Berkshire Hathaway and Asbestos Liability Case

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News Summary

Berkshire Hathaway Specialty has filed a lawsuit in Texas seeking clarification on its responsibility for asbestos liabilities associated with Murco Wall Products. This legal action comes amid numerous claims against Murco for asbestos exposure from their products. The court will address liability issues and the implications of insurance coverage in the context of long-standing asbestos claims.

Berkshire Hathaway Specialty Seeks Court Ruling on Asbestos Liability

In a significant legal maneuver, Berkshire Hathaway Specialty initiated a lawsuit on July 17 in the US District Court for the Northern District of Texas to clarify its role in potential asbestos liabilities. This case centers around allegations of exposure to asbestos tied to products made by Murco Wall Products, a Fort Worth-based manufacturer of drywall and paint.

With hundreds of asbestos lawsuits looming against Murco, the company is bracing for more claims that allege exposure to harmful asbestos components in their products. The dispute arises from Berkshire’s previous underwriting decisions, having issued two umbrella liability policies to Murco back in the early 1980s, both capped at $5 million.

As it stands, Murco has designated Berkshire as their insurer in 17 active lawsuits sprinkled across several states, including Illinois, Missouri, Maryland, and Texas. High-profile cases such as Brown v. 4520 Corp., Gast v. Asbestos Corp. Ltd., and Duvall v. DAP Products, Inc. illustrate the gravity of these allegations.

Berkshire contends that under Texas law, Murco formally chose them for both defense and indemnity in these asbestosis claims. However, the insurer argues that it should not be held responsible for any form of payment, citing a pollution exclusion clause within its policies. According to Berkshire, this clause disallows coverage for damages stemming from the discharge of contaminants unless such events were both sudden and accidental—conditions Berkshire claims the current asbestos allegations do not satisfy.

This legal battle inevitably brings in additional players, as Berkshire looks to implicate Canal Insurance Company and Interstate Fire & Casualty Company, which provided excess liability coverage to Murco from 1984 to 1988. Should Berkshire be found liable, it is also pursuing clarification on possible recovery options from these other insurers for their share of defense costs or settlements. Furthermore, the case seeks judicial guidance on how to address coverage issues arising from defunct insurers and the allocation of liability among multiple triggered policies.

This lawsuit exemplifies ongoing tensions within the insurance sector regarding the responsibility for payments linked to long-tail liabilities like asbestos claims, which often emerge long after coverage periods have lapsed and some insurers have gone defunct.

Barretts Minerals and the Talc-related Asbestos Claims Face Scrutiny

In a separate yet equally concerning matter, Barretts Minerals Inc. is under the microscope as a bankruptcy judge in Texas investigates whether its talc products contained dangerous levels of asbestos. Barretts filed for Chapter 11 bankruptcy in 2023, overwhelmed by a wave of lawsuits asserting that the talc sold by the company was harmful and contributed to conditions such as mesothelioma.

The claims raised by plaintiffs argue that Barretts misrepresented the safety of its talc, which they allege was laced with asbestos contrary to Barretts’ claims. The company is currently operating under the name Barretts Minerals OldCo during its bankruptcy proceedings, while its parent entity, Minerals Technologies Inc., remains unscathed financially.

Skepticism surrounds Barretts’ bankruptcy strategy, with critics alleging that it is a maneuver to shield its solvent parent company from state court litigation. The Texas venue for the bankruptcy has generated speculation, particularly due to Barretts’ ownership of income-producing land in the area.

The presiding judge has permitted the bankruptcy case to move forward but is demanding a clear determination regarding the asbestos content in Barretts’ talc. It is crucial as Barretts divested its talc business for $32 million to Riverspan Partners, which went on to rebrand itself as High Divide Minerals. However, High Divide cannot comment on past operations due to the stipulations tied to the sale.

The bankruptcy plan laid out by Barretts also aims to handle both current and future asbestos-related claims against itself and its parent corporation. Meanwhile, Minerals Technologies has reserved $215 million for responding to talc-related claims but maintains the position that the allegations are without merit.

As a result of Barretts’ bankruptcy filing, most litigation concerning talc claims against Minerals Technologies has been paused—except for some actions focused on product testing. This freeze leaves claimants frustrated as they await the outcome of the bankruptcy proceedings and the ensuing tests concerning asbestos levels.

The implications of these legal battles could resonate throughout the industry, potentially reshaping the landscape for ongoing lawsuits and accountability concerning asbestos-related claims. The way these situations play out could not only impact affected individuals but also set a precedent on how companies are held accountable for legacy liabilities.