Insurer Does Not Have Duty To Warn Employee Of Asbestos Hazards

In Fackelman v. Lac d’Amiante du Que., LTEE, et al., 2008 N.J. Super. LEXIS 47 (App. Div. 2008), the New Jersey Appellate Division held that Defendant/Workers’ Compensation Insurer, which conducted health and safety studies for the Insured/Employer, did not have a duty to warn and educate the Insured’s employees of the dangers of asbestos, because there was no evidence that the Insurer negligently performed the studies nor that the Insurer assumed a duty to supervise workplace safety.  

Plaintiff, Daniel Fackelman, was employed by Owens Corning at its Berlin, New Jersey facility from July, 1967 to May, 1968.  During this ten month period, Plaintiff’s primary job was to remove asbestos pipe from a mold and stack it in a bin.  Plaintiff explained that the product would at times break or shatter, and that the area was dusty.  When he commenced his employment, Plaintiff’s employer did not provide any information to him with regard to asbestos, and he was not required to wear a mask.  Plaintiff further testified that during his employment he recalled individuals testing the air at the facility, examining the equipment and observing the employees performing their jobs.  However, the employees were never informed of the results of any testing.  In 2002, Plaintiff was diagnosed with asbestosis.

The record also reflects that between 1958 and 1972, St. Paul Travelers’ predecessor, Aetna Casualty and Surety Co. (“Aetna”), performed various air sample studies, industrial hygiene studies, and special hazard studies at the Berlin facility pursuant to an agreement with its Insured.  Subsequent to periodic air sampling, Aetna representatives would meet with Owens Corning representatives to review the results, discuss the Insured’s response and offer advice, with the ultimate purpose of aiding Owens Corning in reducing high exposure levels and containing asbestos dust.  In 1969, Owens Corning adopted a safety program and Aetna was involved in assisting Owens Corning in complying with this safety program.  

Plaintiff asserted that Aetna was liable because Aetna performed industrial hygiene studies and dust sampling at the Berlin facility, but failed to warn employees of the dangerous nature of asbestos dust nor educate employees on how to avoid or minimize their exposure.  He further argued that Aetna assumed the duty owed by Owens Corning to provide a safe employment atmosphere, and that the employees were knowledgeable of Aetna’s studies and relied on it to inform them of any dangers.  Plaintiff did not assert, however, that Aetna negligently performed the studies.  Aetna responded that it performed all studies in a competent manner and never assumed any duty of Plaintiff’s employer, Owens Corning.

The Camden County Superior Court, Law Division ruled in Aetna’s favor, finding that Aetna had a contract with Owens Corning to undertake certain studies and provide the results of such studies to Owens Corning.  The Court opined that what Owens Corning did with this information was the business of Owens Corning, and that if there was any duty to the employees, it was owed by their employer.

The Appellate Division affirmed the trial court, holding that there was no basis to impose a duty on Aetna to the Owens Corning employees.  In reaching its conclusion, the Court looked to the Restatement (Second) of Torts § 324A which stated, “[o]ne who undertakes . . . to render services to another which he should recognize as necessary for the protection of a third person . . . is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.” Restatement (Second) of Torts § 324A.    

The Court noted that the federal court case of Daraio v. Carey Canada, Inc., 309 F. Supp. 2d. 706 (E.D. Pa. 2004), involved factually similar circumstances to Fackelman, and was dismissed upon a granting of summary judgment in the defendant’s favor.  In Daraio, the plaintiff was also an employee of the Owens Corning Plant and raised similar theories of liability to that of Plaintiff in Fackelman.  Applying New Jersey law, the federal court found that the employer retained responsibility for the safety at the plant and did not rely on the insurer’s recommendations.  Thus, the plaintiff could not establish an undertaking of a duty as required by 324A(b), or reliance as required by 324A(c).  Moreover, the plaintiff could not establish that the insurer acted negligently in performing the studies, and therefore could not show that the insurer increased the risk of harm pursuant to 324A(a).    

Consistent with the reasoning of the Daraio Court, the Fackelman Court held that the factual record along with the law of New Jersey provided no basis for recovery by Plaintiff Fackelman against Aetna.  The Court determined that Owens Corning retained full responsibility for workplace safety and that Owens Corning treated Aetna’s undertaking as merely informational.  Furthermore, there was no allegation that Aetna acted negligently so as to increase the risk of harm to a third-party.

Plaintiff alternatively argued that tort liability principles provide a basis for recognizing that Aetna had a duty to reduce the risks of foreseeable harm at the facility and warn the employees of the dangers of asbestos.  The Court rejected this argument, reasoning that foreseeabilty of harm, while significant, is not determinative in analyzing whether a duty is owed.  See Carvalho v. Toll Bros. & Developers, 143 N.J. 565, 672 A. 2d 209 (1996).  Other considerations, such as fairness, policy, and the element of control are also essential to the analysis, and the Court determined that Aetna did not have any control over the facility.

Plaintiff’s argument that he was a third-party beneficiary of the contractual relationship between Owens Corning and Aetna was also rejected by the Court on the basis that the policy of insurance was not provided.  Thus, the Court could not find any evidence to support a conclusion that Aetna and Owens Corning contemplated that its contractual relationship was made for the benefit of its employees. 

Under New Jersey tort law, an Insurer does not have a duty to warn a third-party of known asbestos dangers absent a showing of a failure to exercise reasonable care which increases the risk of harm, an undertaking to perform a duty owed by another to the third-person, or reliance upon the undertaking by another or the third-person.  However, a duty to warn under contractual principles may nevertheless exist if the parties to a policy of insurance intended for the contract to benefit third-parties.