Athene Annuity can advance indemnification claims against Assicurazioni Generali over asbestos liabilities, a Delaware court has ruled.
The April 9 ruling by the Superior Court of Delaware partially denied Generali's attempt to have the case thrown out, allowing two of Athene's claims to proceed while dismissing the rest as either moot or insufficiently pleaded. The decision turns on a question that will be familiar to anyone who has ever navigated an indemnification clause in a corporate acquisition: who pays first, and when?
The dispute stems from a 2002 deal in which Athene's predecessor acquired Business Men's Assurance Company of America from Generali's predecessor, Generali Finance B.V. The purchase included Tower Headquarters, an office building in Kansas City, Missouri. As part of the transaction, Generali agreed to indemnify Athene against any losses, liabilities, or expenses arising from ownership of the building – including asbestos claims.
Since then, Athene has defended six asbestos claims related to the property. The most recent, brought by Roslyn T. Barnes, sought punitive damages among other recoveries. A jury sided with Athene in October 2024, but Barnes has appealed.
Athene notified Generali of the Barnes claim and gave it the opportunity to assume the defense. Generali declined. It also refused to participate monetarily in efforts to settle the Barnes claim, pointing to two reasons: Athene should first seek coverage from its own insurers and contributions from co-defendants, and Generali itself had not obtained consent from its own indemnitor, Quest Diagnostics.
Athene did receive some defense costs from insurers, but more than $850,000 in legal expenses went unreimbursed. Generali made no payments.
Athene then filed suit in Delaware, raising four declaratory judgment claims and one breach of contract claim. The declaratory claims asked the court to confirm that Generali's indemnification obligations do not depend on Athene first exhausting its insurance coverage, are not contingent on Quest's cooperation, extend to punitive damages, and include an ongoing duty to pay attorneys' fees as they are incurred.
The breach of contract claim sought recovery of the $850,000 in outstanding legal costs.
At oral argument, Generali conceded two of the four declaratory claims. It acknowledged that its obligations to Athene are not conditioned on what Quest does or does not do. It also accepted that the purchase agreement contains no prohibition on covering punitive damages. The court found both issues moot and dismissed them accordingly.
The two surviving claims center on a provision in the purchase agreement that says damages owed by Generali are to be reduced by any amounts Athene actually receives from third parties, including insurance carriers. Generali reads this as requiring Athene to file insurance claims and wait for final resolution of the underlying lawsuit before any indemnification obligation kicks in. Athene disagrees, arguing that Generali's duty to reimburse defense costs is triggered the moment it declines to take over the defense.
The court found this disagreement ripe for adjudication. The $850,000 in unreimbursed fees exists regardless of how the Barnes appeal turns out, and Athene has a legitimate interest in knowing where it stands.
The breach of contract claim, however, did not survive. The court noted that while the purchase agreement requires Generali to promptly reimburse reasonable fees and expenses as they are incurred, Athene never actually sent Generali the invoices. Without giving Generali the chance to review the charges for reasonableness and make payment, the court found that Athene could not claim a breach. The count was dismissed.
The case will now move forward on the two remaining declaratory claims, with the central issue being whether the purchase agreement requires Athene to go through its insurers before knocking on Generali's door. For insurance professionals watching from the sidelines, the outcome could offer useful guidance on how indemnification and insurance obligations interact in the context of legacy liabilities and long-tail exposure like asbestos.
