August 18, 2025 | Columbia, SC – MedLegalNews.com — A South Carolina federal court has dismissed a decades-spanning asbestos coverage dispute, ruling that a Travelers subsidiary has no obligation to defend a construction company in litigation seeking indemnification over asbestos-related injury claims.
U.S. District Judge Sherri A. Lydon ruled Monday that the suit filed against Daniel International Corp. by the current owner of the Bowater Paper Mill, New-Indy Catawba LLC, did not seek monetary damages but instead requested a legal determination of contractual rights.
The court dismissed with prejudice Daniel’s claims against United States Fidelity and Guaranty Co. (USF&G), which had insured the company under comprehensive general liability policies between 1966 and 1986. Additionally, claims against The Travelers Indemnity Co. were permanently dismissed after the court determined no contractual relationship existed between Travelers and Daniel.
Background of the Dispute
The underlying conflict dates back to Daniel’s construction work at the Catawba, South Carolina, paper mill between 1966 and 1983. In March 2021, New-Indy sued Daniel in state court, asserting that multiple former workers alleged asbestos exposure during Daniel’s work periods. The company sought to hold Daniel responsible for all related losses and expenses.
Daniel tendered the claim to Travelers Indemnity in April 2021. However, in May 2023, the insurers denied coverage, asserting that the state court suit sought only declaratory relief — not damages as defined under the policies. Daniel later sued in state court in May 2024, accusing the insurers of bad faith and breach of the duty to defend.
Court’s Rationale
Judge Lydon concluded that the term “damages” in the CGL policies clearly refers to “reparation in money for a detriment or injury sustained.” Since the underlying suit did not seek direct monetary compensation, but rather a ruling on contractual obligations, coverage was not triggered.
The judge noted that while a ruling in the underlying case might eventually lead to Daniel paying damages in related litigation, that possibility did not alter the nature of the relief sought. Furthermore, any viable claim under the USF&G policies must be pursued directly against USF&G, not Travelers.
The case is Daniel International Corp. v. The Travelers Indemnity Co. et al., case number 3:24-cv-05530, in the U.S. District Court for the District of South Carolina.
Legal analysts note that this decision underscores a broader trend in asbestos coverage dispute litigation, where courts draw a sharp distinction between monetary damages and declaratory relief. For insurers, this ruling provides additional precedent to narrow defense obligations in long-tail liability cases. For policyholders, however, it highlights the difficulty of securing coverage when the underlying claim does not explicitly demand compensation, even if asbestos-related injuries are central to the dispute.
For full access to the court’s decision, see the U.S. District Court of South Carolina docket.
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FAQs: South Carolina Asbestos Coverage Dispute
Why did the court dismiss Daniel International’s claims?
The court found that the underlying lawsuit did not seek damages but only a declaratory judgment on contractual indemnity obligations, which does not trigger coverage under the CGL policies.
What is the significance of the “damages” definition in this case?
The policies defined damages as monetary compensation for injury or loss. Since no such relief was sought in the underlying suit, the insurers had no duty to defend.
How does this ruling affect future asbestos coverage disputes?
It reinforces that courts may deny defense obligations where underlying claims seek only declaratory relief, even if eventual financial liability could arise from subsequent litigation.
What challenges do policyholders face in an asbestos coverage dispute?
Policyholders often struggle to secure defense coverage when claims are framed as declaratory actions instead of direct demands for damages. This case illustrates how insurers may use policy language to limit obligations, making it critical for companies to carefully analyze coverage terms in any asbestos coverage dispute.
Why is this decision significant for insurers nationwide?
The ruling strengthens insurers’ ability to contest defense duties in asbestos coverage disputes, particularly when plaintiffs seek clarification of contractual rights rather than damages. This precedent could influence how federal courts evaluate similar disputes across different jurisdictions.