International Paper Announces Favorable Verdict in Insurance Trial
Press release from the issuing company
STAMFORD, Conn., July 15 -- International Paper today announced that a California Superior Court jury has returned a favorable decision in a lawsuit brought by International Paper against 22 insurers. In this case, International Paper seeks indemnification from these insurers for payments resolving property owners' claims under the 1998 Judy Naef v. Masonite and International Paper class action settlement. That settlement relates to certain exterior siding products manufactured by International Paper's formerly-owned business, Masonite Corporation.
International Paper has paid approximately $485 million in exterior siding claims through June 30, 2003 under the class action settlement. Of this $485 million, approximately $470 million was at issue in the California trial. The jury determined that $383 million of International Paper's payments to settle these claims are covered by its insurance policies. The next phase of the case will determine how much of the $383 million will be allocated to the policies issued by insurance companies that are defendants in this case. The company is unable at this time to estimate the amount it will ultimately recover from the defendants in the California lawsuit, but is pleased with the results in the first phases of the case.
The company anticipates that the California court will also make a determination about indemnification for future claims, based on this verdict. In addition, the company will be pursuing indemnification from other insurance carriers in arbitration proceedings as required by the policies. The company cannot predict at this time the amount it will ultimately recover in connection with arbitration proceedings with these insurance carriers. To date, the company has received $94 million from nine insurance companies other than the defendants in this case, and one of those insurance companies has agreed to pay International Paper an additional $10 million in 2004.
In 2001, Masonite's exterior siding business was closed, and International Paper subsequently sold Masonite Corporation to Premdor Inc. International Paper retained liability for claims under the Naef class action settlement. Details of this settlement are described in the company's 2002 annual report and its subsequent quarterly report for the first quarter of 2003, which have been filed with the Securities and Exchange Commission.
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