The 8th Ohio District Court of Appeals ruled that the Glidden Co., a unit of Imperial Chemical Industries, is entitled to continued insurance coverage from Lumbermens Mutual Casualty Co. Lumbermens and four other insurance companies filed a lawsuit in federal court in 2000 saying that they no longer insured Glidden. The companies claimed that insurance coverage had lapsed when Glidden was sold to ICI in 1986. Glidden does business as ICI Paints, a Cleveland-based division of Imperial Chemicals.

But the court agreed with a series of previous rulings that said when a company with liabilities is taken over, the insurance coverage transfers with those liabilities. "Appellees should have been aware at the time of contracting that they could be required to indemnify and defend liability arising from the Ohio operations of the paints business," Judge Sean Gallagher wrote in the 3-1 decision.

"In the last few years, insurance companies have cooked up arguments that seek to avoid responding to liabilities," said William Passannante, a lawyer with New York-based Anderson Kill & Olick, one of the law firms representing Glidden. "The idea is to avoid insurance coverage by pointing to corporate transactions," he said.