In re Viking Pump, Inc.
Decision Date | 03 May 2016 |
Docket Number | No. 59.,59. |
Citation | 52 N.E.3d 1144,33 N.Y.S.3d 118,2016 N.Y. Slip Op. 03413,27 N.Y.3d 244 |
Parties | In the Matter of VIKING PUMP, INC., et al., Insurance Appeals. Viking Pump, Inc., et al., Appellants, TIG Insurance Company et al., Respondents. |
Court | New York Court of Appeals Court of Appeals |
Kirkland & Ellis LLP, Chicago, Illinois (Michael P. Foradas, of the Illinois bar, admitted pro hac vice, Lisa G. Esayian of the Illinois bar, admitted pro hac vice, and William T. Pruitt of the Illinois bar, admitted pro hac vice, of counsel), and Kirkland & Ellis LLP, New York City (Peter A. Bellacosa of counsel), for Viking Pump, Inc., appellant.
Kasowitz Benson Torres & Friedman LLP, New York City (Robin L. Cohen, Elizabeth A. Sherwin and Keith McKenna of counsel), for Warren Pumps LLC, appellant.
Quinn Emanuel Urquhart & Sullivan, LLP, New York City (Kathleen M. Sullivan of counsel), Simpson Thacher & Bartlett LLP, New York City (Mary Kay Vyskocil, Summer Craig and Alexander Li of counsel), O'Melveny & Myers LLP, Washington, D.C. (Jonathan D. Hacker, of the District of Columbia bar, admitted pro hac vice, of counsel), O'Melveny & Myers LLP, New York City (Tancred Schiavoni, Gary Svirsky, Anton Metlitsky and Brad M. Elias of counsel), Hinkhouse Williams Walsh LLP, Chicago, Illinois (Laura S. McKay, of the Illinois bar, admitted pro hac vice, of counsel), Day Pitney LLP, Hartford, Connecticut (Kathleen D. Monnes, of the Connecticut bar, admitted pro hac vice, John K. Scully, of the Connecticut bar, admitted pro hac vice and John W. Cerreta of counsel), Clausen Miller P.C., Chicago, Illinois (Mark D. Paulson, of the Illinois bar, admitted pro hac vice, Amy R. Paulus, of the Illinois bar, admitted pro hac vice and Don R. Sampen, of the Illinois bar, admitted pro hac vice, of counsel), Zelle Hofmann Voelbel & Mason LLP, Framingham, Massachusetts (Kristin Suga Heres, of the Massachusetts bar, admitted pro hac vice, of counsel), and Carroll, McNulty & Kull LLC, Basking Ridge, New Jersey (Heather E. Simpson and Christopher R. Carroll of counsel), for respondents.
Vedder Price P.C., New York City (John H. Eickemeyer and Daniel C. Green of counsel), and Wiley Rein LLP, Washington, D.C. (Laura A. Foggan and Nicole Audet Richardson of counsel), for Complex Insurance Claims Litigation and another, amici curiae.
Lowenstein Sandler LLP, New York City (David L. Elkind and Eric Jesse of counsel), for New York State Electric & Gas Corporation, amicus curiae.
Anderson Kill P.C., New York City (Robert M. Horkovich and Edward J. Stein of counsel), and Amy Bach, United Policyholders, San Francisco, California, for United Policyholders and others, amici curiae.
Jenner & Block LLP, Chicago, Illinois (Craig C. Martin, of the Illinois bar, admitted pro hac vice, and Peter J. Brennan of counsel), for Olin Corporation, amicus curiae.
Morgan, Lewis & Bockius LLP, Washington, D.C. (Randall M. Levine, Gerald P. Konkel, Stephanie Schuster and Christopher M. Popecki of counsel) and Morgan, Lewis & Bockius LLP, Los Angeles, California (David S. Cox of counsel), for ITT Corporation, amicus curiae.
STEIN
, J.
In this complex insurance dispute, we have accepted two certified questions from the Delaware Supreme Court asking us to determine (1) whether “all sums” or “pro rata” allocation applies where the excess insurance policies at issue either follow form to a non-cumulation provision or contain a non-cumulation and prior insurance provision, and (2) whether, in light of our answer to the allocation question, horizontal or vertical exhaustion is required before certain upper level excess policies attach. We reaffirm that, under New York law, the contract language of the applicable insurance policies controls each of these questions, and we answer the certified questions in accordance with the opinion herein, concluding that all sums allocation and vertical exhaustion apply based on the language in the policies before us.
The facts and procedural history of the underlying litigation are explained in more detail in decisions of the Delaware courts (see In re Viking Pump, Inc., ––– A.3d ––––, 2015 WL 3618924 [June 10, 2015]
; Viking Pump, Inc. v. Century Indem. Co., 2014 WL 1305003, 2014 Del.Super. LEXIS 707 [Feb. 28, 2014, C.A. No. 10C–06–141 FSS CCLD]; Viking Pump, Inc. v. Century Indem. Co., 2013 WL 7098824, 2013 Del.Super. LEXIS 615 [Oct. 31, 2013, C.A. No. 10C–06–141 FSS CCLD]; Viking Pump, Inc. v. Century Indem. Co., 2 A.3d 76 [Del.Ch.2009] ). As relevant here, Viking Pump, Inc., and Warren Pumps, LLC, acquired pump manufacturing businesses from Houdaille Industries, Inc. in the 1980s. Those acquisitions later subjected Viking and Warren to significant potential liability in connection with asbestos exposure claims. Houdaille had extensive multilayer insurance coverage spanning from 1972 to 1985 that included coverage for such claims. More specifically, Liberty Mutual Insurance Company provided Houdaille with primary insurance (totaling approximately $17.5 million) and umbrella excess coverage (totaling approximately $42 million) through successive annual policies. Beyond that, Houdaille obtained additional layers of excess insurance through annual policies issued by various excess insurers (totaling over $400 million in coverage), including a number of policies issued by defendants, designated herein as “the Excess Insurers.”
Viking and Warren sought coverage under the Liberty Mutual policies, and the Delaware Court of Chancery determined that both companies were entitled to exercise rights as insureds under those policies (see generally Viking Pump, Inc. v. Liberty Mut. Ins. Co., 2007 WL 1207107, 2007 Del.Ch. LEXIS 43 [Apr. 2, 2007, C.A. No. 1465–VCS]
). As the Liberty Mutual coverage neared exhaustion, litigation arose regarding whether Viking and Warren were entitled to coverage under the additional excess policies issued to Houdaille by the Excess Insurers and, if so, how indemnity should be allocated across the triggered policy periods.
“Occurrence” is defined, in relevant part, as “injurious exposure to conditions, which results in personal injury” which, in turn, is defined as “personal injury or bodily injury which occurs during the policy period ” (emphasis added). The policies also state that, “[f]or the purpose of determining the limits of the [insured's] liability: (1) all personal injury ... arising out of continuous or repeated exposure to substantially the same general conditions ... shall be considered as the result of one and the same occurrence.” The excess policies issued by the Excess Insurers either follow form to (i.e., incorporate) these provisions, or provide for substantively identical coverage.
Those excess policies that do not follow form to the Liberty Mutual non-cumulation provision contain a similar two-part “Prior Insurance and Non [-]Cumulation of Liability” provision, sometimes referred to as “Condition C,” as follows:
In the underlying litigation, the parties cross-moved for summary judgment with respect to the availability of coverage and the allocation of liability under the excess policies. The Delaware Court of Chancery granted Viking and Warren summary judgment on those issues, and denied the Excess Insurers' cross motions (2 A.3d at 130
). As a threshold matter, the Court of Chancery held that New York law applied to the dispute and that Viking and Warren were each entitled to coverage under the excess policies (see
id. at 90 ).1
With regard to the allocation issue, the Court of Chancery agreed with Warren and Viking (hereinafter, collectively, the Insureds) that the proper method of allocation was the all sums approach, as compared with the pro rata allocation method propounded by the Excess Insurers (see id. at 119–127
). The Court of Chancery acknowledged that this Court had previously applied the pro rata method in Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 222, 746 N.Y.S.2d 622, 774 N.E.2d 687 (2002), where the policy language similarly provided that the insurer would pay “all sums” for an occurrence happening “during the policy period” (see 2 A.3d at 120–121...
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CHAPTER § 5.11 Specific Issues in the Pharmaceutical Industry: Claims Involving Multiple Policy Periods
...(citation and marks omitted).[278] 15 Plitt, Couch on Insurance, N.19 supra, § 220:27; id. at § 220:30.[279] In re Viking Pump, Inc., 52 N.E.3d 1144, 1156 (N.Y. 2016).[280] 15 Plitt, Couch on Insurance, N.19 supra, § 220:30.[281] Id. § 220:31; Cont'l Ins. Co. v. Honeywell Int'l, Inc., 188 A......