Nooter Corp. v. Allianz Underwriters Ins. Co.

• Decision Date: 03 October 2017
• Docket Number: No. ED 103835,ED 103835
• Citation: 536 S.W.3d 251
• Court: Missouri Court of Appeals
• Parties: NOOTER CORPORATION, Respondent/Cross-Appellant, v. ALLIANZ UNDERWRITERS INS. CO., Appalachian Ins. Co., Evanston Ins. Co., National Union Fire Ins. Co. of Pittsburg, Pa., North Star Reinsurance Corp., OneBeacon America Ins. Co., Appellants, and Certain Underwriters Lloyd's London & London Market Ins., Munich Reinsurance America, Inc., Appellants/Cross-Respondents, and Continental Casualty Co., Respondent.

536 S.W.3d 251

NOOTER CORPORATION, Respondent/Cross-Appellant,

v.ALLIANZ UNDERWRITERS INS. CO., Appalachian Ins. Co., Evanston Ins. Co., National Union Fire Ins. Co. of Pittsburg, Pa., North Star Reinsurance Corp., OneBeacon America Ins. Co., Appellants,andCertain Underwriters Lloyd's London & London Market Ins., Munich Reinsurance America, Inc., Appellants/Cross-Respondents,

and

Continental Casualty Co., Respondent.

No. ED 103835

Missouri Court of Appeals, Eastern District, DIVISION TWO.

Filed: October 3, 2017

Motion for Rehearing and/or Transfer to Supreme Court Denied January 23, 2018

Lewis Rice LLC, St. Louis, MO (Richard A. Wunderlich of counsel), Blank Rome LLP, Washington, DC (John A. Gibbons, Omid Safa of counsel), and Lowenstein Sandler, Washington, DC (David L. Elkind of counsel), for respondent/cross-appellant Nooter Corporation.

HeplerBroom LLC, St. Louis, MO (Theodore J. MacDonald, Jr., Michael L. Young of counsel), and Karbal, Cohen, Economou, Silk & Dunne, LLC, Chicago, IL (Roderick T. Dunne, Linda J. Carwile of counsel), for appellant Allianz Underwriters Insurance Company.

Wuestling & James, L.C., St. Louis, MO (Richard C. Wuestling, Susan M. Diamond of counsel), and BatesCarey LLP, Chicago, IL (R. Patrick Bedell of counsel), for appellant Appalachian Insurance Company.

Thompson Coburn LLP, St. Louis, MO (Bruce D. Ryder of counsel), and Hinkhouse Williams Walsh LLP, Chicago, IL (Laura S. McKay of counsel), for appellants Certain Underwriters at Lloyd's, London, Certain London Market Insurance Companies, National Union Fire Insurance Company of Pittsburgh, Pa., and Lamorak Insurance Company, f/k/a OneBeacon America Insurance Company.

Armstrong Teasdale LLP, St. Louis, MO (Thomas B. Weaver, Wilbur L. Tomlinson of counsel), Traub Lieberman Straus & Shrewsberry LLP, Hawthorne, NY (Adam D. Krauss of counsel), and Shook, Hardy & Bacon LLP, Kansas City, MO (J. Stan Sexton, Charles C. Eblen, Sarah Lynn Baltzell of counsel), for appellant Evanston Insurance Company.

McCarthy, Leonard & Kaemmerer, L.C., Town and Country, MO (Timothy J. Ahrenhoersterbaeumer of counsel), and BatesCarey LLP, Chicago, IL (Maryann C. Hayes of counsel), for appellant Munich Reinsurance America, Inc.

Pitzer Snodgrass, P.C., St. Louis, MO (Robyn Greifzu Fox of counsel), and Budd Larner, P.C., Short Hills, NJ (Michael J. Balch of counsel), for appellant North Star Reinsurance Corporation.

Goldstein & Price, L.C., St. Louis, MO (Alan K. Goldstein of counsel), for respondent Continental Casualty Company.

OPINION

Colleen Dolan, JudgeThe appeal before us involves a dispute between Nooter Corporation ("Nooter") and eight different excess insurance companies: Evanston Insurance Company ("Evanston"), National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), Allianz Underwriters Insurance Company ("Allianz"), Certain Underwriters at Lloyd's, London and Certain London Market Insurance companies ("London"), Appalachian Insurance Company ("Appalachian"), Munich Reinsurance America, Inc. ("Munich"), North Star Reinsurance Company ("North Star"), and OneBeacon America Insurance Company ("OneBeacon").¹ Collectively, we will refer to all eight appellants as "Excess Insurers." Aside from London and National Union, which have submitted a brief together, each appellant has submitted its own brief, resulting in seven appellant and reply briefs. Additionally, Nooter has filed a cross-appellant's brief, as well as a reply brief.

Nooter has been in the business of designing, installing, and distributing pressure vessels for refineries and chemical plants for over 100 years. Some of Nooter's sites allegedly contained asbestos. Consequently, claimants began filing lawsuits against Nooter for asbestos-related bodily injuries in the late 1990's. In turn, Nooter began seeking help to defend and/or reimburse Nooter for expenses related to these suits pursuant to various insurance policies. This sparked several disagreements between Nooter and Excess Insurers, eventually resulting in litigation. This appeal primarily involves the trial court's rulings on motions for summary judgment and declaratory judgment actions that concern the Excess Insurers' rights and obligations to indemnify and/or defend Nooter in asbestos lawsuits. Additionally, Evanston appeals the adverse judgments against it based on Nooter's claims of breach of contract and vexatious refusal to pay, for which a jury trial was conducted. We affirm in part and reverse in part. Additionally, we grant, in part, Nooter's motion on appeal for reasonable attorney's fees, but we remand the case to the trial court to hold a hearing and determine the reasonableness of the attorney's fees requested and to enter judgment accordingly.

I. BACKGROUND

A. Factual Background

This appeal concerns numerous insurance policies providing coverage for Nooter from 1949 through 1985. Although only "excess" insurance policies are directly at issue on appeal, we must also examine several "primary" general liability insurance policies that were active during the period. The primary policies serve as the first layer of insurance protection for Nooter. Additionally, some of the excess insurance policies are "second-level" excess policies, which can only attach after the applicable primary policies and "first-level" excess policies have been exhausted. Accordingly, the hierarchy amongst the three policies types is (1) primary policies, (2) first-level excess policies, and (3) second-level excess policies.

After claimants began filing asbestos suits against Nooter, Nooter claims it first sought funds from its primary insurance policies, and then, "[a]s individual primary policies were becoming exhausted by the payment of asbestos claims," it sought coverage from Excess Insurers. In sum, more than 20,000 individuals have brought lawsuits against Nooter for bodily injuries resulting from exposure to asbestos. Although the suits involve similar allegations (i.e., personal injury caused by exposure to asbestos at Nooter sites), each claim involves different exposures based on each claimant's work history and/or unique circumstances that allegedly exposed the claimants to asbestos.

Further complicating matters, most of the suits are "long-tail" claims. Long-tail claims involve allegations of continuous or escalating damages over a range of time, sometimes spanning several years, or even decades; this is often the case for asbestos claims. Unlike most tort actions, where the causal event and resulting injury occur almost instantaneously (e.g., an automobile accident), identifying the timing of the causal event(s) is often difficult or impossible in long-tail claims. For example, it takes years between the affected individual's initial inhalation of asbestos and the manifestation of symptoms.² Moreover, the injury is cumulative—many separate exposures contribute to the affliction. Consequently, it can be difficult to identify which policies cover the periods of asbestos exposure that form the basis of a particular lawsuit.³ Such is the case in the appeal before us.

B. Procedural Background

Due to the number of parties (8) and points on appeal or cross-appeal (29), we will adduce additional facts as necessary under the relevant portions on appeal.⁴ Nooter initiated the lawsuit against Excess Insurers on March 10, 2010, and filed its First Amended Petition (the "Petition") on January 31, 2013, asserting claims for Vexatious Refusal to Pay (pursuant to §§ 375.420 & 375.296),⁵ Breach of Contract, and Declaratory Judgment (pursuant to the Missouri Declaratory Judgment Act, § 527.010 et al.).^{6 ,7 ,8} Before the trial, Nooter agreed to dismiss its breach-of-contract claims against Appalachian, Allianz, Munich, North Star, and OneBeacon without prejudice. On April 28, 2014, Nooter proceeded to trial against three of the Excess Insurers (Evanston, London, and National Union), where only six counts were left for the jury to resolve—claims against all three defendants for both breach of contract and vexatious refusal to pay. On May 9, the jury returned verdicts in favor of National Union and London on both counts, however, it returned verdicts against Evanston on both counts.

On April 2, 2015, the trial court issued an order and judgment based on the "Motions for Summary Judgment that declared certain rights to the parties," the jury verdicts, and "Motions for Declaratory Judgment."⁹ Finally, on September 16, 2015, the trial court entered its final order and judgment in accordance with (1) the May 9, 2014 jury verdicts and (2) the April 2, 2015 order and judgment.

In addition to the Excess Insurers' points on appeal, Nooter has raised three points on cross-appeal. All three points concern the trial court's entry of summary judgment in favor of London regarding its defense cost obligations under its 1949–1961 policies. Accordingly, London is the only cross-respondent on appeal.¹⁰

C. Relevant Insurance Companies and Policies

All of the relevant policies' terms and conditions are necessary to resolve multiple points on appeal. This section is meant to provide a background on the relevant companies and policies.

i. Primary Insurance Companies

There are five "primary" insurance companies relevant to this appeal: Continental Insurance Company ("Continental"), Transamerica Insurance Company ("TIG"), Aetna/Travelers Casualty and Surety Company ("Aetna"), Insurance Company of North America ("INA"), and Home Indemnity Company ("Home"). Relevant information about the primary insurers and their policies will be provided as needed.

ii. Excess Insurance Policies

Eight different excess insurers are parties to this appeal:

Evanston

Evanston issued "four consecutive commercial umbrella liability policies" to Nooter from June 1981 until June 1985. These four policies are broken down further into two subtypes:

UM Policies: The first two annual policies were issued on July 1, 1981 (Policy No. "UM 199286") and July 1, 1982 (Policy No. "UM 100296") (collectively herein,...