Plastics Engineering v. Liberty Mut. Ins.

Decision Date29 January 2009
Docket NumberNo. 2008AP333-CQ.,2008AP333-CQ.
Citation759 N.W.2d 613,2009 WI 13
PartiesPLASTICS ENGINEERING COMPANY, Plaintiff-Appellee-Cross-Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant-Appellant-Cross-Appellee.
CourtWisconsin Supreme Court

An amicus curiae brief was filed by Sarah C. Walkenhorst and Heller Ehrman LLP, Madison, and Mark J. Plumer and Heller Ehrman LLP, Washington, D.C., on behalf of the Wisconsin Utilities Association.

An amicus curiae brief was filed by William J. Mulligan, James E. Braza, Susan G. Schellinger, and Davis & Kuelthau, S.C., Milwaukee, on behalf of the National Federation of Independent Business (NFIB) Small Business Legal Center.

An amicus curiae brief was filed by Todd A. Becker and Coyne, Schultz, Becker & Bauer, S.C., Milwaukee, on behalf of the Transportation Insurance Company and the National Fire Insurance Company of Hartford.

¶ 1 ANNETTE KINGSLAND ZIEGLER, J

This is a certification of questions of law from the United States Court of Appeals for the Seventh Circuit, pursuant to Wis. Stat. § 821.01 (2005-06).1 The questions certified for determination are: "(1) what constitutes an `occurrence' in an insurance contract when exposure injuries are sustained by numerous individuals, at varying geographical locations, over many years; (2) whether Wisconsin Statute § 631.43(1) applies to successive insurance policies; and (3) whether Wisconsin courts would adopt an `all sums' or pro rata allocation approach to determining liability when an injury spans multiple, successive insurance policies."

¶ 2 At the outset, we recognize that a certification usually, and appropriately so, contains questions of law that cannot be answered by controlling precedent from the Wisconsin Supreme Court or Court of Appeals. See Wis. Stat. § 821.01. In a certification, this court does not traditionally decide the issues as if we were reviewing the decision of the magistrate judge. The parties, however, did not brief or argue this case in response to the certified questions. Rather, they briefed and argued this case as if we were called upon to affirm or reverse Judge Goodstein's decision.2

¶ 3 The certification noted that "[h]ow these [policy] provisions are interpreted in the context of long-tailed exposure claims under Wisconsin law will significantly shape the future of insurance litigation in the state." Here we analyze the certified questions by turning to the specific policy language, which apparently is standard language found in other insurance contracts governed by Wisconsin law.3 Wisconsin case law has not interpreted such a policy in light of these facts. Consequently, we answer these questions in a manner that could prove useful beyond the case now before the court.

¶ 4 We answer the three certified questions by concluding that under the language in this policy and the facts of this case, each claimant's repeated exposure is one occurrence; Wis. Stat. § 631.43(1) (1975-current)4 does not apply to successive insurance policies; and once this policy is triggered, Liberty Mutual must fully defend the lawsuit in its entirety and pay for all sums up to the policy limits that Plastics Engineering Company (Plenco) is obligated to pay because of the injury. The policy language here does not support a pro rata allocation of damages.

I. FACTS

¶ 5 Prior to filing motions for summary judgment at the United States District Court for the Eastern District of Wisconsin, the parties stipulated to the following facts:

¶ 6 From approximately 1950 until 1983, Plenco manufactured and sold certain compounds that incorporated asbestos. Plenco has now been named a defendant in a number of lawsuits because of bodily injury or wrongful death that are allegedly related to or have arisen from exposure to asbestos-containing products sold by Plenco. In general, the claimants allege that they were injured by their first exposure to asbestos, but their asbestos-related injuries did not manifest until long after their exposure to the asbestos. The claimants' exposures allegedly occurred at different times and at different geographical locations.

¶ 7 During periods of the alleged exposure and resulting injury, Liberty Mutual provided various insurance policies to Plenco. The policies relevant to this litigation are the primary policies from February 9, 1968, through January 1, 1989, and the umbrella excess coverage policies from May 8, 1970, through January 1, 1984, and January 1, 1986, through January 1, 1988. In each of these years, Liberty Mutual was the insurer who issued the primary and excess policies.5 Primary policies beginning January 1, 1989, and excess policies beginning January 1, 1988, contain an asbestos exclusion.

¶ 8 The policies at issue contained the following coverage limits: From February 9, 1968, through January 1, 1986, Liberty Mutual insured Plenco under a primary policy with coverage limits of $500,000 per occurrence and $500,000 annual aggregate. From January 1, 1986, through January 1, 1989, Liberty Mutual insured Plenco under a primary policy with coverage limits of $1,000,000 per occurrence and $1,000,000 annual aggregate.

¶ 9 From May 8, 1970, through January 1, 1984, Liberty Mutual also insured Plenco under umbrella excess liability policies. From May 8, 1970, through December 19, 1972, the coverage limits under each excess policy were $1,000,000 per occurrence and $1,000,000 annual aggregate. From December 19, 1972, through January 1, 1982, the coverage limits under each excess policy were $5,000,000 per occurrence and $5,000,000 annual aggregate. From January 1, 1982, through January 1, 1984, the coverage limits under each excess policy were $1,000,000 per occurrence and $1,000,000 annual aggregate. From January 1, 1984, through January 1, 1986, Liberty Mutual did not provide Plenco with umbrella excess liability coverage. From January 1, 1986, through January 1, 1988, the coverage limits for each policy were $10,000,000 per occurrence and annual aggregate.

¶ 10 The primary policies issued by Liberty Mutual to Plenco from January 1 1967, through January 1, 1989, contained the following or similar insuring clause:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage A. bodily injury or

Coverage B. property damage

to which this policy applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.

¶ 11 The primary policies provided the following definition for "bodily injury": From January 1, 1967, through January 1, 1973, the policies defined "bodily injury" as "bodily injury, sickness or disease sustained by any person." From January 1, 1973, through January 1, 1989, the primary policies defined "bodily injury" as "bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom."

¶ 12 The primary policies provided the following definition of "occurrence": From January 1, 1967, through January 1, 1973, the primary policies defined "occurrence" as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured." From January 1, 1973, through January 1, 1989, the primary policies defined "occurrence" using the following or similar language, "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."

¶ 13 The primary policies from January 1, 1967, through January 1, 1973, provided the following Limits of Liability provision:

Regardless of the number of (1) insureds under this policy, (2) persons or organizations who sustain bodily injury or property damage or (3) claims made or suits brought on account of bodily injury or property damage, the company's...

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