Zurich Am. Ins. Co. v. Ins. Co. of N. Am.
| Decision Date | 15 November 2016 |
| Docket Number | Case No. 4:14 CV 1112 CDP |
| Parties | ZURICH AMERICAN INSURANCE COMPANY, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Plaintiff Zurich American Insurance Company (ZAIC) brought this suit for equitable contribution, subrogation, and unjust enrichment against defendants Insurance Company of North America (INA), Anheuser-Busch, LLC (A-B), and Pacific Employers Insurance Company. All parties have jointly stipulated that defendant Pacific Employers should be dismissed from this suit, so Pacific's motion to dismiss shall be granted.
A-B had insurance policies with both ZAIC and INA at various times from 1967 - 2008. In 2008, ZAIC represented A-B's interests in a lawsuit involving asbestos exposure, defending under a reservation of rights. ZAIC reached a settlement on A-B's behalf with the plaintiff in that case, and ZAIC paid the full settlement amount. ZAIC then brought this suit to recover a pro rata share of the settlement amount from INA for the relevant time periods when INA provided insurance coverage to A-B. After INA filed its answer asserting an affirmative defense of failure to include all necessary and/or indispensable parties including A-B, ZAIC filed an amended complaint adding A-B as a defendant.
In agreement with both ZAIC and INA, but not with A-B, I conclude that under Missouri law ZAIC and INA's obligations are determined by their pro rata share. Each insurance company's pro rata share is based on the coverage period for each insurer, or each insurer's time on the risk. The settlement amount and costs should be divided by the number of years the asbestos plaintiff was exposed, with ZAIC and INA each paying for the years they provided coverage. But when the settlement is prorated in this way, INA's pro rata share for each year is less than its annual deductible. INA cannot therefore be liable to ZAIC for either contribution or subrogation.
Although the issue of whether ZAIC is entitled to relief against A-B is not before me now, A-B has not established that it is entitled to summary judgment of ZAIC's claims against it. A-B's arguments are not sufficient to preclude a claim in equity by ZAIC concerning either A-B's obligation under the deductible endorsements of the INA policies, or its obligation for the uncovered years when the INA policy exclusion left A-B with no asbestos liability coverage.
All parties assert that this case can be resolved on summary judgment motions and have filed motions seeking such relief. But complete relief cannot be granted on motions for summary judgment because ZAIC's motion is not directed to its claim against A-B. Because I am denying A-B's motion for summary judgment, ZAIC's claim against A-B is still pending.
In 2008, the estate of the wife of a former A-B employee filed a wrongful death suit against A-B.1 The suit alleged that the decedent wife contracted mesothelioma as a result of her husband's exposure to asbestos during his employment as a mechanic with A-B, and her subsequent laundering of his work clothes. The period of alleged exposure occurred between the date of their marriage, July 30, 1971, and the date of the employee husband's retirement from A-B, July 31, 1996. A-B tendered defense of this suit to insurer ZAIC, who agreed to provide A-B with a defense subject to a reservation of rights.2 The parties settled during a 2014 mediation for $1.5 million - an amount all parties stipulate was reasonable.
A-B purchased Policy No. GA 85-79-000 from ZAIC for the period of July 1, 1967 to July 1, 1972 for personal injury liability and excess liability coverage, among other coverages. Subsequently, A-B purchased Policy No. GA 87-13-500 for the period of July 1, 1972 to July 1, 1980 from ZAIC with similar personal injury and excess liability coverage. Both these policies state in part:
Zurich will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... personal injury ... to which this insurance applies.
Joint Stipulation of Fact Ex. 2 at 4, ECF No. 79-2; Ex. 3 at 4, ECF No. 79-3.
They also contain provisions on "Other Insurance" which state:
Joint Stipulation of Fact Ex. 2 at 20, ECF No. 79-2.
Beginning July 1, 1980, and continuing for the next seventeen consecutive years, A-B was insured by INA under Policy No. ISG 1065 for bodily injury liability. Starting July 1, 1989, the INA policy included an asbestos exclusion, which the parties stipulate bars liability for INA past that date. Each INA policy issubject to a deductible endorsement. From July 1, 1980, to July 1, 1986, the deductible amount was $250,000. Thereafter and for the subsequent three years at issue, the deductible amount was $1 million. The INA policy's personal injury coverage includes an exclusion for:
bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water.
In determining whether to grant summary judgment, the court views the facts - and any inferences from those facts - in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The movant bears the burden of establishing that (1) it is entitled to judgment as a matter of law and (2) there are no genuine issues of material fact. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the movant has met this burden, however, the nonmoving party may not rest on the allegations in its pleadings but must, by affidavit and other evidence, set forth specific facts showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(c)(1), (e). Where a factual record taken as a whole couldnot lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Matsushita, 475 U.S. at 587.
"[T]he filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits." Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983). Instead, each summary judgment motion must be evaluated separately on its own merits to determine whether a genuine issue of material fact exists and whether the movant is entitled to judgment as a matter of law. Husinga v. Federal-Mogul Ignition Co., 519 F. Supp. 2d 929, 942 (S.D. Iowa 2007).
As to each summary judgment motion, I have viewed the facts in the light most favorable to the nonmoving party and the following is established for purposes of the summary judgment motions.
Insureds ZAIC and INA admit that they consecutively insured A-B during the July 1971 to July 1996 period of alleged asbestos exposure, and that the asbestos claim falls within their policies' personal and bodily injury coverages. Because ZAIC paid the entire settlement, it now seeks contribution from INA for its pro rata share. INA does not deny that its policies covered the asbestos claim atissue; however, it argues that (1) under a pro rata allocation of the settlement, any amount that would be allocated to its policies would be less than the deductible amounts or (2) the pollution exclusion in its policies bars coverage. Because I agree that no equitable remedy is justified when the pro rata allocation amount is less than the deductible amount, I need not decide the effect of the pollution exclusion.
There is no conflict of laws issue between the parties. All movants state that Missouri law applies in the interpretation of these insurance policies, and I agree.3 The insurance company parties, ZAIC and INA, also agree that the proper method for allocating settlement damages between consecutive insurers of the same risk is a pro rata allocation based on each insurer's time-on-the-risk. "Under the pro rata approach, damages are spread proportionately across the entire period during which the damage takes place." Doe Run Res. Corp. v. Certain Underwriters at Lloyd's London, 400 S.W.3d 463, 474 (Mo. Ct. App. 2013). However, insured A-B argues that a Missouri court would apply an "all sums" allocation method to thisasbestos settlement. Under this method, ZAIC would be liable for the whole settlement, regardless of the coverage period. A-B's argument is based on the language of the ZAIC policy which states that it covers "all sums which the insured shall become legally obligated to pay as damages." Joint Stipulation of Fact Ex. 2 at 4, ECF No. 79-2; Ex. 3 at 4, ECF No. 79-3.
My task is to determine how the Missouri Supreme Court would decide the issue at hand. Lindsay Mfg. Co. v. Hartford Accident & Indem. Co., 118 F.3d 1263, 1267-68 (8th Cir. 1997). Although state courts disagree and no Missouri court has directly ruled this issue of insurance policy interpretation in the context of asbestos exposure, there is sufficient case law for me to...
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