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Zurich American Insurance Co. v. Insurance Co. of North America

United States District Court, E.D. Missouri, Eastern Division

November 15, 2016




         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.

         I. Background

         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:

When both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, Zurich shall not be liable under this policy for a greater proportion of the loss than stated in the applicable contribution provision below:
(A) Contribution by Equal Shares. If all of such other valid and collectible insurance provides for contribution by equal shares, Zurich shall not be liable for a greater proportion of such loss than would be payable if each insurer contributes an equal share until the share of each insurer equals the lowest applicable limit of liability under any one policy or the full amount of the loss is paid.

         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 is subject 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 ...

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