Court of Appeals of Missouri, Eastern District, Second Division
from the Circuit Court of the City of St. Louis Cause No.
1022-CC01145-01 Honorable Steven R. Ohmer
COLLEEN DOLAN, JUDGE
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").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
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.
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.
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.
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. 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. Such is the case in the appeal before us.
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. 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),  Breach of
Contract, and Declaratory Judgment (pursuant to the Missouri
Declaratory Judgment Act, § 527.010 et
al.)., , 
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.
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." 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.
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.
Relevant Insurance Companies and Policies
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
Primary Insurance Companies
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.
Excess Insurance Policies
different excess insurers are parties to this appeal:
issued "four consecutive commercial umbrella liability
policies" to Nooter from June 1981 until June 1985.
These four policies are broken down further into two
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, the "Evanston UM Policies").
CN Policies: The last two Evanston policies were
issued on July 1, 1983 (Policy No. "CN 503824) and July
1, 1984 (Policy No. "CN 504032") (collectively
herein, the "Evanston CN Policies").
Evanston CN Policies contain two separate levels of
coverage: (1) Coverage A ("occurrence-based"
coverage) and (2) Coverage B ("claims-made"
coverage). Nooter and Evanston dispute which type of coverage
applies to asbestos claims under the Evanston CN Policies.
After reviewing the language of the Evanston CN policies and
the relevant endorsement, we have determined any relevant
asbestos claims would fall under Coverage A. For further
discussion, see infra Sec. III(G).
Union issued a one-year "umbrella liability policy"
to Nooter with effective dates from July 1, 1980, to July 1,
1981 (Policy No. "BE 1331118") (the
"National Union Policy"). Because London and
National Union have jointly filed a brief, any reference to
London's arguments in support of its Point I or Point II
will also reflect National Union's position unless
and Nooter grouped the relevant policies before us on appeal
into two separate groups.
Policies from September 13, 1949 to May 17, 1961
and Nooter entered into numerous policy agreements during
this span. As relevant to this appeal, Nooter purchased
annual excess policies from London from September 13, 1949 to
May 17, 1961. London's annual excess policies from
this period included the same relevant language.
Policies from May 17, 1961 to July 1, 1965 and July 1, 1975
to July 1, 1980
"various periods from May 17, 1961 to July 1, 1965, and
from July 1, 1975 to July 1, 1980, " London provided
Nooter with umbrella coverage through numerous policies with
identical relevant language.
purchased only one relevant insurance policy from
Appalachian, which covered three years (July 1, 1972 through
July 1, 1975)-Policy No. 71174 (the "Appalachian
issued only one policy to Nooter (Policy No. AUX5201679).
This policy (the "Allianz Policy") began on July 1,
1983, and ran until July 1, 1985. The Allianz Policy is a
"second-level" excess insurance policy, attaching
to Evanston's two annual CN policies (first-level excess
policies), which covered the same policy period. The Allianz
Policy also contains "broad as primary" language
under its MAINTENANCE OF UNDERLYING UMBRELLA INSURANCE
provision, which states the Allianz Policy "is subject
to the same terms, definitions, exclusions and conditions [of
Evanston Umbrella Policy No. CN 503824] (except as regards
[to] the premium, the amount and limits of liability and
except as otherwise provided [in the Allianz Policy])."
issued two separate three-year policies to Nooter: (1) Policy
No. M 7811 0001, which covered July 1, 1965 through July 1,
1968; and (2) Policy No. M 0085094, which covered July 1,
1968 through July 1, 1971. Only the 1968-1971 policy is at
issue on appeal ("the Munich Policy").
and North Star entered into a three-year policy agreement
(Policy No. NSX-9590) beginning on July 1, 1971, and
terminating on July 1, 1974 (the "North Star
issued one excess umbrella policy (No. EW-8500-566), which
was effective from July 1, 1971 until December 31, 1973 (the
"OneBeacon Policy"). However, the OneBeacon
Policy's terms were changed after the first year of
coverage; accordingly, the OneBeacon Policy has two periods
with different terms and conditions.
OneBeacon Policy's Terms and Conditions from July 1, 1971
through June 30, 1972
OneBeacon Policy was primarily subject to the same terms and
conditions as an Aetna policy (No. 51 XS 570 SCA) (the
"Aetna Policy"). The terms and conditions were
substantially similar because the OneBeacon Policy included a
"broad as primary" endorsement. This endorsement
expanded the scope of the OneBeacon policy to incorporate
most of the coverage provided by the Aetna policy, which was
broader than the OneBeacon Policy would otherwise provide.
OneBeacon Policy's Terms and Conditions from July 1, 1972
through December 31, 1973
OneBeacon Policy was primarily subject to the same terms and
conditions contained in Appalachian Policy No. 71174 (the
STANDARDS OF REVIEW
majority of the issues before us are based on petitions for
declaratory judgment and motions for summary judgment. The
heart of these rulings concerned issues of insurance policy
interpretation. Additionally, Evanston has presented several
independent issues concerning the trial and the jury
Standard of Review for Interpretation of Insurance
proper interpretation of an insurance policy is a question of
law that appellate courts review de novo; this
includes determinations of whether provisions are
"ambiguous." Owners Ins. Co. v. Craig, 514
S.W.3d 614, 616-18 (Mo. banc. 2017); Taylor v. Bar Plan
Mut. Ins. Co., 457 S.W.3d 340, 344 (Mo. banc 2015).
"[T]he trial court receives no deference where
resolution of the controversy is a question of law."
State Farm Mut. Auto. Ins. Co. v. Stockley, 168
S.W.3d 598, 600 (Mo. App. E.D. 2005). Further, where there
are no factual issues left to resolve, any application of
facts to the insurance policies is also a matter of law.
Standard of Review for Declaratory Judgments
Generally, we review court-tried cases under the standards
set forth in Murphy v. Carron and will affirm the
judgment unless it is against the weight of the evidence, it
is not supported by substantial evidence, or it erroneously
declares or applies the law. 536 S.W.2d 30 (Mo. banc 1976).
In a court-tried declaratory judgment action, however,
interpretation of an insurance policy is a question of law,
and the trial court receives no deference where resolution of
the controversy is a question of law. Only if an ambiguity
within the policy necessitates a factual determination will
the standards set forth in Murphy govern.
Id. (citing Murphy v. Carron, 536 S.W.2d 30
(Mo. banc 1976)).
Standard of Review for Summary Judgment
trial court's decision to grant summary judgment is an
issue of law, which this Court reviews de novo; we
will affirm such a decision if it is proper under any legal
theory supported by the record." Fruendly Auto
Source, Inc. v. Chrostowski, 514 S.W.3d 646, 650 (Mo.
App. E.D. 2017) (citing Burns v. Smith, 303 S.W.3d
505, 509 (Mo. banc 2010)). Summary judgment is only
appropriate when the moving party has established (1) there
is no genuine dispute of material fact, and (2) it is
entitled to judgment as a matter of law. Binkley v. Am.
Equity Mortg., Inc., 447 S.W.3d 194, 196 (Mo. banc
2014); Rule 74.04(c). The trial court's grant of summary
judgment is reviewed in the light most favorable to the party
against whom summary judgment was entered. Id.
is great overlap amongst many of the issues before us, most
of which center around questions of insurance policy
interpretation. Certain Excess Insurers have asked our Court
to determine (1) when a policy or policies underlying Excess
Insurers' policies become "exhausted"; (2) the
appropriate method(s) for allocating losses among Excess
Insurers; (3) the extent of certain Excess Insurers'
obligations to defend and/or indemnify Nooter; (4) how
payment of defense costs impacts certain Excess Insurers'
policies' limits; (5) whether Evanston's CN Policies
require coverage on an "occurrence-basis" or a
"claims-made basis"; (6) Munich's policy
limits; (7) whether Evanston's CN Policies were excess
over INA policies for certain claims; and (8) whether the
trial court erred in making certain rulings during
Evanston's trial. We will address these issues in that
General Rules and Principles of Insurance Policy
of insurance policy interpretation are at the center of
nearly every point on appeal. Thus, before delving into the
specific points on appeal, we will discuss several rules and
principles guiding our interpretation of the insurance
interpreting an insurance contract, we must keep in mind that
insurance policies are contracts; thus, the rules of contract
construction apply." Doe Run Res. Corp. v. Certain
Underwriters at Lloyd's London, 400 S.W.3d 463, 474
(Mo. App. E.D. 2013). The cardinal rule of contract
interpretation "is that courts seek to determine the
parties' intent and give effect to it."
Chochorowski v. Home Depot U.S.A., 404 S.W.3d 220,
226 (Mo. banc 2013). When a contract is unambiguous on its
face, we ascertain the intent of the parties based on the
contract language alone. Id. at 226-27. Thus, we
will only resort to canons of construction if the policy
language is ambiguous. Id. at 227. However, clear
and unambiguous language will be enforced as written.
Taylor, 457 S.W.3d at 344. Accordingly, determining
whether a policy is "ambiguous" is paramount.
Maritz Holdings, Inc. v. Fed. Ins. Co., 298 S.W.3d
92, 99 (Mo. App. E.D. 2009).
is black-letter law that: An ambiguity exists when there is
duplicity, indistinctness, or uncertainty in the meaning of
the language in the policy. Language is ambiguous if it is
reasonably open to different constructions."
Burns, 303 S.W.3d at 509. We assess whether an
insurance policy is ambiguous by reading the agreement as a
whole. Owners Ins. Co., 514 S.W.3d at 617. We do not
view provisions in isolation. Id. Unless a word or
phrase is clearly intended to be used as a term of art, we
assign a plain and ordinary meaning to the policy's words
in a manner consistent with the parties' reasonable
expectations and objectives. Doe Run, 400 S.W.3d at
474. Additionally, we aim to give a reasonable meaning to
every provision and to avoid an interpretation that renders
some provisions trivial or superfluous. Id.
Allocation (Allianz Point VI, OneBeacon Point I,
London Point I, Evanston Point III, and North Star Point
Introduction to the Issue of Allocation
"allocation" determines how losses are divided
amongst the insured and its insurers. As is the case with
exhaustion, the issue of allocation is more complex in
Traditional claims are limited in time, place, and space. In
the context of long-tail claims (e.g., pollution,
mass product, or toxic tort exposures), however, damage or
injury may take place over time, and often there is a latency
period between the date on which the polluting activity or
injurious process begins and the date on which the resulting
bodily injury or property damage is discovered. In other
words, long-tail claims may span several years or even
decades. In some instances, the damage is progressive. In
others, it is merely continuous.
M. Seaman & Jason R. Schulze., Allocation of Losses
in Complex Insurance Coverage Claims § 2:2 (2016).
Accordingly, "the courts are left with the nettlesome
problem of how to allocate damages among the policies, "
a problem to which there is no universal approach. Boston
Gas Co. v. Century Indem. Co., 910 N.E.2d 290, 301, 454
Mass. 337, 351, (2009) (quoting 15 Couch on Ins. §
220:25 (3d ed. 2005)). However, two leading methods of
allocation have emerged to address this issue: the "all
sums" approach and the "pro-rata"
approach. In re Viking Pump, Inc., 52
N.E.3d 1144, 1150, 27 N.Y.3d 244, 256-57 (2016).
"all sums" approach allows the policyholder to
select a policy among the range of years triggered by the
"occurrence" at issue. Conversely, "[u]nder
the pro rata approach, damages are spread proportionately
across the entire period during which the property damage
takes place." Doe Run, 400 S.W.3d at 474. Under
the "all sums" approach, the insurer may be able to
recoup some or all of these funds from other insurers.
OneBeacon Am. Ins. Co. v. Am. Motorists Ins. Co.,
679 F.3d 456, 460 (6th Cir. 2012) (explaining that the
"all sums" approach allows the targeted insurer to
"seek contribution from the other insurers for any
amounts for which they are potentially
responsible"). Accordingly, "[t]his method places
the onus on the targeted insurer, rather than on the
often determine the proper approach based on policy language,
but some courts weigh other considerations more heavily, such
as public policy concerns. See In re Viking Pump,
Inc., 52 N.E.3d at 1150. Consistent with Missouri's
long-standing principles for contract and insurance policy
interpretation, our analysis will focus on the language of
the Excess Insurers' policies.
six of the Excess Insurers have appealed the trial
court's grant of Nooter's motion for summary judgment
regarding allocation, holding that an "all sums"
allocation method applies to relevant asbestos claims under
all of the policies addressed in this section (Sec.
the relevant policies have different variations, the
arguments, as Evanston noted, are "substantially
similar." Moreover, as several of these appellants have
chosen to adopt and incorporate by reference some of the
other appellants' allocation arguments, these arguments
are intricately intertwined. The arguments advanced under
London's Point I have been adopted by OneBeacon,
Evanston, North Star, and Allianz. Unless specifically stated
otherwise, any reference to London's allocation argument
will subsume arguments made by the other four
view contracts as a whole; we will not consider contract
language in isolation. Owners Ins. Co., 514 S.W.3d
at 617. That being said, two categories of language play the
most prominent roles in addressing the allocation issue. All
of the relevant policies have (1) some type of "all
sums" language ("all sums, " "the sum,
" "the sums, " or "the total sum")
and (2) language limiting losses or occurrences to a
particular policy period ("during the [policy] period,
" "while this policy is in force, "
"occurring during the policy period, " "coming
within the terms and limits of this [policy], "
etc.). As aforementioned, even when
interpreting insurance policies with great similarity, courts
have reached different results on the issue of allocation.
For example, some jurisdictions have concluded an "all
sums" method applies "usually [by] relying on
language in policies obligating an insurer to pay 'all
sums' for which an insured becomes liable." In
re Viking Pump, Inc., 52 N.E.3d at 1150. When courts
rely on policy language to determine that a pro-rata
allocation scheme should apply, they often do so by
emphasizing language limiting losses to a particular policy
period. Id. (explaining some jurisdictions have
"utilized the pro rata method, emphasizing language in
the insurance policies that may be interpreted as limiting
the 'all sums' owed to those resulting from an
occurrence 'during the policy period'").
Missouri's most instructive case on this issue (Doe
Run, 400 S.W.3d at 474), our Court found the "all
sums" language was not limited by the "during the
policy" language. In that case, the "pertinent
part" of a policy at issue read:
Underwriters hereby agree, subject to the limitations, terms
and conditions hereinafter sanctioned, to indemnify the
insured for all sums which the Assured shall be
obliged to pay by reason of the liability…for
damages…caused by or arising out of each occurrence
happening during the policy period."
Id. at 475 (emphasis in the original). In that
policy, an "occurrence" was defined as "one
happening or series of happenings, arising out of, or due to
one event taking place during the term of this policy."
Id. Our Court determined "[t]his definition
does not limit the policies' promise to pay
all sums of the policy holder's liability
solely to damage during the policy period,
" therefore, we found "the express language of the
applicable insurance policies requires the adoption of the
all sums allocation scheme[.]" Id. (emphasis
attempts to distinguish Doe Run by advancing several
similar arguments. For example, in the instance of the
National Union Policy, London maintains that the policy
provides "exactly what was deemed missing in [Doe
Run]" by limiting occurrences to events "which
result in Personal Injury or Property Damage during the
policy period…" (emphasis added). However,
we find this to be a distinction without a difference. The
policy discussed in Doe Run also limits coverage to
occurrences "during the policy period."
Id. (emphasis added). The policies at issue here
operate in a very similar manner to the language analyzed in
Doe Run. See id. Moreover, after
reading all of the language in the policies, we have found
nothing elsewhere to affect the provisions which use
permutations of "all sums" and "during the
policy limit" language. In the context of the policies
before us in this section (Sec. III(C)), we find the two
categories of language-permutations of (1) "all
sums" language and (2) "during the policy
period" language-to operate in a substantially similar
manner. Accordingly, we affirm the trial court's grant of
summary judgment in favor of Nooter regarding allocation, and
we deny Allianz Point VI, OneBeacon Point I, London Point I,
Evanston Point III, and North Star Point III.
Method of Exhaustion (Points on Appeal: London Point
II, OneBeacon Point II, Evanston Point I, North Star Point
Introduction to the Exhaustion Issue
Excess Insurers appeal the trial court's grant of
"Summary Judgment Regarding Exhaustion." Defining
what constitutes "exhaustion" is necessary for
assessing the Excess Insurers' obligations and potential
liability; typically, exhaustion is a condition precedent to
triggering an excess insurer's duties. In this case,
it is undisputed that exhaustion of the Excess Insurers'
underlying policies is required. The definition of exhaustion
as it pertains to certain policies is the sticking point.
First, we look to the policy language to define when
underlying insurance policies are "exhausted."
See Schmitz v. Great Am. Assur. Co., 337 S.W.3d 700,
706 (Mo. banc 2011) ("It has been long recognized that
parties to an insurance contract are free to define when an
underlying insurance policy is exhausted so that the excess
carrier's obligation to pay is triggered."). The
definition of exhaustion is not precisely defined in any of
the Excess Insurers' policies. This is a common problem
that courts have been grappling with
nationwide. See Mayor & City Council of
Baltimore v. Utica Mut. Ins. Co., 145 Md.App. 256,
314-15 (Md. 2002).
primary methods of exhaustion have been used by courts:
horizontal exhaustion and vertical exhaustion. Id.
It is important to understand where these two approaches
differ. Vertical exhaustion is a principle of insurance
priority that allows the attachment of an excess policy once
all of the policies immediately below it (as identified in
the policy agreement) have been exhausted. Horizontal
exhaustion requires every triggered lower-level policy to
become exhausted before implicating an excess policy.
use the Allianz Policy as an example. This is a two-year
policy covering July 1, 1983 through July 1, 1985. Allianz is
a second-level excess insurer, with Evanston's CN
policies (first-level excess policies) directly underlying
the Allianz Policy.
claimant alleging injury from asbestos inhalation worked for
Nooter from January 1, 1970 through December 31, 1985, Nooter
would need to exhaust any and all primary and
first-level excess insurance policies triggered during that
sixteen-year span before any of Allianz's obligations
were triggered under horizontal exhaustion. This means Nooter
must exhaust policies covering periods in which the Allianz
Policy was not in effect. For example, Nooter would be
required to exhaust every Home policy (which covered Nooter
from July 1, 1972 through July 1, 1985), the Appalachian
Policy (which covered Nooter from July 1, 1972 through July
1, 1975), and most of the other policies discussed in this
opinion before Allianz would owe any obligations to Nooter.
On the other hand, vertical exhaustion only requires
exhaustion of policies limits that directly underlie the
Allianz Policy, in this case Evanston's CN policies and
any of their underlying primary policies. Thus, exhaustion of
the Appalachian Policy and any Home Policy providing coverage
before July 1, 1983, is immaterial if vertical exhaustion
Nooter's Judicial Admission Argument
we will address Nooter's argument that the trial court
did not err in applying vertical exhaustion to the policies
of Evanston, National Union, and London because these excess
insurers "withdrew their 'reservations of
rights" and judicially admitted their
obligations…that [they] would indemnify Nooter without
reservation." If Nooter is correct in its assertion,
there is no need to address the language of the relevant
asserts that the judicial admissions of Evanston, National
Union, and London bind them on the issue of exhaustion.
Nooter contends that these three Excess Insurers told the
jury Nooter had properly exhausted the primary coverage under
their policies. Nooter directs us to portions of the
transcript that support the opposite conclusion. The
transcript primarily concerned the trial court's
"all sums" ruling, but it also provides strong
support that the three appellants did not "admit"
the relevant policies were exhausted. For example,
Evanston's counsel states: "There's no testimony
about the '81-'82 policies, the UM policies. I'll
just talk about them. No testimony about them. No evidence of
exhaustion, " Evanston's counsel made a similar
statement about the 1983-1984 CN policy ("no testimony
about it, no evidence of exhaustion."). Additionally,
Evanston's counsel contested the 1984-1985 policy:
"the simple fact is in this case Home kept paying money
under that policy. The policy wasn't
exhausted..." (emphasis added).
also uses a quote from London's opening statement to
advance their argument: "Give us the bill, give us the
specific amount and the information and we'll pay for
it." However, London prefaced the statement by saying
this would be done "[w]hen the primary is gone and when
the policyholder gives the insurance company the
information." London emphasized that exhaustion must
first occur ("the money has to be gone"). When the
quote is read in context, it is apparent that London did not
make the representation Nooter argues it made. The references
by the three Excess Insurers to payments that they paid or
will pay to Nooter was predicated on the parties'
acknowledgement of various trial court rulings. These alleged
"admissions" were effectively reiterations of
issues previously determined by the trial court. We do not
find Nooter's judicial admission argument to be
persuasive. Accordingly, we will examine the merits of all of
the exhaustion arguments raised by the Excess Insurers.
Certain Excess Insurers' Points on Appeal Regarding
Vertical and Horizontal Exhaustion (London Point II,
OneBeacon Point II, Evanston Point I, and North Star Point
has raised two main arguments relating to exhaustion. First,
London argues that horizontal exhaustion of primary insurance
is required before triggering coverage, and the trial court
erred in determining vertical exhaustion applied. Second,
London argues the trial court erred in finding the record
supported summary judgment in favor of Nooter and
consequently granting Nooter's motion for summary
judgment on the exhaustion issue, because Nooter failed to
provide sufficient evidence that the limits of
Continental's or TIG's primary policies had been
exhausted. London also filed a cross-motion for summary
judgment to establish those primary policies had not been
exhausted, which the trial court denied.
adopts the arguments made by London in its Point II(B) of its
appellate brief, also advocating for horizontal exhaustion of
all triggered primary policies. North Star also "joins
in and adopts the Argument of London…on the issue of
exhaustion set forth in Point II of [London's
brief]." Further, Evanston notes that its "position
regarding horizontal primary exhaustion is substantially
aligned with that set forth in [London's Appellant's
Brief]" and it "adopts and incorporates by
reference" London's statement of facts and arguments
on the matter. Additionally, Evanston has advanced several
arguments independent of London.
has several substantially similar insurance policies, which
we separate into two groups: (1) London's policies from
September 1, 1955 through May 17, 1961 (the "Older
London Policies"); and (2) London's policies from
May 17, 1961 through July 1, 1965 and London's policies
from July 1, 1975 to July 1, 1980 (the "Newer London
Horizontal Exhaustion Arguments
"Other Insurance" Provisions
several policies, "Other Insurance" provisions lie
at the forefront of our exhaustion analysis. Regarding these
types of provisions, the Supreme Court of South Carolina made
an apt observation that encapsulates our viewpoint:
When judges first set about the task of interpreting
insurance policies, we looked confidently to tried and true
principles of contract law. After all, lawyers are taught in
their earliest classes that the common law rules of contract
are the bedrock of all Anglo-American jurisprudence, thus
judges clearly had at hand the perfect tools for crafting
fair and lucid interpretations of insurance agreements. We
failed utterly to anticipate the linguistic excesses to which
the insurance industry would resort in order to avoid paying
claims when 'other insurance' may be available. This
is an area in which hair splitting and nit picking has been
elevated to an art form. 'Other insurance' clauses
have been variously described as: 'the catacombs of
insurance policy English, a dimly lit underworld where many
have lost their way, ' a circular riddle, and
'policies which cross one's eyes and boggle one's
South Carolina Ins. Co. v. Fidelity and Guar. Ins.
Underwriters, Inc., 489 S.E.2d 200, 201-02 (S.C. 1997)
(internal quotations omitted).
relevant "other insurance" provisions are
substantially similar to each other. There are five
permutations of "other insurances" language
relevant to the issue of exhaustion:
Newer London Policies (from May 17, 1961 through July 1, 1965
and July 1, 1975 through July 1, 1980):
If other valid and collectible insurance with any other
insurer is available to the Assured covering a loss also
covered by this Policy, other than insurance that is in
excess of the Insurance afforded by this Policy, the
Insurance afforded by this Policy shall be in excess of and
shall not contribute with such other insurance…
National Union Policy:
Other Insurance. If other valid and collectible insurance
with any other insurer is available to the insured covering a
loss also covered hereunder, this insurance shall be excess
of, and shall not contribute with such other
Four Evanston Policies:
Other Insurance: The insurance afforded by
this policy shall be excess insurance over any other valid
and collectible insurance available to the Insured and
applicable to any part of ultimate net loss or excess net
loss, whether such other insurance is stated to be primary,
contributing, excess, contingent or otherwise, unless such
other insurance applies specifically as excess insurance over
the limits of liability provided by this policy...
OneBeacon Policy (from July 1, 1971 through June 30, 1972,
following the form of the Aetna Policy)
Other Insurance. The Insurance afforded by this policy shall
be excess Insurance over any other valid and collectible
Insurance available to the insured and applicable to any part
of ultimate net loss, whether such other insurance is stated
to be primary, contributing, excess, contingent or
OneBeacon Policy (from July 1, 1972 through December 31,
1973, following the form of the Appalachian Policy)
If other collectible insurance with any other insurer is
available to the insured covering a loss also covered
hereunder (except insurance purchased to apply in excess of
the sum of the Retained Limit and the limit of liability
hereunder), the Insurance hereunder shall be in excess of,
and not contribute with such other insurance…
relevant excess insurers argue that the "other
insurance" clauses plainly require
to exhaust all "other valid and collectible
insurance" before the excess policy attaches, as the
policy is "in excess of" such other insurance.
Nooter, however, argues that it is "well- established
Missouri law that 'other insurance language'
addresses concurrent, not successive, coverage and the rights
among insurers; 'other insurance' language does not
limit the insurers' obligations to the
policyholder." Respondent's Brief p. 44-45 (citing
Heartland Payment Sys., L.L.C. v. Utica Mut. Ins.
Co., 185 S.W.3d 225, 232 (Mo. App. E.D. 2006)).
language is ambiguous when it is reasonably open to different
interpretations. Burns, 303 S.W.3d at 509 Concerning
the issue of exhaustion, we find both parties offer
reasonable interpretations Looking solely at the "other
insurance" language in isolation, the relevant excess
insurers' explanation is arguably more persuasive
However, Missouri and other jurisdictions have interpreted
"other insurance" provisions to only apply to
"concurrent" policies covering the same policy
period See Heartland Payment Sys, LLC, 185 S.W.3d at
232; see also In re Viking Pump,
Inc, 52 N.E.3d at 1157 (finding "'other
insurance' clauses apply when two or more policies
provide coverage during the same period, and they serve to
prevent multiple recoveries from such policies, and that such
clauses have nothing to do with whether any coverage
potentially exists at all among certain high-level policies
that were in force during successive years") (emphasis
in original); see also Benjamin Moore & Co. v Aetna
Cas & Sur Co, 179 N.J. 87, 98, 843 A.2d 1094, 1101
(N.J. 2004) ("'[O]ther insurance' clausesare
provisions typically designed to preclude a double recovery
when multiple, concurrent policies provide coverage for a
loss. We determined that such clauses were not generally
applicable in the continuous-trigger context where successive
rather than concurrent policies were at issue.");
see also Arco Indus. Corp. v. Am. Motorists Ins.
Co., 232 Mich.App. 146, 165, 594 N.W.2d 61, 70 (Mich.
Ct. App. 1998) (citing Continental Casualty Co. v.
Medical Protective Co., 859 S.W.2d 789, 791 (Mo. App.
E.D. 1993)), aff'd, 462 Mich. 896, 617 N.W.2d 330 (2000)
(explaining "Other Insurance" clauses "relate
to the effect of concurrent coverages of a single occurrence.
They are individual contractual agreements between the
insured and the insurer, designed to prevent the insured from
recovering multiple times for an injury that occurs at one
point in time"). The fact that jurisdictions dispute the
function of "other insurance" provisions in excess
policies in similar situations supports a finding of
ambiguity. See Harrison v. Tomes, 956 S.W.2d 268,
270 (noting that "divergent conclusions reached by
[other] jurisdictions is further evidence of [an]
ambiguity" and resolving the ambiguity in favor of the
although "exhaustion" was not at issue in the case,
our Court's analysis of policy language in Doe
Run provides further support for Nooter's
position. As addressed in the previous section,
our application of Doe Run to similar language in
the policies currently at issue called for an "all
sums" allocation. Although we do not conflate the issues
of exhaustion and allocation,  courts typically pair either
(1) "all sums" allocation with vertical exhaustion
or (2) "pro-rata" allocation with horizontal
exhaustion, finding the grouped methodologies conceptually
consistent. See In re Viking Pump, Inc., 52 N.E.3d
at 1156 ("[V]ertical exhaustion is conceptually
consistent with an all sums allocation, permitting the
Insured to seek coverage through the layers of insurance
available for a specific year."); see also Boston
Gas Co. v. Century Indem. Co., 454 Mass. 337, 351, 910
n.24 N.E.2d 290, 301 (Mass. 2009) (using "all sums"
allocation and "vertical exhaustion" synonymously);
Westport Ins. Corp. v. Appleton Papers Inc., Wis.2d
120, 167, 787 N.W.2d 894, 918 (2010) (stating that horizontal
exhaustion "is another name for pro rata
allocation"); see also Restatement of the Law
of Liability Insurance § 44 cmt. j (tentative draft)
(2016) ("Under the all-sums approach…insureds
exhaust the coverage available in one year using a
'vertical-exhaustion' approach before accessing the
coverage available in another year[.]").
ambiguity exists when language is reasonably open to
different constructions. Owners Ins. Co., 514 S.W.3d
at 617. "In determining whether language in the policy
is ambiguous, the words will be tested in light of the
meaning which would normally be understood by the average
layperson." Maher Bros., Inc. v. Quinn Pork,
LLC, 512 S.W.3d 851, 856 (Mo. App. E.D. 2017). A person
of ordinary intelligence could reasonably conclude that the
"other insurance" provisions either call for
horizontal exhaustion or are wholly inapplicable to the
exhaustion determination. Indeed, when other courts have been
confronted with nearly identical language to the policies
before us, they have reached opposite conclusions. Further,
compared to an average person with "ordinary
intelligence, " courts have greater experience in
reading and interpreting contracts and legalese, yet they
still reach different conclusions, which supports a finding
that the language is reasonably open to different
constructions and thereby ambiguous. We find the policies
containing "other insurance" provisions to be
ambiguous on the issue of exhaustion. Consequently, we
resolve the ambiguities in favor of the insured, Nooter, and
we conclude ...