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Zurich American Insurance Company v. Insurance Company of North America

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

May 8, 2018




         In 2014, plaintiff Zurich American Insurance Company (ZAIC) settled an asbestos claim on behalf of its insured Anheuser-Busch, LLC (A-B). During the multi-year period of the claimant's alleged asbestos exposure, A-B was consecutively insured by ZAIC and by defendant Insurance Company of North America (INA). After ZAIC paid the full amount of the settlement, it brought this suit for equitable contribution, subrogation, and unjust enrichment against the other insurer, INA, and against its insured, A-B.

         Both the ZAIC policies and the INA policies have “all sums” provisions and cover damage that “occurs during the policy period.” The dispute over which insurer must pay arises because asbestos exposure occurred during the policy periods of both insurers. In ruling on summary judgment, I predicted that Missouri courts considering the insurance contract provisions in this case would apply a “pro rata” loss allocation, based on each insurance company's “time on the loss.” (November 15, 2016 Memorandum and Order, ECF No. 99). I granted summary judgment to INA because, when the losses were allocated over the various policy years, A-B's deductibles under the INA policies exceeded the amount of the loss that INA would otherwise have had to pay for those years. I denied summary judgment for A-B, reasoning that ZAIC should be able to seek contribution from A-B for those amounts ZAIC could have sought as equitable contribution from INA but for the deductibles. Had A-B target-tendered INA instead of ZAIC, of course, A-B would have been responsible for those deductibles. I then held a one-day bench trial to consider ZAIC's equitable claims against A-B.

         A few weeks before the bench trial, the Missouri Court of Appeals decided a case involving consecutive insurers for “long-tail” asbestos claims similar to the case here. In Nooter Corp. v. Allianz Underwriters Insurance Co., 536 S.W.3d 251 (Mo.Ct.App. 2017), application for rehearing and/or transfer denied (Jan. 23, 2018), the Court of Appeals applied an “all sums” method to allocate losses from asbestos claims among a number of insurers. The Court described the difference in allocation methods:

The “all sums” approach allows the policyholder to select a policy among the range of years triggered by the “occurrence” at issue. Conversely, under the pro rata approach, damages are spread proportionately across the entire period during which the property damage takes place. … Under the “all sums” approach, the insurer may be able to recoup some or all of these funds from other insurers. … Accordingly, this method places the onus on the targeted insurer, rather than on the policyholder.

Id. at 264-65 (quotation marks and citations omitted).

         I now conclude that Nooter requires application of the “all sums” approach to the policy disputes here, and thus my earlier summary judgment ruling was incorrect. A-B was entitled to target whichever policy it chose (a so-called “target tender”). Here A-B chose the ZAIC policy, and the onus is on ZAIC, as the targeted insurer, to seek any equitable remedies it believes are available from INA. ZAIC's liability to A-B is based on the targeted insurance contract, and ZAIC cannot obtain equitable remedies from its insured to avoid its obligations arising from that contract. Thus, A-B was entitled to summary judgment and INA was not entitled to summary judgment.

         ZAIC now asks me to reconsider the summary judgment order, which INA obviously opposes. At the bench trial A-B argued, as it had in the summary judgment motion, that it was entitled to judgment as a matter of law under the “all sums” approach. Whether I reconsider summary judgment and grant summary judgment for A-B or rule for A-B based on the bench trial, the result as to these two parties is clear as a matter of law: A-B is entitled to judgment on ZAIC's claims for equitable relief against it. I will therefore enter judgment in favor of A-B on ZAIC's claims. And because the summary judgment in favor of INA was interlocutory as well as incorrect, it is appropriate for me to reconsider and vacate that grant of summary judgment to INA. Given my ruling that “all sums” is the correct basis for allocation, the remaining insurer parties - ZAIC and INA - will be allowed to file further briefs on ZAIC's claim for equitable relief, as they have requested.

         I. Factual Background[1]

         In 2008, the estate of the wife of a former A-B employee filed a wrongful death suit against A-B.[2] 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. The parties settled during a 2014 mediation for $1.5 million - an amount all parties stipulate was reasonable. ZAIC paid the full amount of the settlement and defense costs.

         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. As stipulated by the parties, endorsements to these policies have excess coverage limits between fifteen and twenty-five million dollars. ECF No. 79 ¶ 7. For purposes of this order, the relevant portions of these policies are as follows:

(1) Coverage for “all sums”:
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. ECF No. 79-2 at 4; ECF No. 79-3 at 4 (emphasis added).
(2) Limiting language:
This insurance applies only to bodily injury or property damage which occurs during the policy period. Id. (emphasis added).
(3) Required contribution from other applicable insurance policies:
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 ...

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