Motors Liquidation Company DIP Lenders Trust v. Allianz Insurance Company ( 2017 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
MOTORS LIQUIDATION
COMPANY DIP LENDERS TRUST,
Plaintiff,
v. C.A. No. Nl lC-12-022 PRW CCLD
ALLIANZ INSURANCE COMPANY,
et al. ,
Defendants.
Submitted: May 25, 2017
Decided: June 8, 2017
Corrected: June 19, 2017
MEMORANDUM OPINION AND ORDER
Upon Defena'ants OneBeacon Ins. C0. & Continental Casually InS. C0. ’s
Motions for Summary Jua’gment On Trigger and Sul``t Limitations,
DENIED.
Upon Defendant OneBeacOn Ins. Co. ’s Motl``onfor Summary Jua’gment On
Transfer of R ights,
DENIED.
Upon Plaintij§‘"Motol/s Liquidatz'on Co. DIP Lenders Trust’s Cross-Motionsfor
Summary Judgment on Transfer of Rights and Trl``gger,
GRANTED.
Upon Defendants OneBeacon Ins. Co. & Continental Casualty Ins. C0. ’s
Cross-Motionsfor Partial Summary Jua'gment On Number of Occurrences,
DENIED.
Upon Plaintijj‘Motors Liquia’ation Co. DIP Lenders Trust ’s Renewed Motz``on for
Partial Summarjy Jua’gment on the Number of Occurrences,
GRANTED.
Upon Defendants OneBeacOn Ins. Co. & Continental Casually Ins. C0. ’S Cross-
Motions for Summary Judgment On Allocation,
GRANTED.
Upon Plainti]j"Motors Liquidation C0. DIP Lenders Trust ’s Renewed Motl'on for
Partial Summarjy Judgment On Allocatz``on,
DENIED.
Jennifer C. Wasson, Esquire, Carla M. Jones, Esquire, Potter Anderson & Corroon,
LLP, Wilmington, DE, Selena J. Linde, Esquire (pro hac vice), Michael T.
Sharkey, Esquire (pro hac vice) (argued), Perkins Coie LLP, Washington, D.C.,
Attorneys for Plaintiffs Motors Liquidation Co. DIP Lenders Trust.
Carmella P. Keener, Esquire, Rosenthal, Monhait & Goddess, P.A., Wilmington,
DE, John S. Favate, Esquire (pro hac vice) (argued), Henry T.M. LeFevre-Snee,
Esquire (pro hac vice) (argued), Hardin, Kundala, McKeon & Poletto, P.A.,
Attorneys for Defendant OneBeacon Insurance Company.
Carmella P. Keener, Esquire, Rosenthal, Monhait & Goddess, P.A., Wilmington,
DE, Ronald P. Schiller, Esquire (pro hac vice), Michael R. Carlson, Esquire (pro
hac vice), Lisa M. Salazar, Esquire (pro hac vice) (argued), Hangley Aronchick
Segal Pudlin & Schiller, Attorneys for Defendant Continental Casualty Insurance
Company.
WALLACE, J.
I. INTRODUCTION
Plaintiff Motors Liquidation Trust DIP Lenders Trust (“Motors”) sued
several excess carriers, seeking coverage for underlying asbestos claims brought
against General Motors (“GM”). OneBeacon Insurance Company (“OneBeacon”)
issued three excess policies from 1969 to 1972. Defendant Continental Casualty
Company (“Continental”) purportedly issued two excess policies from 1969 to
l97l. The parties bring a series of motions seeking summary judgment on
Defendants’ liability, if any, and the proper framework under Which to evaluate
and allocate Motors’s claims.
First, OneBeacon argues its insurance policies Were excluded from the asset
transfer between GM and Motors during GM’s bankruptcy. Naturally, Motors says
that the policies Were properly transferred from GM, and that OneBeacon still
retains adopted responsibility under those policies.
Second, OneBeacon argues its insurance policies Were not triggered because
the liability policies that underlay them Were never triggered Motors contends
these pre-1972 policies Were, in fact, triggered because they are occurrence-based
Third, OneBeacon argues the underlying policies’ Suit Limitations Clause
bars Motors’S claims because Motors filed suit years beyond the limitations period.
Fourth, the parties disagree on the definition of “occurrence” as it pertains to
policy coverage. Motors contends all of the remaining asbestos claims stem from
GM’s initial parts’ manufacture. Conversely, OneBeacon says that each claim is
its own occurrence deriving from each claimant’s alleged exposure to Gl\/l’s parts.
Finally, the parties disagree on how to determine allocation. Motors
contends that any allocation must be done on an “all sums” basis. OneBeacon says
allocation must be done on a “pro rata” basis.
Continental, if it must, joins all of OneBeacon’s summary judgment motions
except OneBeacon’s motion for summary judgment regarding transfer. The Court
puts it that way because Continental has posited that Motors has not provided
sufficient evidence to show Continental’s policies follow form to the underlying
Royal policies and therefore has failed to establish it has any liability here.
The Court’s introduction to and recitation of the factual and procedural
history of this litigation is set forth in the Court’s previous decisions.l The Court
will, therefore, not undertake a protracted recounting thereof, but only briefly set
forth that expressly necessary for this ruling.
l Motors Liquidatz``on C0., Dip Lenders Trust v. Allianz Ins. C0., et al., 2013 WL 7095859
(Del. Super. Ct. Dec. 31, 2013) (“Motors 1”); Motors Liquia'ation Co. Dip Lena’ers Trust v.
Allianz lns. C0., et al., 2015 WL 10376123 (Del. Super. Ct. Nov. 25, 2015), reargument denied,
2016 WL 825473 (Del. Super. Ct. Mar. 2, 2016) (“Motors II”).
_2_
II. FACTUAL AND PROCEDURAL BACKGROUND
A. GM’S INSURANCE TOWERS
GM and Royal lnsurance Company (“Royal”) had a longstanding insurance
relationship, beginning in approximately 1921 and continuing through September
1, 1993.2 On August 18, 1954, Royal issued RTP 060000 to Gl\/I, which was
effective “until canceled.”3 Section IV of RTP 060000, entitled “Policy Period,
Territory,” provided as follows:
This policy applies worldwide, only to occurrences
[deflned as: “an event, or continuous or repeated
exposure to conditions, which unexpectedly cause bodily
injury . . .”] during the policy period provided the
services, goods or products were manufactured, sold,
handled or distributed within the United States of
America, its territories, possessions, or Canada.4
2 Transmittal Aff. of Carmella P. Keener in Connection with OneBeacon Insurance
Company’s Mot. for Summ. J. on Trigger, Ex. 4, at MLC DE 0004768-0004769 [hereinafter
“Keener Trigger Aff.”].
3 Ia'. Ex. 6 (“RTP 060000”), at MLC DE 0000007.
4 Id. at MLC DE 0000004
1. OneBeacon’s Policies5
Between November l, 1969, and March 21, 1972, OneBeacon issued three
excess insurance policies to GM (collectively, the “OneBeacon Policies”).6 The
OneBeacon Policies followed form to Royal Catastrophe Excess Policy RLA 35
(“RLA 35”).7 RLA 35, in turn, followed form to RTP 060000:
[T]his Insurance is subject to the same warranties, terms
and conditions (except as regards the premium, the
obligation to investigate and defend, the amount and
limits of liability and except as otherwise provided
herein) as are contained in or as may be added to the
Underlying Insurance prior to a happening for which
claim is made hc-;~reunder.8
RTP060000 defines “occurrence” as: “an event, or continuous or repeated
exposure to conditions, which unexpectedly cause bodily injury[.]”9
5 OneBeacon is the Transferee of the Liabilities of American Employers Insurance
Company. See Pl. Motors Liquidation Co. DIP Lenders Trust’s Opp. to Def. OneBeacon
Insurance Company’s Mot. for Summ. J. on the Alleged Transfer of Rights Under the
OneBeacon Policies and Cross-Mot. for Summ. J. on the Transfer of Rights Under the
OneBeacon Policies at 3, n. 3 [hereinafter “Pl.’s Opp’n. & Cross-Mot. on Transfer.”]. For ease
of reference, the Court will simply use OneBeacon throughout.
6 Keener Trigger Aff. Ex. l.
7 Id. Ex. l, at MLC DE 0000243, MLC DE 0000280, and MLC DE 0000334.
8 Ia'. Ex. 7, at MLC DE 0000198.
9 See Affldavit of Christina E. Buschmann in Supp. of. Pl.’s Two Renewed Mots. For
Summ. J. Ex. 3 (RTP 060000), at MLC DE 0000003~MLC DE 0000005.
_4_
RLA35 states that the insurance company covers all sums GM becomes
liable to pay arising out of continuous and repeated exposure to conditions, if that
exposure results in bodily injury during the policy period, promising:
To pay on behalf of the Insured all sums which the
Insured shall be obligated to pay by reason of the liability
(i) imposed upon the Insured by law arising out of an
event or a continuous or repeated exposure to conditions
which result in Personal Injury or Property Damage as
defined in the Underlying Insurance.
. which occurs during the period of this Insurance,
provided that in respect of this Section this Insurance is
subject to the same warranties, terms and conditions
(except as regards the premium, the obligation to
investigate and defend, the amount and limits of liability
and except as otherwise provided herein) as are contained
in or as may be added to the Underlying Insurance prior
to a happening for which claim is made hereunder. '"
2. Continental’s Policies
Continental purportedly issued two excess policies to GM.ll These two
policies covered GM from March 21, 1969, to March 21, 1970 and from March 21,
1970, to March 2l, 1971.12 The policies had $1 million limits in excess of $50
10 See id. Ex. 2,R0ya1 indemnity CO. Policy No. RLA35, ar MLCDE0000197_198_
ll See, e.g., Def. Continental Casualty Company’s Brief in Supp. of its Mot. for Summary J.
and Joinder in OneBeacon Ins. Co.’s Mot. for Summary J. on the Suit Limitation Clause at 2.
12 lay
million.'3 Like OneBeacon’s, Motors contends Continental’s policies follow form
to RLA 35, albeit through Home Insurance Company’s Policy #HEC 97915 82.14
Continental argues Motors’s only evidence is two documents: a declarations
page showing Continental provided coverage in excess of the Home Insurance
policy for the 1969_70 policy year, and the Home Insurance policy itself.15 The
parties’ discovery regarding missing or lost policies is now complete. But the
parties have agreed that they “will not be filing summary judgment motions on the
existence or completeness of the Continental policies at this time.”16
B. GM-RoYAL MICHIGAN LITIGATION
On January 26, 2005, GM sued Royal, its longstanding primary, umbrella,
and first-layer excess insurer, for Asbestos Claims coverage.17 That lawsuit
resolved in 2008, with Royal releasing hundreds of millions dollars to settle
underlying lawsuits.
13 Id
14 1a 313-4.
‘5 Id. at 2-3.
16 Letter of Carmella P. Keener to the Honorable Paul R. Wallace on behalf of Continental
and Plaintiff regarding status of issues relating to the existence or completeness of Continental
policies, dated May 25, 2017 (D.I. 1110).
‘7 Gen. Motors Corp. v. Royal & Sun Alliance Ins. Grp, PLC, er al., 2007 WL 1206830
(Mich. Ct. App. Apr. 24, 2007). See also Transmittal Affidavit of Carmella P. Keener in
Connection with OneBeacon Ins. Co.’s Mot. for Summ. J. on the Suit Limitation Clause Ex. 6
[hereinafter “Keener Suit Limitation Aff.”].
C. GM’s BANKRUPTCY AND REoRGANIZATIoN
GM went belly up in 2009. GM voluntarily filed for Chapter ll bankruptcy
protection in the United States Bankruptcy Court for the Southem District of New
York in June of that year.18 As part of its reorganization, GM sold its core assets to
NGMCO, Inc., and was renamed Motors Liquidation Company (“MLC”).19 GM
retained all pre-1986 excess liability insurance policies.20
On March 29, 2011, the Bankruptcy Court issued an order (the “Bankruptcy
Order”) approving l\/lLC’s Second Amended Joint Chapter ll Plan (the “Chapter
ll Plan”). The Bankruptcy Order and the Chapter ll Plan were to distribute
MLC’s remaining assets. The Bankruptcy Order stated: “[a]ll of the parties’ rights
and arguments with respect to their rights and duties under any Insurance Policies
(as hereinafter defined) are expressly preserved and are not impaired, increased, or
otherwise altered by this Confirmation Order, the [Chapter ll] Plan, and the
. . 21 . . . . . .
exhibits thereto.” “lnsurance Policies” means insurance policies issued to the
18 Transmittal Affidavit of Carmella P. Keener in Connection with OneBeacon Insurance
Company’s Mot. for Summ. J. on the Alleged Transfer of Rights Under the OneBeacon Policies
Ex. 4 [hereinafter “Keener Transfer Aff.”].
19 Pl.’s Opp’n. & Cross-Mot. on Transfer at 4.
20 Aff. of Michael T. Sharkey in Support of the Trust’s Opp. to Defs.’s Mots. Ex. 12. 11 5.
[hereinafter “Sharkey Aff.”].
21 Keener Transfer Aff. Ex. 3 (Order) 11 63(a).
_7_
Debtors with inception dates prior to 1986 that are included in the Asbestos
Insurance Assets.”22 The Chapter ll Plan defined “Asbestos Insurance Assets” as:
All rights arising under liability insurance policies issued
to the Debtors with inception dates prior to 1986 with
respect to liability for Asbestos Claims, including, but
not limited to: (i) rights (a) under insurance policies,
(b) under settlement agreements made with respect to
such insurance policies, (c) against the estates of
insolvent insurers that issued such policies or entered into
such settlements, and (d) against state insurance guaranty
associations arising out of any such insurance policies
issued by insolvent insurers, and (ii) the right, on behalf
of MLC and. its subsidiaries as of the Effective Date, to
give a full release of the insurance rights of MLC and its
subsidiaries as of the Effective Date under any such
policy or settlement agreement with the exception of
rights t§)3 coverage with respect to workers' compensation
claims.
On December 15, 2011, MLC formed the Motors Liquidation Company DIP
Lenders Trust (again, “Motors”) through a Trust Agreement (the “Trust
Agreement”). Motors was established to:
(i) avoid abandonment of certain assets of [MLC] and
facilitate the recovery of certain causes of actions that
will not be able to be monetized before MLC[’s]
dissolution as required by the [Chapter 11] Plan; and (ii)
to hold and administer the assets and any corresponding
liabilities of the Trust listed on Schedule A, Schedule B
and Schedule C attached hereto (the “Ti'ust Assets”) for
the benefit of the DIP Lenders under the DIP Credit
Agreement and to distribute the Trust Assets to the DIP
22 Id. 11 63(g).
22 ld. Ex. 3 (Chapter ii Pian), at § 1.7.
Lenders in accordance with the terms of this
Agreement.24
Schedule B states that Motors has “[t]he right to prosecute, and receive the
benefit of, all claims that [Motors] has or may have relating to the pre-1986
insurance policies that are identified on Exhibit A hereto for which Perkins Coie
LLP has been retained on a contingency basis.”25
Exhibit A is a seven-page long document detailing carrier names, policy
start and end dates, policy numbers, and limits.26 OneBeacon is not listed
anywhere on Exhibit A.27 But the Trust Agreement gave Motors authority to
“[a]mend or supplement this Trust Agreement without notice to or consent of the
Bankruptcy Court or any DIP Lender for the purpose of . . . curing any ambiguity,
omission, inconsistency or correcting or supplementing any defective provision.”28
Motors and GM simultaneously executed an Assignment and Assumption
Agreement (the “Assignment Agreement”).29 There, GM transferred its “right,
24 See ia’. Ex. 13 (Trust Agmt., Background, jj C).
25 1a schedule B, j i.
26 See id. Ex. 13 (Trust Agmt.), Exhibit A.
27 See id.
28
Ia'. § 11.13(a)(x).
29 See id. Ex. 15 (Assignment Agmt.).
title and interest in and to the assets (including claims against third parties) set
forth and described on Schedule A hereto[.]”30
Schedule A to the Assignment Agreement states that Motors has “the right
to prosecute, and receive the benefit of, all claims that [Motors] has or may have
relating to the pre-1986 insurance policies that are identified on Exhibit A hereto
for which Perkins Coie LLP has been retained on a contingency basis.”31
However, there is no Exhibit A to the Assignment Agreement. Instead, there is a
one-page document entitled “Annex A.” Annex A simply says “Pre-1986
Insurance Policies[.]”32
Motors filed its initial suit on December 1, 2011. On January 31, 2012,
Motors amended its complaint to include OneBeacon. On February 29, 2012,
using its authority to cure any ambiguity, Motors amended Section B of the Trust
Agreement to include language capturing OneBeacon.33 Specifically, the
amendment stated:
The right to prosecute, and receive the benefit of, all
claims that [Motors] has or may have relating to all
excess liability insurance policies incepting before 1986
20 Id. at § i.i(b). (emphasis in Originai).
31 Ia’. at Schedule A, 11 1. Schedule A of the Assignment Agreement and Schedule B of the
Trust Agreement state the same thing.
32 Keener Transfer Aff. Ex. 15 (Assignment Agmt., Annex A).
33 Id. Ex. 16 (Feb. 29, 2012, Trust Amendment Letter from AP Services, LLC, Motors’s
Trustee).
_1()_
including, without limitation, the pre-1986 insurance
policies that are identified on Exhibit A hereto for which
Perkins Coie LLP has been retained on a contingency
basis.34
III. STANDARD OF REVIEW
This Court cannot grant either party’s motion for summary judgment under
Delaware Superior Court Civil Rule 56 “unless no genuine issue of material fact
exists and one of the parties is entitled to judgment as a matter of law.”35
Summary judgment will not be granted if there is a material fact in dispute or if “it
seems desirable to inquire thoroughly into [the facts] to clarify the application of
the law to the circumstances.”36 The moving party has the burden of showing that
there is no genuine issue of material fact.37 If that burden is met, the non-moving
party must demonstrate tha “there is a genuine issue for trial.”38 And in
34 1a
35 Del. Super. Ct. Civ. R. 56; Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742,
745 (Del. 1997) (citing Playtex FP, Inc. v. Columbia Cas. Co., 622 A.2d 1074, 1076 (Del. Super.
Ct. 1992)).
26 Ebersole v. Lowengmb, 180 A.2d 467, 468-69 (Dei. 1962).
22 Moore v. Sizemore, 405 A.2d 679, 680 (Dei. 1979).
38 Del. Super. Ct. Civ. R. 56(e); see also Tanzer v. Int’l Gen. Indus., Inc., 402 A.2d 382, 385
(Del. Ch. 1979) (“If the movant puts in the record facts which, if undenied, entitle him to
summary judgment, the burden shifts to the defending party to dispute the facts by affidavit or
proof of similar weight.”).
_11_
determining whether there is, the Court must view the facts in the light most
favorable to the non-moving party.39
Where cross-motions for summary judgment are filed and neither party
argues the existence of a genuine issue of material fact, “the Court shall deem the
motions to be the equivalent of a stipulation for decision on the merits based on the
9940
record submitted with the motions. But where cross-motions for summary
judgment are filed and an issue of material fact exists, summary judgment is not
appropriate.41 In its evaluation of whether there is a genuine issue of material fact,
the Court should evaluate each motion independently.42 Where it seems prudent to
make a more thorough inquiry into the facts, summary judgment is inappropriate43
IV. DISCUSSION
A. TRANSFER oF RIGHTS
OneBeacon filed a motion for summary judgment alleging that Motors
Liquidation Company (again, “MLC”) did not transfer its rights under the
39 Tanzer, 402 A.2d ar 385 (citing Judah v. Del. Trust Co., 387 A.2d 624, 632 (Dei. super.
ct. 1977)).
40 Del. Super. Ct. Civ. R. 56(h).
41 Comei Sys., ina S’holders’Agem v. er/A, lnc., 980 A.2d 1024, 1029 (Dei. Ch. 2008).
42 Fasciana v. Elec. para Sys. Corp., 829 A.2d 160, 167 (Dei. Ch. 2003).
43 Pathmark Stores, Inc. v. 382] Associates, L.P. , 663 A.2d 1189, 1191 (Del. Ch. 1995)
(“[S]ummary judgment may not be granted when the record indicates a material fact is in dispute
or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application
of law to the circumstances.”).
_12_
OneBeacon insurance policies to Motors Liquidation Company DIP Lenders Trust
(again, the Trust is referred to herein as “Motors”). Motors contends that it was
“assigned the rights to prosecute, and receive the benefit of, whatever rights
[MLC] had against OneBeacon” as of December 15, 2011.44 The Court finds that
the rights under the OneBeacon policies were property assigned to Motors. The
Court GRANTS Plaintiff Motors Liquidation Company DIP Lender’s Trust’s
Cross-Motion for Summary Judgment on Transfer of Rights, and DENIES
Defendant OneBeacon’s Motion for Summary Judgment on Transfer of Rights
1. The GM Bankruptcy
On June 1, 2009, GM filed for Chapter 11 bankruptcy in the Southern
District of New York.45 As a part of this Chapter 11, GM sold its assets to New
GM, and GM was renamed Motors Liquidation Company (again, “MLC”).46 All
pre-1986 insurance policies were not included in this initial transfer to New GM
and remained held by GM.47 On March 29, 2011, the bankruptcy court approved
MLC’s amended Chapter 11 Plan. This amended Plan required that MLC’s rights
44 Pl.’s Opp’n. to Def.’s Mot. for Summ. J. on Transfer of Rights & Cross-Mot. for Summ.
J. on Transfer of Rights, at 1 [hereinafter “Pl.’s Opp. & Cross-Mot. on Transfer.”].
43 Id. at 4.
46 Id
47 Ia'. at 5; Sharkey Aff. Ex. 12 (Stip. of Settlement Re: Master Sale & Purchase Agmt. 11 5).
_13_
under any pre-1986 insurance policies also be transferred to Motors.48 OneBeacon
was not excluded from this transfer.
2. MLC Creates the Motors Trust and Transfers All Assets to It.
On December 15, 2011, MLC formed Motors to avoid abandonment of
assets held by MLC and to hold and administer the assets in a manner to benefit
the DIP Lenders via the Trust Agreement.49 The Trust Agreement stated
“[e]ffective upon the Transfer Date, [MLC] hereby transfers to the Trust, in
furtherance of the [amended Chapter 11 Plan], the Trust Assets free and
clear . . . .”50 The Trust Agreement defines Trust Assets as “the assets and any
corresponding liabilities of the Trust listed on Schedule A, Schedule B, and
Schedule C attached hereto.”51 Schedule B listed “[t]he right to prosecute, and
receive the benefit of, all claims that [MLC] has or may have relating to the
pre-1986 insurance policies that are identified on Exhibit A hereto. . . .”52 Exhibit
A did not include the OneBeacon policies. But the Trust was additionally
48 Pl.’s Opp. & Cross-Mot. on Transfer at 5. The Order confirming the amended Chapter
11 Plan defined these insurance policies as “insurance policies issued to the Debtors with
inception dates prior to 1986 that are included in the Asbestos Insurance Assets.” Keener
Transfer Aff. Ex. 3 (Order 11 63(g)). Asbestos insurance claims means “all rights arising under
liability insurance policies issued to the Debtors with inception dates prior to 1986 with respect
to liability for Asbestos Claims . . . .” Ia'. Ex. 3 (Chapter 11 Plan § 1.7).
49 Pl.’s Opp. & Cross-Mot. on Transfer at 7.
50 Keener Transfer Aff. Ex. 13 (Trust Agmt. § 2.3).
51 Ia'. Ex. 13 (Trust Agmt. § 1.1(gg) & Background 11 C).
32 Id. Ex. 13 (Trust Agmt. Ex. A).
_14_
authorized to hold “all other property held from time to time.”53 And the Trust
Administrator could “amend or supplement [the] Trust Agreement . . . for the
purpose of . . . curing any ambiguity, omission, inconsistency or correcting or
supplementing any defective provision. . . .”54
After MLC created Motors, it executed the separate Assignment Agreement
to transfer and assign assets to Motors. In that document, MLC “absolutely and
unconditionally transfer[red], assign[ed], and deliver[ed] unto [Motors] all of
[MLC’s] rights, title, and interest in and to . . . the assets (including claims against
third perties) set fcrth end described cu schedule A heretc.”33 schedule A lists
“[t]he right to prosecute, and receive the benefit of, all claims that [MLC] has or
may have relating to the pre-1986 insurance policies that are identified on Exhibit
A hereto . . . .”56 While there is no Exhibit A, there is an Annex A. Annex A lists
“Pre-1986 Insurance Policies.”57 OneBeacon policies are not carved out.
On February 29, 2012, the Trust Administrator effectively amended Exhibit
B of the Trust Agreement to read “[t]he right to prosecute and receive the benefit
33 ld. Ex. 13 (Trust Agmt. § 2.3).
34 let Ex. 13 (Trust Agmt. § 11.13(3)(><)).
55 Id. Ex. 15 (Assignment § 1.1(b)). That document further stated that the Trust “hereby
accepts such transfer, assignment, and delivery of the Assigned Assets . . . .” Id. at § 1.2.
34 ld. Ex. 15 (schedule A, item l).
32 ld. Ex. 15 (Ahuex A).
_15_
of, all claims that [MLC] has or may have relating to all excess liability insurance
policies incepting before 1986 including, without limitation, the pre-1986
insurance policies that are identified on Exhibit A hereto . . . .”58 lt is undisputed
that OneBeacon is a pre-1986 insurance policy.
3. The Plain Language of the Assignment Agreement Shows MLC
Successfully Transferred All Rights Under the Pre-1986 Insurance
Policies to Motors, Including the OneBeacon Policies.
OneBeacon contends that the omission of its name from the schedule of
insurance policies means that MLC excluded them from the transfer to Motors.
Not so. The Trust Agreement created Motors, but the actual transfer of assets to
Motors occurred via the Assignment Agreement.59 Exhibit A to (Schedule A of``)
the Trust Assignment does not exist, but there is an Annex A that lists the
information purported to be in “Exhibit A.” Annex A lists “Pre-1986 Insurance
Policies” as assets to be transferred to Motors. “[T]he plain language of an
assignment determines its breadth and scope.”60 Here, the plain language of Annex
58 Id. Ex. 16 (Feb. 29, 2012, Trust Amendment Letter from AP Services, LLC, Motors’s
Trustee).
59 Bank ofAm. Nat’l Trust & Sav. Ass’n v. Private Trust Corp., 1998 WL 230991, at *4
(S.D.N.Y. May 6, 1998) (“And because it is the Assignment Agreement through which the
parties effected the sale of the Obligation, and not the Trust Agreement, the former
agreement must relate to this action, whether or not the latter does as well.”). Section 2.2 of the
Assignment Agreement states “[T]his Agreement shall be construed and enforced in accordance
with, and the rights and obligations of the parties hereunder shall be governed by, the laws of the
State of New York, without giving effect to the principles of conflicts of law thereof.” See
Keener 'l``rillisl"er Aff. Ex. 15 (Assignment Agmt. § 2.2).
60 Nu,;';tu- cirp., LLC v. W. 56111 Hctel LLC, 106 A.D.3d 640, 641 (N.Y. 2013) (ihtet~uel
citations omitted).
_16_
A transferred all “Pre-1986 Insurance Policies.” OneBeacon policies were in
effect from November 1, 1969, to March 21, 1972_they are, therefore, pre-1986
policies.
“[A] written agreement that is complete, clear and unambiguous on its face
9961
must be enforced according to the plain meaning of its terms. “A contract is
unambiguous if the language it uses has ‘a definite and precise meaning,
unattended by danger of misconception in the purport of the [agreement] itself, and
concerning which there is no reasonable basis for a difference of opinion.”’62 The
clear, unambiguous language of the Assignment Agreement transfers all “Pre-1986
Insurance Policies” from MLC to Motors. No doubt, OneBeacon’s is a pre-1986
insurance policy. Accordingly, Motors assumed all rights to prosecute and receive
the benefits of the OneBeacon insurance policies.
4. Omission of OneBeacon from the Initial Trust Agreement Does Not
Preclude Transfer to Motors.
Neither Motors nor OneBeacon dispute that OneBeacon was not listed in
Exhibit A (aka Annex A) of (Schedule A) of the initial Trust Agreement.63 But,
the Trust Administrator amended the Trust Agreement, as he was empowered to
do, by including “all excess liability insurance policies incepting before 1986
44 Grceujield v. Phillics Reccrds, luc., 780 N.E.2d 565, 569 (N.Y. Ct. App. 2002) (citeticus
omitted).
62 Ia’. at 569-70 (intemal citations omitted).
63 Pl.’s Opp. & Cross-Mot. on Transfer at 17.
_17_
including, without limitation, the pre-1986 insurance policies that are identified on
Exhibit A hereto . . . .”64 OneBeacon was not initially on Exhibit A as MLC was
precluded from suing OneBeacon pursuant to a Standstill Agreement. Exhibit A of
the original complaint in this action became the basis for Exhibit A of the Trust
Agreement. When that Standstill Agreement expired on January 17, 2012, Motors
added OneBeacon to the Complaint. Upon realizing the unintentional omission,
the Trust Administrator amended the Trust Agreement so as to include the
OneBeacon policies.
OneBeacon claims that the Motors’s initial omission of OneBeacon serves
as an intentional waiver of its rights. It was not. Intent to abandon rights must be
clear.65 There is no evidence that MLC expressly chose to abandon its rights under
the OneBeacon policies while it clearly sought to exercise its rights under all
others. Further, the rights under the OneBeacon policies had already been
transferred to Motors via the valid Assignment Agreement. The amendment by the
Trust Administrator only served to “[cure] any ambiguity, omission, [or]
. . 66 .
inconsistency” in the Trust Agreement.
64 See Keener Transfer Aff. Ex. 16 (Feb. 29, 2012, Trust Amendment Letter from AP
Services, LLC, Motors’s Trustee); see also ia'. Ex. 13 (Trust Agmt. § 11.13(a)(x)).
63 See lit re Sti Pldu, 100 B.R. 690, 693 (Beul703 N.W.2d 23, 30 (Mich. 2005) (“in failing tc emplcy the plain
language of the contract, the . . .Court erred.”). The Court finds that the policies must be
interpreted under Michigan law. Delaware utilizes Restatement (Second) of Conflicts of Law
§ 188’s “most significant relationship test” to determine appropriate choice of law. Liggett
Group, Inc. v. Ajj?liated FM Insur. Co., 788 A.2d 134, 137 (Del. Super. Ct. 2001). “The most
significant factor of conflicts of law analysis in a complex insurance case with multiple insurers
and multiple risks is the principal place of business of the insured because it is the ‘situs which
link[s] all the parties together.”’ Id. (quoting Monsanto Co. v. Aetna Cas. and Sur. Co., 1991
WL 236936, at *3 (Del. Super. Ct. Oct. 29, 1991). The Royal policies, to which OneBeacon and
Continental follow form, were issued to GM, a company headquartered in Michigan. See Keener
Trigger Aff. Ex. 91 (Motors’s Responses and Objections to OneBeacon’s First Set of Requests
for Admission), at 1111 1-4; Certain Underwriters at Lloyds, London v. Chemtura Corp., --- A.3d -
---, 2017, WL 1090544, at *7 (Del. Mar. 23, 2017) (“ln [analyzing] a contract dispute [under §
188 of the Restatement (Second) of Conflicts of Law], where parties seek a decision about their
mutual obligations under the contract, the appropriate time period to consider is the time at
which the contract was formed. . . .This approach is also supported by general principles
employed in contract interpretation.”) (citations omitted).So Michigan law controls.
68 Rory, 703 N.W.2d at 30 (“A fundamental tenet of our jurisprudence is that unambiguous
contracts are not open to judicial construction and must be enforced as written.”) (emphasis in
original).
_19_
RTP 06000 was no longer available, because Endorsement 15 converted it to
“occurrence-reported” coverage.69 They argue that because none of the claims at
issue in this case were reported prior to Endorsement 15 taking effect, none of the
claims trigger RTP 06000.70
Motors counters by asserting that the Michigan Court of Appeals already
decided this precise issue regarding coverage under Endorsement 15. Motors
claims that Court did so in its decision regarding Royal’s coverage.71 Motors
argues that Defendants attempt to “improperly expand Judge Silverman’s [2015]
ruling” when they say the reporting dates of the claims at issue preclude
coverage.72
lt is true that RTP 06000 changed via Endorsement 15 on December 31,
1971.73 The language “[t]his policy applies worldwide, only to occurrences during
the policy period”74 was changed to “this policy applies worldwide, only to
69 OneBeacon Ins. Co. Mot. for Summary J. on Trigger, at 9, 24 [hereinafter “OneBeacon
Mot. on Trigger”].
22 1d. st23.
71 See Gen. Motors Corp. v, Royal & Sun Alliance Ins. Grp. PLC, et al., 2007 WL 1206830
(Mich. Ct. App. Apr. 24, 2007).
22 sec generally Motors 11, 2015 WL 10376123 (Del. supet. Ct. ch. 25, 2015).
73 Transmittal Aff. of Carmella P. Keener in Connection with OneBeacon Insurance
Company’s Mot. for Summ. J. on Trigger Ex. 6 at MLC DE 0000078 [hereinafter “Keener
Trigger Aff.”].
24 167 Ex. 6 et MLC DE 0000004.
_20_
occurrences which are reported . . . during the policy period.”75 This language in
Endorsement 15 took effect on December 31, 1971, at 12:01am.76 No retroactive
date was included in the change.77
Because of this change in language, Defendants argue that: (1) Endorsement
15 deems the date of the report to be the date of the occurrence; and (2) RTP 06000
covered all occurrences reported during its effective dates, even if the occurrence
itself took place outside of those dates.78 Essentially, Defendants assert that
because the claims at issue are not covered by RTP 06000, the claims do not
trigger the upper-level insurance that OneBeacon and Continental provided.
The OneBeacon policies “shall pay in respect of any one loss, whether under
Section A of the lnsuring Clause, or under Section B of the lnsuring Clause, or
under both sections combined, the excess of: . . . [t]he ultimate net loss amount
covered under the Underlying Insurances as per Schedule.”79 Motors must show
that RTP 06000 was, in fact, triggered by the claims in order to prevail here. There
is no dispute by either party that the asbestos claims at issue now were reported
23 Id. Ex. 6 at MLC DE 0000078 (eniphasis added).
76 Id_
77 OneBeacon Mot. on Trigger at 26.
78 Id
79 Keener Trigger Aff. Ex. 7 at MLC DE0000198.
_21_
long after RTP 06000 expired.80 Further, Motors cannot leapfrog over the primary
level of insurance to get to the Defendants’ upper-level insurance. ln order to hold
OneBeacon and Continental liable, two requirements must be metz first, that RTP
06000 be triggered, and second, that the amount at stake is enough to trigger the
OneBeacon and Continental policies.
2. The Michigan Litigation
Motors contends that OneBeacon and Continental are trying to re-litigate the
trigger issue, which, Motors says, was already decided by the Michigan courts. In
General Motors v. Royal & Sun Alliance,81 the Michigan Court of Appeals found
that the unambiguous language of Endorsement 15 did not impact GM’s pre-1972
Royal coverage and that “occurrence-based” coverage remained available for
GM’s claims after 1972.82 In that case, Royal (an insurer) relied on the same
arguments and documentation that OneBeacon and Continental relies upon here.
Royal argued that it could refuse coverage of GM’s asbestos-related claims
because “the change in the type of policy coverage in 1972, [which] altered the
80 See OneBeacon Mot. on Trigger at 33 (“The salient and undisputed fact is that no claim
at issue was made against or reported to Old-GM, much less Royal, while a Royal policy was
on-risk at to that claim.”) (emphasis in original).
3' 2007 WL 1206830 (Mich. Ct. App. Apn 24, 2007).
32 Id. et *4.
_22_
nature of the agreement and coverage was no longer available for that time
period.”83
The court of appeals found that “[a]lthough the [Royal] policy coverage was
altered in 1972, Endorsement 15 provided that the policy was amended effective
December 31, 1971, and the endorsement fails to delineate any change to prior
policies that were in effect.”84 Further, that court held that Royal’s pre-1972
“occurrence-based” coverage remained intact after 1972, and Royal’s duty to
defend under the pre-1972 coverage was triggered by GM’s asbestos claims.85
Most importantly here, Endorsement 15 did not retroactively convert the parties’
“occurrence-based” coverage to “occurrence-reported.”86 Because the pre-1972
underlying Royal coverage was triggered, and the change in trigger was not
retroactive to prior to December 31, 1971, Judge Silverman’s 2015 decision does
not apply to GM’s pre-1972 excess coverage.87
33 1a at *2.
84 Id. at *4 (“[P]laintiff has submitted complaints wherein it was named as a party
responsible for asbestos exposure to individuals during the policy period in question, specifically
between 1954 to 1971. Although the policy coverage was altered in 1972, Endorsement 15
provided that the policy was amended effective December 31, 1971, and the endorsement fails to
delineate any change to prior policies that were in effect. . . . The plain language of the policy at
issue invokes the broad duty to defend.”)
33 ld. st *4.
86 lai
87 Motors II, 2015 WL 10376123, at *4 (“[T]he decision here flows from the court’s
holding as a matter of law that barring exceptional circumstances or policy language not present
_23_
3. Endorsement 15 Does Not Change RTP 06000 Coverage Prior to
1972 from “Occurrence-Based” to “Occurrence-Reported.”
The arguments that OneBeacon and Continental make in their present
motions are identical to Royal’s in the prior Michigan action regarding the
application of Endorsement 15. This Court, too, finds that Endorsement 15 does
not preclude or obviate the trigger of coverage under RTP 06000 for OneBeacon
and Continental.
The Court previously examined Endorsement 15 in the context of post-1971
policies.88 Many of the insurers argued that Endorsement 15 changed the
underlying policies to “occurrence-reported” rather than “occurrence-based.” And
so, they said, Motors could not aggregate to trigger the excess insurance policies.
But that prior decision resolving those arguments did not discuss the effect on the
pre-1972 policies -the policies at issue here.
The Michigan Court of Appeals found the underlying Royal policies to be
“occurrence-based.”89 OneBeacon and Continental contend this finding does not
here, higher level excess insurance policies do not respond if the primary and first-level excess
policies have not been triggered.”) Judge Silverman’s decision addressed the trigger of coverage
regarding post-1971 policies only. He found that post-1971 Royal insurance coverage responded
only to “occurrences-reported” during the policy period and excess coverage could not be
triggered if underlying coverage was not triggered
33 Motors 11, 2015 WL 10376123, et *4.
33 Reydl, 2007 WL 1206830, at *4.
_24_
bind them, as they were not parties to that litigation.90 But that decision did affect
a lower level of coverage beneath OneBeacon and Continental. That decision was
based upon the same language of the same Endorsement 15 that OneBeacon relies
upon in its instant motion. And the Court finds that decision is now dispositive of
OneBeacon and Continental’s instant argument; it was and is binding with respect
to GM and Royal’s relationship, and it was never altered on reargument
RTP 06000 was triggered by the claims at issue here. Those claims, in tum,
triggered Royal’s coverage. And they now trigger OneBeacon and Continental’s.
Even if this Court were to find the Michigan decision non-binding, the rules
of construction employed in Royal do not change.91 That is to say, “[a]n insurance
policy must be enforced according to its terms,” “1t]he goal of contract
construction is to determine and enforce the parties’ intent based on the plain
language of the contract itself,” and “[w]hen the language of the contract is clear
and unambiguous, its construction presents a question of law for the trial court.”92
In looking at the language of Endorsement 15, this Court is in accord with
the Michigan Court of Appeals. The plain language of Endorsement 15 “fails to
90 Rep. Br. in Further Supp. of Def. OneBeacon Insurance Company’s Mot. for Summ. J. on
Trigger and in Opp’n. to Pl.’s Mot. for Partial Summ. J. on Trigger at 6. See also Def.
Continental Casualty Company’s Joinder in OneBeacon Insurance Company’s Rep. Br. in
Further Supp. of Mot. for Summ. J. on Trigger and in Opp’n. to Pl.’s Mot. for Partial Summ. J.
on Trigger at 1.
34 Rcydl, 2007 WL 1206830, st *2_3.
92 Id
_25_
delineate any change to prior policies that were in effect.”93 Endorsement 15 went
into effect at 12:01 AM on December 31, 1971, and altered no policy in effect
prior to that time. OneBeacon and Continental’s “occurrence-based” policies were
in effect prior to December 31, 1971. And those policies were not converted to
“occurrence-reported” under Endorsement 15’s plain language.
Plaintiff Motors Liquidation Company DIP Lender’s Trust’s Cross-Motion
for Summary Judgment on Trigger is GRANTED. Defendants OneBeacon and
Continental’s Motions for Summary Judgment on Trigger are DENIED.
C. SUIT LIMITATioNs
OneBeacon and Continental argue that the Suit Limitations Clause
incorporated into the Royal policies precludes Motors from bringing this suit
because it is time barred. Motors contends that the suit is not time barred, because
the Suit Limitations Clause only applies to first-party coverage, not the third-party
liability insurance here. The Court finds that this suit is not precluded by RLA35’s
Suit Limitations Clause, and DENIES OneBeacon and Continental’s Motion for
Summary Judgment on Suit Limitations.
1. The Background and Structure of OneBeacon’s and Continental’s
Policies
Between November 1, 1969 and March 21, 1972, OneBeacon sold three
excess insurance policies to GM. GM properly transferred the rights to these
33 Id. et *4.
_26_
policies through its Chapter 11 Plan.94 OneBeacon’s policies follow form to the
excess policies and incorporate by reference most of the terms of the RLA35
umbrella policy.95 lt does so, stating their policies are, “[e]xcept as herein
provided, subject to all the terms and conditions of Policy No. RLA35 issued by
Royal lndemnity Insurance Company.”96
Continental’s policies’ purportedly follow form to Home #HEC 97915 82,
which follows form to RLA35 “except as provided otherwise herein.”97
RLA35 is a package policy that provides both first- and third-party
coverage. First-party coverage is that which responds to any harm the insured
itself suffers. Third-party coverage is liability coverage that covers claims made
by others against the insured. Section A of RLA35 pertains to the first-party
insurance coverage, while Section B pertains to the third-party insurance
coverage.98 lt is this third-party coverage that responds when an injured third party
alleges liability against GM for bodily injury or property damage - like suits
against Old GM for asbestos damage.
94 See Section lV.A (Transfer of Rights), supra
95 Transmittal Aff. of Carmella P. Keener in Connection with OneBeacon Insurance
Company’s Mot. for Summ. J. on the Suit Limitations Clause Ex. 1 at MLC DE 0000243; MLC
DE 0000280; MLC DE 0000336 [hereinafter “Keener Suit Limitations Aff.”].
96 Id
32 sharkey Aff. Ex. 4 at MLC DE 0000254
33 Id. Ex. 2 et MLC DE 0000197
_27_
Because RLA35 includes both first-party and third-party coverage, there are
terms and clauses in the policy that pertain to one, the other, or both. Some of
these terms and clauses are typically found only in one type, while others would
not make sense if applied to that type. One of the terms used in both is “loss.”
“Loss” is used in different contexts throughout RLA35 “Loss” can mean
the physical event that takes place during the policy period, causing first-party
coverage to respond.99 “Loss” can also mean that amount of payment made for a
100
f.
covered event under the policy-not the event itsel This is the meaning of
“loss” in the third-party liability coverage context.
Here, the meaning of the term “loss” in the Suit Limitations Clause within
RLA35’s Notice of Loss clause is critical. This is the clause, OneBeacon and
Continental say, that bars Motors’s suit. The Suit Limitations Clause states: “[n]o
suit to recover on account of loss under this policy shall be brought before the
expiration of two months from the filing of proof as aforesaid on account of such
loss, nor after the expiration of thirty-six months from the discovery of the
,,101
aforesaid loss or occurrence. The general and products liability policies under
33 Keener suit Lnniteticns Aff Ex. 2 at MLC DE 0000197
433 Id. et MLC DE 0000199.
434 Id. at MLC DE 0000202
_28_
RLA35 _ those which would provide third-party coverage - do not contain this
Suit Limitations Clause.102
2. RLA35 is Ambiguous as Written and Must Be Interpreted According
to Its Context.
lnterpreting contract language is a question of law.103 Normally a term in a
contract is used uniformly throughout the document. However, when it is clear
from the context that the term has obviously different meanings throughout the
4
contract and these cannot be reconciled, this rule does not apply.10 Contracts
should be read as a whole.105 But, when reading the document as a whole results
in a term being used in clearly different ways, those several different (but
. . 1
reasonable and sensible) meanings must control. 06
102 See Keener Trigger Aff. Ex 6. See also Sharkey Aff. Ex 1.
103 See, e.g., Cily of Grosse Pointe Park v. Michigan Municipal Liabilily and Property Pool,
702 N.W.2d 106, 113 (Mich. 2005) (“lf the language of the contract is clear and unambiguous, it
is to be construed according to its plain sense and meaning[‘]”) (citation omitted); see also E.I.
du Pont de Nemours & Co. v. Adrniral Ins. Co., 711 A.2d 45, 56 (Del. Super. 1995).
104 See DaimlerChrysler Corp. v. G Tech Professz'onal Stajj‘ing, Inc., 678 N.W.2d 647, 649
(Mich. Ct. App. 2003) (“[P]arties may, of course, specifically assign a different meaning to the
words used in a contract. And the circumstances may clearly indicate a word used in a contract
has a meaning contrary to its ordinary usage.”) (citations omitted); Radio Corp. of America v.
Philadelphia Storage Battery Co., 6 A.2d 329, 334 (Del. 1939) (“[W]ords used in one sense in
one part of the contract will ordinarily be considered to have been used in the same sense in
another part where the contrary is not indicated.”); See also Md. Cas. Co. v. W.R. Grace & Co.,
128 F.3d 794, 799 (2d Cir. 1997) (“Terms in a document, especially terms of art, normally have
the same meaning throughout the document in the absence of a clear indication that different
meanings were intended.”).
105 Allstate Ins. Co. v. Tomaszewski, 447 N.W.2d 849, 851 (Mich. Ct. App. 1989).
'33 see Ddimzerchrysler Ccrp., 678 N.W.2d et 649.
_29_
“Under Michigan law, ‘contracts must be construed consistent with common
sense and in a manner that avoids absurd results.”’107 “A contract is ambiguous ‘if
its words may reasonably be understood in different ways.”’108 “ln other words, a
‘contract is ambiguous when its provisions are capable of conflicting
”’109 ln insurance policies, any such ambiguity is “construed
interpretations
liberally in favor of the insured and strictly against the insurer, because an insurer
has a duty to express clearly the limitations in its policy.”110 This is settled law in
Michigan.111
When looking to standard practice in the insurance industry, it is almost
impossible to find third-party liability coverage that contains a suit limitations
. . 11 . . . . . .
provision. 2 Suit limitations clauses are common features of first-party policies,
432 Weruiment v. Prudcnticl Life 1ns. Cc., 2015 WL 328603, et *4 (W.D. Mich. Jan. 26,
1969) (citing Certified Restoration Dry Cleaning v. Tenke Corp., 511 F.3d 535, 545 (6th Cir.
2007) (quoting Kellogg Co. v. Sabhlok, 471 F.3d 629, 636 (6th Cir. 2006))).
108 Wernz``mont, 2015 WL 328603, at *4 (citing Certifl``ed Restoration Dry Cleanz``ng, 511
F.3d, at 544 (quoting UA W-GM Human Res. Ctr. v. KSL Recreation Corp., 579 N.W.2d 411,
414 (Mich. Ct. App. 1998)).
109 Wernz'mont, 2015 WL 328603, at *4 (intemal citations and quotations omitted).
110 Id. (intemal citations and quotations omitted).
444 see c.g., Grcup Ins. Cc. cf Mtch v. Cchek, 489 N.W.2d 444, 447 (Mich. 1992)
(“Further, the exclusions to the general liability in a policy of insurance are to be strictly
construed against the insurer.”) (citing Francis v. Scheper, 40 N.W.2d 214 (Mich. 1949))
(followed by Hunt v. Drielick, 852 N.W.2d 562, 565-66 (Mich. 2014)).
442 see e.g., Dumnt Ccnst. lnc. v. chncy, 336 N.W.2d 856, 859 (Mich. Ct. App. 1983)
(“Evidence of custom and usage of a trade is admissible to explain ambiguous language in a
contract.”).
_30_
but not third party liability policies,113 “Many first-party insurance policies, often
pursuant to statute, contain provisions stating that no suit on the policy is
sustainable unless commenced within a certain number of months after the loss.”114
And “[b]ecause the time of loss is more readily ascertainable in first party losses, it
is easier to determine when the suit limitations period begins to run.”115 Why is
this practice of import here? Because the Suit Limitations Clause falls within
RLA35’s Notice of Loss clause. lt is tied to a “proof-of-loss” requirement
- something found more typically in first-party than third-party coverage.
3. RLA 35 Does Not Bar Motors’s Suit Because “Loss” Does Not Have
a Uniform Meaning and Must be Read in Context and According to
Industry Standards.
As noted before, RLA35 is a package policy that provided GM with both
first- and third-party liability insurance. Because of its dual nature, certain parts of
the policy apply to first-party coverage; others apply to third-party coverage. And
the use of the term “loss” appears in each.
The Suit Limitations Clause at issue is found within the Notice of Loss
clause. Again, it states that “[n]o suit to recover on account of loss under this
policy shall be brought before the expiration of two months from the filing of proof
113 3-20 New Appleman on Insurance § 20.03(1).
114 Alan D. Windt, 2 Ins. Claims and Dispules § 9.3 (6th ed.).
115 John H. Mathias, John D. Shugrue, and Thomas A Marrinson, Insurance Coverage
Dispules § 2.02[5] (2002).
_31_
as aforesaid on account of such loss, nor after the expiration of thirty-six months
from the discovery of the aforesaid loss or occurrence.”116 So what’s the meaning
of “loss” in the context of this provision?
The term “loss” appears in two different insuring clauses. ln lnsuring
Clause A, pertaining to first-party property coverage, it states that the policy
“cover[s] all loss occurring during the period of this insurance, resulting from
physical loss or damage to all property of every description.”1 17 lt does not appear
in lnsuring Clause B, pertaining to third-party liability coverage. Motors contends
that this difference is present because the Suit Limitations Clause referring to
“loss” only applies to first-party property coverage, not third-party liability
coverage. The Court agrees.
OneBeacon argues that the term “loss” should also apply to this third-party
liability coverage because even though the term “loss” only appears in the
first-party insuring clause A, it is used elsewhere in RLA35 in a context that refers
to both first- and third-party coverage. Maybe so. But while it is true that “loss” is
used throughout RLA35, its different meanings therein depend on the context of
the particular part of the document in which it is found.
443 Keener suit Limitations Aff. Ex. 2 et MLC DE 0000202
442 rel st MLC DE 0000197.
_32_
The several meanings of the term “loss” in RLA35 can only make sense if
the term is read on each occasion in context. F or instance, as to its use singularly
for first-party property coverage, one of RLA35’s clauses speaks to other insurance
that exists “at the time of the happening of any loss which would, but for the
existence of this insurance, insure such loss.”118 RLA35’s subrogation provision
releases liability given by the insured party “prior to loss.”1 19
But as to third-party liability coverage, one singularly applicable term is
“ultimate net loss.” That phrase is defined in the context of third-party coverage as
“the amount payable in settlement of the liability of the Insured after making
deductions for all recoveries and for other valid and collectively insurances . . .
.”120 For first-party coverage, it is defined to mean “the total sum actually paid in
final settlement of any claim after making deductions for all recoveries and for
other valuable and collectible insurance . . . .”121 Another one of RLA35’s
provisions bars coverage for “that part of any loss represented by any deductible or
self-insured amount” under a policy.122 This clearly refers to an amount paid out,
not the event causing the insurance to pay.
443 Id. et MLC DE 0000200.
443 id et MLC DE 0000203.
423 1a at MLC DE 0000199.
121 lay
_33_
These few examples illustrate that “loss” has different meanings throughout
RLA35 And the meaning in each instance depends on the context in which it is
used. ln the clauses where “loss” refers to the event itself, it clearly cannot mean
an amount paid. Conversely, in the clauses were “loss” refers to the amount paid,
it cannot mean the event.
4. Reading the Suit Limitations Clause to Apply to Third-Party
Liability Coverage Would Produce Absurd Results.
Here, the Suit Limitations Clause referring to “loss” is tied to a “proof of
loss” requirement - something that does not exist in the industry for third-party
liability coverage, That is why the term “loss” in that provision must be read as
applying to first-party property coverage, not third-party liability coverage,
The Notice of Loss clause states that “[n]o suit to recover on account of loss
under this policy shall be brought after the expiration of thirty-six months from the
discovery of the aforesaid loss or occurrence.” F or this to apply to a “loss” in the
context of third-party liability coverage, Motors had to know not only that some
third party suffered damage that would trigger OneBeacon’s coverage, but also file
a suit with OneBeacon for coverage for any sums Motors paid out within thirty-six
months of that third party’s damage. Many states have statutes of limitations that
422 Id. at MLC DE 0000202.
_34_
allow a suit to be filed more than thirty-six months after the damage takes place.123
lf someone in one of those states was injured by a defect in a GM vehicle, and did
not bring the suit until thirty-seven months after the injury, Motors would not have
known of the suit and would not have known whether it triggered OneBeacon and
Continental’s coverage layer within the thirty-six months required.
Michigan law prohibits insurance policy provisions that have unattainable
conditions allowing the right to file a suit to expire before it accrues.124 lf a
contract has a provision that cannot be met, then it cannot stand. Here, having the
Suit Limitations Clause apply to third-party liability claims could require
something that is impossible for Motors to do. As such, the Suit Limitations
Clause must apply only to first-party property claims, not the third-party liability
claims at issue here. Accordingly, OneBeacon and Continental’s Motions for
Summary Judgment based upon the Suit Limitations Clause are DENIED.
423 sea c.g., ME. REv. sTAT. ANN. tit. 14, § 752 (six years in Maine); Mo. REv. star §
516.120 (five years in Missouri); NEV. REV. STAT. § 11.190 (four years in Nevada); WYO. STAT.
ANN. § 1-3-105(a)(iv)(C) (four years in Wyoming).
124 See M.L.C.A. § 500.2254 (“No article, bylaw, resolution or policy provision adopted by
any life, disability, surety, or casualty insurance company doing business in this state prohibiting
a member or beneficiary from commencing and maintaining suits at law or in equity against such
company shall be valid and no such article, bylaw, provision or resolution shall hereafter be a bar
to any suit in any court in this state.”); Klz'da v. Braman, 748 N.W.2d 244, 252 (Mich. Ct. App.
2007) (“We are also cognizant of the well-established tenet that ‘[c]ourts enforce contracts
according to their unambiguous terms because doing so respects the freedom of individuals
freely to arrange their affairs via contract.’ But contracts may not grant a right and then burden
that right with a condition that cannot be met.”) (internal citation omitted).
_35_
D. NUMBER oF OCCURRENCES
Motors alleges that this Court’s prior decisions make the “cause test” the law
of the case. There, Motors contends, this Court found that when a company makes
a product which causes an injury or systemic injuries, there is only one occurrence.
Essentially, all 80,000 outstanding asbestos claims funnel back to one occurrence:
when the injurious products were manufactured
OneBeacon argues that each claim is distinct. Claimants were exposed to at
least a dozen different types of asbestos-containing products, suffered exposure at
different locations, and were all exposed to asbestos on different start and end
dates.125 OneBeacon points out also that GM and Royal treated each asbestos
claim as a separate occurrence during the parties’ relationship126 And so,
OneBeacon says, Motors must take on GM’s prior practice, GM’s previous
arguments thereon, and is estopped from now arguing to the contrary.127
To forward its contention, each side cites to several supporting cases.
125 Br. in Supp. of Def. OneBeacon Insurance Company’s Cross-Mot. for Partial Summ. J.
on the Number of Occurrence and in Opp’n. to Pl. Motors Liquidation Company DIP Lenders
Trust’s Mot. for Partial Summ. J. on the Number of Occurrences at 9.
423 id at 10.
422 1a at 40-41l
_36_
ln Dow Corning Corp. v. Continental Cas. Co. Inc., et al.,128 Dow Corning
Company (“Dow ]”) manufactured silicone-filled breast implants. Between
1964_1991, many women received these Dow implants.129 By the early 1980s,
numerous claimants alleged the silicone leaked, causing various autoimmune
disorders.130 The number of claimants escalated into the early 1990s.131 And Dow
sought coverage for these claims from its several insurers.
All of the insurers sold “occurrence” policies between 1962 and 1985. The
. . . . . . . 1 2
policies covered Dow’s liability “caused by or arising out of each occurrence.” 3
The policies defined occurrence as:
The term “occurrence” wherever used herein shall mean
an accident or a happening or event or a continuous or
repeated exposure to conditions which unexpectedly and
unintentionally results in personal injury, property
damage or advertising liability during the policy period.
All such exposure to substantially the same general
conditions existing at or emanating from one premises
location shall be deemed one occi.lrl'ence.133
423 1999 WL 33435067 (Mich. Ct. App. oct. 12, 1999).
423 1a at *1.
130 Id
131 See id.
432 lai at *4.
433 Id. at *17.
_37_
Dow argued that each implantation was a separate occurrence. One excess
carrier argued that the manufacture or sale of the silicone implants constituted one
“occurrence,” regardless of when implantation occurred.13 4
The Michigan Court of Appeals held that each implantation of breast
implant products was a separate occurrence in the context of 19,000 lawsuits filed
by more than 33,000 claimants.135 The Dow l court held that there was “no basis
in the policy language for construing the terms ‘accident,’ ‘event,’ or ‘happening’
necessarily to mean the manufacture and sale of breast implants.”136 Further, the
Dow 1 court held that considering exposures to the breast implants to be “general
conditions [] substantially the same” for all underlying claimants is highly
questionable; the implants were at different locations when exposure occurred.137
ln Stryker Corp. v. Natl``onal Union Fire Ins. Co. of Pittsburgh, Pa.,138
another case applying Michigan law, Stryker sought coverage for at least 71 claims
seeking damages for injury allegedly caused by implantation of a defective
artificial knee product. The artificial knees consisted of metal and ultrahigh
134 Id
135 lar
136 Id
137 Id
433 Nc. 4:01-cv-l57-RHB, Dec. 603 (W.D. Mich. Aug. 27, 2004).
_38_
molecular weight polyethylene.139 After construction, the artificial knees were
40
irradiated and stored in packages containing air.1 The radiation and storage
purportedly weakened the knees’ effectiveness, making them unsuitable for
implantation five years post-sterilization.141 Several unfit knees were implanted.142
Stryker sought coverage from its insurers.
One insurer, National Union, argued that 67 claims it potentially covered
were separate occurrences National Union’s policy defined occurrence as “an
accident, including continuous and repeated exposure to conditions, which results
in Bodily lnjury. All such exposure to substantially the same general conditions
shall be considered as arising out of one Occurrence.”143
The Stryker Court applied the “cause test,” and found in National Union’s
favor: there was not one continuous, uninterrupted cause of the implantation of
144
expired products. Stryker retained ownership of each artificial knee until the
433 Ial at *2.
140 lar
141 lar
442 1a at *4.
443 lai at *8.
444 Id. at *10_
_39_
time of implantation. Stryker faced potential liability only when an individual
artificial knee was sold and implanted.145
Motors alleges Stryker and Dow 1 are inapplicable.146 Dow added a premise
requirement that Motors’s policies lack. That is, Dow’s breast implantation
failures constituted separate occurrences because the policy stated: “All such
exposure to substantially the same general conditions existing at or emanating from
one premises location shall be deemed one occurrence.”147 Motors’s policy has no
such location-specific requirement
Motors argues Stryker is inapplicable because the artificial knees were
allowed to expire prior to implantation. This expiration is an additional,
8 Motors claims its asbestos-containing
independent link in the causal chain.14
products had no such additional, independent link. So, all of the claims arising out
of the sale of its products should be deemed one occurrence.149
145 Id
146 Motors Liquidation DlP Lenders Trust’s Reply in Supp. of its Mot. for Partial Summ. J.
on the Number of Occurrences & Opp. to Def. OneBeacon lns. Co.’s Cross-Mot. for Partial
Summ. J. on the Number of Occurrences at 14.
442 Dcw 1, 1999 WL 33435067 at *17.
148 Motors Liquidation DlP Lenders Trust’s Reply in Supp. of its Mot. for Partial Summ. J.
on the Number of Occurrences & Opp. to Def. OneBeacon lns. Co.’s Cross-Mot. for Partial
Summ. J. on the Number of Occurrences at 15.
149 lay
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Motors cites to Associated Indem. Corp. v. Dow Chem. Co. (“Dow II”)150 for
support. ln Dow II, Dow manufactured a resin used in natural gas pipeline
installation.151 Dow either manufactured the resin itself or supplied the
components for others to manufacture it for placement in the gas pipes.152 The
resin never set properly, causing difficult installation and leakage.153 Dow’s
insurers brought a declaratory judgment action seeking to determine the number of
occurrences for the leaking pipes.154
Dow’s primary insurer, to which the excess carriers followed form, defined
OCCUI``I``€HC€S 3.Sf
[A]n event, including continuous or repeated exposure to
conditions which results, during the policy period, in
personal injury or property damage not intended from the
standpoint of the insured. . . . All personal injury and
property damage arising out of the repeated exposure to
substantially the same general conditions shall be
considered as arising out of one occurrence.155
The Dow 11 Court held that the production of the defective resin was the
sole, proximate, uninterrupted, and continuing cause of all of the property
433 814 F. supp. 613 (E.D. Mich. 1993).
434 1a at 614_15.
432 1a at 615.
153 Ia'_
434 Id. at 616-17.
433 lai at617.
_41_
damage.156 All of the resin was intrinsically harmful. There was an unexplained
property or characteristic in its manufacture that caused all pipes into which it was
installed to be deficient.157
Same here, Motors says. GM sold certain inherently defective products that
caused injuries. There is no additional, independent link in the causal chain that
had to be forged subsequent to the products’ production and sale in order for them
to become harmful.158 To understand the parties’ current positions, it helps to give
an overview of the Court’s two prior decisions in this case - those rulings having
been rendered by the judge previously assigned.
The parties first sought summary judgment on occurrences in 2013.159 Then,
like now, Motors argued that the policies should be read that all claims funnel back
to a single occurrence.160 And Motors argued that Michigan and Delaware law
both follow the “cause test”: similar injuries caused by the continuous
433 1a at 623.
157 1011
158 Pl. Motors Liquidation Company DIP Lenders Trust’s Opening Br. in Supp. of its
Renewed Mot. for Partial Summ. J. on the Number of Occurrences at 16.
433 Motors 1, 2013 WL 7095859 (Del. super Dec. 31, 2013).
433 1a at*i.
_42_
manufacture and sale of an intrinsically harmful product constitutes a single
occurrence.161
The lnsurers countered that summary judgment was premature. The lnsurers
implicitly agreed that a false conflict between Delaware and Michigan law
existed.162 Nonetheless, the lnsurers argued a true conflict existed between the
policy’s occurrence definition and the parties’ longstanding course of conduct.163
The lnsurers argued a latent ambiguity existed because the parties’ course of
conduct differed (greatly in this case) from the policy’s language.164 The lnsurers
had “years of claims handling data” showing that Motors treated each occurrence
individually.433
The Court agreed that, at the litigation’s then-early stage, a latent ambiguity
could exist.166 The Court reasoned that, if the lnsurers could prove that the parties’
434 Id. at *2.
162 Id. at *3 (“As to ‘occurrence,’ the parties agreed at oral argument, and as presented
above, there is no conflict of law. Both Michigan and Delaware agree that similar injuries
caused by the continuous manufacture and sale of intrinsically harmful products, such as
asbestos, is a single occurrence.”).
433 lai at *4.
164 Id.
433 id at *5.
166 Id. at *4 (“[Defendants] suggest the course of performance between GM and Royal
altered the contract’s plain terms. As the limited record suggests further discovery will likely
lead to a different result than relying solely on the policy language, summary judgment must be
denied.”).
_43_
conduct modified their agreed-upon occurrence definition, the lnsurers might
prevail in spite of the language.167
The parties cross-moved for summary judgment again in 2015-.168 The focus
then was the “patent disharmony between the primary and excess policies’ triggers
of coverage.”169 Until 1972, Motors’s primary coverage was occurrence-based.176
Motors and Royal bilaterally negotiated to replace the occurrence-based policies
with “claims-reported” coverage.171
The Court found that Motors was judicially estopped from relitigating its post-
1971 claims. As discussed more thoroughly above, Motors and Royal sued each
other, both here and in Michigan, over Royal’s primary coverage.172 ln that
primary coverage litigation, Motors “unequivocally assured” this Court (actually
both states’ courts) that:
[W]ith respect to the [post-1971] years of coverage, there
is no justiciable issue[.] These are claims made policies.
167 Id. at *5 (“While it may be difficult to prove the parties established a standard different
from the clear policy language, if Defendants are successful, they may be entitled to judgment
despite policy language.”).
433 Motors 11, 2015 WL 10376123 (Dcl. super. Ct. ch. 25, 2015).
433 Id. at *1.
423 Id. at *2.
424 Id. at *2, *4.
172 See Sections ll.B, IV.B, supra
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We are not submitting these claims under them, and l
don’t know how much clearer we can say that.173
Additionally, the Court found that the parties’ “latent ambiguity” discovery
“clearly d[id] not help [Motors’s] position.”174 The Court stated that “it is safe to
say that the primary [policy] was never called-on to respond to a post-1971 claim.
Similarly [Motors] never made a demand against an excess carrier concerning a
post-1971 claim.”175
The Court’s analysis then must inform the Court’s interpretation of the
parties’ “occurrence” dispute now. This is because “[a] successor judge overruling
a decision of a predecessor judge of the same Court is strongly disfavored.”176
“Such a situation is guided by the doctrine of the law of the case so as to promote
173 Motors II, 2015 WL 10376123 at *3 (quoting GM’s counsel unequivocal assurances to
this Court); id. (and GM told the Michigan court: “General Motors has informed [Royal] that
[GM is ] not claiming and will not claim under those remaining twenty years. They don't believe
us, but we submit that we are judicially bound; we would be estopped to contend otherwise.”)
(emphasis in original).
424 Id. at *9.
175 Id
423 New Castle Cty. v. Pike Creek Rec. servs., LLC, 82 A.3d 731, 744 (Del. Ch. Dec. 30,
2013) (citing Frank G. W. v. Carol M W., 457 A.2d 715, 718 (Del. 1983) (“[W]e want to
emphasize that we take a dim view of a successor judge in a single case overruling a decision of
his predecessor.”)). lt is well-settled that once a decision is rendered by the same court that
decision should stand. May v. Bigmar, Inc. 838 A.2d 285, n.8 (Del. Ch. 2003) (“The ‘law of the
case’ doctrine requires that issues already decided by the same court should be adopted without
relitigation, and once a matter has been addressed in a procedurally appropriate way by a court, it
is generally held to be the law of that case and will not be disturbed by that court unless
compelling reason to do so appears.” (citation omitted) (internal quotation marks omitted)).
_45_
‘fundamental fairness and . . . judicial efficiency.”’177 Yet unlike res judicata, the
“law of the case doctrine is not inflexible it is not an absolute bar to
reconsideration of a prior decision that is clearly wrong, produces an injustice or
should be revisited because of changed circumstances.”178 “This is to ensure that,
especially where the case is taken on by a successor judge, the parties are not
‘entrapped by varying philosophies of different judges of the same Court in the
case.”’179
Here, nothing suggests either a change in circumstances or injustice by
applying the prior law of this case. ln 2013, the Court found that Michigan and
Delaware follow the “cause test,” and that the parties’ course of conduct may have
180
changed how the Court should have interpreted the “occurrence” definition. ln
2015, the Court supplemented its 2013 decision, holding that Motors’s post-1972
course of conduct comported with Endorsement 15’s “game-changing” language.
Nothing the parties have presented convinces the Court it should abandon the
422 Pikc Creek Rec. servs., LLC, 82 A.3d, at 744415 (qucting zim v. VLl Carp., 1994 WL
548938, at *2 (Del. Ch. Sept. 23, 1994)). This is especially true in Delaware where often more
than one judge will preside over an individual case during its pendency. Frank G. W., 457 A.2d
at 719 (“Considerations of courtesy and comity are particularly relevant in Delaware where it is
not unusual for our Superior Court to have various judges involved at different stages of
protracted cases.”).
423 Gannett Cc., Inc. v. Kanaga, 750 A.2d 1174, 1181 (Del. 2000) (emphasis in original).
423 Pike Creek Rec. Servs., LLC, 82 A.3d, at 745 (quoting Frank G. W., 457 A.2d at 719).
433 Motors 1, 2013 WL 7095859 at *4-5.
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general law-of-the-case principle: it should abide “in all instances except in those
extraordinary circumstances where justice demands revisiting the merits of the
parties’ claims.”161 The Court finds no such extraordinary circumstances exist
here.
There is a clear distinction between the parties’ pre-1972 and post-1972
conduct. The post-1972 insurers have been dismissed from the case. The Court
does not agree with OneBeacon that Motors is estopped from arguing the pre-1972
claims are one “occurrence.” And the Court finds in these circumstances, under
Dow II, they are one “occurrence.”
Therefore, Plaintiff Motors Liquidation Company DlP Lender’s Trust’s
Renewed Motion for Partial Summary Judgment on the Number of Occurrences is
GRANTED. Defendants OneBeacon and Continental’s Cross-Motions for
Summary Judgment on the Number of Occurrences is DENIED.
E. DETERMINING ALLoCATIoN
The Court has determined: that the OneBeacon policies transferred to
Motors; that the 80,000 claims trigger the excess policies; that Royal’s Suit
Limitations Clause, to which OneBeacon follows form, does not bar Motors’s
434 Pikc Cree/r Rec. servs., LLC, 82 A.3d, at 745; Frank G.W., 457 A.2d at 719 (ncting
exceptions to the general rule of restraint a successor judge follows in adhering to prior ruling
“should be entertained only in extraordinary circumstances”).
_47_
claims; and that the claims are to be treated as one occurrence. Now, the Court
must determine how to allocate to the insurers any liability Motors incurs.
Motors alleges that the RLA35 language, to which OneBeacon follows,
requires “all sums” allocation under Michigan law. OneBeacon argues that the
language calls for “pro rata,” or “time on the risk” allocation. Michigan courts
39182 n 183
have, on different occasions, followed “all sums and “pro rata allocation
- depending on the contract language used. The overwhelming majority of cases,
however, consider Michigan a “pro rata” state.184
Arco Industries Corp. v. American Motorists Insurance Company provides
an example of Michigan’s trend toward “pro rata” allocation. ln Arco, plaintiff, a
small automotive parts manufacturer, operated a manufacturing plant beginning in
432 Dcw 1, 1999 WL 33435067 (Mich. Ct. App. oct. 12, 1999).
163 See, e.g., Arco Industries Corp. v. American Motorists Ins. Co., 594 N.W.2d 61 (Mich.
Ct. App. 1998).
164 See, e.g., Cont'l Cas. Co. v. lna'ian Head Indus., [nc., 666 F. App'x 456, 464-65 (6th Cir.
2016) ("While the Michigan Supreme Court has not determined which allocation method
applies, other courts have concluded that the pro rata method of allocation applies under
Michigan law.") (citing Cily ofSterling Height,s' v. United Nal'l Ins. Co., 319 F. App"x 357, 361
(6th Cir. 2009);Decker M/g. Corp. v. Traveler.s" [ndeni. Co., 106 F. Supp. 3d 892, 895 (W.D.
Mich. 2015); Alticor. [nc. v. Nal ``l Union Fire Ins. Co. ofPa., 916 F. Supp. 2d 813, 832-33 (W.D.
Mich. 2013); Stryker Corp. v. Nat'l Union Fire Ins. Co. of``Piltsburgh, Pa., 2005 Wl1 1610663, at
*7-8 (W.D. Mich. .lul. 1, 2005); Century lndem. Co. v. Aero--Motive Co., 318 F. Supp. 2d 530,
545 (W.D. l\/Iicli. 2003).; see also id., 666 F. App"'x at 465 (“The Michigan Court of Appeals has
recognized in at least three other instances that liability l``or continuous injuries should be
measured on a pro rata basis.”).
_48_
1967.185 Plaintiff used volatile organic compounds to clean parts during the
manufacturing process and to remove plastisol from the plant’s floors.186 The
compounds drained down a trench into an unlined seepage lagoon away from the
plant.187 The compounds contaminated the lagoon and groundwater.188
Michigan’s Depaitment of Natural Resources sued Arco for cleanup costs. The
trial court allocated Arco’s risk on an “other insurance” approach.189
On appeal, the Michigan Court of Appeals approved of a “time-on-the-risk,”
or “pro rata” approach.190 Under American Motorist Insurance Company’s
(“AMICO”) policy, coverage was available to Arco when damage occurred
“during the policy.”191 The court of appeals stated that the “logical corollary” to
AMlCO’s occurrence definition was that “AMICO must provide coverage for
damage sustained ‘during the policy period’ [only,] but not for the years outside
the policy period.”192 The court of appeals reversed the trial court’s “other
433 see Arcc, 594 N.W.2d at 64.
186 Id.
187 Id.
188 Id.
433 Id. at 68.
433 Id. at 69.
191 Id.
192 lar
_49_
insurance” allocation, and required it to implement Al\/llCO’s risk using the
time-on-the-risk method.193
The parties only cite to one Michigan case prescribing “all sums” allocation.
ln Dow I, Plaintiff Dow Coming provided silicone gel breast implants from
approximate 1964-1991.194 By 1991, a “flood of litigation” hit, costing
approximately $4 billion.195 Dow sought coverage from its myriad insurers.
All of Dow’s insurers sold “occurrence” policies from 1962-1985. Dow
6
argued for “joint and several” allocation.19 lts insurers argued for “pro rata
allocation with policyholder participation.”197 The relevant allocation provision in
the subject policies stated:
The Company hereby agrees, subject to the limitations,
terms and conditions hereinafter mentioned, to indemnify
the insured for all sums which the Insured shall be
obligated to pay by reason of the liability (a) imposed
upon the Insured by law, or (b) assumed under contract
or agreement by the Named Insured for damages, direct
or consequential and expenses, all as more fully defined
by the term “ultimate net loss” on account of:
433 Id. at 70-71.
434 Dcw 1, 1999 WL 33435067 at *l.
195 lar
433 id at *6.
197 Id-
_50_
personal injuries, caused by or arising out of each
l
occurl‘ence.1 111
The Michigan Court of Appeals found in Dow’s favor by linking allocation
with the policies’ “occurrence” definition. “Occurrence,” in these policies, was
defined as “an accident or a happening or event or a continuous or repeated
exposure to conditions which unexpectedly and unintentionally results in personal
injury, property damage or advertising liability during the policy period.”199
Further, the policies contained a provision that “in the event that personal injury or
property damage arising out of an occurrence covered hereunder is continuous at
the time of termination of this policy, The Company will continue to protect the
Insured for liability in respect of such personal injury or property damage without
payment of additional premium.”200 Reading these three provisions together, the
Dow 1 court found “all sums” applied.261
The Dow 1 court distinguished its “all sums” decision from Arco’s “pro rata”
allocation. First, Dow 1 involved a different “occurrence” definition than Arco:
198 Id.
433 Id. at *7.
200 Id_
261 Id. at *8 (“Because we read the policy language at issue here as requiring defendants to
pay ‘all sums,’ and because the panel in Arco was construing different language, we decline to
extend Arco to the present case. The trial court correctly held that, under the relevant policy
language, defendants are liable for ‘all sums.”’).
_51_
Dow 1’s included “continuous or repeated exposure.”262 Second, Dow 1’s policy
included the specific clause protecting the insured after the policy expired.263
Arco’s pro rata allocation is the sensible and right approach here. While
Motors seeks Dow 1 ’s application, there are several reasons the policies here hew
closer to Arco. The RTP06000 policy contains a temporal limitation on
occurrence: an injury that occurs during the policy period. lt follows, therefore,
that the parties intended to cut-off occurrences at some point The RTP06000
policy simply does not contain the additional, interminable language that Dow 1 ’s
policy did.264
Motors also focuses on the phrases “all sums” and “arising out of” to support
its “all sums” allocation argument Alone, those terms could support an all sums
5
determination Yet, they did not in Arc026 And Motors does not cite one
Michigan case using that same language without additional supporting policy
language (like Dow 1 ’s). Michigan law requires an insurance policy to be read as a
whole, so that all of the policy’s provisions make sense. The policies here clearly
262 See id at *7.
233 Id. at *8.
264 See Stryker Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2005 WL 1610663,
at *7 (W.D. Mich. Jul. 1, 2005) (applying pro rata allocation and distinguishing Dow because
Dow ’s clause extending coverage was not present in this case).
265 See, e.g., Arco, 594 N.W.2d at 64 (“AMICO agreed to ‘pay all sums which the insured
shall become legally obligated to pay as damages because of (a) a bodily injury or (b) property
damage to which this insurance applies.”’).
_52_
state that coverage will be provided for injuries that occur during the policy period.
Nothing more.
ln turn, Plaintiff Motors Liquidation Company DlP Lender’s Trust’s
Renewed Motion for Partial Summary Judgment on Allocation is DENIED.
Defendants OneBeacon and Continental’s Cross-Motions for Summary Judgment
on Allocation is GRANTED.
V. CONCLUSION
The insurance policies for which OneBeacon and Continental are (or may
be) responsible were not excluded from the asset transfer between GM and Motors
during GM’s bankruptcy. Those policies can be triggered. The Suit Limitations
Clause of the lower level policies does not bar Motors’s suit here under the
OneBeacon and Continental policies. All of the remaining pre-1972 asbestos
claims for which Motors seeks coverage, under the circumstances here, are one
“occurrence.” And allocation must be done on a pro rata basis.
Accordingly, for there the reasons stated above, the parties’ various
summary judgement motions are disposed as set forth herein.
Paul R. Wallace, Judge
IT IS SO ORDERED.
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