Liberty Mutual Insurance Company issued successive annual insurance policies to the Fairbanks Company from January 1, 1974 to January 1, 1982. Liberty issued both comprehensive general liability and umbrella policies. Multiple lawsuits were filed in several jurisdictions against Fairbanks, alleging injuries due to exposure to asbestos, and this coverage litigation resulted.
On March 21, 2016, the court ruled on Liberty’s motion for summary judgment, concluding that the policies were subject to pro rata allocation such that Liberty was only liable to indemnify Fairbanks for the years Liberty was “on the risk.” In this decision, the court granted reconsideration of its ruling in light of the New York Court of Appeals decision in In re Viking Pump, Inc., 27 N.Y.3d 244 (2016), which held that “all sums” allocation should apply to policies with non-cumulation clauses because the non-cumulation clauses “plainly contemplate that multiple successive insurance policies can indemnify the insured for the same loss or occurrence” and non-cumulation was inconsistent with a pro rata approach.
However, Liberty argued that, even though “all sums” allocation applied, the non-cumulation clauses in the umbrella policies operate so that as Liberty makes payments for the asbestos claims under the first-year policy, those payments would also reduce the amount available under subsequent Liberty umbrella policies. As Liberty would have it, the occurrence limit and the aggregate limit on the first-year policy preclude “stacking,” or recovery under more than one policy. In Viking Pump, the New York Court of Appeals held that the non-cumulation clauses at issue prevented stacking.
The non-cumulation clause at issue here provided as follows: “If the same occurrence gives rise to personal injury . . . which occurs . . . partly within any annual period of this policy, the each occurrence limit and the applicable aggregate limit or limits of this policy shall be reduced by the amount of each payment made by the company with respect to such occurrence, either under a previous policy or policies of which this is a replacement, or under this policy with respect to previous annual periods thereof.”
The court held that summary judgment was not appropriate because of ambiguity regarding how the non-cumulation clause operated. Fairbanks argued that the occurrence limit applies to each individual claim, not to the overall liability for asbestos injuries. Liberty argued that once the policy limit is reached for one claim, irrespective of whether there are other claims, the policy limit is exhausted for the particular policy triggered and all subsequent policies.
The issue, then, was how many occurrences were at issue. The court ruled that lawsuits had been filed against Fairbanks in numerous jurisdictions, and the lawsuits alleged different dates and places of exposure. Moreover, there had been no discovery on how many occurrences were at issue. Until the number of occurrences at issue had been determined, it was impossible to decide whether the non-cumulation clause applied.