Opinion
C.A. No: N11C-12-022 FSS (CCLD)
11-25-2015
MOTORS LIQUIDATION COMPANY DIP LENDERS TRUST, Plaintiff, v. ALLIANZ INSURANCE COMPANY, et al., Defendants.
MEMORANDUM OPINION AND ORDER
Upon Defendants' Motion for Summary Judgment - GRANTED.
Upon Plaintiff's Cross-Motion for Summary Judgment - DENIED.
Upon Munich Reinsurance America, Inc.'s Motion for an Order Declaring Plaintiff is Judicially Estopped - GRANTED. SILVERMAN, J.
This insurance coverage case involves $100,000,000's in asbestos-related claims. Defendants are excess carriers, and the focus now is on the patent disharmony between the primary and excess policies' triggers of coverage. The primary's is a narrow, claims-made trigger, while the excess policies include broader, occurrence-based language. The question here is whether the excess policies have been triggered.
The case has a twist because throughout the insured's and insurer's contractual relationship spanning many decades, and for almost 20 years after it ended, the original insured never made an asbestos-related claim against its primary policy, much less any excess coverage. Year-after-year, the insured treated each asbestos-related claim as a separate occurrence, consistent with its view of the claims-made coverage it purchased after careful negotiation.
Instead of attempting to aggregate all asbestos claims as a single or related occurrence spanning many years, the insured treated each claim as an isolated occurrence happening in the year reported, applying a separate deductible to each claim. Accordingly, the insured never made a demand on its primary coverage, much less did it ever exceed its primary coverage. For its entire existence, the insured never demanded coverage from its excess carriers for an asbestos loss.
After the insured went bankrupt, however, a judicially created trust, Plaintiff, was tasked with seeking coverage under the insured's insurance program. The Trust scrutinized the insured's policies and concluded that the insured never realized what it had. Hence, the Trust contends here that because the excess policies clearly have occurrence-based language and because asbestos-related claims were made against the insured, which if aggregated as a single or related occurrence clearly exceed the excess policies' attachment points, all of which is true, then the excess policies must respond to all asbestos-related claims stemming from the insured's alleged misuse of asbestos, regardless of when those claims arose or when the claims were made. And, that is so even if the excess policies sit above policies that never responded to an asbestos-related claim.
According to the Trust, the excess policies must respond even if the insured neither demanded coverage from its primary carrier, nor claimed its asbestos-related losses exceeded its primary or first-layer excess coverage. The fact that the Trust's predecessor read the insurance contracts it had carefully negotiated opposite from the way the Trust now reads them is irrelevant because, according to the Trust, the policies unambiguously work as the Trust now contends.
I.
The case's procedural history is unimportant, except the court issued a preliminary decision in 2013, mostly discussing "occurrence." Basically, the court preliminarily read the primary and excess policies in isolation and without context, determining that"occurrence" is an unambiguous term of art. That is still correct, but the term is just a brick in the wall. Now, the court is deciding how the trigger clauses relate in this case's specific context.
See Motors Liquidation Co., DIP Lenders Trust v. Allianz Ins. Co., C.A. No: N11C-12-022 FSS CCLD, 2013 WL 7095859 (Del. Super. Dec. 31, 2013).
Also, there was earlier litigation between the insured and its primary/umbrella carrier, discussed here in Section III. Otherwise, this decision relies mostly on full briefing, oral argument and unrequested but authorized supplemental briefing, and less on the extensive discovery of record. Basically, the court is deciding the pending motions, including summary judgment motions, as a matter of law based on undisputed facts.
See Hercules, Inc. v. AIU Ins. Co., 784 A.2d 481, 504 (Del. 2001).
II.
After General Motors crashed and burned in 2009, a federal bankruptcy court combed the wreckage, looking for salvage. One survivor was the late-GM's sophisticated and elaborate insurance program. The bankruptcy court created the Trust, authorized to seek coverage for GM under its pre-1986 policies. This phase of the quest concerns thousands of asbestos-related, personal injury claims filed against GM since the first in November 1977.
In re Gen. Motors Corp, 407 B.R. 463 (Bankr. S.D.N.Y. 2009) aff'd sub nom. In re Motors Liquidation Co., 428 B.R. 43 (S.D.N.Y. 2010).
See Zitis v. Gen. Motors Corp., No. L-11634-77 (N.J. Super. Ct. Law Div. - Bergen County Nov. 24, 1977).
From 1954, and perhaps as far back as 1921, until 1993, GM was primarily insured by the Royal Insurance Company family. Towering above Royal's primary and first-layer excess or umbrella policies were layers of excess policies issued by different carriers, covering different periods, in different amounts, and with different attachment points. For now, the architecture can be appreciated from a distance.
Until 1972, Royal's coverage was occurrence-based. Anticipating a rise in products liability claims and desiring to keep premiums lower, Royal and GM agreed in 1971 to replace their former occurrence-based insurance with "claims-reported" coverage, which GM consistently and accurately referred to as "claims-made insurance." Until the Trust appeared, GM and Royal agreed that the occurrence-based triggers were converted to claims-made to eliminate longtail claims against Royal. Accordingly, the asbestos-related claims made against GM after the first in November 1977 were not bundled or aggregated with similar claims. Instead, GM treated each claim as a separate occurrence, tied to the year it was reported. And, that was how GM treated asbestos-related claims while Royal was on-risk.
See infra Section V.
Initially, the asbestos-related claims were trivial, resulting in nominal settlements or no-liability findings. Thus, significantly, no claim exceeded Royal's primary deductible or GM's self-retention, and GM made no demand on Royal. Royal's coverage was never triggered, much less exhausted, therefore no claim was made against any excess policy. Their claims practices were consistent with claims-based coverage in general and the primary policy's specific terms.
See Zitis, No. L-11634-77.
E.g. Friedman v. Gen. Motors Corp., No. L-35859-77 (N.J. Super. Ct. Law Div. - Bergen County May 16, 1985).
As for the excess policies, excess policies typically "follow-form," largely adopting the underlying policy's terms whole cloth. But here, even after the primary coverage changed in 1971, some excess policies included occurrence-based language until the mid-1980's. That disparity, of course, paved the way for this litigation. The excess carriers whose policies included occurrence-based clauses are the defendants here. The excess policies, however, have other relevant clauses.
For example, in their excess net loss provisions, the excess policies at issue reference claims "covered" by the "underlying" Royal policies. As suggested above and discussed below, the primary and excess policies' triggers are clear enough when standing alone. The challenge is reconciling the excess net loss provisions with their occurrence-based language, and then making the primary and excess policies work harmoniously under the undisputed facts.
III.
Before coming to the legal argument about the excess policies' triggers, judicial estoppel bears consideration. In 2005, GM and Royal sued each other over pre-1972 coverage, with GM filing in Michigan and Royal filing here. To bolster its forum choice, GM assured both the courts here and in Michigan that GM would never make an asbestos claim under its post-1971 policies, the ones underlying the excess policies here. Moreover, the record in both cases is replete with GM's admissions that its post-1971 coverage was "claims-made." Specifically, for example, GM's counsel unequivocally assured this court:
[W]ith respect to the [post-1971] years of coverage, there is no justiciable issue here. These are claims made policies. We are not submitting claims under them, and I don't know how much clearer we can say that.GM similarly assured the court in Michigan concerning the post-1971 policies:
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.That was then.
Now, the Trust says that when GM unequivocally promised it "will not claim," GM was clear that it only meant it would not claim under Royal's policies. Although the Trust has a tenuous and circumstantial explanation for why it now refuses to concede that the Royal policies at issue are "claims-made," which is based entirely on two shreds of evidence taken out of context, it has no way around GM's concession that Royal's policies are, in effect, "claims-made." And, as a matter of fact, the Trust must admit GM never made a claim against its post-commutation, Royal coverage, and it never will.
See Feb. 7, 1980 letter from Albert Mauceri, Asst. Sec., to Robert Cross, Excess & Treaty Management Corp.; Apr. 13, 1984 letter from Raymond M. Seng, Jr., Alexander & Alexander of Michigan, Inc., to Eileen Davis, McAlear Associates, Inc.
As to estoppel, the court will take GM's "clear" assurances in 2005 as having left enough wiggle room for the Trust to now submit claims against the excess policies. But, GM stated then, and the Trust must stand by it now, the reason it did not and will not make claims against the underlying Royal policies here is because they are "claims-made" policies. Accordingly, as GM acknowledged in the Royal litigation, all post-1971 claims against GM were treated as separate occurrences, happening in the year they were reported. As discussed below, that acknowledgment was not magnanimous. It merely recognized what GM always took as undeniable: under the policies' clear, negotiated language, the Royal policies are claims-made.
Finally as to estoppel and history's implications, no claim has ever been made on any primary or first-layer excess policy in connection with a post-1971, asbestos-related injury. And due to reality, or at least estoppel, no claim will ever be made. Not only will those primary policies neither cover an asbestos claim nor pay on account of such a claim, they will never even have to respond to such a claim. Those policies will never be triggered.
Accordingly, if there were room to call the primary coverage ambiguous, GM's judicial assurances coupled with its never demanding that its Royal policies respond to an asbestos claim leave no room for factual dispute by GM's successor now. Royal's policies are claims-made. The Trust cannot deny it, and a jury could not conclude otherwise.
Thus, the Trust is undeniably trying to step-over GM's primary and first-layer excess insurance to reach its excess tower. At oral argument it conceded that. As mentioned above and explained below, the decision here flows from the court's holding as a matter of law that barring exceptional circumstances or policy language not present here, higher level excess insurance policies do not respond if the primary and first-level excess policies have not been triggered. That holding is consistent with the primary and excess policies read in tandem, rather than in isolation. While that holding, coupled with the undisputed facts presented above, essentially decides this case, the court will go on.
IV.
A. Royal Primary Coverage
The parties agree that post-1971, Royal's primary coverage included a bilaterally negotiated "occurrence-reported" trigger of coverage, sometimes referred to as Endorsement 15. And, as explained here and before, the Trust cannot deny that the primary policy's acted as claims-made coverage for present purposes. Therefore, unless an injury was reported or a demand was made on the primary insurance during the primary policy's term, the primary policy was not triggered. That is true even if an asbestos-related injury happened to have occurred (however the term "occurred" is defined) during the policy's time on-risk. If neither the injury was reported nor a claim was made during the term, despite the injury's occurrence, the primary was not triggered. It follows that if a claim is made on another policy, such as an excess policy, triggering it, as a matter of law it still cannot be said that the primary was triggered.
Endorsement 15: "Insuring Agreement . . . is amended as follows: This policy applies worldwide, only to occurrences which are reported to the Insured or the Company, whichever occurs first, during the policy period provided the services, goods or products were manufactured, sold, handled or distributed within the United States of America . . . . The date if te report to the Insured or the Company, shall be deemed the date of occurrence." (effective December 31, 1971).
Furthermore, as to aggregating claims under the primary's trigger, only those claims reported during a single coverage period could be aggregated and treated as a single occurrence. If enough claims had been made or reported in a given period, GM could have bundled them. And, had the aggregated loss exceeded its deductible/self-retention, GM could have made a claim on its primary coverage. Again, none of that happened, and so the primary was not triggered.
B. Aetna Excess Coverage
The parties agree that the Aetna excess policies for which Travelers is now responsible, and almost all the others, were generally structured and sold as excess insurance. Most pages of the policies are captioned: "Excess Overlay Indemnity Policy." The policies repeatedly refer to "underlying insurance." Furthermore, they all contain "Excess Net Loss" provisions requiring the excess carriers to pay "sums which [sic] the insured becomes . . . obligated to pay . . . and which would be covered by the terms of the controlling underlying insurance [i.e. the primary policy], if written without any limit of liability."
Excess Overlayer Indemnity Policy Revised Definitions Excess Net Loss:
"Excess Net Loss" means that part of the total of all sums which the insured becomes legally obligated to pay or has paid, as damages on account of any one accident or occurrence, and which would be covered by the terms of the controlling underlying insurance, if written without any limit of liability, less realized recoveries and salvages, which is in excess of any self-insured retention and the total of the applicable limits of liability (except aggregate limits of liability) of all policies described in Section 3. Schedule of Underlying Insurance; whether or not such policies are in force or any aggregate limits of liability have been exceeded.
As established above, even if the underlying insurance (the primary policies) generally covered asbestos-related losses, the underlying insurance's terms specifically included the claims-reported trigger. Hence, none of the Trust's claims was covered by the terms of the controlling, underlying insurance.
Aetna's excess policies, and the like, contain triggers including "occurrence" or "common cause" language. If claims had broken-through the primary and first excess layers to trigger those policies, then arguably through their occurrence-based language, all the excess asbestos-related claims may then have been aggregated. And, where a harmful substance like asbestos is involved, an occurrence can generate a continuous trigger, usually spanning years of coverage. For example, as the Trust sees it, if GM were liable for a mesothelioma diagnosed in 1993, it could claim coverage from all the occurrence-based policies in effect while GM was misusing asbestos, if the injury happened during the occurrence, regardless of whether any underlying policy was triggered. That view might apply to thousands of claims.
Amended Definitions: 3. Occurrence: "The term 'occurrence' means an accident or a continuous or repeated exposure to conditions which cause injury, damage or destruction neither expected nor intended from the standpoint of the insured. Any number of such injuries, damage or destruction resulting from a common cause or form exposure to substantially the same conditions shall be deemed to result from one occurrence."
See Stonewall Ins. Co. v. E.I. du Pont de Nemours & Co., 996 A.2d 1254, 1258 (Del. 2010).
According to the Trust, even if GM neither demanded coverage nor called-on the Royal policies to respond, Royal's primary and first-layer excess policies were nonetheless triggered by the fact that a claim was filed against GM when Royal was on-risk. Furthermore, because the "claim" concerned an injury stemming from an occurrence, the excess policy was also triggered.
Not only that, and most significantly, because a primary policy was in effect triggered, even if no demand was made against it, then all the occurrence-based excess policies were also triggered, regardless of when they were issued and when the claims against GM were filed, provided the occurrence was on-going while the policy was on risk. That way, all the excess policies must respond to asbestos-related injuries that happened while the policies were on-risk, regardless of when the claims were filed, because that is how occurrence-based coverage works. For example, the Trust draws special attention to 1976's underlying policy, PTE 33. The Trust reads PTE 33 as a multi-year policy, concluding that because a claim was made against GM in 1977, PTE was triggered, regardless of whether GM made a demand under PTE 33.
In reality, of course, it is undisputed that: the insured never made a demand on Royal; Royal never responded, even to provide a defense; Royal was never required to provide coverage, much less held liable to pay; and, most importantly, Royal's limits were never reached by any judgement or settlement by Royal on its insured's behalf. Basically, the Trust has sewed selected facts together with a thread of inferences to rationalize its sweeping demand for coverage from the excess policies sitting above Royal's un-triggered policies.
V.
First, the Trust argues that the excess policies are traditional, occurrence-based, casualty insurance, the operation of which the court has already acknowledged is well-established. Occurrence-based insurance aggregates similar claims.
See Motors Liquidation Co., DIP Lenders Trust v. Allianz Ins. Co., C.A. No: N11C-12-022 FSS CCLD, 2013 WL 7095859 (Del. Super. Dec. 31, 2013).
As discussed in this court's 2013 ruling, over many years GM used asbestos in its products, allegedly injuring workers and others who inhaled the fibers. Thus, as the Trust contends, for a traditional occurrence-based trigger clause's purposes, it arguably may be said that all the asbestos-related injuries were caused by and are attributable to a single occurrence: GM's continuous use of asbestos in its manufacturing process over the years.
Id.
That also means it may be said that any occurrence-based policy on-risk during the occurrence - GM's on-going use of asbestos - must respond to every claim of injury caused by the occurrence, regardless of when the injury happened. Therefore, no matter when someone fell ill or was diagnosed with an asbestos-related disease, the claim would be covered by every primary policy on-risk during the occurrence. For example, if a worker was diagnosed with asbestosis in 1997, his claim potentially would be covered by an occurrence-based policy on-risk in 1977, as well as all the other policies on-risk throughout the occurrence.
In this way, it can be seen why occurrence-based insurance sometimes aggregates or bundles similar claims caused by a single occurrence. Similarly, all the policies on-risk during the occurrence are described as providing seamless coverage, because it does not matter when one policy's term ends and the next begins. They all respond. And, because some claims are made after a policy's term has ended, but to which the policy will nevertheless have to respond because it is occurrence-based, those claims are sometimes referred to as longtail claims.
Whether claims are aggregated and whether coverage is seamless has an enormous impact on whether a responding policy will be exhausted. Obviously, if a policy has to respond to every claim caused by an occurrence, regardless of when the actual injury happened or when the claim was made, the policy's limit is more likely to be reached, and therefore exhausted. That means another policy will have to cover until it, too, is exhausted, and so on.
It does not matter much in this case, but for completeness, it bears mention that aggregating claims under seamless coverage has spawned litigation over how to allocate each responding policy's responsibility. Usually, the question is whether the allocation method is all sums or pro-rata.
E.g. Hercules, Inc., 784 A.2d at 504.
Similarly, aggregating claims raises the question whether all the policies in a coverage layer must be exhausted before a higher layer is triggered, known as horizontal exhaustion, or whether coverage may instead be exhausted vertically by triggering excess policies sitting above the exhausted lower-level policy, even though other coverage exists at the lower level. Vertical exhaustion returns the court to the Trust's first argument.
E.g. Viking Pump, Inc. v. Century Indem. Co., C.A. No.: 10C-06-141 FSS CCLD, 2013 WL 7098824 (Del. Super. Oct. 31, 2013).
The Trust's first argument takes as given that the terms and operation of the underlying Royal policies have no bearing on the excess policies to the extent the excess policies, by their terms, do not follow form. And, as presented above, the excess policies have their own triggers, triggers pulled by the underlying occurrence at GM regardless of whether any demand was made on Royal, according to the Trust.
Alternatively, the Trust acknowledges, at least for argument's sake, that the Royal policies have some sort of claims-made trigger. Because claims were undeniably made against GM, the Royal policies were triggered regardless of whether GM tendered those claims and despite the fact that those claims did not reach the Royal policies' attachment points in any covered year, even in theory. According to the Trust, the fact that one asbestos-related claim was made against GM when an excess policy was on risk, no matter how minuscule, opened the door to the excess policies' broader coverage. The fact that no primary policy was asked to respond is beside the point to the Trust. Again, the key to the Trust's argument is the notion that what happened at GM's facilities met the excess policies' definition of occurrence and, therefore, those policies were triggered to provide occurrence-based coverage, even for claims not actually covered by the underlying, Royal primary insurance.
The Trust treats the underlying insurance as peripheral. If an occurrence happened, in the broad sense of "occurrence," while a policy-any policy-is on-risk, then GM is entitled to look directly to its excess coverage because of its language, which the Trust views while wearing blinders. With blinders on, the excess looks like primary coverage to the Trust.
The Trust further argues that even if the Royal policies are claims-made, claims-made policies, themselves, aggregate all related claims, with all subsequent claims relating back to the first, related claim. Specifically, the Trust argues:
"Claims-made" coverage typically contains provisions grouping related claims and requiring that they all be covered under the policy triggered by the first such claims. The occurrence-reported coverage contains just such a provision: the 'occurrence' definition itself, which . . . groups all claims alleging harm from intrinsically harmful products into a single occurrence."The Trust attempts to draw further strength by pointing out that policy provisions refer to renewals of the policies, suggesting they act seamlessly.
If claims-made coverage grouped claims as the Trust argues, every asbestos-related claim here, regardless of when reported or made, would relate back to the first claim in 1977. Accordingly, that year's policy must respond and, obviously, it will be exhausted. Eventually, like falling dominos, all the primary coverage will be exhausted, the excess policies' attachment points will be reached, and they will be triggered, which is how excess policies are typically triggered.
The Trust's legal position as to claims-made coverage rests on four authorities that do not apply here, and which are otherwise unhelpful. Three of them concern claims-made policies that have "interrelated claims" or "multiple claims" provisions, specifically grouping related claims. Notably, the primary policies here do not have those related claims provisions. The Trust's fourth authority concerns an occurrence-based policy. At the risk of jumping ahead, the court holds the primary policy at issue does not aggregate claims, except in the year they were reported and only within that year.
See Pierce, Weston, Levy and McMahon, Insurance Practices & Coverage in Liability Defense § 11.04(A) (Wolters Kluwer 2014); Gidney v. AXIS Surplus Ins. Co., 140 So. 3d 609, 613 (Fla. App. 2014); United Westlabs, Inc. v. Greenwich Ins. Co., C.A. No. 09C-12-048 MMJ, 2011 WL 2623932 (Del. Super. July 1, 2011).
See Chemstar, Inc. v. Liberty Mut. Ins. Co., 41 F.3d 429 (9th Cir. 1994).
VI.
As mentioned, the core dispute between the Trust and the excess insurers now concerns how the claims-made trigger in the primary poly relates to the occurrence-based language in the excess policies. The Trust argues, as a mixed question of fact and law, that because the excess policies have specific, broad language, and because the excess policies were written after the primary, when the excess carriers presumably knew about the primary's narrow trigger, the excess policies' broad language trumps the primary's narrower trigger.
The Trust says because there was an occurrence and, perhaps, a timely claim against GM in 1977, the Trust can reach over the primary and first-layer excess insurance to pull the higher excess policies' triggers. In that way, the Trust transforms the excess policies into primary coverage. For the Trust, it is as if the primary coverage, vis-à-vis the excess policies, merely creates a deductible or self-retention. (The Trust concedes that due to their higher attachment points, the excess policies do not actually drop-down to provide ground-level coverage.) But, the lynchpin of the holding here is that the primary policy, including PTE 33, was not triggered for the excess policies' purposes by the mere happening of an event that would have been treated as an occurrence under the excess policies had a demand been made on the primary.
See Motors Liquidation Co., DIP Lenders Trust, C.A. No: N11C-12-022 FSS CCLD, at 40 (Del. Super. July 10, 2015) (TRANSCRIPT) ("THE COURT: So what you're saying, in effect, is that based on the trigger in the excess policy, the primary . . . is a self-retention. MR SHARKEY: Yes, Your Honor.").
Id. ("MR. SHARKEY: Well, it wouldn't be primary because the amount of the underlying limit still has to be reached.").
The simple holding is, however, that the excess policies, even with their potentially problematic language, only provide excess coverage. That is how they were marketed, titled, and, presumably, priced. They include clear, excess net loss clauses. By their terms, they only pay claims "covered" by the primary policy. Although the excess policies have "occurrence-based" language, the policies also have clear language limiting their triggers to the underlying policy's trigger. Reading excess policies the way the Trust reads them is convoluted, leading to an anomalous result. That reading is, therefore, unreasonable.
The court appreciates there are cases addressing issues involving excess insurance relating to scope, exhaustion, insolvency, attachment points, triggers, and so on. The Trust, however, does not name a case where an excess policy had to respond without the underlying coverage being triggered first. To be clear, this is not an exhaustion case where the primary carrier was triggered but then did not pay because the insurer was insolvent, or it settled for less than 100% of the loss, or the like.
Again, no one here made a demand on the primary, the primary was not held to provide coverage for any asbestos claim, and the primary was not held legally obligated to pay. The only way the Trust's claim works is if it can be said that a personal injury claim against an insured tortfeasor triggers all the tortfeasor's insurance, both primary and excess, even if no one demands coverage from the primary insurance.
The court further appreciates that in the insurance context, "primary" and "excess" are words that may be defined differently from policy-to-policy. Thus, it is theoretically possible that a primary policy could be written to provide a self-retention, like the one the Trust envisions here, or an "excess" policy could be written to provide both primary and excess coverage. The court found an example of the latter.
In Wells Fargo Bank, a policy had an excess net loss clause providing different coverage for losses exceeding "the limits of the underlying insurances . . . in respect of each occurrence covered by said underlying insurances or . . . each occurrence not covered by said underlying insurances." Wells Fargo Bank held that because its excess net loss clause was written alternatively, the policy provided excess or primary coverage depending on whether the claim was or was not covered by other primary insurance. The policy in Wells Fargo Bank spoke directly to the possibility that the underlying insurance might not cover an occurrence.
Wells Fargo Bank v. Cal. Ins. Guarantee Assn., 45 Cal. Rptr. 2d 537, 543 (Cal. Ct. App. 1995).
Accordingly here, if the parties had intended the excess insurance to work in the anomalous and perhaps unique way the Trust envisions, the policies had to be plainly written to make that counterintuitive intent undeniable, as in Wells Fargo Bank. But, the excess policies' excess net loss clause only speaks to "covered" claims, so the Trust is reading the alternative language into the otherwise clear, excess net loss clause through the excess policies' occurrence-based language. The Trust cannot turn night into day by force of argument. The excess policies' language does not transform by implication the policies' basic nature as excess insurance.
Finally as to the triggers' interpretation, the Trust's position is unsustainable. Beyond the fact that the excess policies are written to provide true excess coverage rather than as de facto primary insurance sitting over a self-retention, the Trust's position effectively renders the excess net loss clause useless by requiring the excess policies to cover claims not covered first by the underlying insurance.
Moreover, not that it is necessary in context here, the policies' triggers and the excess net loss provisions can otherwise be reconciled. Assuming a claim triggers a primary policy and the net loss reaches an excess policy's attachment point, the excess policy's language then, but only then, comes into play. In that event, the excess policy's occurrence-based language may have a bearing on the relationship between the excess policies, such as exhaustion between different excess policies and insurers then on-risk, aggregation, and so on.
VII.
Before closing, extrinsic evidence and further discovery bear mention. When it denied the threshold, dispositive motions the court invited discovery, which the parties have undertaken extensively. Although everyone has mentioned "latent ambiguity," and the final, supplemental briefing addresses it, the court never saw discovery as a way to change an insurance contract's plain meaning. Basically, the court was concerned the parties' past conduct might give the contracts further meaning or new meaning. The most important reason for discovery was the suggestion that the parties' post-formation pattern of conduct either defined or modified the original agreement.
Even though both sides demand more fact discovery if it will stave-off an adverse legal ruling, it is safe to say that the primary was never called-on to respond to a post-1971 claim. Similarly, GM never made a demand against an excess carrier concerning a post-1971 claim. These facts do not prove the excess carriers' case, but clearly they do not help the Trust's position. There is nothing in the already voluminous, factual record substantively showing that excess carriers meant to extend sweeping, primary-style coverage through their excess policies' language, except for one flimsy, albeit highly touted, note written by an underling.
Feb. 7, 1980 letter from Albert Mauceri, Asst. Sec. to Robert Cross, Excess & Treaty Management Corp.:
This will serve as a precautionary notification of a potential ceding in connection with the "asbestosis" litigation. To date we have received over 10,000 lawsuits alleging asbestosis . . . arising out of exposure to asbestos fibers released by . . . our various insured. To date we have established gross reserves in excess of $6 million. Some facultative reinsurance may be applicable. While the question of when an "accident" or an "occurrence" took place has yet to be definitively resolved by the courts, it is the position of the Royal that these lawsuits have a common origin and are traceable to the same act, ommission[sic], mistake or occurrence.
The expansive record undeniably proves that GM maintained a sophisticated, comprehensive insurance program. In 1971, it agreed with Royal to limit "longtail claims" by converting to claims-made-style insurance. The change was meant to be implemented "world-wide." A jury could not find otherwise. In any event, the Trust had access to whatever evidence is available to GM, and GM's concessions in the earlier litigation foreclose any attempt by the Trust to delve into Royal's records.
Simply put, the decision here comes from applying the law to the policies, as written, and a few basic, undisputed, background facts. The broader factual record developed so far, bears passing mention only as being consistent with the legal holding on which this decision actually relies. More extrinsic evidence or discovery cannot make a difference. That holding specifically includes the Trust's interest in Royal's reinsurers.
XIII.
The Trust's arguments against Munich-Re (American Re-Insurance (Am Re)), Allstate (Northbrook), Westport (Puritan), Mt. McKinley (Gibralter), and Granite State's position on trigger of coverage suffer from the same infirmity, repeatedly discussed above. The Trust argues that those companies' excess policies expressly do not follow-form as to their occurrence-based triggers and that an occurrence was reported to GM while those policies were on-risk. Therefore, they must respond as if they are primary, occurrence-based insurance, aggregating all asbestos claims, etc.
Like Travelers, all the other excess insurers see themselves above the underlying policies, policies that must be triggered before the excess are triggered. Because no demand was made against, much less did a claim break through, the primary and umbrella coverage, the excess policies' triggers did not convert the excess polices into primary insurance.
As it is does with the Travelers (Aetna) policies, the court holds for the other excess insurers that GM cannot step-over its primary coverage to reach its excess tower. Before an insurance policy undeniably written as excess coverage can be forced to respond to an occurrence instead of the insured's underlying insurance, the policy must include unmistakable language to that effect.
Moreover, if there was room to argue that the excess policies are ambiguous, the Trust cannot invoke the summary judgment standard in light of the consistent way GM undeniably handled asbestos claims from the first one in 1977 until it went out of business in 2009. The Trust has no evidence from which a jury could reasonably conclude that GM thought for an instant that its excess insurance covered its asbestos claims. The same goes in spades for the excess carriers, themselves.
IX.
For the foregoing reasons, Defendants' Motion for Summary Judgment is GRANTED. Plaintiff's Motion for Partial Summary Judgment on "occurrence" is DENIED. Munich Reinsurance America, Inc.'s Motion for an Order Declaring Plaintiff is Judicially Estopped is GRANTED.
IT IS SO ORDERED.
/s/ Fred S. Silverman
Judge cc: Prothonotary
Counsel of Record