In the

United States Court of Appeals

For the Seventh Circuit

No. 07-2848

ROCKWELL AUTOMATION, INC.,

Plaintiff,

v.

NATIONAL UNION FIRE INSURANCE

COMPANY OF PITTSBURGH, PA,

Defendant, Cross Plaintiff-Appellant,

v.

TRAVELERS INDEMNITY COMPANY,

as successor in interest to Gulf Insurance

Company, and FEDERAL INSURANCE COMPANY,

Defendants, Cross Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 06 C 904—Lynn Adelman, Judge.

ARGUED MAY 8, 2008—DECIDED SEPTEMBER 12, 2008
2 No. 07-2848

Before MANION, EVANS, and WILLIAMS, Circuit Judges.

MANION, Circuit Judge. Following a state court trial in

Missouri, a jury found Rockwell Automation, Inc.

(“Rockwell”) liable for damages exceeding $97 million. The

court also awarded post-judgment interest which eventually accrued to over $18 million. Rockwell’s excess

insurers, National Union Fire Insurance Company of

Pittsburgh (“National Union”), Federal Insurance Company (“Federal”), and Gulf Insurance Company (“Gulf”)

refused to pay the post-judgment interest, and Rockwell

filed suit in Wisconsin state court seeking indemnification. The insurers removed the action to federal court.

National Union settled with Rockwell, paid the postjudgment interest, and then filed cross-claims against

the other excess insurers seeking to recoup the $18 million.

The district court granted motions to dismiss and for

summary judgment filed by Federal and Travelers Indemnity Company (“Travelers”), Gulf’s successor in interest.

The motions were granted based on the district court’s

conclusion that the general coverage sections of Federal

and Gulf did not make them responsible for payment of

post-judgment interest, and that National Union’s assumption of Rockwell’s defense obligated it to pay the postjudgment interest under its policy. National Union

appeals the entry of judgment against it on these bases, as

well the district court’s determination that National

Union’s policy should be construed under Wisconsin law

thus making it responsible for all of the post-judgment

interest that accrued on the judgment against Rockwell.

We affirm.
No. 07-2848 3

I.

This case arises out of a negligence and products liability

lawsuit filed in 2001 in Jackson County, Missouri. Kansas

City Power and Light (“KCPL”) sued those it believed

responsible for a natural gas explosion which occurred on

February 17, 1999, and caused hundreds of millions of

dollars in damage. Among the defendants was Rockwell,

whose excess insurers are the parties in this appeal. The

case proceeded to trial, and on March 4, 2004, the jury

returned a verdict assessing KCPL’s damages at $452

million, and finding Rockwell 30% at fault. After it

applied credits for settlements between KCPL and other

defendants, the trial court determined that Rockwell’s

portion of the jury verdict was $97,622,191.16. The trial

court also determined, however, that based on limiting

language in the contract between Rockwell and KCPL,

Rockwell’s liability should be reduced to $190,867. KCPL

appealed, and the Missouri Court of Appeals reversed the

trial court’s decision to reduce the judgment. The lower

court was directed not only to reinstate its original judgment, but to award post-judgment interest from August 12,

2004, the date the judgment was originally entered.

Rockwell had several layers of insurance coverage

relevant to the liability it incurred in the Missouri suit.

First, it was self-insured for $2 million per occurrence,

and held a policy with Travelers providing $1 million in

excess general liability coverage. Next, National Union

issued an excess general liability policy with coverage

up to $50 million over the $3 million in underlying coverage. Federal issued an additional $50 million excess policy
4 No. 07-2848

Travelers and Gulf merged after this policy was issued, and

1

Travelers became Gulf’s successor in interest. Accordingly,

while the policy it issued is discussed below, Gulf is no longer

a party to these proceedings.

We will use the term “excess insurers” to refer collectively to 2

the issuers of the $50 million excess policies, namely National

Union, Federal, and Travelers as Gulf’s successor in interest.

to Rockwell, and a third $50 million excess policy was

issued by Gulf. The questions before us on appeal relate 1

to coverage under the three $50 million excess policies.2

The National Union policy begins with a general coverage section entitled “Coverage.” In that section, National

Union states that it

will pay on behalf of the Insured those sums in excess

of the Retained Limit that the Insured becomes legally

obligated to pay by reason of liability imposed by law

or assumed by the Insured under an Insured Contract

because of Bodily Injury, Property Damage, Personal

Injury or Advertising Injury that takes place during the

Policy Period and is caused by an Occurrence happening anywhere in the world.

A section entitled “Defense” follows and states, in pertinent part, that whenever National Union assumes

the defense of any claim or suit, it will pay

. . .

d. pre-judgment interest awarded against the Insured

on that part of the judgment we pay. If we make an

offer to pay the applicable Limit of Insurance, we will
No. 07-2848 5

not pay any pre-judgment interest based on that period

of time after the offer;

e. all interest that accrues after entry of judgment and

before we have paid, offered to pay or deposited in

court the part of the judgment that is within our

applicable Limits of Insurance.

The Federal policy lists the National Union policy as

underlying insurance, and states in its coverage section

that Federal “will pay that part of loss, covered by this

insurance, in excess of the limits of Underlying Insurance.”

The Federal policy does not expressly mention payment of

post-judgment interest. The Gulf policy also lists the

National Union policy as underlying insurance, and its

coverage section provides that Gulf will “indemnify the

Insured that amount of loss which exceeds the amount

of loss payable by the underlying policies described in

the Declarations . . . .” Like the Federal policy, the Gulf

policy makes no express mention of payment of postjudgment interest.

While not expressly mentioning post-judgment

interest, both policies contain language indicating that

they follow form with the National Union policy. The

Federal policy provides that “[t]he terms and conditions

of Underlying Insurance are made a part of this policy,

except with respect to any contrary provision contained

in this policy.” The Gulf policy likewise provides that,

subject to certain exceptions irrelevant here, “this policy

shall apply in like manner as the underlying insurance.”

Therefore, the terms of the National Union “Defense”

section, and specifically those covering payment of post-
6 No. 07-2848

judgment interest, are subject to our review in determining

the obligation of Federal and Travelers to pay post-judgment interest. See Sphere Drake Ins. Ltd. v. All Am. Ins. Co.,

256 F.3d 587, 589 (7th Cir. 2001) (noting that it is the

essence of a follow-form policy to follow the underlying

policy in every respect except where specifically mentioned); see also Houbigant, Inc. v. Fed. Ins. Co., 374 F.3d 192,

203 (3rd Cir. 2004) (noting that under a follow-form

policy “coverage issues presented turn solely on the

interpretation of the underlying polic[y]”).

Because Rockwell was self-insured for the initial

$2 million of its coverage, it retained and paid for its

own trial counsel, Steven P. Sanders. The record shows

that National Union, Federal, and Travelers were, at the

very least, being kept abreast of developments in the case

by Sanders. National Union also retained and paid for

attorney Melinda Kollross with the intention that she

would, at a minimum, assist at trial by identifying and

preserving appellate issues. To that end, Kollross worked

on a proposed verdict form and the post-trial motions,

and prepared a memorandum identifying appellate

issues which she forwarded to Sanders. Towards the

end of the trial, KCPL asserted the existence of a

conflict with Kollross’s firm, and it was decided that

counsel other than Kollross would be sought to assist on

post-trial motions and the appeal. Attorney Susan Ford

Robertson was retained by National Union for that purpose. National Union admits that it paid Robertson’s fees,

but the parties dispute whether National Union alone

selected Robertson, and whether primary responsibility

for Rockwell’s defense ever transferred from Sanders to

Robertson.
No. 07-2848 7

Following the decision of the Missouri Court of Appeals,

National Union and Federal contributed the amounts

within their respective policy limits to satisfy the damages

portion of the judgment. However, the three excess insurers refused to pay the post-judgment interest ordered

by the appellate court prompting Rockwell to initiate this

action in the Milwaukee County Circuit Court seeking

indemnification. Rockwell alleged that National Union

was responsible for the post-judgment interest because

it had assumed Rockwell’s defense after the jury verdict. It

also alleged in the alternative that each of the excess

insurers was responsible for payment of the postjudgment interest under the general coverage sections of

their policies. The excess insurers removed the action to

federal court citing 28 U.S.C. § 1332 as the basis for

federal jurisdiction. National Union and Rockwell entered

into a settlement where Rockwell assigned to National

Union its claims against Federal and Travelers. In

return, National Union payed the post-judgment interest

at issue, which by that point had accrued to an amount

exceeding $18 million.

National Union filed amended cross-claims against

Federal and Travelers denying that it had assumed

Rockwell’s defense and alleging that it, Federal, and

Travelers had each merely participated in defending

Rockwell. National Union sought from Federal and

Travelers damages to compensate it for paying the

$18 million in post-judgment interest. Federal and Travelers both moved to dismiss National Union’s cross-claims

arguing that the general coverage sections of their

policies did not obligate them to pay Rockwell’s post-
8 No. 07-2848

judgment interest. Federal moved alternatively for summary judgment arguing that National Union assumed

Rockwell’s defense, and that it was therefore solely responsible for payment of post-judgment interest.

The district court granted Federal and Travelers’ motions

to dismiss concluding that their policies did not require

them to pay post-judgment interest on the judgment

against Rockwell. Specifically, the court found that the

language in National Union’s policy, with which

Federal and Gulf’s policies follow form, requiring it to pay

post-judgment interest when it assumed Rockwell’s

defense would be rendered superfluous if post-judgment

interest were included in the terms “sums” and “loss” used

in the general coverage section of the excess policies. The

court therefore concluded that the excess insurers were

only required to pay post-judgment interest when they

assumed the defense, and that since National Union did

not allege that Federal and Travelers had done so, it had

not stated a claim upon which relief could be granted. The

district court also concluded, as an alternative basis for

its finding, that Federal and Travelers were entitled to

summary judgment because even if post-judgment interest was covered by the “sums” and “loss” language,

National Union assumed Rockwell’s defense and therefore

became solely liable for the post-judgment interest.

Finally, the district court determined that Wisconsin law

applied when construing the policies, and that National

Union was therefore responsible for all of the post-judgment interest on the judgment against Rockwell, and not

just the portion falling with National Union’s coverage

limits.
No. 07-2848 9

On appeal, National Union argues that there was at least

a question of fact about whether it assumed Rockwell’s

defense during the Missouri trial, and that the district

court therefore erred in entering summary judgment

for Federal and Travelers. National Union also asserts

that the district court erred in determining that its policy

should be construed under Wisconsin law. It argues that

facts exist in the record raising the possibility that its

policy should be construed under California law, which

is more favorable to National Union, and that the parties

should have been allowed to develop the factual record

more fully before the determination was made. Finally,

National Union argues that the district court incorrectly

interpreted the policies when it concluded that postjudgment interest was not included in the “sums” and

“loss” for which the excess insurers covered Rockwell.

II.

When the district court grants motions to dismiss

made pursuant to Federal Rule of Civil Procedure 12(b)(6)

or for summary judgment, our review is de novo and

we draw all reasonable inferences in favor of the nonmovant. Williams v. Seniff, 342 F.3d 774, 781 (7th Cir. 2003).

We turn first to the question of whether National Union

assumed Rockwell’s defense during the Missouri state

proceedings. This question was considered below on a

motion for summary judgment, and we may therefore

consider the evidence filed by the parties. Fed. R. Civ. P.

56(c). We have previously noted that selection, supervision,

and payment of counsel by an insurer are signs that the
10 No. 07-2848

insurer has assumed an insured’s defense. Taco Bell Corp.

v. Cont’l Cas. Co., 388 F.3d 1069, 1076 (7th Cir. 2004).

National Union argues that our statement was dicta, and

does not provide a controlling test for when an insurer

has assumed the defense of its insured. It is true that our

concern in Taco Bell was an insurer’s complaint that its

insured had incurred unreasonable expenses in

defending itself for which the insurer did not want to be

held responsible. However, our discussion took for

granted that selection, supervision, and payment of

counsel are accepted indications that an insurer has

assumed an insured’s defense. See id. (noting that if the

insurer did not trust the insured, “it could . . . have assumed the defense and selected and supervised and paid

for the lawyers defending” the insured); see also Pendleton

v. Pan Am. Fire & Cas. Co., 317 F.2d 96, 100 (10th Cir. 1963)

(noting that while an insurer did not have a duty to

defend the insured, it assumed the defense by retaining

two lawyers and controlling the litigation); but see

Arkwright-Boston Mfrs. Mut. Ins. Co. v. Aries Marine Corp.,

932 F.2d 442, 445-46 (5th Cir. 1991) (concluding that mere

presence at and participation in settlement discussions

did not constitute an assumption of the defense).

National Union argues that even if these factors are

accepted as showing that an insurer assumed the defense,

there exist genuine issues of material fact in determining

whether it alone selected Robertson, and whether Robertson was in control of the Missouri state litigation on

appeal. In support, National Union points to emails

exchanged before Robertson’s selection in which National Union’s claims handler, Doug Brosky, solicited
No. 07-2848 11

and received input from Rockwell and its insurers on

identifying appellate counsel. However, although input

was being sought from Rockwell and its insurers, National

Union was taking the lead, at least implying that the

decision regarding selection of appellate counsel was

National Union’s to make.

We need not rely solely on any inference arising from

the fact that National Union was seeking input from the

other concerned parties. In an email sent to Rockwell’s

general counsel on May 17, 2004, Brosky stated that his

inclination was “to retain [Robertson] regardless of what

[Federal] says.” Brosky continued that he “would like to

have [Federal’s] support, but their position should not

and will not affect the selection process.” Additionally, a

representative from Federal sent Brosky an email the

following day asking if he had “decided on an appellate

counsel,” to which Brosky responded that he was

working on it and hoped to have the matter decided by

the end of the month. While National Union argues that

its solicitation of input creates a question of material fact

to determine who selected Robertson, it should be remembered that “we are not required to draw every conceivable inference from the record, and mere speculation

or conjecture will not defeat a summary judgment motion.” McCoy v. Harrison, 341 F.3d 600, 604 (7th Cir. 2003)

(quotations omitted). The fact that National Union was

the one seeking input, when combined with Bosky’s later

statements that he was going to make the decision regardless of what input he received from Federal, shows that

National Union was in charge of selecting appellate

counsel.
12 No. 07-2848

National Union admits that it paid Robertson’s fees, but

it says it only did so after suggesting that all of the excess

insurers pay part, and they declined to do so. Its purpose in making this argument is to point out that it paid

Robertson voluntarily, and not because of any contractual

obligation to do so. National Union’s motivation for

retaining and paying for Robertson is clear—it was going

to be the first excess insurer impacted if the Missouri trial

court’s decision was overturned on appeal. While clear,

however, the motivation is not the deciding factor here.

National Union’s policy binds it to pay post-judgment

interest not included in any underlying policy or other

insurance when it assumes the defense of any claim or

suit against its insured. There is no concern expressed in

the policy for what may have caused National Union to

assume the defense, or attention given to the effect of any

particular motivation. Therefore, National Union is not

relieved of its obligation to pay post-judgment interest if

it assumed Rockwell’s defense voluntarily rather than

because it was contractually obligated to do so.

National Union’s final argument on this point is that

Robertson was not in control of the case on appeal, and

therefore National Union cannot be said to have assumed

Rockwell’s defense. If true, this would be important

because mere participation in Rockwell’s defense would

not obligate National Union to pay post-judgment

interest under the “Defense” section of its policy. In

support of its argument, National Union again highlights

an email in which Brosky responds to Robertson’s submission of post-trial motion drafts saying he would defer

to Sanders on their final approval. National Union also
No. 07-2848 13

relies on communications indicating that Robertson was

receiving advice from Sanders and others on appellate

strategy, and that Robertson kept Rockwell, Sanders, and

the excess insurers apprised of the status of the appeal. The

conclusion National Union draws from this evidence is

that it “did not assume exclusive control over Rockwell’s

defense at the post-trial stage.” However, the fact that

various parties were participating in Rockwell’s defense

during the appeal says nothing of who was in charge of the

defense. National Union concedes that it participated in

Rockwell’s defense at trial, yet it argues, and the record

confirms, that Rockwell was in charge of its own defense

at that stage. Likewise, the fact that multiple parties were

participating in Rockwell’s defense on appeal does not

undercut the fact that one party was in charge.

Even the evidence cited by National Union establishes

that Robertson was in charge of Rockwell’s defense on

appeal. Robertson was the one seeking input and keeping

others apprised. Additionally, to the communications

cited by National Union can be added numerous emails

in which parties expressed deference to Robertson’s

judgment and indicated that they were only making

“suggestions.” In fact, Sanders expressly told Robertson

when discussing the issue of whether to file a reply brief,

“you are the appellate expert so I defer to you.” Not only

was Robertson the hub of communication to whom

others deferred, but the record reveals no other attorney

who could have been considered in charge if Robertson

was not.

In sum, selection and payment by an insurer of the

attorney who controls an insured’s defense indicates that
14 No. 07-2848

the insurer has assumed the defense. Taco Bell, 388 F.3d at

1076. The record establishes that National Union selected

and paid for Robertson to represent Rockwell on appeal,

and that Robertson was in charge of Rockwell’s defense

by the time the case reached the appellate level. There is

no evidence in the record sufficient to raise an inference

otherwise. We conclude, therefore, that National Union

assumed Rockwell’s defense during the proceedings in

the Missouri state court.

Our determination that National Union assumed

Rockwell’s defense makes necessary a review of the

district court’s determination that National Union’s policy

should be construed under Wisconsin law. National

Union argued below that Rockwell exhibited California

ties that warranted allowing the parties to develop the

factual record before a choice of law determination was

made. The district court, however, found that the National

Union policy’s most significant ties were with Pennsylvania, and then applied Wisconsin law noting that there

was no outcome-determinative difference between the

relevant law in the two states. National Union argues that

the choice of law question is relevant because if its policy

is construed under California law, then its responsibility

for paying “all interest that accrues after entry of judgment” when it assumes the defense means it is responsible only for “all interest on that part of the judgment for

which the company was liable, and not all interest on the

entire judgment.” Standard Accident Ins. Co. of Detroit v.

Winget, 197 F.2d 97, 106 (9th Cir. 1952) (quoting Sampson v.
No. 07-2848 15

National Union also attempts to argue on appeal that New 3

York law governs its contract. However, it never asserted this

argument to the district court, nor did it raise any New York

contacts below. Accordingly, the argument is waived. Hicks

v. Midwest Transit, Inc., 500 F.3d 647, 652 (7th Cir. 2007).

Century Indem. Co., 66 P.2d 434, 436 (Cal. 1937)). If, on the 3

other hand, Wisconsin law governs, then “all interest”

means “all interest on the judgment, whatever its amount

in relation to the policy limits.” Weimer v. Country Mut. Ins.

Co., 575 N.W.2d 466, 473 (Wis. 1998). We review a district

court’s choice of law determination de novo. Tanner v.

Jupiter Realty Corp., 433 F.3d 913, 915 (7th Cir. 2006).

In a suit, like this one, where subject matter jurisdiction

is based on diversity, the forum state’s choice of law

rules determine the applicable substantive law. Sound of

Music Co. v. Minn. Min. & Mfg. Co., 477 F.3d 910, 915

(7th Cir. 2007). “In contract cases, Wisconsin courts

apply the law of the state with which the contract has

the most significant relationship.” Hystro Prods., Inc. v.

MNP Corp., 18 F.3d 1384, 1387 (7th Cir. 1994). Contacts

considered relevant are (1) the place of contracting; (2) the

place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the respective domiciles, places of incorporation and places of business of the parties. Id. It is important

“not to count contacts but instead, to consider which

contacts are most significant and to determine where

those contacts are found.” Id.

Taking the last factor first, we note that National Union

is a Pennsylvania company and the Declarations page of
16 No. 07-2848

the policy it issued to Rockwell lists its home office at a

Pennsylvania address. Rockwell was issued the policy

under its prior name, Rockwell International Corporation.

The Declarations page provides a Pennsylvania address

for Rockwell International Corporation, but a revised

Declarations page list an address in California. Rockwell,

however, is incorporated in the state of Delaware with its

principal place of business in Wisconsin. Regarding the

place of performance and the location of the policy’s

subject matter, we note that National Union agreed to

insure Rockwell for an occurrence “happening anywhere

in the world.” This does not help our analysis much, but

it is helpful to note that the specific subject matter at issue

here was an explosion resulting in property damage to

KCPL in Missouri. The resulting law suit was filed in

Missouri, and it was a Missouri court that issued the

judgment under which Rockwell became liable, thus

triggering its coverage under the National Union policy.

These facts are sufficient to indicate that the policy’s

most significant contacts are with Pennsylvania or Missouri. The district court determined that the strongest

connection was with Pennsylvania, but in reliance on

Wood v. Mid-Valley, Inc., 942 F.2d 425, 426 (7th Cir. 1991),

it applied the law of Wisconsin because it was the

forum state and “there is no outcome-determinative

difference between the law of Pennsylvania and that of

Wisconsin with respect to the issue in question.” In Wood,

however, we held that “when neither party raises a

conflict of law issue in a diversity case, the federal court

simply applies the law of the state in which the federal

court sits.” Id. Here, National Union did raise the choice

of law issue, and Wood is therefore inapposite.
No. 07-2848 17

For the specific question under consideration, however,

we need not resolve the choice of law issue because, like

Wisconsin, courts in Pennsylvania and Missouri construe

the “all interest” language as rendering an insurer responsible for the entirety of the interest on a judgment, not

just that portion of the judgment falling within the insurer’s coverage. See Levin v. State Farm Mut. Automobile

Ins. Co., 510 S.W.2d 455, 458 (Mo. 1974) (noting that an

“agreement to pay court costs and interest is not part of,

but is a separate obligation beyond the limit of the [insurer’s] liability”); Underwood v. Buzby, 136 F. Supp. 957,

959 (E.D. Pa. 1955) (concluding that the requirement

under Pennsylvania law that vague provisions be resolved in favor of the insured required that the “all interest” language render an insurer liable for all of the interest on a judgment regardless of policy limits).

Additionally, even under California law, courts have a

“duty to construe the policy in its entirety, and taking the

instrument by its four corners . . . to ascertain the mutual

intention of the parties as it existed at the time of the

execution of the instrument.” Sampson v. Century Indem.

Co., 66 P.2d 434, 436 (Cal. 1937). As the court noted in

Underwood when considering the “all interest” language,

“very little restrictive language would have been

required to limit the liability of the insurer to interest

only upon that portion of the judgment covered by its

policy if that were the intention of the insurer.” Underwood,

136 F. Supp. at 959. National Union’s policy, in fact,

contains such language, but it applies only to pre-judgment
18 No. 07-2848

“When we assume the defense of any claim or suit . . . [w]e 4

will pay . . . pre-judgment interest awarded against the

Insured on that part of the judgment we pay.”

interest. The fact that National Union’s policy requires it 4

to pay pre-judgment interest only on that part of the

judgment falling within its policy limit, but is missing a

similar limitation on post-judgment interest would have

made National Union’s position tenuous even under

California law. See Maxconn, Inc. v. Truck Ins. Exch., 88 Cal.

Rptr. 2d 750, 758 (Cal. Ct. App. 1999) (“The absence of an

expression or word in a policy is clearly an appropriate

consideration in the interpretation of contracts.”). We

conclude, therefore, that under the law of any of the

states put forth, National Union’s policy requires it to pay

all of the post-judgment interest for which Rockwell

became liable when it has assumed Rockwell’s defense.

National Union attempts to circumvent the language

in its policy requiring it to pay “all interest” after assuming

Rockwell’s defense by arguing that post-judgment

interest is included in the general coverage sections of the

three excess policies. As noted above, the “Coverage”

section in National Union’s policy makes it responsible for

paying “those sums . . . that the Insured becomes legally

obligated to pay by reason of liability imposed by law . . . .”

Federal’s policy obligates it to pay “that part of loss . . . in

excess of the limits of Underlying Insurance,” and Gulf’s

requires it to “indemnify the Insured that amount of loss

which exceeds the amount of loss payable by the underlying policies.” The district court determined that the

words “sums” and “loss” in the coverage sections do not
No. 07-2848 19

Our conclusion above that we need not resolve the choice of 5

law issue is not changed by citation to these general construction principles because they are in effect in both Missouri

and Pennsylvania. See Wall Rose Mut. Ins. Co. v. Manross, 939

A.2d 958, 962 (Pa. Super. Ct. 2007); Farmland Indus., Inc. v.

Republic Ins. Co., 941 S.W.2d 505, 508 (Mo. 1997).

include post-judgment interest, and we review that

construction de novo. BASF AG v. Great Am. Assurance Co.,

522 F.3d 813, 819 (7th Cir. 2008). When construing an

insurance policy, the objective should be to discern and

give effect to the parties’ intentions. State Farm Mut. Auto.

Ins. Co. v. Bailey, 734 N.W.2d 386, 391 (Wis. 2007). This

occurs primarily by giving “the common, ordinary meaning to the policy language (i.e., what the reasonable

person in the insured’s position would understand it to

mean).” Id. While ambiguities are construed in favor of

the insured, ambiguities only exist when “the language of

the policy is susceptible to more than one reasonable

construction.” Id. (quotation omitted).5

National Union’s argument that post-judgment interest

is included in the general coverage sections of the three

excess policies hinges on the general definitions of the

terms “sums” and “loss.” Additionally, National Union

argues that the coverage sections of the policies set forth

what the excess insurers are required to pay within the

their policy limits, while the “Defense” section of

National Union’s policy spells out what they must pay in

addition to their policy limits. Neither of these arguments is supported by a reasonable reading of National

Union’s policy. First, as noted by the district court, the
20 No. 07-2848

terms “sums” and “loss” can arguably be read in isolation to include post-judgment interest. However, when

considered in the context of the policy as a whole, it is

unreasonable to read those terms as including post-judgment interest because there is a section specifically articulating when the insurer will pay post-judgment interest,

i.e., when it assumes Rockwell’s defense. See 1325 North

Van Buren, LLC v. T-3 Group, Ltd., 716 N.W.2d 822, 838 (Wis.

2006) (noting that “a contract is to be construed so as to

give a reasonable meaning to each provision of the contract, and that courts must avoid a construction which

renders portions of a contract meaningless, inexplicable

or mere surplusage”); accord TAP Pharm. Prods. Inc. v. State

Bd. of Pharm., 238 S.W.3d 140, 143 (Mo. 2007); Guy M.

Cooper, Inc. v. East Penn Sch. Dist., 903 A.2d 608, 616 (Pa.

Super. Ct. 2006). The provision stating that National

Union will pay post-judgment interest when it assumes

the defense would be rendered superfluous if in the

preceding section it promised to pay post-judgment

interest as part of a “sum” for which Rockwell became

liable, whether it assumed Rockwell’s defense or not.

Inclusion of post-judgment interest in the term “loss” as

used in the follow-form policies of Federal and Gulf

would likewise render superfluous the National Union

“Defense” section.

National Union attempts to overcome this conclusion by

arguing that the “Coverage” section sets forth National

Union’s obligations within its policy limits, and that

the “Defense” section provides for its obligations in

addition to the policy limits. It is true that the “Defense”

section sets forth amounts National Union will pay above

its policy limit. Indeed, the final line of the section
No. 07-2848 21

Contrary to National Union’s argument, the final line of the 6

“Defense” section referenced above does not show that the

section’s purpose is to set forth the amounts National Union

will pay in addition to the policy limit. There are payments

discussed in the “Defense” section that are not expenses that

would be incurred by National Union in Rockwell’s

defense—post-judgment interest is an example of one. The

language plainly means that the expenses National Union

incurs while defending Rockwell (such as Robertson’s fees)

will not reduce the amount for which National Union has

agreed to cover Rockwell. It is unreasonable to attempt to read

this line as a sort of policy statement giving meaning to the

entire section.

states, “All expenses we incur in the defense of any suit

or claim are in addition to our Limits of Insurance.”

However, it is unreasonable to read a section entitled

“Defense” as if its purpose is to set forth the amounts

National Union will pay outside of its policy limits. A

more reasonable reading of the section is that its purpose

is to describe when National Union can and must

defend Rockwell, and then what amounts will be paid

when National Union assumes the defense that are not

already provided for in the “Coverage” section. If postjudgment interest were already included in the coverage

section, there would be no need to list it separately as an

amount to be covered in the event National Union

assumed Rockwell’s defense. Furthermore, if the purpose

of the “Defense” section was to articulate the amounts

that would be paid outside of the policy limits, it would

have been very simple to state as much. As the policy is

written, however, it contains no such language. Accord- 6

ingly, the district court did not err in concluding that post-
22 No. 07-2848

judgment interest is not included in the general coverage

sections of the National Union, Federal, and Gulf policies.

III.

The record establishes that National Union selected

and paid for the attorney who controlled Rockwell’s

defense on appeal, which in turn establishes that National

Union assumed Rockwell’s defense during the Missouri

state proceedings. Additionally, the law of the states

shown in the record to have the most significant

contacts with National Union’s policy require an insurer

who agrees to pay “all interest” accruing after entry of

judgment to pay the interest accrued on the entire judgment. The district court therefore did not err in determining that National Union is responsible for the full

amount of post-judgment interest that accrued on the

judgment against Rockwell. Finally, the district court did

not err in its determination that post-judgment interest

was not included in the general coverage sections of the

policies issued by National Union, Federal, and Gulf.

Accordingly, we AFFIRM the district court’s dismissal of

National Union’s claims and entry of judgment for

Federal and Travelers.

9-12-08