## IN THE SUPREME COURT OF CALIFORNIA

MONTROSE CHEMICAL CORPORATION

OF CALIFORNIA, Petitioner,

v. THE SUPERIOR COURT OF LOS ANGELES COUNTY

, Respondent ; CANADIAN UNIVERSAL INSURANCE COMPANY, INC., et al.

, Real Parties in Interest.

S244737

Second Appellate District, Division Three

B272387

Los Angeles County Superior Court

BC005158April 6 , 2020

Justice Kruger authored the opinion of the Court, in which
Chief Justice Cantil

- Sakauye and Justices Liu, Cuéllar, Groban, Elia, * and Brown ** concurred.

* Associate Justice of the Court of Appeal, Sixth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

** Associate Justice of the Court of Appeal, First Appellate District, Division Four, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.1

MONTROSE CHEMICAL CORP ORATION OF CALIFORNI A

v. SUPERIOR COURT

S244737

Opinion of the Court by Kruger, J.

Montrose Chemical Corporation (Montrose) was sued for causing continuous environmental damage in the Los Angeles
area between 1947 and 1982 and subsequently entered into partial consent decrees to resolve various claims. Montrose now seeks to tap its liability insurance to cover amounts it owes in
connection with those claims. For each policy year from 196 1 to
1985 , Montrose had secured primary insurance and multiple layers of excess insurance. This case concerns the sequence in which Montrose may access the excess insurance policies covering this period

. Montrose argues it is entitled to coverage under any
relevant policy once it has exhausted directly underlying excess policies for the same policy period

. The insurers, by contrast, argue that Montrose may call on an excess polic y only after it has exhausted every lower level excess policy covering the
relevant years

. Reading the insurance policy language in light of background principles of insurance law, and considering the reasonable expectations of the parties, we agree with Montrose : It is entitled to access otherwise available coverage under any

excess policy once it has exhausted directly underlying excess policies for the same policy period . An insurer called on to provide indemnification may, however, seek reimbursement
from other insurers that would have been liable to provideMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

2 coverage under excess policies issued for any period in which the injury occurred

. I.
We have previously recount ed the basic facts underlying this dispute . (See Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 292

– 29 4 .) To summarize

, Montrose
manufactured the insecticide dichloro

- diphenyl

- trichlor o ethane (DDT) at its facility in Torrance from 1947 t o 1982

. In 1990, the
United States and the State of California sued Montrose for environmental contamination allegedly caused by Montrose’s operation of this facility. Montrose entered into partial consent
decrees in which it agreed to pay for environmental cleanup. To

meet its obligation s , Montrose has now expended millions of
dollars

— Montrose represents the total is more than $100
million

— and asserts that its anticipated future liability could approach or exceed this amount.

Montr ose purchased primary and excess comprehensive general liability insurance to cover its operations at the Torrance facility from defendant insurers between 196 1 and
198 5

. Primary insurance refers to the first layer of coverage, whereby “liability attaches immediately upon the happening of the occurrence that gives rise to liability.” ( Olympic Ins. Co. v. Employers Surplus Lines Ins. Co. (1981) 126 Cal.App.3d 593, 597.) Excess insurance, by contrast, “refers to indemnity coverage that attaches upon the ex haustion of underlying insurance coverage for a claim.” ( County of San Diego v. Ace Property & Ca sualty Ins. Co. (2005) 37 Cal.4th 406, 416, fn. 4.) An excess insurer’s coverage obligation begins once a certain level of loss or liability is reached; that level is generally referred to as the “attachment point” of the excess policy. (Rest., LiabilityMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

3 Insurance, § 39, c om

. d, p. 338 .) Here, 40 insurers collectively issued more than 115 excess policies during th e 196 1 to 198 5 period, which collectively provide coverage sufficient to indemnify Montrose’s anticipated total liability

. Montrose and the insurers, which are the real parties in
inte rest here, 1 agree for purposes of this dispute that Montrose’s

1 The real party insurer s are: Continental Casualty Company and Columbia Casualty Company, joined by AIU Insurance Company; Allstate Insurance Company ( solely as

successor in interest to Northbrook Excess and Surplus Insurance Company ) ; American Centennial Insurance Company; American Home Assurance Company; Federal Insurance Company; Employers Insurance of Wausau; Everest Reinsurance Company (as successor in interest to Pruden tial Reinsurance Company); Fireman’s Fund Insurance Company; General Reinsurance Corporation; Granite State Insurance Company; Lamorak Insurance Company (formerly known as OneBeacon America Insurance Company, as successor in interest to Employers Commercia l Union Insurance Company of America

, The Employers Liability Assurance Corporation, Ltd

., and Employers Surplus Lines Insurance Company) ; Employers Mutual Casualty Company; Landmark Insurance Company; Lexington Insurance Company; Mt. McKinley Insurance Co mpany (as successor in interest to Gibraltar Casualty Company); Munich Reinsurance America, Inc. (formerly known as American Re

- Insurance Company); National Surety Corporation; National Union Fire Insurance Company of Pittsburgh, PA; New Hampshire Insuranc e Company; North Star Reinsurance Corporation; Providence Washington Insurance Company ( as successor by way of merger to Seaton Insurance Company, formerly known as Unigard Security Insurance Company, formerly known as Unigard Mutual Insurance Company); Tr ansport Insurance Company (as

successor in interest to Transport Indemnity Company); Westport Insurance Corporation ( formerly known as Puritan Insurance Company, formerly known as The Manhattan FireMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

4 primary coverage has been exhausted. Further, the parties
have stipulated to the relevant language found in the excess policies. 2 Specifically, each policy provides that Montrose must
exhaust the limits of its underlying insurance coverage before there will be coverage under the policy. The policies describe
the applicable underlying coverage in four main ways:

1. Some policies contain a schedule of underlying insurance listing all of the underlying policies in the same policy period by insurer name, policy number, and dollar amount.

2. Some policies r eference a specific dollar amount of underlying insurance in the same policy period an d a schedule of underlying insurance on file with the insurer

. 3. Some policies r eference a specific dollar amount of underlying insurance in the same policy period and identif y one or more of the underlying insurers.

4. Some policies r eference a speci fic dollar amount of underlying insurance that corresponds with the combined limits

o f the underlying policies in that policy period.

and Marine Insurance Company); Zurich International (Bermuda), Ltd. Insurers Travelers Casualty and Surety Company (formerly known as Aetna Casualty and Surety Company) and The Travelers Indemnity Company opposed Montrose on independent grounds and filed a separate answering brief.

2 The rec ord does not contain complete copies of every policy between Montrose and the insurers. Instead, the parties have identified the terms of these policies that they believe are sufficient to resolve this dispute. The parties agree the various policies use different language that all communicates the same exhaustion requirement in different ways.MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

5 In a variety of ways, t he excess policies also provide that
“other insurance” must be exhausted before the excess policy
can be accessed. Relevant examples include the following:

• S ome policies provide that they will “indemnify the
insured for the amount of loss which is in excess of the applicable limits of liability of the [scheduled] underlying
insurance

, ” and then define “loss ” as “the sums paid as damages in settlement of a claim or in satisfaction of a judgment for which the insured is legally liable, after making deductions for all recoveries, salvages and other insurances (whether recoverable or not) other than the

un derlying insurance and excess insurance purchased specifically to be in excess of this policy

. ” (Italics added.)

• Some policies state that the insurer is liable for “the
ultimate net loss in excess of the retained limit ” and define “retained limit” to mean, among other things, the “total of the applicable limits of the underlying policies listed in [a schedule] [and] the applicable limits of any other underlying insurance collectible by the insured

. ” (Italics added.)

• Unde r a “Loss Payable” provision, one polic y provide s it will pay “any ultimate net loss,” which is separately defined as “the sums paid in settlement of losses for which the Insured is liable after making deductions for all recoveries, salvages and other insu rance (other than recoveries under the underlying insurance, policies of co

insurance, or policies specifically in excess hereof)

. ” (Italics added.)

• Under a “Limits” provision, some policies provide that “the insurance afforded under this policy shall app ly only afterMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

6 all underlying insurance has been exhausted.” (Italics added.)

• One polic y state s that “[i]f other valid and collectible
insurance with any other insurer is available to the Insured covering a loss also covered by this policy, other
than insu rance that is in excess of the insurance afforded by this policy, the insurance afforded by this policy shall
be in excess of and shall not contribute with such other
insurance.” (Italics added.)
Montrose and the insurers disagree whether these
clause s

— w hich we will collectively call “other insurance”
clauses

— require Montrose to exhaust other insurance coverage from other policy periods. Th is dispute dates to 1990
, when Montrose first sued its insurers to resolve various coverage disputes, but the relevant filing for our purposes occurred in 2015, when Montrose’s f ifth a mended c omplaint asserted a new
cause of action seek ing the following declaration:

“a. In order to seek indemnification under the Defendant Insurers’ excess policies, Montrose need only establish that its liabilities are sufficient to exhaust the underlying policy(ies)
in the same policy period , and is not required to establish that all policies insu ring Montrose in every policy period (including policies issued to cover different time periods both before and after the policy period insured by the targeted policy) with limits of liability less than the attachment point of the targeted policy,
have bee n exhausted; and
“b. Montrose may select the manner in which [to] allocate its liabilities across the policy(ies) covering such losses.”MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

7 The rule Montrose proposes in its amended complaint is a rule of “vertical exhaustion” or “elective stacking,” where by it may access any excess policy once it has exhausted other policies with lower attachment points in the same policy period. The insurers, in contrast, each of which has issued an excess policy to Montrose in one of the triggered policy years, argue fo r a rule of “horizontal exhaustion,” whereby Montrose may access an excess policy only after it has exhausted other policies with lower attachment points from every policy period in which the environmental damage resulting in liability occurred. The parties filed cross

- motions for summary adjudication of this
issue. 3
The trial court denied Montrose’s motion and granted the
insurer s ’ motion , holding that the excess policies required
horizontal exhaustion in the context of this multiyear injury.
The c ourt concluded there is a “ ‘ well

- established rule that horizontal exhaustion should apply in the absence of policy language specifically describing and limiting the underlying
insurance. ’ ” Montrose filed a petition for a writ of mandate

,

3 One set of insurers, Travelers Casualty and Surety Company and The Travelers Indemnity Company (collectively, Travelers), opposed Montrose’s motion for summary adjudication for two independent reasons. First, Travelers argued that Montrose’s requested declaration would entitle Montrose to indemnification without actually exhausting the relevant underlying insurance, as required by the terms of the Travelers poli cies. Travelers further argued that California law did not apply to their policies. Because the Court of Appeal concluded for other reasons that Montrose was not entitled to summary adjudication, it did not address the issues raised by Travelers. We did not grant review of either question, as discussed at part II.D., post

.MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

8 which the Court of Appeal summarily denied. We granted Montrose’s petition for review and transferred the case to the
C ourt of A ppeal with instructions to issue an order to show cause why the relief Montrose sought should not be granted.

The C ourt of A ppeal affirmed th e trial court’s denial of Montrose’s motion for summary adjudication and affirmed in part the trial court’s grant of the insurers’ parallel motion

. ( Montrose Chemical Corp. v. Superior Court (2017) 14 Cal.App.5th 1306, 132 1, 1338 ( Montrose II ) .) The cour t concluded that the plain language of many of the excess policies purchased by Montrose provide that they “attach not upon
exhaustion of lower layer policies within the same policy period, but rather upon exhaustion of all available insurance.” ( Id. at

p. 1327.)
Shortly after the Court of Appeal published its opinion in this case, another Court of Appeal disagreed with its reasoning
in State of California v. Continental Ins. Co. (2017) 15 Cal.App.5th 1017. T he court in that case determined that vertical exhaustion was appropriate given the relevant policy language and our case law. ( Id. at pp. 1031

– 1037.)
We granted review in this case to det ermine whether vertical exhaustion or horizontal exhaustion is required when
continuous injury occurs over the course of multiple policy periods for which an insured purchased multiple layers of excess
insurance. Reading the relevant policy language in li ght of background principles of insurance law and considering the parties’ reasonable expectations , we conclude that a rule of vertical exhaustion is appropriate. Under that rule, the insured has access to any excess policy once it has exhausted other directly underlying excess policies with lower attachmentMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

9 points, but an insurer called upon to indemnify the insured’s loss may seek reimbursement from other insurers that issued policies covering relevant policy periods. 4

II.

A.
We begin our analysis wi th a few background insurance
law principles specific to the continuous or “long

- tail” injury at
issue here , where damage occurs over multiple policy periods

. (See State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195

– 196 ( Continental ).) In a much earlier iteration of this

case, we noted “the settled rule ” is that “ an insurer on the risk when continuous or progressively deteriorating damage or injury first manifests itself remains obligated to indemnify the
insured for the entirety of the ensuing damage or injury

, ” up to the policy’s limit. ( Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 686 , italics added ( Montrose I ) .) “There is no requirement that .

. . the conditions giving rise to the damage or injury

. . . themselves occur within the policy period in order for potential liability coverage t o arise.” ( Ibid. ) Extending this logic to the continuous injury context, we held
that “bodily injury and property damage which is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods.” ( Id. at p. 689.) This principle is also known as the “continuous injury trigger of coverage.” ( Ibid. )

4 Because the question is not presented here, we do not decide when or whether an insured may access excess policies before all primary insurance covering all relevant policy periods h as been exhausted.MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

10 In Aerojet

- General Corp. v. Transport Indem nity Co. (1997) 17 Cal.4th 38, 57 ( Aerojet ) , we illustrated th e principle with an example: I f an insured company discharges a hazardous substance that causes property damage in the amount of $100,000 each year for a span of 30 years, a $1 million insurance policy that is purchased for the first year of that 30

- year sp an would be required to pay the insured the full $1 million limit for indemnification. Even though the damage traceable to the policy year in which the insurance policy was in effect only amounted to $100,000

, the insurer is liable for all damages . As

we explained, the insurer’s obligation to pay is “triggered if specifi ed harm is caused by an included occurrence, so long as at least some such harm results within the policy period.” ( Id. at p. 56, fn. omitted, citing Montrose I

, supra , 10 Cal.4th at

pp. 669

– 673.) “It extends to all specified harm caused by an included occurrence, even if some such harm results beyond the policy period.” (

Aerojet

, at p p

. 56

– 57

. )

This “all sums” rule, as we described it in Aerojet , mean s that “insurers [a] re respons ible for defending the insured for all claims that involved the triggering damage” in a continuous injury case ; “as long as the policyholder is insured at some point during the continuing damage period, the insurers’ indemnity obligations persist until the loss is complete, or terminates.” ( Continental

, supra , 55 Cal.4th at p. 197 , citing Aerojet

, supra , 17 Cal.4th at p. 71 ; Continental

, at p. 200 [under all sums allocation, insurers must “pay all sums for property damage
attributable to the [polluted] site, up to their policy limits, if applicable, as long as some of the continuous property damage occurred while each policy was ‘on the loss’ ”] .) We adopted this rule because, contrary to Aerojet ’s stylized example, “[i]t is oftenMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

11 ‘virtually impossible’ for an insured to prove what specific damage occurred during each of the multiple consecutive policy periods in a progressive property damage case.” ( Id. at p. 196. ) “If such evidence were required, an insured who had procured
insurance cover age for each year during which a long

- tail injury occurred likely would be unable to recover.” ( Ibid. ) The all sums approach, we explained

, “best reflects the insurers’ indemnity obligations under the respective policies, the insured’s expectations, and the true character of the damages that flow from a long

- tail injury.” ( Id. at p. 200.)
Finally, r ecognizing that the limits of any one policy may be insufficient to cover the entire liability resulting from a continuous injury, we concluded in Continenta l that the insured may seek indemnification from every policy that covered a portion of the loss

, up to the full limits of each policy

. ( Continental

, supra , 55 Cal.4th at p. 200.) This “all

- sums

- with

stacking indemnity principle ,” we said, “ properly incorporates
the Montrose [ I

] continuous injury trigger of coverage rule and
the Aerojet all sums rule, and ‘effectively stacks the insurance coverage from different policy periods to form one giant “uber

policy” with a coverage limit equal to the sum of all purchased insurance policies. ’ ” ( Id. at p. 201.) “ ‘ [T] his approach treats all the triggered insurance as though it were purchased in one policy period ’ ” and recognizes “ the uniquely progressive nature of long

- tail injuries that cause progr essive damage throughout multiple policy periods.” ( Ibid. ) Importantly, “ the insured has immediate access to the insurance it purchased .” ( Ibid. ) T he insurers can then sort out their proportional share through
actions for equitable contribution or subrogation. ( Id. at p. 200;MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

12 see Continental Cas. Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 37.) 5
Having adopted an all

- sums

- with

- s tacking approach to the coverage of long

- tail injuries, we are now presented with a follow

- on question: In what order may an insured access excess policies from different policy periods to cover liability arising from long

- tail injuries ? To illustrate the parties’ competing approaches, consider a hypothetical company that caused property damage over three years that resulted in $ 9 0 million of damage. Further imagine that in each of these three years, the company had purchased primary insurance with a $10 million
li mit a nd two layers of excess insurance, each providing an additional $10 million of coverage:

5 In a contribution action, an insurer that paid more than its share in the initial coverage action can seek reimbursement from other insurers that were obligated to indemnify or defend the same loss or claim. ( Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1293.) The doctrine of equitable subrogation allows an insurer to stand in the shoes of the insured and recover from third parties that are liable to the insured for a loss that the insurer both ins ured and paid. ( Id. at
pp. 1291

– 1292.) As a general matter, these types of actions allow insurers to apportion liability for losses among themselves after the insured has been indemnified.MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

13 Year 1 Year 2 Year 3
$50 million
$40 million
$30 million Policy 2A Policy 2B Policy 2C
$20 million Policy 1A Policy 1B Policy 1C
$10 million Primary

Insurance Primary

Insurance Primary

Insurance

W e are tasked with deciding between two proposed methods by which these six excess insurance policies might be
stacked after the primary insurance has been exhausted to cover the $ 9 0 million liabilit y in a way that “ ‘ treats all the triggered insurance as though it were purchased in one policy period. ’ ” ( Continental

, supra , 55 Cal.4th at p. 201.) Under the insurers’ proposed rule of horizontal exhaustion, the insured would have
to exhaust all of it s lower layer excess coverage across all relevant policy periods before accessing any of its higher layer

coverage:MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

14 $90 million Policy 2C
$80 million Policy 2B
$70 million Policy 2A
$60 million Policy 1C
$50 million Policy 1B
$40 million Policy 1A
$30 million Primary

Insurance
$20 million Primary

Insurance
$10 million Primary

Insurance

Under Montrose’s proposed rule of vertical exhaustion, in contrast, an insured would be permitted to access a ny higher layer excess policy once it has exhausted the directly underlying

excess policy covering the same period :MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

15 $90 million Policy 2C
$80 million Policy 1C
$70 million Policy 2B
$60 million Policy 1B
$50 million Policy 2A
$40 million Policy 1A
$30 million Primary

Insurance
$20 million Primary

Insurance
$10 million Primary

Insurance

Which approach applies depends on the terms of the parties’ agreement. We therefore begin by looking, as we must, to the language of the insurance policies at issue. ( Minkler v. Safeco Ins. Co. of America (2010) 49 Cal.4th 315, 321 ( Minkler ) ; AIU Ins. Co. v. Superior Court (19 90) 51 Cal.3d 807, 822

– 823 .)

B.
“The principles governing the interpretation of insurance policies in California are well settled. ‘Our goal in construing insurance contracts, as with contracts generally, is to give effect to the parti es’ mutual intentions. [Citations.] “If contractual language is clear and explicit, it governs.” [Citations.] If the terms are ambiguous [i.e., susceptible of more than one reasonable interpretation ] , we interpret them to protect “ ‘theMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

16 objectively rea sonable expectations of the insured.’ ” ’ ” ( Minkler

, supra , 49 Cal.4th at p. 321.) If these rules do not
resolve a n ambiguity, we may then “ ‘ resort to the rule that ambiguities are to be resolved against the insurer.’ ” ( Ibid. )
The parties’ dispute c enters on the meaning of the “other insurance” clauses in the excess insurance policies

. These clauses provide, in a variety of ways, that each policy shall be excess to other insurance available to the insured, whether or
not the other insurance is specifically listed in the policy’s schedule of underlying insurance. The insurers argue that these
clauses call for a rule of horizonal exhaustion because they restrict indemnification from any excess policy until the insured
has exhausted all other avai lable insurance

— which, in a case of long

- tail injury, means every policy with a lower attachment point from every policy period triggered by the continuous injury.
Although the insurers’ interpretation is not an unreasonable one , it is not the only possib le interpretation of the policy language. 6 The “other insurance” clauses at issue clearly

6 Nor, contrary to the insurers’ suggestion, has this interpreta tion already been adopted in California cases. The insurers invoke various cases interpreting “other insurance” clauses in other settings, but none addresses the question here: whether “other insurance” clauses require horizontal exhaustion of excess ins urance policies in cases involving long

tail injury. (See, e.g., Legacy Vulcan Corp. v. Superior Court (2010) 185 Cal.App.4th 677, 689

– 690 [addressing defense obligations of a policy providing both excess and “umbrella” defense coverage]; Peerless Cas. Co . v. Continental Cas. Co. (1956) 144 Cal.App.2d 617 , 625

– 626 [excess insurer not required to contribute when insurance settlement was prorated acrossMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

17 require exhaustion of underlying insurance, but none clearly or explicitly states that Montrose must exhaust insurance with lower attachment points purchased for dif ferent policy periods

. Policies that disclaim coverage for amounts covered by “other underlying insurance,” or require exhaustion of “all underlying insurance,” for example, could fairly be read to refer only to
other directly underlying insurance in the same policy period
that was not specifically identified in the schedule of underlying insurance, anticipating that the scheduled underlying insurance may later be replaced or supplemented with different policies.
Other formulations require deductions for

, in the words of one set of representative policies

, all “other insurances (whether recoverable or not) othe r than the underlying insurance and excess insurance purchased specifically to be in excess of this policy .” (Italics added.) If this language were read to apply to insurance purchased for other policy periods, it could fairly be understood to require th e exhaustion of every other insurance policy at every attachment point

— not merely, as the insurers’ theory of horizontal exhaustion would have it, excess policies from other policy periods that contain lower attachment points.
The insurers do not advance this expansive reading, however; they contend that the reference to “other insurance,” properly understood, means “other underlying insurance”

— that is, only excess insurance with lower attachment points from all relevant policy periods

. The insurers do no t explain why the reference is not properly understood to mean “other directly underlying

two primary insurers and at least one primary policy remained unexhausted]

. )MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

18 insurance”

— that is, a requirement that the insured exhaust only excess insurance with lower attachment points from the

same policy period. This is one clue that the plain language of these clauses is not adequate to resolve the dispute in the
insurers’ favor.

Consideration of the traditional use of “other insurance”
clauses reinforces our doubts about the insurers’ interpretation. As we have previously explained, “ ‘ [h]istorically, “ other
insurance ” clauses were designed to prevent multiple recoveries when more than one policy provided coverage for a particular
loss. ’ ” ( Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1079 ( Dart ). ) They have not generally
been understood as dictating a particular exhaustion rule for policyholders seeking to access successive excess insurance policies in cases of long

- tail injury.

In Dart , we considered the meaning of an “other
insurance” clause in a different context

. There, the policyho lder
had acquired successive primary policies covering multiple
decades and subsequently sought defense and indemnity from one of its primary insurers for a continuous injury during that time even though the policy provided by that insurer had been
lost or destroyed. ( Dart

, supra , 28 Cal.4th at p p

. 1064

– 1065.) The policyholder was able to prove the material terms of the policy, but the insurer argued that its contractual obligations may have been relieved or reduced by an “other insurance”
clause in the l ost policy , pointing to the other policies purchased
for the period during which the injury occurred . ( Id. at p. 1078.) We rejected this argument, explaining that reliance on an “other
insurance” clause could not be used to “defeat the insurer’s obligations altogether.” ( Id. at p. 1079.) In other words, theMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

19 insurer in Dart could not simply invoke the possibility of an “other insurance” clause to escape its coverage obligations. We
reasoned , in a passage the parties have focused on here :

“ ‘[A] pportionment among multiple insurers must be distinguished from apportionment between an insurer and its insured. When multiple policies are triggered on a single claim, the insurers’ liability is apportioned pursuant to the “other
insurance” clauses of t he policies [citation] or under the equitable doctrine of contribution [citations]. That apportionment, however, has no bearing upon the insurers’ obligations to the policyholder.

. . . The insurers’ contractual obligation to the policyholder is to cover the full extent of the policyholder’s liability (up to the policy limits).’ ” ( Id. at p. 1080, quoting Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co. (1996) 45 Cal.App.4th 1, 105

– 106.)
The parties dispute whether Dart meant to set out a categori c al view of the meaning of “other insurance” clauses in cases of continuous injury and whether that view forecloses the insurers’ proposed interpretation of the “other insurance”
clauses in the distinct context we confront here

. Citing Dart

, Montrose asserts that the “other insurance” clauses are relevant
to contribution actions between insurers but not to coverage actions between insurers and policyholders. (See State of California v. Continental Ins. Co.

, supra , 15 Cal.App.5th at

p. 1032. ) W e need not rely on any such categorical rule in this

case , however ; it is enough to observe that Dart undermines the insurers’ claim that the “other insurance” clauses clearly and explicitly call for a rule of horizontal exhaustion.
In rejecting the insurer’s claim in Dart , we emphasized
that “other insurance” clauses have not traditionally been usedMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

20 to address questions concerning the obligation of successive
insurers to indemnify policyholders for a continuously manifesting injury (a question which

, as Dart reminds us, “is a separate issue from the obligations of the insurers to each other” ( Dart

, supra , 28 Cal.4th at p. 1080 ) ). ( Id. at p. 1078, fn. 6.) Elaborating on th e same point, t he Restatement explains that “other insurance” clauses have generally been used to address “[a]llocation questions with respect to overlapping concurrent policies .” (Rest., Liability Insurance, supra , § 40, c om . c , p. 345
, italics added.) Consistent with this understanding, most cou rts to address the issue have found that “ other insurance” clauses are not aimed at governing the proper allocation of liability among successive insurers in cases of long

- tail injury or the appropriate sequence in which a policyholder may access its
insur ance across several policy periods

. ( Id. , § 41, com. j, p. 361 ;

see In re Viking Pump, Inc. (2016) 27 N.Y.3d 244, 26 6 [52 N.E.3d 1144, 1157] [ holding that “other insurance” clauses do not
mandate horizontal exhaustion under all sums allocation, and explaining that “ ‘ o ther insurance’ clauses ‘apply when two or more policies provide coverage during the same period, and they serve to prevent multiple recoveries from such policies’

. . . . [O]ther insurance clauses are not implicat ed in situations involving successive

— as opposed to concurrent

— insurance policies” ]; see also Steadfast Insurance Co

. v. Greenwich Ins

. (2019) 385 Wis.2d 213, 228 [922 N.W.2d 71 , 79 ] [“ ‘The accepted meaning of “other insurance” provisions does not include application to successive insurance policies. ’ ”]; Ohio Cas. Ins. Co. v. Unigard Ins. Co. (Utah 2012) 268 P.3d 180, 184 [“ ‘[O]ther insurance’ provisions do not apply to successive insurers.”] ; Boston Gas Co. v. Century Indem. Co. (2009) 454 Mass. 337, 36 1MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

21 [910 N.E.2d 290, 308] [“ ‘[O]ther insurance’ clauses simply reflect a recognition of the many situations in which concurrent, not successive, coverage would exist for the same loss.”] ; Benjamin Moore & Co. v. Aetna Cas. (N.J. 2004) 843 A.2d 1094,
1101 [“ ‘[O]ther insurance’ clauses, which are provisions typically designed to preclude a double recovery when multiple, concurrent policies provide coverage for a loss [,]

. . . [are] not generally applicable in the continuous

- trigger context where successive rather than concurrent policies [are] at issue.”]

. ) Given the generally understood purpose o f “other insurance” clauses, it is difficult to read the clauses here as a clear and explicit direction to adopt a requirement of horizontal exhaustion in cases of long

- tail injury.

W hile the “ other insurance ” clauses do not speak clearly to the question before us, other aspects of the insurance policies strongly suggest that the exhaustion requirements we re meant

to apply to directly underlying insurance and not to insurance purchased for other policy periods

. First and most obviously

, the excess policies explicitly state their attachment point, generally by referencing a specific dollar amount of underlying insurance in the same policy period that must be exhausted. For

exa mple, certain Fireman’s Fund Insurance Company policies provide : “It is a condition of this policy that the insurance afforded under this policy shall apply only after all underlying insurance has been exhausted.” The policies then list the “Underlying I nsurance Limit of Liability”

— for example, “$30,000,000 each occurrence $30,000,000 aggregate.” In other
words , this policy agrees to indemnify Montrose once it has exhausted $30 million of underlying insurance. But u nder the insurers’ theory of horizonta l exhaustion, Montrose would notMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

22 be permitted to access this policy until it has exhausted $30 million of underlying insurance for every relevant policy period

— which would add up to substantially more than $30 million. Indeed, here, where the continuous i njury occurred over the
course of a quarter century, such a rule would increase the operative attachment point for this policy from $30 million to upwards of $750 million. Thus

, where aggregate liability amounts to approximately $200 million, Montrose would not be
able to access an insurance policy that

, by its terms

, kicks in after $30 million of underlying insurance is exhausted.
Relatedly , the excess policies regularly include or
reference s chedules of underlying insurance

— all for the same policy period

. Under Montrose’s reading, these schedules provide a presumptively complete list of insurance coverage that must be exhausted before the excess policy may be accessed,
with the “ other insuran ce ” clauses serving as a backstop to prevent double recovery in the rare circumstance where underlying coverage changes after the excess policy is written. ( See Dart

, supra , 28 Cal.4th at p. 1079. ) But u nder the insurers’ rule of horizontal exhaustion, the se schedule s would represent only a fraction

— perhaps only a small fraction

— of the insurance policies that must be exhausted before a given excess policy may
be accessed

. In sum, the “ other insurance ” clauses do not clearly specify
whether a rule of h orizontal or vertical exhaustion applies here. Read in isolation, the “other insurance” clauses might plausibly
be read to perform the function the insurers ascribe to them.
But read in conjunction with the actual language of other provisions in the poli cies

, and in light of their historical role of governing allocation between overlapping concurrent policies

,MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

23 the insurers’ reading becomes less likely

. Rather, in the absence
of any more persuasive indication that the parties intended otherwise, the policies are most naturally read to mean that
Montrose may access its excess insurance whenever it has
exhausted the other directly underlying excess insurance policies that were purchased for the same po licy perio d.

C.
To the extent any of the language of these policies remain s ambiguous, we resolve these ambiguities to protect “ ‘ “ ‘ the objectively reasonable expectations of the insured

. ’ ” ’ ” ( Minkler

, supra , 49 Cal.4th at p. 321.) Consideration of the parties’ reasonable expectations favors a rule of vertical
exhaustion rather than horizontal exhaustion

. For starters , apply ing t he horizontal exhaustion rule
would be far from straightforward. The insurers describe the rule in simpl e terms: as a matter of traveling across “layers” of stacked “blocks” of excess insurance coverage before the insured may travel upwards. But this depiction suggests a degree of
standardization across policies that does not exist. T he policies
Montrose purchased come in all shapes and sizes, each covering different periods of time, providing different levels of coverage, and setting forth distinct exclusions, terms, and conditions. Given all of these variations across the relevant dimensions,
how would a rule of horizonal exhaustion apply? If one were to
stack the excess policies on a graph based on their coverage
limits or attachment points , t he first layer of excess insurance in 1984, for example, would appear to reach as high as the 13th layer of excess coverage in 1974. To which horizontal layer does the 1984 policy belong? The policies do not say

. Nor does anything in the text of these p olicies tell us how an “otherMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

24 insurance” clause in a policy from one period ought to apply to a policy from another period that contains both a lower attachment point and a higher coverage limit. The policies’ silence on these basic, foundational question s tends to undermine the idea the parties expected such a rule to apply.
But perhaps more importantly , b ecause the exclusions,

terms , and conditions may vary from one policy to another, a rule of horizontal exhaustion would create significant practical
ob stacles to securing indemnification

. As the Court of Appeal
stated in State of California v. Continental Ins. Co.

, supra , 15 Cal.App.5th at p age 1033 , “ i f a lower

- layer insurer for a different policy period happened to claim that some exclusion in its pol icy applied, a court could not determine whether Continental’s policies were triggered without first determining that exclusion
claim.” Such a rule would put the insured to the considerable expense of establishing a right to coverage under the definitions, terms, conditions, and exclusions from policies in every policy period triggered by the continuous injur y. Coverage under less restrictive policies would be delayed until more restrictive policy terms are adjudicated

. In sum, “[h]orizontal exhaustion would create as many layers of additional litigation as there are layers of polic i es.” ( Westerport Ins. Corp. v. Appleton Papers Inc. (Wis.Ct.App. 2010) 787 N.W.2d 894, 918.) What i s more,

r equiring a policyholder to litigate the terms and conditions of all policies with lower attachment points in every policy period before accessing policies with higher attachment points would effectively increase the attachment point

— thereby undermining the policyholder ’s reasonable expectation that

coverage would b e triggered upon the exhaustion of the amount listed as the policy’s stated attachment point. ObjectivelyMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

25 speaking, the parties could not have intended to require the
insured to surmount all thes e hurdles before the insured may access the excess insurance it has paid for.

The insurers counter that the rule of horizontal
exhaustion is logically compelled by our adoption of an all

- sums

with

- stacking approach to liability for long

- tail injuries

. They argue that if the insured is to have access to all policies across all relevant policy periods, it only makes sense that the insured

must seek indemnification based on its excess coverage across all relevant policy periods ; to do otherwise

, the insurers assert, would “artificially break[]” the long

- tail injury into distinct periods, contrary to our holding in Continental

. ( Continental

, supra , 55 Cal.4th at p

. 201. ) But the insurers’ conclusion does
not follow. A rule of vertical exhaustion does not restrict the
insured from access ing excess coverage from other policy periods if the terms and conditions are otherwise met; it merely relieves
the insured of the obligation of e stablishing whether all of the applicable terms and conditions at any given “layer” of excess coverage are met before it accesses the next “ layer ” of coverage. There is no evident inconsistency between an all sums approach
and one that avoids placing th is burden on the insured , with its associated delays, before the insured may access its excess
insurance

. But if horizontal exhaustion imposes a heavy burden on the insured, the insurers claim that vertical exhaustion is “totally unfair” to them because “de cades’ worth of environmental damage [could] fall on the shoulders of disfavored insurers who happened to provide excess insurance

. . . during that single unlucky year or two.” This argument is

no t different in kind from arguments we have alreadyMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

26 considered and rejected in adopting the all

- sums

- with

- stacking approach to the coverage of long

- tail injuries. (See, e.g.,
Continental

, supra , 55 Cal.4th at pp. 199

– 200; id. at pp. 201

– 202.) What we have said in prior cases applies here as well : There is no evident unfairness to insurers when their insured s incur liabilities triggering indemnity coverage under the negotiated policy contract. 7 Just as the all

- sums

- with

- stacking approach allows the insured “immediate access to the insurance it purchased,” so, too, does vertical exhaustion in a continuous injur y case . ( Continental

, at p. 201.)

E qually to the point, nothing about the rule of vertical
exhaustion requires a single insurer to shoulder the burden of
indemnification alon e. As we explained in the context of primary insurance, “the obligation of successive primary insurers to cover a continuously manifesting injury is a separate issue from the obligations of the insurers to each other.” ( Dart

, supra , 28 Cal.4th at p. 1080.) Even though a rule of vertical exhaustion permits Montrose to access excess insurance from any given policy period, provided the directly underlying insurance has been exhausted, insurers may seek contribution
from other e xcess insurers also liable to the insured. The exhaustion rule does not alter the usual rules of equitable
contribution between insurer s. A n insurer required to provide

excess coverage for a long

- tail injury may lessen its burden by seeking reimbursement from other insurers that issued policies during the relevant period

. Once again, t he critical difference

7 Whether losses may be part ially allocated to the insured for policy periods in which the insured chose to self

- insure is a question not presented here.MONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

27 between a rule of vertical exhaustion and horizontal exhaustion thus is not whether a single disfavored excess insurer will be made to carry a dispro portionate burden of indemnification, but instead whether the administrative task of spreading the loss among insurers is one that must be borne by the insurer instead
of the insured. There is no obvious unfairness to insurers from
a rule that requires th em to bear this administrative burden.

The insurers lean heavily on Community Redevelopment Agency v. Aetna Casualty & Surety Co. (1996) 50 Cal.App.4th
329
, but that case addresses a meaningfully different scenario
and thus offers no real lessons for resolving the question now before us

. In Community Redevelopment

, a primary insurer sought contribution from an excess insurer for defense costs on
behalf of the insured in a case involving continuous loss

. To resolve the conflict, the court applied what it termed a “horizontal exhaustion rule”; under that rule, the court held, an excess insurer in a continu ous injury case is not required “to ‘drop down’ and provide a defense to a common insured before the liability limits of all primary insur ers on the risk have been exhausted.” ( Id. at p. 332.) In adopting that rule, the court explained: “Absent a provision in the excess policy specifically describing and limiting the underlying insurance, a horizontal exhaustion rule should be applied in continuous loss cases because it is most consistent with the principles enunciated in
Montrose [ I

, supra , 10 Cal.4th 645].

. . . Under the principle of horizontal exhaustion, all of the primary policies must exhaust
before any excess will have coverage exposure. ” ( Community Redevelopment

, at p. 340.)

This case differs from Community Redevelopment in
fundamental respects. This case, unlike CommunityMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

28 Redevelopment , is not a contribution action between primary
and excess insure rs; it is , rather, a coverage dispute between

excess insurers and their insured. Regardless of whether Community Redevelopment was correct to apply a rule of
horizontal exhaustion in that distinct context

— a question not presently before us

— we are unpersua ded that the reasoning of
Montrose I requires us to apply a rule of horizontal exhaustion that would limit Montrose’s ability to access the excess insurance coverage it has paid for.
In sum, we conclude that i n a case involving continuous injury, where all primary insurance has been exhausted, the policy language at issue here permits the insured to access any excess policy for indemnification during a triggered policy period once the directly underlying excess insurance has been
exhausted. P arties to insurance contracts are, of course, free to write their policies differently to establish alternative exhaustion requirements or coverage allocation rules if they so
wish

. ( See Continental

, supra , 55 Cal.4th at p. 202.)

D.

As note d earlier, T ravelers oppose s Montrose’s motion for summary adjudication on two independent grounds. First, Travelers argue s that Montrose’s requested declaration, which would permit Montrose to “ seek indemnification ” from an excess policy upon establishin g that “its liabilities are sufficient to
exhaust the underly ing policy(ies) in the same policy period

, ” is directly contrary to the terms of the Travelers policies, which require actual exhaustion before a policyholder may access

excess coverage. Second, Travelers argues that its policies with
Montrose must be construed under Connecticut or New York law, rather than California law as assumed by Montrose’sMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

29 petition

, given Montrose’s principal place of business at the time the Travelers policies were issued

. The lower court did not reach
either of these issues because it determined for other reasons
that Montrose is not entitled to summary adjudication. ( Montrose II

, supra , 14 Cal.App.5th at p. 1336, fn. 9.)
These arguments are not properly before u s

. We granted
Montrose ’s petition to determine whether Montrose may seek coverage from its excess policies under a rule of vertical
exhaustion rather than horizontal exhaustion. The choice
between these two rules does not alter any of the remaining

prere quisites Montrose must satisfy to obtain indemnification, including actual exhaustion of directly underlying insurance

, according to the specific terms of its excess policies. And because the lower courts have not addressed the competing claims about
choi ce of law , we decline to resolve the matter in the first
instance. (See Guz v. Bechtel Nat ional Inc. (2000) 24 Cal.4th 317, 348.) Whether California law governs the construction of Montrose’s policies with Travelers is a question for the C ourt of
A ppeal on remand.

III.
California law permits Montrose to seek indemnification
under any excess polic y once Montrose has exhausted the underlying excess policies in the same policy period. Montrose is not required to exhaust excess insurance at lower leve ls for all periods triggered by continuous injury before obtainingMONTROSE CHEMICAL CORPORATION OF CALIFORNIA

v. SUPERIOR COURT Opinion of the Court by Kruger, J.

30 coverage from higher level excess insurance in any period. W e

reverse the judgment of the C ourt of A ppeal and remand for further proceedings consistent with this opinion.
KRUGER, J.

We Concur:
CANTIL

- SAKAUYE, C. J. LIU, J. CU É LLAR, J. GROBAN, J. ELIA, J. * BROWN, J. **

* Associate Justice of the Court of Appeal, Sixth Appellate District, assigned by the Chief Justice pursuant to article VI, sectio n 6 of the California Constitution.

** Associate Justice of the Court of Appeal, First Appellate District, Division Four, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Montrose Chemical Corp. v. Superior Court

__________________________________________________________________________________ Unpublished Opinion Original Appeal Original Proceeding Review Granted XXX 14 Cal.App.5th 1306 Rehearing Granted

_______________ ___________________________________________________________________ Opinion No. S244737 Date Filed: April 6, 2020

__________________________________________________________________________________
Court: Superior County: Los Angeles Judge: Elihu Ber le

__________________________________________________________________________________
Counsel:

Latham & Watkins

, Brook B. Roberts

, John M. Wilson and Drew T. Gardiner for Petitioner.

Morgan Lewis & Bockius

, Michel Y. Horton

, Jeffrey S. Raskin

, Thomas M. Peterson

, Paul A. Zevnik and David S. Cox for ITT LLC and Santa Fe Braun, Inc., as Amici Curiae on behalf of Petitioner.

No appearance for Respondent.

Gibson, Dunn & Crutcher, Theodore J. Boutrous , Jr., Julian W. Poon, Jeremy S. Smith and Madeleine F. McKenna for Real Parties in Interest Continental Casualty Company, Columbia Casualty Company, American Centennial Insurance Company and Lamorak Insurance Company.

Sinnott, Puebla, Campagne & Curet

, Kenneth H. Sumner and Lindsey A. Morgan for Real Parties in Interest AIU Insurance Company, American Home Assurance Company, Granite State Insurance Company, Landmark Insurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and New Hampshire Insurance Company.

Sinnott, Puebla, Campagne & Curet

, Randolph P. Sinnott, Mary E. Gregory ; Cozen O'Conner and John Daly for Real Party in Interest Zurich International (Bermuda) Ltd.

Duane Morris

, Max H. Stern and Jessi ca E. La Londe for Real Party in Interest American Centennial Insurance Company.

Craig & Winkelman and Bruce H. Winkelman for Real Party in Interest Munich Reinsurance America, Inc.

Selman & Breitman

, Ilya A. Kosten, Kelsey C. Start; Barbanel & Treuer and Alan H. Barbanel for Real Parties in Interest Transport Insurance Company and Lamorak Insurance Company.

Selman & Breitman and Elizabeth M. Brockman for Real Party in Interest Federal Insurance Company.

Berkes, Crane, Robinson & Seal

, Steven M

. Crane and Barbara S. Hodous for Real Parties in InterestContinental Casualty Company and Columbia Casualty Company.

Lewis Brisbois Bisgaard & Smith, Peter L. Garchie and James P. McDonald for Real Party in Interest Employers Mutual Casualty Company.

B arber Law Group and Bryan M. Barber for Real Party in Interest Employers Insurance of Wausau.

McCurdy & Fuller

, Kevin G. McCurdy and Vanci Y. Fuller for Real Parties in Interest Everest Reinsurance Company and MT. McKinley Insurance Company.

Chamberlin & Keaster, Chamberlin Keaster & Brockman

, Kirk C. Chamberlin, Michael Denlinger and Kevin J. Schettig for Real Party in Interest Providence Washington Insurance Company.

Tressler, Linda Bondi Morrison and Ryan B. Luther for Real Party in Intere st Allstate Insurance Company.

Archer Norris

, Andrew J. King, GailAnn Y. Stargardter; Tressler and Charles R. Diaz for Real Parties in Interest Fireman's Fund Insurance Company and National Surety Corporation.

Lewis, Brisbois, Bisgaard & Smith, Jordon E. Harriman, Shannon L. Santos; Budd Larner and Michael J. Balch for Real Parties in Interest General Reinsurance Corporation and North Star Reinsurance Corporation.

Hinshaw & Culbertson, Thomas R. Beer and Peter J. Felsenfeld for Real Party in Interest Ger ling Konzern Allgemeine Versicherungs

- Aktiengesellschaft.

O'Melveny & Myers, Richard B. Goetz

, Zoheb P. Noorani and Michael Reynolds for Real Party in Interest TIG Insurance Company.

McCloskey, Waring, Waisman & Drury and Andrew McCloskey for Real Party in Interest Westport Insurance Corporation.

Simpson Thacher & Bartlett , Peter R. Jordon, Andrew T. Frankel, Deborah Lynn Stein and Tyler Z. Bernstein for Real Parties in Interest Travelers Casualty and Surety Company and The Travelers Indemnity Company.

Covington & Burling, David B. Goodwin, Reynold L. Siemens, Jeffrey A. Kiburtz and Heather W. Habes for United Policyholders as Amicus Curiae on behalf of Petitioner

.Counsel who argued in Supreme Court (not intended for publication with opinion):

John Wilson Latham & Watkins LLP 12670 High Bluff Drive San Diego, CA 92130 (858) 523

- 5400

Theodore J. Boutrous, Jr. Gibson, Dunn & Crutcher, LLP 333 South Grand Avenue Los Angeles, CA 90071 (213) 229

- 7500