Court Opinion

ID: 9682473
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:11:43.96894+00
Date Added: 2024-06-11T18:17:39.539551
License: Public Domain

MICHAEL J. GABLEMAN, J.
¶ 79. {concurring in part, dissenting in part).
¶ 80. I concur in the majority opinion to the extent it holds that each exposed claimant constitutes a separate occurrence and that the non-cumulation clause is not violative of Wis. Stat. § 631.43(1). However, the policies issued to Plenco by Liberty Mutual, by their plain language, do not apply to those portions of bodily injury which occurred during the time periods in which Plenco elected to not purchase insurance coverage from Liberty Mutual. The reason the policies do not so apply is that no such policies were in existence *592during those periods. Therefore, I respectfully dissent in part from the decision of the majority, authored by my learned and respected colleague.
I. THE POLICY LANGUAGE
¶ 81. To construe the language of the policy at issue so as to require Liberty Mutual to indemnify for "all sums" is to effectuate by judicial fiat policy coverage where none has been purchased and none has been provided. It is, in effect, to reward the uninsured corporation for its failure to purchase insurance coverage by requiring its uncompensated provision, a condition neither supported by a fair and comprehensive reading of the entire policy nor contemplated by the parties.1
¶ 82. This court should decline to grant coverage for periods in which none was bargained for by applying a time-on-the-risk pro rata allocation of a loss between successive insurers and the insured when an occurrence takes place partly outside policy periods. Under the time-on-the-risk pro rata approach, each insurer is liable only for the portion of occurrence taking place while that insurer is on the risk. A corollary to this approach is that the insured retains the risk during any period for which it did not purchase insurance.
A. Pro rata Allocation
¶ 83. The majority states that the pro rata approach is contrary to the policies' plain language, partly *593because the words "all sums" appear in the policies and the words "pro rata" do not. However, courts in several jurisdictions have interpreted policy language essentially identical to the "all sums" language at issue in the present case2 and have determined that language to require a pro rata method of allocation. Those jurisdictions include the United States Courts of Appeals for the Second, Third, Fourth, Sixth, Seventh, and Eighth Circuits, Colorado, Connecticut, Delaware, Illinois, Kansas, Louisiana, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New York, and Vermont.3 *594Many of those courts applied pro rata allocation in conjunction with the continuous trigger approach as followed in Wisconsin.4 Additionally, courts in Kentucky and Utah have required pro rata allocation in cases in which the opinions specify that the policy obligated the insurer to pay "all sums" the insured became legally obligated to pay as damages due to bodily injury or property damage caused by an occurrence, but the opinions were silent as to whether the policies limited coverage to occurrences, injury, or damage taking place "during the policy period."5 Moreover, the United States *595Court of Appeals for the Fifth Circuit applied pro rata allocation for a policy that bound the insurer to pay "those sums" that the insurer became obligated to pay because of bodily injury or property damage "to which this insurance applies."6
¶ 84. Plenco uses the "all sums" label to great effect in a bootstrapping argument by pointing to the "all sums" language in the policy as justification for adopting what it calls the "all sums" allocation method.7
¶ 85. The plain language of the policy relieves Liberty Mutual from indemnifying Plenco for any portion of an occurrence taking place in part outside the period of a Liberty Mutual policy. The Comprehensive General Liability ("CGL") policy at issue here, like almost every other standardized CGL policy, provides that the insurer "will pay on behalf of the insured all sums which the insured shall become obligated to pay as damages because of. . . bodily injury or . . . property damage to which the policy applies, caused by an occurrence .. . ." The policy definitions of both "bodily injury" and "property damage" are limited to that "which occurs during the policy period . . . ." Thus, the *596plain language of the policy makes clear that Plenco has purchased coverage only for bodily injury and property damage taking place during the policy period, and that there is no provision of coverage for periods for which no insurance has been purchased.
¶ 86. The majority claims that the policy's limitation of coverage to bodily injury or property damage "which occurs during the policy period" is actually only a description of the trigger for the policy, and that it does not determine the scope of liability once triggered. Majority op., ¶ 57. The primary fault with this claim is its silence as to what then serves as the trigger for coverage for injuries and damages that indisputably took place during a time when Plenco chose to proceed self-insured and Liberty Mutual therefore issued no policies. The phrase "which occurs during the policy period" cannot be merely trigger language because, under that logic, during any period for which there was no policy there would, by definition, be no such trigger phrase and, therefore, no coverage, yet the majority urges exactly the opposite result. I maintain that injuries taking place when no policy is in effect cannot trigger an expired previous policy, a non-existent policy for the current period, or any future policy that may be purchased. This position is in harmony with the continuous trigger approach, as illustrated by the previously cited cases from ten jurisdictions applying a continuous trigger analysis while also applying pro rata allocation to allow insurance coverage only for those periods for which the insured purchased such coverage. See cases cited supra note 4.
¶ 87. The majority incompletely quotes a portion of the policy's Combined Single Aggregate Limit of Liability Endorsement in order to claim that the policy's plain language supports imposition of coverage *597that was never requested or paid for. Majority op., ¶ 55. The majority offers as its basis this first portion: "[I]f an occurrence gives rise to Bodily Injury or Property Damage which occurs partly before and partly within the policy period the liability of [Liberty Mutual] under this policy for such occurrence shall not exceed $500,000 . . . ." Id. However, the majority's analysis fails to acknowledge that the quoted provision continues: "minus the total of all payments made with respect to such occurrence under a previous policy or policies of which this policy is a replacement." Thus, the majority has cited as its basis nothing more than a statement that the per occurrence liability limit still applies if an occurrence extends across multiple policy periods.8 On its face, this language contemplates successive Liberty Mutual policies, and cannot be reasonably interpreted by the majority to mean:
If an occurrence gives rise to Bodily Injury or Property Damage before this policy goes into effect and during a time when Liberty Mutual did not provide any other coverage, Liberty Mutual will fully defend and indemnify the insured anyway, up to the full amount of the loss, even for periods when no coverage was in place.
To the contrary, the non-cumulation clause only means that Plenco cannot horizontally stack the per occurrence liability limits of successive policies. Put another way, this clause merely restricts the coverage to the limit associated with the policy or policies in effect at the time of the occurrence. The clause precludes the insured from "stacking" successive per occurrence limits to obtain a coverage amount which is greater than the *598coverage amount which it has purchased. It is unreasonable to read into this language anything more.
1. Pro rata Allocation of Defense Costs
¶ 88. I also acknowledge an insurer's duty in Wisconsin to defend a suit in full, even if some of a claim's allegations fall outside the scope of coverage, so long as coverage for some portion of the claim is fairly debatable. See Doyle v. Engelke, 219 Wis. 2d 277, 285 n.4, 580 N.W.2d 245 (1998); Red Arrow Prods. Co. v. Employers Ins. of Wausau, 233 Wis. 2d 114, 124, 607 N.W.2d 294 (Ct. App. 2000). The plain language of the policies, however, obligates Liberty Mutual to defend suits only for bodily injury or property damage occurring "during the policy period." For bodily injury or property damage occurring outside the policy period, Plenco is self-insured and should be required to bear its own defense costs. Here, Liberty Mutual does not propose to provide only a partial defense on some claims. Rather, it offers to provide a full defense, per Wisconsin precedent, but to pay for such full defense only in proportion to the time it was on the risk that gave rise to the claim it is fully defending. If this court were to apply the time-on-the-risk pro rata allocation method for indemnity, then the insurer could advance the cost of the entire defense, with a pro rata setoff applied at the end of the suit according to the insurer's time on the risk, thereby accounting for the insured's time as a self-insurer.
¶ 89. While the court of appeals has held that "apportionment of responsibility for the defense is neither practical nor desirable,"9 a time-on-the-risk pro *599rata allocation of defense costs is practical, desirable, and reasonable. It provides the insured with a full and seamless defense, but also adheres to the plain language of the policies that shifts the risk of defense costs to the insurer only for bodily injury occurring "during the policy period." If this court determines in the present case that indemnity liability should be allocated pro rata based on each policy's time on the risk, then the court will have already laid the clear, certain, and consistent framework by which notoriously indivisible defense costs could be reliably and transparently allocated. This approach is both reasonable and capable of efficient administration by mathematical calculation of the insurer's time on the risk, and has been adopted by several jurisdictions. See, e.g., Gulf Chem. & Metal lurgical Corp. v. Associated Metals & Minerals Corp., 1 F.3d 365 (5th Cir. 1993); Ins. Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980); Sec. Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 826 A.2d 107 (Conn. 2003). The federal district court for the eastern district of Michigan explained in Fireman's Fund Ins. Cos. v. Ex-Cell-O Corp., 685 F. Supp. 621, 626 (E.D. Mich. 1987)(citations omitted):
An insurer on the risk during the period of alleged exposure is liable for the policyholders' defense in the proportion that the period it was on the risk bears to the total period of alleged exposure. .. . The policyholders must bear their own pro rata share of costs for any period during which they had no coverage or cannot identify the insurer.
B. Joint and Several Allocation of Indemnity
¶ 90. This case does not present the proper factual basis for the majority to apply joint and several allocation because, unlike many of the cases on which *600the majority relies,10 there are no successive insurers from which Liberty Mutual can seek contribution. Typically the joint and several approach is utilized for the convenience and protection of the insured, who can choose one solvent insurer from which to seek payment quickly and with a minimum of litigation complexity.11 That chosen insurer then later seeks contribution, either through litigation or negotiation, from other insurers on the risk during portions of the occurrence.12 Therefore, joint and several allocation is really just a two-step version of the pro rata allocation method *601because under joint and several allocation the insured gets paid in the first step and the insurers fight over contribution in the second step. The biggest difference in the present case, however, is that the majority is imposing coverage for periods when the insured bargained for none, whereas a pro rata allocation would allocate the loss among all insurers, including self-insurers, for the time each was on the risk.
¶ 91. In the present case, Liberty Mutual is the only insurer at issue, unless we treat Plenco, as we rightfully should, as a self-insurer for the periods during which it purchased no insurance. If, during any given period, Plenco failed to purchase an insurance policy, thereby shifting the risk to an insurer, then it follows that Plenco retained that risk for that period. It follows there from that Plenco should be held to account for damages springing from that risk during the uninsured period. Under a strict application of the joint and several approach applied today by the majority, Liberty Mutual should be entitled to bring suit against Plenco for contribution, thereby effectuating an allocation of loss that precisely mirrors the allocation of risk that Plenco made when it chose to purchase insurance for some periods but at other times chose to retain the premiums and remain self-insured.13 Such a contribution action would result in exactly the same outcome ás if the court today applied the time-on-the-risk pro rata approach, but only after the filing and litigation of a secondary and utterly inefficient suit that could much more efficiently and justly be determined by applying a time-on-the-risk pro rata allocation when the dispute *602centers on periods for which the insured purchased no coverage.
II. ILLUSTRATIVE HYPOTHETICALS
¶ 92. Two hypothetical scenarios, set forth below, may best illustrate the inequitable result of the majority's holding. In the first scenario, after years of exposure to other firms' asbestos, Worker 1 was exposed to Plenco's asbestos-containing molding compounds for one day in 1972 while a Liberty Mutual CGL policy was in effect for Plenco. If Worker 1 died of an asbestos-related illness ten years later and his estate were to sue Plenco, under the joint and several allocation method applied today by the majority, Liberty Mutual would be liable for all of the worker's damages for the entire period from 1972 to 1982, including those stemming from his death, even if Plenco only purchased insurance coverage for one of those years. This would constitute a windfall for Plenco, which purchased only one year of coverage but received ten years of indemnity. From Liberty Mutual's perspective, it received only one year of premiums — which were set based upon the assumption of only one year of risk — but would be forced to pay for ten years of coverage.
¶ 93. In the second scenario, Worker 2 was exposed to asbestos every day for 30 years during which Plenco's CGL policies from Liberty Mutual contained a valid exclusion for product hazards coverage. If the policy containing the exclusion expired the day before Worker 2 retired (never to be exposed to asbestos again) and the new policy omitted the product hazards exclusion, then under the majority's decision Plenco would receive full indemnity and defense for all of the worker's damages when he or his estate sues years later. Under the majority's approach, it would not matter that the *603worker was exposed during only one day of coverage, that he had been exposed for the previous 29 years and 364 days with no coverage, or that Plenco promptly cancelled the policy after the worker retired and never paid Liberty Mutual another premium. This result is inequitable, yet unavoidable under the majority's approach. The more reasonable approach under this second scenario would be to require the insured to pay for damages and defense costs for occurrences, bodily injury, or property damage taking place outside the period for which it purchased coverage.
III. CONCLUSION
¶ 94. In summary, I am not opposed to holding one insurer liable for an occurrence's entire loss under a joint and several liability theory and then permitting that insurer to seek contribution from other insurers on the risk during the occurrence, including self-insurers. However, I am opposed to forcing an insurer to pay for the entirety of a loss occurring partly or even primarily during a period for which the insured did not bargain to shift the risk of that loss from the insured to the insurer. The illogical result of the majority's decision is that the insured not only keeps the insurance premiums that it did not pay, but also receives coverage under the insurance policies that it did not purchase. In a situation such as the present case where the insured was self-insured for significant periods and thereafter purchased insurance from only one insurer — leaving no other insurer from which Liberty Mutual may seek contribution — the joint and several allocation approach would make sense only if we were to allow contribution from Plenco via a setoff for the periods of the occurrences during which Plenco was self-insured. I would support application of such a modified or hybrid joint *604and several allocation method, but cannot support the provision of insurance coverage where the insured may have made a strategic business calculation to not purchase insurance coverage, and then, after a loss occurred, sought judicial imposition of the very indemnity and defense coverage that the insured previously rejected and for which it did not bargain or pay a premium.
¶ 95. For the foregoing reasons I respectfully concur in part and dissent in part.

 See Pub. Serv. Co. of Colo. v. Wallis and Cos., 986 P.2d 924, 939-40 (Colo. 1999)(noting that the joint and several allocation approach "creates a false equivalence between an insured who has purchased insurance coverage continuously for many years and an insured who has purchased only one year of insurance coverage").

 The phrases "all sums" and "during the policy period" are common to the policy of all of these cases, with only slight variations as to whether the quoted portion of the policy refers to occurrences taking place during the policy period or instead mentions the bodily injury or property damage taking place during the policy period.

 Nationwide Ins. Co. v. Cent. Mo. Elec. Coop., Inc., 278 F.3d 742 (8th Cir. 2001)(applying Missouri law); Sybron Transition Corp. v. Sec. Ins. of Hartford, 258 F.3d 595 (7th Cir. 2001)(apply-ing New York law); Olin Corp. v. Ins. Co. of N. Am., 221 F.3d 307 (2d Cir. 2000)(applying New York law); Spartan Petro. Co., Inc. v. Federated Mut. Ins. Co., 162 F.3d 805 (4th Cir. 1998) (applying South Carolina law); Chem. Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 89 F.3d 976 (3d Cir. 1996)(applying New Jersey law); Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178 (2d Cir. 1995) (applying New York and Texas law); Ins. Co.of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980)(applying Illinois and New Jersey law); Pub. Serv. Co. of Colo. v. Wallis and Cos., 986 P.2d 924 (Colo. 1999); Sec. Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 826 A.2d 107 (Conn. 2003); E.I. du Pont de Nemours and Co. v. Admiral Ins. Co., No. 89C-AU-99, 1995 Del. Super. LEXIS 488, 1995 WL 654020 (Del. Super. Ct. 1995); Mo. Pac. R.R. Co. v. Int'l Ins. Co., 679 N.E.2d 801 (Ill. App. Ct. 1997); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 670 N.E.2d 740 (Ill. App. Ct. 1996); Atchison, Topeka & Santa Fe Ry. Co. v. Stonewall Ins. Co., 71 P.3d 1097 (Kan. 2003); Norfolk S. Corp. v. Cal. Union Ins. Co., 859 So. 2d 201 (La. Ct. *594App. 2003); Mayor and City Council of Baltimore v. Utica Mut. Ins. Co., 802 A.2d 1070 (Md. Ct. Spec. App. 2002); Arco Indus. Corp. v. Am. Motorists Ins. Co., 594 N.W.2d 61 (Mich. Ct. App. 1998); Domtar, Inc. v. Niagara Fire Ins. Co., 552 N.W.2d 738 (Minn. Ct. App. 1996); EnergyNorth Natural Gas, Inc. v. Certain Underwriters at Lloyd's, 934 A.2d 517 (N.H. 2007); Owens-Illinois, Inc. v. United Ins. Co., 650 A.2d 974 (N.J. 1994); Consol. Edison Co. of N.Y. v. Allstate Ins. Co., 774 N.E.2d 687 (N.Y. 2002); Towns v. N. Sec. Ins. Co., 964 A.2d 1150, 2008 Vt. 98 (Vt. 2008).

 Chem. Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 89 F.3d 976 (3d Cir. 1996); Pub. Serv. Co. of Colo. v. Wallis and Cos., 986 P.2d 924 (Colo. 1999); Sec. Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 826 A.2d 107 (Conn. 2003); E.I. du Pont de Nemours and Co. v. Admiral Ins. Co., No. 89C-AU-99, 1995 Del. Super. LEXIS 488, 1995 WL 654020 (Del. Super. Ct. 1995); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 670 N.E.2d 740 (Ill. App. Ct. 1996); Atchison, Topeka & Santa Fe Ry. Co. v. Stonewall Ins. Co., 71 P.3d 1097 (Kan. 2003); Mayor and City Council of Baltimore v. Utica Mut. Ins. Co., 802 A.2d 1070 (Md. Ct. Spec. App. 2002); EnergyNorth Natural Gas, Inc. v. Certain Underwriters at Lloyd's, 934 A.2d 517 (N.H. 2007); Owens-Illinois, Inc. v. United Ins. Co., 650 A.2d 974 (N.J. 1994); Towns v. N. Sec. Ins. Co., 964 A.2d 1150, 2008 Vt. 98 (Vt. 2008).

 Aetna Cas. & Sur. Co. v. Commonwealth of Ky., 179 S.W.3d 830 (Ky. 2005); Sharon Steel Corp. v. Aetna Cas. and Sur. Co., 931 P.2d 127 (Utah 1997).

 Gulf Chem. and Metallurgical Corp. v. Associated Metals & Minerals Corp., 1 F.3d 365 (5th Cir. 1993)(applying Texas law).

 The name assigned to the allocation method cannot drive our analysis because there is no limit to the labels that could be applied to any particular allocation method. For instance, one court, in rejecting joint and several allocation, referred to it as the "pick-and-choose" allocation method which allows insureds to consider an occurrence taking place over many years, during some of which there was no coverage, pick a year for which there was coverage, and then choose to assign the entirety of damages to that year. See Pub. Serv. Co. of Colo. v. Wallis and Cos., 986 P.2d 924 (Colo. 1999).

 In fact, this is the exact non-cumulation clause that resolves the second certified question regarding stacking of coverage limits, but it has no bearing on what allocation method should be applied in the present case.

 Grube v. Daun, 173 Wis. 2d 30, 73, 496 N.W.2d 106 (Ct. App. 1992) (citing Engsberg v. Town of Milford, 597 F. Supp. 251 (W.D. Wis. 1984)).

 See, e.g., ACandS, Inc. v. Aetna Cas. & Sur. Co., 764 F.2d 968 (3d Cir. 1985); J.H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502 (Pa. 1993)(citing Keene Corp. v. Ins. Co. of N. Am., 667 F.2d 1034 (D.C. Cir. 1981), cert. denied, 455 U.S. 1007 (1982)).

 In the situation of several insurers on the risk during an occurrence, the joint and several approach best protects the insured by insulating it from the complex, costly, and time-consuming litigation and negotiation that the insurers will engage in to determine their respective contribution. Long before the contribution matters will be resolved among the insurers, the insured will have been made whole with minimal disruption. These benefits of the joint and several allocation approach, however, do not justify imposing coverage when such coverage was not purchased or was expressly rejected.

 See Keene Corp. v. Ins. Co. of N. Am., 667 F.2d 1034, 1051-52 (D.C. Cir. 1981), cert. denied, 455 U.S. 1007 (1982).
The possibility of additional coverage can be determined eonsensually among insurers, or it can he adjudicated among insurers in a subsequent lawsuit. At that point the insurance obligations can he reallocated among all the insurers whose policies are found to cover a particular injury. ... [I]f a suit arises to resolve the allocation of insurance liability, any insurance company can try to prove that there was no inhalation of [the insured's] asbestos during or before its policy period. If an insurance company does so, then that company will be free of liability.

 See, e.g., Uniroyal, Inc. v. Home Ins. Co., 707 F. Supp. 1368, 1392 (E.D.N.Y. 1988)("Self-insurance is called 'going bare' for a reason.").