Benjamin Moore & Co. v. Aetna Casualty & Surety Company

843 A.2d 1094 (2004)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

In 2000, P filed a declaratory judgment action seeking defense and indemnity from Lumbermens Mutual Casualty Company (D) in connection with two class action law suits alleging bodily injury and property damage as a result of exposure to lead paint distributed by P. Lumbermens (D) had issued five Comprehensive General Liability (CGL) insurance policies to P covering the eleven year period between September 30, 1990, and September 30, 2001. They all had limits of $1 million per occurrence but some had $500,000 deductibles and others had $250,000 deductibles. For each 'occurrence' covered under the several policies, P had agreed to pay either the first $500,000 or the first $250,000 of the loss, and Lumbermens (D) had agreed to pay the remaining $500,000 or $750,000 of the loss, depending on the applicable deductible. Because of the high deductibles, the premiums that P paid were lower than they would have been had it sought 'guaranteed cost or first-dollar primary coverage for the same limits in the same policy period[.]' The 'Deductible Liability Endorsement' (DLE) modifies and amends certain aspects of the policies. Although the language contained in the DLE varies slightly from policy to policy, the parties do not claim that any minor language variation is material. The parties filed cross-motions for summary judgment. P sought an order permitting it to choose the Lumbermens (D) policy under which it would be defended and ordering that it only be required to pay one deductible. Alternatively, P requested that the trial court 'order that deductibles in multiple, consecutively triggered insurance policies be allocated on the same basis as insurance coverage is allocated' under Owens-Illinois and Carter-Wallace. Lumbermens (D) sought a declaration that P must 'satisfy each per occurrence deductible in each triggered policy without proration before P is entitled to coverage.' The court rejected P's request to choose a policy under which it would be defended, noting that the State Supreme Court previously had declined to adopt such a ''joint and several' allocation scheme.' The court rejected P's assertion that the deductibles in the triggered policies should be prorated in the same fashion as the losses under the Owens-Illinois and Carter-Wallace, concluding that deductibles in multiple, consecutively triggered policies should be enforced as written and that pro rata allocation would not be consistent with those cases. The court granted partial summary judgment in favor of Lumbermens (D). The Appellate Division affirmed. The court cited the unambiguous policy terms and the fact that P had risked high deductibles to reduce its premiums. It reasoned that, in a vertical exhaustion scheme, it makes sense that 'each layer' includes the deductible. Lumbermens (D) appealed.