Wooddale Builders, Inc. v. Maryland Casualty Co.

Facts

Wooddale Builders, Inc. is a general contractor that constructs single-family homes. Wooddale began to receive claims of defective construction and/or faulty workmanship from the owners of stucco homes it had built from 1991 to 1999. Wooddale had continuous commercial general liability (CGL) insurance coverage from five different insurers from November 13, 1990, until November 13, 2002. Each of Wooddale's CGL policies is an occurrence-based policy containing a standard insuring agreement calling upon the insurer to defend and indemnify Wooddale for 'sums that [Wooddale] becomes legally obligated to pay [for property damage] to which this insurance applies.' Wooddale commenced a declaratory action against Maryland Casualty (P) to establish Maryland Casualty's (P) obligation to defend and indemnify Wooddale for the homeowners' claims. Maryland Casualty (P) in turn brought a third-party action against American Family, Western National, West Bend, and SafeCo, (Ds) seeking 'an amount of money equal to each Third-Party Defendants' (sic) share of the total damages awarded to [Wooddale], if any, [pro rata by time on the risk].' The parties agreed that the appropriate method for apportionment of liability among the insurers is pro rata by time on the risk and that the starting point for the liability allocation period for each claim is the closing date on the purchase of the home. The parties disagreed about the appropriate end date for the liability allocation period as well as the appropriate method by which to allocate defense costs. The court applied Minnesota's 'actual injury' rule, and concluded that 'the damage sustained to these homes was not the result of a discrete and identifiable event, but rather so continuous and indivisible as to make it impossible to identify one such event.' The court then concluded that the 'appropriate method of allocating damages to the Insurers in this case is pro rata by time on the risk.' The court concluded that the costs of investigating and defending the homeowners' claims should be borne equally by the insurers whose policies were triggered for each claim. West Bend (D) appealed to the court of appeals, arguing that the district court erred in setting the end date for allocation purposes as the date Wooddale received notice of a claim and by allocating defense costs equally among the insurers whose policies were triggered. SafeCo (D) also appealed, seeking clarification regarding whether, if a policy is triggered, the entire policy period is considered for allocation purposes. The court of appeals affirmed the district court's decision to grant summary judgment but reversed that court's rulings on the end date for allocation purposes and the apportionment of defense costs. 'The appropriate ending date when allocating liability among consecutive insurers according to the pro-rata-by-time-on-the-risk method is the date of remediation' and that fairness required 'that defense costs among consecutively liable insurers should be allocated according to the same method used to apportion indemnity costs.' It dismissed SafeCo's (D) policy period appeal, concluding that the issue SafeCo (D) sought to have reviewed had not been properly presented to the district court. Maryland Casualty (P) and Western National (D) sought a review of the court of appeals' rulings on both the end date for allocation purposes and the allocation of defense costs. American Family (D) sought a review of the allocation of defense costs. Wooddale also sought review, requesting clarification of whether the court of appeals' ruling on the end date for allocation purposes means that Wooddale is potentially liable for the continuing damages occurring between the date on which the last triggered policy expired and the end of remediation. The court addressed the allocation of damages and costs. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

© 2007-2024 ABN Study Partner.