{"id":899568,"date":"2022-02-02T14:31:33","date_gmt":"2022-02-02T21:31:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=899568"},"modified":"2022-02-02T14:31:50","modified_gmt":"2022-02-02T21:31:50","slug":"pollution-exclusion-landmark-montana","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/pollution-exclusion-landmark-montana\/","title":{"rendered":"Landmark Montana Supreme Court Decision Series: Trigger and Allocation"},"content":{"rendered":"\n

Lorielie S. Masters, Patrick M. McDermott and Rachel E. Hudgins | Hunton Insurance Recovery Blog<\/a><\/p>\n\n\n\n

In one of the top insurance-coverage decisions of 2021, the Montana Supreme Court at the end of the year handed down a landmark decision adopting the continuous trigger of coverage and \u201call sums\u201d allocation, finding a duty to defend and ruling that the qualified, or \u201csudden and accidental\u201d pollution exclusion<\/a> did not apply.\u00a0Nat\u2019l Indem. Co. v. State<\/em>, 499 P.3d 516 (Mont. 2021). The Supreme Court affirmed in part and reserved in part the rulings entered by the trial court, largely upholding a $98,000,000 judgment for the State against its CGL insurer for the policy years 1973 to 1975. The ruling thus helps ensure coverage for the hundreds of claims alleging that the State had failed to warn claimants of the dangers of asbestos exposures to workers in vermiculite mining and milling operations in Libby, Montana, operated by W. R. Grace (the \u201cLibby Mine\u201d).<\/p>\n\n\n\n

Representing amicus curiae <\/em>United Policyholders (\u201cUP\u201d), Hunton Andrews Kurth supported the position of the policyholder, the State of Montana, on the key rulings on trigger of coverage, allocation, and the pollution exclusion, with the court specifically citing to the Hunton brief in adopting all-sums allocation. This first post in our series covering the Montana Supreme Court\u2019s decisions will address the court\u2019s rulings on trigger of coverage and allocation.<\/p>\n\n\n\n

The ruling on allocation is particularly noteworthy as it confirmed that standard-form general-liability insurance policies require insurers to pay for the policyholder\u2019s entire liability up to the full limits of the policies, rejecting the insurance industry\u2019s arguments that long-term (or \u201clong-tail\u201d) liabilities that take place over years should be prorated, assigning liability to the policyholder. This ruling brings Montana into line with those states that have rejected the \u201cpublic policy\u201d arguments insurers use to argue for pro-rata allocation, choosing instead to enforce the promise of \u201call sums\u201d as written by the insurance industry.<\/p>\n\n\n\n

In the Hunton brief (reproduced on the UP website at\u00a0https:\/\/uphelp.org\/amicus-briefs\/national-indemnity-co-v-state-of-montana\/<\/a>), UP argued that the lower court correctly held that the insurer, National Indemnity, owed the State a complete defense and indemnity for long-tail asbestos claims under the \u201call sums\u201d language in its insurance policy. UP contended that interpretation accords not only with the contract language; but also, with the insurance industry\u2019s stated intent when it drafted the CGL Policy and marketed it to policyholders.<\/p>\n\n\n\n

UP presented the insurance industry\u2019s drafting history of standard-form CGL policy language on the key allocation issues in the case, showing that:<\/p>\n\n\n\n

(1)  The standard-form CGL policy language supports a continuous-injury trigger of coverage, activating coverage when\u2014as in this case with longtail asbestos liabilities \u2014injury is shown to have taken place during each of the policy periods at issue.<\/p>\n\n\n\n

(2)  Once triggered, CGL policies provide coverage, as written, for \u201call sums,\u201d without assignment of any portion of the liability to the policyholder.<\/p>\n\n\n\n

Court Ruling on Trigger<\/strong><\/p>\n\n\n\n

On trigger of coverage, the court specifically rejected the insurer\u2019s narrow exposure-only arguments and made clear that the standard-form CGL policy language does not require a showing of manifestation of injury during the policy period. Id.<\/em> at 544\u201345. Applying, in effect, the concept called \u201cexposure-in-residence\u201d in the landmark continuous-trigger decision, Keene Corp. v. Ins. Co. of N. Am., <\/em>667 F.2d 1034, 1042\u201347 (D.C. Cir. 1981), the Montana Supreme Court, instead, found that injury can happen during the policy period even if exposure took place before the policy period:<\/p>\n\n\n\n

Given the ongoing progressive nature of asbestos injury, we agree with the State regarding the eligibility of claimants exposed only prior to the policy period. A [c]laimant exposed either during or prior to the policy period may, despite a lack of manifestation of injury during the policy period, be covered under the policy \u201cas long as it can be determined, even retroactively, that some injury did occur during the policy period[.]<\/p>\n\n\n\n

Nat\u2019l Indem. Co.<\/em>, 499 P.3d at 545. The Court remanded for further proceedings on this issue because the lower court had held that asbestos claimants \u201cwho were exposed only before the Policy period could not qualify for coverage.\u201d  Id.<\/em><\/p>\n\n\n\n

Court Ruling on Allocation<\/strong><\/p>\n\n\n\n

On the dispute over \u201cpro rata\u201d or \u201call sums\u201d allocation, relying in part on Hunton\u2019s brief for UP, the Court rejected the insurer\u2019s argument, based on the \u201cduring the policy period\u201d language in the definition of \u201coccurrence,\u201d that limited the amount of coverage to that proven to have taken place in the policy period. The Court relied, instead, on the standard-form CGL policy Insuring Agreement, noting that the plain language supported the State\u2019s argument. The Court emphasized that the standard-form CGL policy included no clause requiring proration:<\/p>\n\n\n\n

Pro rata allocation is a significant limitation of coverage, but it is not expressly provided in the policy, though it clearly could have been. National\u2019s interpretation also ignores and fails to give meaning to the \u201call sums\u201c language in [insuring agreement]\u2026.<\/p>\n\n\n\n

Id<\/em>. at 544. The Court also specifically rejected the insurer\u2019s argument that the State\u2019s self-insurance fund should somehow reduce the insurer\u2019s obligation and refused then to apply the \u201cother insurance\u201d clause to require proration of liability to the policyholder.  Id.<\/em><\/p>\n\n\n\n

This ruling brings Montana into the \u201ccontinuous trigger\u201d and \u201call sums\u201d camp. It provides further confirmation that standard-form CGL policies apply when injury or damage takes place over a period of years\u2014and that, consistent with insurance-industry intent, liability for injury or damage taking place over a period of years should not be assigned, or \u201cprorated,\u201d to the policyholder.<\/p>\n\n\n\n

<\/p>\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Lorielie S. Masters, Patrick M. McDermott and Rachel E. Hudgins | Hunton Insurance Recovery Blog In one of the top insurance-coverage decisions of 2021, the Montana Supreme Court at the end of the year handed down a landmark decision adopting the continuous trigger of coverage and \u201call sums\u201d allocation, finding a duty to defend and… Continue reading Landmark Montana Supreme Court Decision Series: Trigger and Allocation<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[9895,530],"class_list":["post-899568","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-advise-consult","tag-pollution-exclusion","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nLandmark Montana Supreme Court Decision Series: Trigger and Allocation - 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