31 N.Y.3d 51
Court for the Trial of Impeach...2018Background
- KeySpan (successor to LILCO) conducted manufactured gas operations at two sites that caused gradual, long-term contamination requiring remediation.
- Century issued eight excess liability policies to LILCO covering 1953–1969; contamination was continuous before, during, and after those policy years and cannot be apportioned to particular years.
- KeySpan sued for coverage; Century moved for partial summary judgment seeking pro rata time-on-the-risk allocation and exclusion of liability for years outside its policy periods.
- KeySpan conceded pro rata allocation governed but argued the insurer’s share should exclude years when relevant pollution coverage was not available in the marketplace (pre-availability or after industry adopted exclusions).
- Supreme Court denied relief as to years when coverage was unavailable; the Appellate Division reversed, holding Century not liable for losses attributable to marketplace-unavailable years; the Court of Appeals granted certification.
Issues
| Issue | Plaintiff's Argument (KeySpan) | Defendant's Argument (Century) | Held |
|---|---|---|---|
| Whether, under pro rata time-on-the-risk allocation, years when applicable liability coverage was not offered in the market should be excluded from the denominator (the "unavailability rule"). | Exclude unavailable years; policyholder should not bear risk for years insurance was unobtainable (pre-availability or after pollution exclusions). | Inclusion of unavailable years contradicts pro rata policy language limiting liability to occurrences "during the policy period"; insurer should not cover periods outside its policy. | Court rejected the unavailability rule; pro rata time-on-risk includes years of noncoverage, so KeySpan bears risk for years without purchased coverage. |
| Whether "other insurance" clauses here constitute noncumulation/prior-insurance clauses requiring all-sums allocation. | (Alternative) Certain other-insurance clauses function as noncumulation, mandating all-sums allocation. | Century disputed but primary appeal did not squarely raise this. | Not decided here — the argument was not properly before the Court on this appeal. |
Key Cases Cited
- Matter of Viking Pump, Inc. v. Century Indem. Co., 27 N.Y.3d 244 (N.Y. 2016) (discusses allocation methods and when all sums vs. pro rata applies)
- Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208 (N.Y. 2002) (policy language limiting liability to occurrences during policy period supports pro rata allocation)
- Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, Pa., 21 N.Y.3d 139 (N.Y. 2013) (contract interpretation governs allocation)
- Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (Mass. 2009) (refused to apply unavailability rule where pro rata language limited coverage to policy periods)
- Sybron Transition Corp. v. Security Ins. of Hartford, 258 F.3d 595 (7th Cir. 2001) (rejected unavailability rule; time-on-risk reflects premiums collected and insurer’s share)
- Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178 (2d Cir. 1995) (discusses time-on-risk proration methods)
- Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 177 F.3d 210 (3d Cir. 1999) (addresses allocation approaches in long-tail claims)