979 N.W.2d 627
Wis. Ct. App.2022Background
- Wausau issued occurrence-based primary and umbrella liability policies to Waukesha Foundry Co. (Old Waukesha, 1963–1968) and then to Waukesha Foundry Co., Inc. (New Waukesha, 1968–1971); policies included an anti-assignment clause requiring insurer consent.
- Old Waukesha conveyed its assets, liabilities, contracts and "rights under insurance policies" to New Waukesha by a 1968 Bill of Sale/Assumption at closing; New Waukesha later merged into Abex (1974).
- Abex assigned its assets to PA Holdings (1990), which became Pneumo Abex Corp and later merged into Pneumo Abex, LLC (successor to the Waukesha companies); Pneumo Abex, LLC assigned any Wausau-policy rights to Pepsi in 2019.
- Over 100 asbestos claims alleged injury from Waukesha pumps; Huff (mesothelioma claimant) sued Pneumo Abex, alleging exposure during the Wausau policy periods.
- Wausau refused to defend, asserting the anti-assignment clauses (and alleged breaks in the corporate transfers) precluded coverage; the circuit court granted Wausau summary judgment relying on Red Arrow.
- The Court of Appeals reversed: it held (1) anti-assignment clauses do not bar post-loss assignments under Wisconsin law; (2) the corporate transfers conveyed the policy rights through to Pneumo Abex, LLC; and (3) Huff’s complaint sufficiently implicated covered occurrences to trigger Wausau’s duty to defend.
Issues
| Issue | Plaintiff's Argument (Pepsi) | Defendant's Argument (Wausau) | Held |
|---|---|---|---|
| Enforceability of anti-assignment clause for post-loss assignments | Anti-assignment clauses do not bar assignments made after the occurrence (loss); Wausau’s consent is not required for post-loss transfers | Anti-assignment clause prohibits any transfer of policy rights without insurer consent, so coverage cannot be assigned | Anti-assignment clause unenforceable as to post-loss assignments under Wisconsin law; occurrence (asbestos exposure) is the loss, so consent not required |
| Whether corporate transactions (1968 Bill of Sale; 1990 assignment/merger) transferred Wausau-policy rights to successors | Bill of Sale, Assumption and later assignment/mergers conveyed "all" rights including insurance recoveries to successors; transfers were operative and continuous | The transactional documents (and missing schedule) do not show specific transfer of the Wausau policies; there were breaks in the chain preventing transfer | Transfers (1968 Bill of Sale and 1990 assignment) sufficiently conveyed rights; chain of assignment to Pneumo Abex, LLC was unbroken for purposes of asserting defense rights |
| Duty to defend based on Huff complaint | Huff’s complaint alleges asbestos exposure during Wausau policy periods implicating products made by insured predecessors; therefore duty to defend is triggered | Huff names Pneumo Abex, LLC (not Old/New Waukesha) and allegations are not specifically tied to insured entities; complaint does not trigger coverage | Under the four-corners rule and liberal construction, Huff’s allegations create at least a potential for coverage; Wausau has a duty to defend |
Key Cases Cited
- Dogge v. Northwestern Nat'l Ins. Co., 49 Wis. 501 (1880) (post-loss assignments of insurance claims are valid without insurer consent)
- Alkan v. New Hampshire Ins. Co., 53 Wis. 136 (1881) (assignment after loss does not render policy void)
- Max L. Bloom Co. v. United States Cas. Co., 191 Wis. 524 (1926) (anti-assignment clauses apply to pre-loss transfers; post-loss assignment of the chose in action is permissible)
- Red Arrow Prods. Co. v. Employers Ins. of Wausau, 233 Wis. 2d 114 (Ct. App. 2000) (discussed by courts here; held no coverage where policies were not assigned and not included in sale)
- Plastics Eng’g Co. v. Liberty Mut. Ins. Co., 315 Wis. 2d 556 (2009) (defines "occurrence" in exposure cases and treats exposure as the loss for occurrence-based policies)
- Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins. Co., 369 Wis. 2d 607 (2016) (duty to defend is broader than duty to indemnify; compare four-corners of complaint to policy)
- Fireman’s Fund Ins. Co. v. Bradley Corp., 261 Wis. 2d 4 (2003) (insurer's duty to defend hinges on the nature of the plaintiff’s claim and is liberally construed in favor of the insured)