2020 Ohio 3270
Ohio Ct. App.2020Background
- The William Powell Company (Powell), a manufacturer of valves containing asbestos components, faced thousands of asbestos bodily-injury claims and sought coverage under multiple primary and excess CGL policies issued between 1969 and 1977 by successors of OneBeacon and by Federal.
- OneBeacon issued three excess policies (covering 1969–1976) and several primary policies; Federal issued one excess policy (1976–1977). Powell also had a National Union primary policy for 1977–1979 with a $250,000 per-occurrence self-insured retention endorsement.
- Central dispute: whether the excess policies require horizontal exhaustion (all primary policies across periods must be exhausted before any excess attaches) or vertical exhaustion (each excess attaches once underlying insurance directly beneath it for the same policy period is exhausted), and whether the National Union policy constituted “underlying and collectible” insurance that prevented excess attachment.
- After a three-week bench trial, the trial court held horizontal exhaustion applied, found OneBeacon and Federal not triggered, and awarded contribution/reimbursement to insurers for amounts paid; Powell appealed and OneBeacon cross-appealed allocation rulings.
- The appellate court reversed the exhaustion ruling, held the excess policies support vertical exhaustion (so OneBeacon’s excesss were attached), found OneBeacon breached by failing to pay the excess defense/indemnity and remanded for damages, reversed the trial court’s contribution award (but allowed restitution to Federal for payments made under reservation of rights), and affirmed that Powell retained Goodyear allocation rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper exhaustion rule for these excess policies (vertical vs horizontal) and whether National Union policy is underlying/collectible | Only underlying insurance covering the same policy period as an excess must be exhausted; prior/subsequent policies (like National Union) are not "underlying" | Excess insurers contend horizontal exhaustion: all collectible underlying insurance (including National Union) must be exhausted before excess attaches | Court held policies support vertical exhaustion (underlying = insurance covering the same occurrence/policy period); National Union (1977–79) was not underlying/collectible for OneBeacon/Federal excesses |
| Breach of contract: did OneBeacon breach by not paying defense/indemnity under its excess policies | OneBeacon’s excesss were triggered (vertical exhaustion), so it must pay all sums (defense and indemnity) once its retained limits were met | OneBeacon said excesss were not triggered because other collectible underlying insurance existed (horizontal exhaustion) | Court held OneBeacon’s excesss were attached and therefore breached by failing to pay; remanded to determine damages |
| Contribution/restitution: may insurers recover contribution from insured for sums they paid when not obliged? | Powell: insurers cannot seek contribution from their insured for amounts properly paid; insurers who overpaid may not recover from insured | OneBeacon/Federal: entitled to equitable recovery (contribution/reimbursement) for overpayments | Court held trial court abused discretion awarding contribution against Powell; Federal, having paid under a reservation of rights while not liable, is entitled to restitution ($477,385.80); OneBeacon not entitled to restitution because its excesss were properly triggered |
| Allocation of loss among multiple triggered policies and waiver/laches to assert Goodyear allocation | Powell: entitled to allocate under Goodyear ("all sums" choice of a single triggered policy) and did not waive that right | OneBeacon: Powell waived allocation rights or laches bars recovery; pro rata allocation appropriate | Court affirmed trial court: Powell did not waive Goodyear allocation rights and laches defense failed; Powell may direct allocation per Goodyear |
Key Cases Cited
- Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St.3d 512 (Ohio 2002) (approves "all sums" allocation—insured may select a single policy covering all sums incurred during its period)
- Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216 (Ohio 2003) (insurance-contract interpretation principles; review de novo)
- Dart Industries, Inc. v. Commercial Union Ins. Co., 28 Cal.4th 1059 (Cal. 2002) (other-insurance clauses govern apportionment among insurers; they generally do not affect insurer’s obligations to the insured)
- Montrose Chemical Corp. v. Superior Court of Los Angeles County, 9 Cal.5th 215 (Cal. 2020) (distinguishes primary vs. excess attachment and pricing assumptions underlying excess coverage)
- Babcock & Wilcox Co. v. Arkwright-Boston Mfg. Mut. Ins. Co., 53 F.3d 762 (6th Cir. 1995) (triggering-event analysis for exposure-based claims)
- Consolidated Edison Co. of New York v. Allstate Ins. Co., 98 N.Y.2d 208 (N.Y. 2002) (other-insurance clauses historically prevent multiple recoveries when concurrent policies cover the same period)