Presenting a live 90-minute webinar with interactive Q&A All-Sums-With-Stacking Rule: Landmark Stringfellow Decision Analyzing the Impact of the California Supreme Court’s Ruling on Trigger of Coverage, Stacking of Limits, and Allocation of Loss WEDNESDAY, SEPTEMBER 12, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Robert M. Horkovich, Shareholder, Anderson Kill & Olick , New York Laura A. Foggan, Partner, Wiley Rein , Washington, D.C. Roger W. Simpson, Principal, Law Offices of Roger W. Simpson , Fountain Valley, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Strafford Litigation Teleconference ALL SUMS WITH STACKING RULE: LANDMARK STRINGFELLOW DECISION Analyzing the Impact of the California Supreme Court’s Ruling on Trigger of Coverage, Stacking of Limits, and Allocation of Loss Wednesday, September 12, 2012 1:00 p.m. Eastern Time / 12:00 p.m. Central Time / 11:00 a.m. Mountain Time / 10:00 a.m. Pacific Time Laura A. Foggan, Esq. Roger W. Simpson, Esq. Robert M. Horkovich, Esq. WILEY REIN LLP LAW OFFICES OF ROGER W. SIMPSON ANDERSON KILL & OLICK PC lfoggan@wileyrein.com rsimpson@rsimpsonlaw.com rhorkovich@andersonkill.com (202) 719-3382 (714) 968-8521 (212) 278-1322 Law Offices of Roger W. Simpson
6 ALLOCATION OF LIABILITY (Robert Horkovich) All sums rule
7 ALLOCATION OF LIABILITY (Laura Foggan) Pro rata/Time on the risk allocation
8 COURT TREATMENT (Robert Horkovich) S tate of California v. Continental Ins. Co. (2012) 55 Cal.4 th 186, 281 P.3d 1000, 145 Cal. Rptr.3d 1. • All Sums (Horkovich). • Stacking (Simpson).
9 ALL SUMS RULING (Robert Horkovich) “We therefore conclude that the policies at issue obligate the insurers to pay all sums for property damage attributable to the Stringfellow site, up to their policy limits, if applicable, as long as some of the continuous property damage occurred while each policy was ‘on the loss.’” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 10.
10 ALL SUMS RULING (Robert Horkovich) “Aerojet reasoned that the insurers would be liable to indemnify the insured against all claims that resulted from some triggering harm during the respective policy periods, even if the claims arose after the policy period expired. **** Aerojet understood Montrose as extending insurers’ indemnity obligations beyond the expiration of the policy period where there has been a continuous loss. **** As the present Court of Appeal observed, Aerojet’s “all sums” approach to the duty to indemnify was essential to its holding regarding the duty to defend.” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 8.
11 ALL SUMS RULING (Robert Horkovich) “Similar reasoning applies to the indemnity question presented here. Neither the State nor the insurers dispute that progressive damage to property at the Stringfellow site ‘occurred’ during numerous policy periods. In addition, the insurers concede that in cases such as this it is impossible to prove precisely what property damage occurred during any specific policy period. The fact that all policies were covering the risk at some point during the property loss is enough to trigger the insurers’ indemnity obligation.” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 8.
12 ALL SUMS RULING (Robert Horkovich) “The insurers advocate that we adopt an alternative allocation scheme – a pro rata rule for indemnity allocation.” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 9.
13 ALL SUMS RULING (Robert Horkovich) “Although some states have concluded, as the insurers urge in this case, that pro rata coverage would be more fair and equitable when compared to all sums allocation, we are constrained by the language of the applicable policies here…which supports adoption of the all sums coverage principles….” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 10.
14 ALL SUMS RULING (Robert Horkovich) “Under the CGL policies here, the plain ‘all sums’ language of the agreement compels the insurers to pay ‘all sums which the insured shall become obligated to pay … for damages … because of injury to or destruction of property….’ ( Ante , at p. 4, 281 P.3d at p. 1003.) As the State observes, ‘[t]his grant of coverage does not limit the policies’ promise to pay ‘all sums’ of the policyholder’s liability solely to sums or damage ‘during the policy period.’’” State of California v. Continental (2012) 55 Cal.4 th 186; 145 Cal. Rptr. 3d 1, 11.
15 ALL SUMS RULING (Robert Horkovich) “The insurers contend that it would be ‘objectively unreasonable’ to hold them liable for losses that occurred before or after their respective policy periods. But as the State correctly points out, the ‘during the policy period’ language that the insurers rely on to limit coverage, does not appear in the ‘Insuring Agreement’ section of the policy and therefore is neither ‘logically [n]or grammatically related to the ‘all sums’ language in the insuring agreement.’” State of California v. Continental (2012) 55 Cal. 4 th 186; 145 Cal. Rptr. 3d 1, 11.
16 ALL SUMS RULING (Robert Horkovich) “The insurers’ claim that their indemnity responsibility is limited to damage occurring ‘during the policy period’ would unduly restrict their agreement to pay ‘all sums’ the insured is obligated to pay for damages due to ‘injury to or destruction of property….’ The CGL policy language does not contemplate such a limited result once there is a property damage occurrence that triggers the insurers’ indemnity responsibilities for the entirety of the loss, and a growing number of states have similarly adopted this interpretation of the all sums language.” State of California v. Continental (2012) 55 Cal. 4 th 186; 145 Cal. Rptr. 3d 1, 10.
17 STACKING (Roger Simpson) “Stacking policy limits means that when more than one policy is triggered by an occurrence, each policy can be called upon to respond to the claim up to the full limits of the policy.” State of California v. Continental (2012) 55 Cal.4 th 186 Law Offices of Roger W. Simpson
18 STACKING (Roger Simpson) Standard policy language permits stacking: Each policy promised to pay “all sums” of the insured’s liability (up to the policy limits) if damage occurs during its policy period No provision reduced or eliminated coverage if other insurance exists “As the Court of Appeal recognized, absent antistacking provisions, statutes that forbid stacking, or judicial intervention, ‘standard policy language permits stacking.’ We agree with the Court of Appeal, and find that the policies at issue here, which do not contain anti- stacking language, allow for its application. In so holding, we disapprove FMC Corp. v. Plaisted & Companies .” State v. Continental , supra . Law Offices of Roger W. Simpson
19 STACKING (Roger Simpson) Rejecting Common Insurance Industry Arguments: Windfall argument: Stacking gives the insured a windfall; it allows him to recover more coverage than he paid for. The insured paid a premium for one occurrence limit, not many. “[I]f an occurrence is continuous across two or more policy periods, the insured has paid two or more premiums and can recover up to the combined total of the policy limits.” State v. Continental, supra. Law Offices of Roger W. Simpson
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