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Motors Liquidation Company Dip Lenders Trust v. Allianz Insurance Co.

Superior Court of Delaware

June 8, 2017

MOTORS LIQUIDATION COMPANY DIP LENDERS TRUST, Plaintiff,
v.
ALLIANZ INSURANCE COMPANY, et al., Defendants.

          Submitted: May 25, 2017

         Upon Defendants OneBeacon Ins. Co. & Continental Casualty Ins. Co. 's Motions for Summary Judgment on Trigger and Suit Limitations, DENIED.

         Upon Defendant OneBeacon Ins. Co. 's Motion for Summary Judgment on Transfer of Rights, DENIED.

         Upon Plaintiff Motors Liquidation Co. DIP Lenders Trust's Cross-Motions for Summary Judgment on Transfer of Rights and Trigger, GRANTED.

         Upon Defendants OneBeacon Ins. Co. & Continental Casualty Ins. Co. 's Cross-Motions for Partial Summary Judgment on Number of Occurrences, DENIED.

         Upon Plaintiff Motors Liquidation Co. DIP Lenders Trust's Renewed Motion for Partial Summary Judgment on the Number of Occurrences, GRANTED.

         Upon Defendants OneBeacon Ins. Co. & Continental Casualty Ins. Co. 's Cross-Motions for Summary Judgment on Allocation, GRANTED.

         Upon Plaintiff Motors Liquidation Co. DIP Lenders Trust's Renewed Motion for Partial Summary Judgment on Allocation, DENIED.

          Jennifer C. Wasson, Esquire, Carla M. Jones, Esquire, Potter Anderson & Corroon, LLP, Wilmington, DE, Selena J. Linde, Esquire (pro hac vice), Michael T. Sharkey, Esquire (pro hac vice) (argued), Perkins Coie LLP, Washington, D.C., Attorneys for Plaintiffs Motors Liquidation Co. DIP Lenders Trust.

          Carmella P. Keener, Esquire, Rosenthal, Monhait & Goddess, P.A., Wilmington, DE, John S. Favate, Esquire (pro hac vice), Henry T.M. LeFevre-Snee, Esquire (pro hac vice) (argued), Hardin, Kundala, McKeon & Poletto, P.A., Attorneys for Defendant OneBeacon Insurance Company.

          Carmella P. Keener, Esquire, Rosenthal, Monhait & Goddess, P.A., Wilmington, DE, Ronald P. Schiller, Esquire (pro hac vice), Michael R. Carlson, Esquire (pro hac vice), Lisa M. Salazar, Esquire (pro hac vice) (argued), Hangley Aronchick Segal Pudlin & Schiller, Attorneys for Defendant Continental Casualty Insurance Company.

          MEMORANDUM OPINION AND ORDER

          Paul R. Wallace, Judge.

         I. INTRODUCTION

         Plaintiff Motors Liquidation Trust DIP Lenders Trust ("Motors") sued several excess carriers, seeking coverage for underlying asbestos claims brought against General Motors ("GM"). OneBeacon Insurance Company ("OneBeacon") issued three excess policies from 1969 to 1972. Defendant Continental Casualty Company ("Continental") purportedly issued two excess policies from 1969 to 1971. The parties bring a series of motions seeking summary judgment on Defendants' liability, if any, and the proper framework under which to evaluate and allocate Motors's claims.

         First, OneBeacon argues its insurance policies were excluded from the asset transfer between GM and Motors during GM's bankruptcy. Naturally, Motors says that the policies were properly transferred from GM, and that OneBeacon still retains adopted responsibility under those policies.

         Second, OneBeacon argues its insurance policies were not triggered because the liability policies that underlay them were never triggered. Motors contends these pre-1972 policies were, in fact, triggered because they are occurrence-based.

         Third, OneBeacon argues the underlying policies' Suit Limitations Clause bars Motors's claims because Motors filed suit years beyond the limitations period.

         Fourth, the parties disagree on the definition of "occurrence" as it pertains to policy coverage. Motors contends all of the remaining asbestos claims stem from GM's initial parts' manufacture. Conversely, OneBeacon says that each claim is its own occurrence deriving from each claimant's alleged exposure to GM's parts.

         Finally, the parties disagree on how to determine allocation. Motors contends that any allocation must be done on an "all sums" basis. OneBeacon says allocation must be done on a "pro rata" basis.

         Continental, if it must, joins all of OneBeacon's summary judgment motions except OneBeacon's motion for summary judgment regarding transfer. The Court puts it that way because Continental has posited that Motors has not provided sufficient evidence to show Continental's policies follow form to the underlying Royal policies and therefore has failed to establish it has any liability here.

         The Court's introduction to and recitation of the factual and procedural history of this litigation is set forth in the Court's previous decisions.[1] The Court will, therefore, not undertake a protracted recounting thereof, but only briefly set forth that expressly necessary for this ruling.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         A. Gm's Insurance Towers

         GM and Royal Insurance Company ("Royal") had a longstanding insurance relationship, beginning in approximately 1921 and continuing through September 1, 1993.[2] On August 18, 1954, Royal issued RTP 060000 to GM, which was effective "until canceled."[3] Section IV of RTP 060000, entitled "Policy Period, Territory, " provided as follows:

This policy applies worldwide, only to occurrences [defined as: "an event, or continuous or repeated exposure to conditions, which unexpectedly cause bodily injury . . ."] during the policy period provided the services, goods or products were manufactured, sold, handled or distributed within the United States of America, its territories, possessions, or Canada.[4]

         1. OneBeacon's Policies[5]

         Between November 1, 1969, and March 21, 1972, OneBeacon issued three excess insurance policies to GM (collectively, the "OneBeacon Policies").[6] The OneBeacon Policies followed form to Royal Catastrophe Excess Policy RLA 35 ("RLA 35").[7] RLA 35, in turn, followed form to RTP 060000:

[T]his Insurance is subject to the same warranties, terms and conditions (except as regards the premium, the obligation to investigate and defend, the amount and limits of liability and except as otherwise provided herein) as are contained in or as may be added to the Underlying Insurance prior to a happening for which claim is made hereunder.[8]

RTP060000 defines "occurrence" as: "an event, or continuous or repeated exposure to conditions, which unexpectedly cause bodily injury[.]"[9]

         RLA35 states that the insurance company covers all sums GM becomes liable to pay arising out of continuous and repeated exposure to conditions, if that exposure results in bodily injury during the policy period, promising:

To pay on behalf of the Insured all sums which the Insured shall be obligated to pay by reason of the liability (i) imposed upon the Insured by law arising out of an event or a continuous or repeated exposure to conditions which result in Personal Injury or Property Damage as defined in the Underlying Insurance.
. . . which occurs during the period of this Insurance, provided that in respect of this Section this Insurance is subject to the same warranties, terms and conditions (except as regards the premium, the obligation to investigate and defend, the amount and limits of liability and except as otherwise provided herein) as are contained in or as may be added to the Underlying Insurance prior to a happening for which claim is made hereunder.[10]

         2. Continental's Policies

         Continental purportedly issued two excess policies to GM.[11] These two policies covered GM from March 21, 1969, to March 21, 1970 and from March 21, 1970, to March 21, 1971.[12] The policies had $1 million limits in excess of $50 million.[13] Like OneBeacon's, Motors contends Continental's policies follow follows form to RLA 35, albeit through Home Insurance Company's Policy #HEC 97915 82.[14]

         Continental argues Motors's only evidence is two documents: a declarations page showing Continental provided coverage in excess of the Home Insurance policy for the 1969-70 policy year, and the Home Insurance policy itself.[15] The parties' discovery regarding missing or lost policies is now complete. But the parties have agreed that they "will not be filing summary judgment motions on the existence or completeness of the Continental policies at this time."[16]

         B. GM-Royal Michigan Litigation

         On January 26, 2005, GM sued Royal, its longstanding primary, umbrella, and first-layer excess insurer, for Asbestos Claims coverage.[17] That lawsuit resolved in 2008, with Royal releasing hundreds of millions dollars to settle underlying lawsuits.

         C. GM's Bankruptcy and Reorganization

         GM went belly up in 2009. GM voluntarily filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York in June of that year.[18] As part of its reorganization, GM sold its core assets to NGMCO, Inc., and was renamed Motors Liquidation Company ("MLC").[19] GM retained all pre-1986 excess liability insurance policies.[20]

         On March 29, 2011, the Bankruptcy Court issued an order (the "Bankruptcy Order") approving MLC's Second Amended Joint Chapter 11 Plan (the "Chapter 11 Plan"). The Bankruptcy Order and the Chapter 11 Plan were to distribute MLC's remaining assets. The Bankruptcy Order stated: "[a]ll of the parties' rights and arguments with respect to their rights and duties under any Insurance Policies (as hereinafter defined) are expressly preserved and are not impaired, increased, or otherwise altered by this Confirmation Order, the [Chapter 11] Plan, and the exhibits thereto."[21] "Insurance Policies" means insurance policies issued to the Debtors with inception dates prior to 1986 that are included in the Asbestos Insurance Assets."[22] The Chapter 11 Plan defined "Asbestos Insurance Assets" as:

All rights arising under liability insurance policies issued to the Debtors with inception dates prior to 1986 with respect to liability for Asbestos Claims, including, but not limited to: (i) rights (a) under insurance policies, (b) under settlement agreements made with respect to such insurance policies, (c) against the estates of insolvent insurers that issued such policies or entered into such settlements, and (d) against state insurance guaranty associations arising out of any such insurance policies issued by insolvent insurers, and (ii) the right, on behalf of MLC and. its subsidiaries as of the Effective Date, to give a full release of the insurance rights of MLC and its subsidiaries as of the Effective Date under any such policy or settlement agreement with the exception of rights to coverage with respect to workers' compensation claims.[23]

         On December 15, 2011, MLC formed the Motors Liquidation Company DIP Lenders Trust (again, "Motors") through a Trust Agreement (the "Trust Agreement"). Motors was established to:

(i) avoid abandonment of certain assets of [MLC] and facilitate the recovery of certain causes of actions that will not be able to be monetized before MLC['s] dissolution as required by the [Chapter 11] Plan; and (ii) to hold and administer the assets and any corresponding liabilities of the Trust listed on Schedule A, Schedule B and Schedule C attached hereto (the "Trust Assets") for the benefit of the DIP Lenders under the DIP Credit Agreement and to distribute the Trust Assets to the DIP Lenders in accordance with the terms of this Agreement.[24]

         Schedule B states that Motors has "[t]he right to prosecute, and receive the benefit of, all claims that [Motors] has or may have relating to the pre-1986 insurance policies that are identified on Exhibit A hereto for which Perkins Coie LLP has been retained on a contingency basis."[25]

         Exhibit A is a seven-page long document detailing carrier names, policy start and end dates, policy numbers, and limits.[26] OneBeacon is not listed anywhere on Exhibit A.[27] But the Trust Agreement gave Motors authority to "[a]mend or supplement this Trust Agreement without notice to or consent of the Bankruptcy Court or any DIP Lender for the purpose of. . . curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision."[28]

         Motors and GM simultaneously executed an Assignment and Assumption Agreement (the "Assignment Agreement").[29] There, GM transferred its "right, title and interest in and to the assets (including claims against third parties) set forth and described on Schedule A hereto[.]"[30]

         Schedule A to the Assignment Agreement states that Motors has "the right to prosecute, and receive the benefit of, all claims that [Motors] has or may have relating to the pre-1986 insurance policies that are identified on Exhibit A hereto for which Perkins Coie LLP has been retained on a contingency basis."[31] However, there is no Exhibit A to the Assignment Agreement. Instead, there is a one-page document entitled "Annex A." Annex A simply says "Pre-1986 Insurance Policies[.]"[32]

         Motors filed its initial suit on December 1, 2011. On January 31, 2012, Motors amended its complaint to include OneBeacon. On February 29, 2012, using its authority to cure any ambiguity, Motors amended Section B of the Trust Agreement to include language capturing OneBeacon.[33] Specifically, the amendment stated:

The right to prosecute, and receive the benefit of, all claims that [Motors] has or may have relating to all excess liability insurance policies incepting before 1986 including, without limitation, the pre-1986 insurance policies that are identified on Exhibit A hereto for which Perkins Coie LLP has been retained on a contingency basis.[34]

         III. STANDARD OF REVIEW

         This Court cannot grant either party's motion for summary judgment under Delaware Superior Court Civil Rule 56 "unless no genuine issue of material fact exists and one of the parties is entitled to judgment as a matter of law."[35] Summary judgment will not be granted if there is a material fact in dispute or if "it seems desirable to inquire thoroughly into [the facts] to clarify the application of the law to the circumstances."[36] The moving party has the burden of showing that there is no genuine issue of material fact.[37] If that burden is met, the non-moving party must demonstrate that "there is a genuine issue for trial."[38] And in determining whether there is, the Court must view the facts in the light most favorable to the non-moving party.[39]

         Where cross-motions for summary judgment are filed and neither party argues the existence of a genuine issue of material fact, "the Court shall deem the motions to be the equivalent of a stipulation for decision on the merits based on the record submitted with the motions."[40] But where cross-motions for summary judgment are filed and an issue of material fact exists, summary judgment is not appropriate.[41] In its evaluation of whether there is a genuine issue of material fact, the Court should evaluate each motion independently.[42] Where it seems prudent to make a more thorough inquiry into the facts, summary judgment is inappropriate.[43]

         IV. DISCUSSION

         A. Transfer of Rights

         OneBeacon filed a motion for summary judgment alleging that Motors Liquidation Company (again, "MLC") did not transfer its rights under the OneBeacon insurance policies to Motors Liquidation Company DIP Lenders Trust (again, the Trust is referred to herein as "Motors"). Motors contends that it was "assigned the rights to prosecute, and receive the benefit of, whatever rights [MLC] had against OneBeacon" as of December 15, 20ll.[44] The Court finds that the rights under the OneBeacon policies were property assigned to Motors. The Court GRANTS Plaintiff Motors Liquidation Company DIP Lender's Trust's Cross-Motion for Summary Judgment on Transfer of Rights, and DENIES Defendant OneBeacon's Motion for Summary Judgment on Transfer of Rights

         1. The GM Bankruptcy

         On June 1, 2009, GM filed for Chapter 11 bankruptcy in the Southern District of New York.[45] As a part of this Chapter 11, GM sold its assets to New GM, which was renamed Motors Liquidation Company (again, "MLC").[46] All pre-1986 insurance policies were not included in this initial transfer to MLC and remained held by GM.[47] On March 29, 2011, the bankruptcy court approved MLC's amended Chapter 11 Plan. This amended Plan required that MLC's rights under any pre-1986 insurance policies also be transferred to Motors.[48] OneBeacon was not excluded from this transfer.

         2. MLC Creates the Motors Trust and Transfers All Assets to It.

         On December 15, 2011, MLC formed Motors to avoid abandonment of assets held by MLC and to hold and administer the assets in a manner to benefit the DIP Lenders via the Trust Agreement.[49] The Trust Agreement stated "[e]ffective upon the Transfer Date, [MLC] hereby transfers to the Trust, in furtherance of the [amended Chapter 11 Plan], the Trust Assets free and clear . . . ."[50] The Trust Agreement defines Trust Assets as "the assets and any corresponding liabilities of the Trust listed on Schedule A, Schedule B, and Schedule C attached hereto."[51] Schedule B listed "[t]he right to prosecute, and receive the benefit of, all claims that [MLC] has or may have relating to the pre-1986 insurance policies that are identified on Exhibit A hereto. . . ."[52] Exhibit A did not include the OneBeacon policies. But the Trust was additionally authorized to hold "all other property held from time to time."[53] And the Trust Administrator could "amend or supplement [the] Trust Agreement ... for the purpose of . . . curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision. . . ."[54]

         After MLC created Motors, it executed the separate Assignment Agreement to transfer and assign assets to Motors. In that document, MLC "absolutely and unconditionally transferred], assign[ed], and deliver[ed] unto [Motors] all of [MLC's] rights, title, and interest in and to . . . the assets (including claims against third parties) set forth and described on Schedule A hereto."[55] Schedule A lists "[t]he right to prosecute, and receive the benefit of, all claims that [MLC] has or may have relating to the pre-1986 insurance policies that are identified on Exhibit A hereto . . ., "[56] While there is no Exhibit A, there is an Annex A. Annex A lists "Pre-1986 Insurance Policies."[57] OneBeacon policies are not carved out.

         On February 29, 2012, the Trust Administrator effectively amended Exhibit B of the Trust Agreement to read "[t]he right to prosecute and receive the benefit of, all claims that [MLC] has or may have relating to all excess liability insurance policies incepting before 1986 including, without limitation, the pre-1986 insurance policies that are identified on Exhibit A hereto . . . ."[58] It is undisputed that OneBeacon is a pre-1986 insurance policy.

         3. The Plain Language of the Assignment Agreement Shows MLC Successfully Transferred All Rights Under the Pre-1986 Insurance Policies to Motors, Including the OneBeacon Policies.

         OneBeacon contends that the omission of its name from the schedule of insurance policies means that MLC excluded them from the transfer to Motors. Not so. The Trust Agreement created Motors, but the actual transfer of assets to Motors occurred via the Assignment Agreement.[59] Exhibit A to (Schedule A of) the Trust Assignment does not exist, but there is an Annex A that lists the information purported to be in "Exhibit A." Annex A lists "Pre-1986 Insurance Policies" as assets to be transferred to Motors. "[T]he plain language of an assignment determines its breadth and scope."[60] Here, the plain language of Annex A transferred all "Pre-1986 Insurance Policies." OneBeacon policies were in effect from November 1, 1969, to March 21, 1972-they are, therefore, pre-1986 policies.

         "[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms."[61] "A contract is unambiguous if the language it uses has 'a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion."[62] The clear, unambiguous language of the Assignment Agreement transfers all "Pre-1986 Insurance Policies" from MLC to Motors. No doubt, OneBeacon's is a pre-1986 insurance policy. Accordingly, Motors assumed all rights to prosecute and receive the benefits of the OneBeacon insurance policies.

         4. Omission of OneBeacon from the Initial Trust Agreement Does Not Preclude Transfer to Motors.

         Neither Motors nor OneBeacon dispute that OneBeacon was not listed in Exhibit A (aka Annex A) of (Schedule A) of the initial Trust Agreement.[63] But, the Trust Administrator amended the Trust Agreement, as he was empowered to do, by including "all excess liability insurance policies incepting before 1986 including, without limitation, the pre-1986 insurance policies that are identified on Exhibit A hereto . . . ."[64] OneBeacon was not initially on Exhibit A as MLC was precluded from suing OneBeacon pursuant to a Standstill Agreement. Exhibit A of the original complaint in this action became the basis for Exhibit A of the Trust Agreement. When that Standstill Agreement expired on January 17, 2012, Motors added OneBeacon to the Complaint. Upon realizing the unintentional omission, the Trust Administrator amended the Trust Agreement so as to include the OneBeacon policies.

         OneBeacon claims that the Motors's initial omission of OneBeacon serves as an intentional waiver of its rights. It was not. Intent to abandon rights must be clear.[65] There is no evidence that MLC expressly chose to abandon its rights under the OneBeacon policies while it clearly sought to exercise its rights under all others. Further, the rights under the OneBeacon policies had already been transferred to Motors via the valid Assignment Agreement. The amendment by the Trust Administrator only served to "[cure] any ambiguity, omission, [or] inconsistency" [66] in the Trust Agreement.

         As such, MLC did validly and completely transfer all of its rights under the OneBeacon policies to Motors. Plaintiff Motors Liquidation Company DIP Lender's Trust's Cross-Motion for Summary Judgment on Transfer of Rights is GRANTED. Defendant OneBeacon's Motion for Summary Judgment on Transfer of Rights is DENIED.

         B. Triggering OneBeacon and Continental's Policies

         1. RTP 06000 Must Be Triggered for OneBeacon to be Liable

         Under Michigan law, courts "employ the plain language of the contract."[67] Therefore, "unambiguous contracts are not open to judicial construction and must be enforced as written"[68] Defendants assert that enforcement "as written" requires this Court to find that after December 31, 1971 "occurrence-based" coverage under RTP 06000 was no longer available, because Endorsement 15 converted it to "occurrence-reported" coverage.[69] They argue that because none of the claims at issue in this case were reported prior to Endorsement 15 taking effect, none of the claims trigger RTP 06000.[70]

         Motors counters by asserting that the Michigan Court of Appeals already decided this precise issue regarding coverage under Endorsement 15. Motors claims that Court did so in its decision regarding Royal's coverage.[71] Motors argues that Defendants attempt to "improperly expand Judge Silverman's [2015] ruling" when they say the reporting dates of the claims at issue preclude coverage.[72]

         It is true that RTP 06000 changed via Endorsement 15 on December 31, 1971.[73] The language "[t]his policy applies worldwide, only to occurrences during the policy period"[74] was changed to "this policy applies worldwide, only to occurrences which are reported . . . during the policy period."[75] This language in Endorsement 15 took effect on December 31, 1971, at 12:01am.[76] No retroactive date was included in the change.[77]

         Because of this change in language, Defendants argue that: (1) Endorsement 15 deems the date of the report to be the date of the occurrence; and (2) RTP 06000 covered all occurrences reported during its effective dates, even if the occurrence itself took place outside of those dates.[78] Essentially, Defendants assert that because the claims at issue are not covered by RTP 06000, the claims do not trigger the upper-level insurance that OneBeacon and Continental provided.

         The OneBeacon policies "shall pay in respect of any one loss, whether under Section A of the Insuring Clause, or under Section B of the Insuring Clause, or under both sections combined, the excess of: ... [t]he ultimate net loss amount covered under the Underlying Insurances as per Schedule."[79] Motors must show that RTP 06000 was, in fact, triggered by the claims in order to prevail here. There is no dispute by either party that the asbestos claims at issue now were reported long after RTP 06000 expired.[80] Further, Motors cannot leapfrog over the primary level of insurance to get to the Defendants' upper-level insurance. In order to hold OneBeacon and Continental liable, two requirements must be met: first, that RTP 06000 be triggered, and second, that the amount at stake is enough to trigger the OneBeacon and Continental policies.

         2. The Michigan Litigation

         Motors contends that OneBeacon and Continental are trying to re-litigate the trigger issue, which, Motors says, was already decided by the Michigan courts. In General Motors v. Royal & Sun Alliance[81] the Michigan Court of Appeals found that the unambiguous language of Endorsement 15 did not impact GM's pre-1972 Royal coverage and that "occurrence-based" coverage remained available for GM's claims after 1972.[82] In that case, Royal (an insurer) relied on the same arguments and documentation that OneBeacon and Continental relies upon here. Royal argued that it could refuse coverage of GM's asbestos-related claims because "the change in the type of policy coverage in 1972, [which] altered the nature of the agreement and coverage was no longer available for that time period."[83]

         The court of appeals found that "[a]lthough the [Royal] policy coverage was altered in 1972, Endorsement 15 provided that the policy was amended effective December 31, 1971, and the endorsement fails to delineate any change to prior policies that were in effect."[84] Further, that court held that Royal's pre-1972 "occurrence-based" coverage remained intact after 1972, and Royal's duty to defend under the pre-1972 coverage was triggered by GM's asbestos claims.[85] Most importantly here, Endorsement 15 did not retroactively convert the parties' "occurrence-based" coverage to "occurrence-reported."[86] Because the pre-1972 underlying Royal coverage was triggered, and the change in trigger was not retroactive to prior to December 31, 1971, Judge Silverman's 2015 decision does not apply to GM's pre-1972 excess coverage.[87]

         3. Endorsement 15 Does Not Change RTP 06000 Coverage Prior to 1972 from "Occurrence-Based" to "Occurrence-Reported."

         The arguments that OneBeacon and Continental make in their present motions are identical to Royal's in the prior Michigan action regarding the application of Endorsement 15. This Court, too, finds that Endorsement 15 does not preclude or obviate the trigger of coverage under RTP 06000 for OneBeacon and Continental.

         The Court previously examined Endorsement 15 in the context of post-1971 policies.[88] Many of the insurers argued that Endorsement 15 changed the underlying policies to "occurrence-reported" rather than "occurrence-based." And so, they said, Motors could not aggregate to trigger the excess insurance policies. But that prior decision resolving those arguments did not discuss the effect on the pre-1972 policies - the policies at issue here.

         The Michigan Court of Appeals found the underlying Royal policies to be "occurrence-based."[89] OneBeacon and Continental contend this finding does not bind them, as they were not parties to that litigation.[90] But that decision did affect a lower level of coverage beneath OneBeacon and Continental. That decision was based upon the same language of the same Endorsement 15 that OneBeacon relies upon in its instant motion. And the Court finds that decision is now dispositive of OneBeacon and Continental's instant argument; it was and is binding with respect to GM and Royal's relationship, and it was never altered on reargument.

         RTP 06000 was triggered by the claims at issue here. Those claims, in turn, triggered Royal's coverage. And they now trigger OneBeacon and Continental's.

         Even if this Court were to find the Michigan decision non-binding, the rules of construction employed in Royal do not change.[91] That is to say, "[a]n insurance policy must be enforced according to its terms, " "[t]he goal of contract construction is to determine and enforce the parties' intent based on the plain language of the contract itself, " and "[w]hen the language of the contract is clear and unambiguous, its construction presents a question of law for the trial court."[92]

         In looking at the language of Endorsement 15, this Court is in accord with the Michigan Court of Appeals. The plain language of Endorsement 15 "fails to delineate any change to prior policies that were in effect."[93] Endorsement 15 went into effect at 12:01 AM on December 31, 1971, and altered no policy in effect prior to that time. OneBeacon and Continental's "occurrence-based" policies were in effect prior to December 31, 1971. And those policies were not converted to "occurrence-reported" under Endorsement 15's plain language.

         Plaintiff Motors Liquidation Company DIP Lender's Trust's Cross-Motion for Summary Judgment on Trigger is GRANTED. Defendants OneBeacon and Continental's Motions for Summary Judgment on Trigger are DENIED.

         C. Suit Limitations

         OneBeacon and Continental argue that the Suit Limitations Clause incorporated into the Royal policies precludes Motors from bringing this suit because it is time barred. Motors contends that the suit is not time barred, because the Suit Limitations Clause only applies to first-party coverage, not the third-party liability insurance here. The Court finds that this suit is not precluded by RLA35's Suit Limitations Clause, and DENIES OneBeacon and Continental's Motion for Summary Judgment on Suit Limitations.

         1. The Background and Structure of OneBeacon's and Continental's Policies

         Between November 1, 1969 and March 21, 1972, OneBeacon sold three excess insurance policies to GM. GM properly transferred the rights to these policies through its Chapter 11 Plan.[94] OneBeacon's policies follow form to the excess policies and incorporate by reference most of the terms of the RLA35 umbrella policy.[95] It does so, stating their policies are, "[e]xcept as herein provided, subject to all the terms and conditions of Policy No. RLA35 issued by Royal Indemnity Insurance Company."[96]

         Continental's policies' purportedly follow form to Home #HEC 97915 82, which follows form to RLA35 "except as provided otherwise herein."[97]

         RLA35 is a package policy that provides both first- and third-party coverage. First-party coverage is that which responds to any harm the insured itself suffers. Third-party coverage is liability coverage that covers claims made by others against the insured. Section A of RLA35 pertains to the first-party insurance coverage, while Section B pertains to the third-party insurance coverage.[98] It is this third-party coverage that responds when an injured third party alleges liability against GM for bodily injury or property damage - like suits against Old GM for asbestos damage.

         Because RLA35 includes both first-party and third-party coverage, there are terms and clauses in the policy that pertain to one, the other, or both. Some of these terms and clauses are typically found only in one type, while others would not make sense if applied to that type. One of the terms used in both is "loss."

         "Loss" is used in different contexts throughout RLA35. "Loss" can mean the physical event that takes place during the policy period, causing first-party coverage to respond."[99] "Loss" can also mean that amount of payment made for a covered event under the policy-not the event itself.[100] This is the meaning of "loss" in the third-party liability coverage context.

         Here, the meaning of the term "loss" in the Suit Limitations Clause within RLA35's Notice of Loss clause is critical. This is the clause, OneBeacon and Continental say, that bars Motors's suit. The Suit Limitations Clause states: "[n]o suit to recover on account of loss under this policy shall be brought before the expiration of two months from the filing of proof as aforesaid on account of such loss, nor after the expiration of thirty-six months from the discovery of the aforesaid loss or occurrence."[101] The general and products liability policies under RLA35 - those which would provide third-party coverage - do not contain this Suit Limitations Clause.[102]

         2. RLA35 is Ambiguous as Written and Must Be Interpreted According to Its Context.

         Interpreting contract language is a question of law.[103] Normally a term in a contract is used uniformly throughout the document. However, when it is clear from the context that the term has obviously different meanings throughout the contract and these cannot be reconciled, this rule does not apply.[104] Contracts should be read as a whole.[105] But, when reading the document as a whole results in a term being used in clearly different ways, those several different (but reasonable and sensible) meanings must control.[106]

         "Under Michigan law, 'contracts must be construed consistent with common sense and in a manner that avoids absurd results.'"[107] "A contract is ambiguous 'if its words may reasonably be understood in different ways.'"[108] "In other words, a 'contract is ambiguous when its provisions are capable of conflicting interpretations.'"[109] In insurance policies, any such ambiguity is "construed liberally in favor of the insured and strictly against the insurer, because an insurer has a duty to express clearly the limitations in its policy."[110] This is settled law in Michigan."[111]

         When looking to standard practice in the insurance industry, it is almost impossible to find third-party liability coverage that contains a suit limitations provision."[112] Suit limitations clauses are common features of first-party policies, but not third party liability policies.[113] "Many first-party insurance policies, often pursuant to statute, contain provisions stating that no suit on the policy is sustainable unless commenced within a certain number of months after the loss."[114] And "[b]ecause the time of loss is more readily ascertainable in first party losses, it is easier to determine when the suit limitations period begins to run."[115] Why is this practice of import here? Because the Suit Limitations Clause falls within RLA35's Notice of Loss clause. It is tied to a "proof-of-loss" requirement-something found more typically in first-party than third-party coverage.

         3. RLA 35 Does Not Bar Motors's Suit Because "Loss" Does Not Have a Uniform Meaning and Must be Read in Context and According to Industry Standards.

         As noted before, RLA35 is a package policy that provided GM with both first- and third-party liability insurance. Because of its dual nature, certain parts of the policy apply to first-party coverage; others apply to third-party coverage. And the use of the term "loss" appears in each.

         The Suit Limitations Clause at issue is found within the Notice of Loss clause. Again, it states that "[n]o suit to recover on account of loss under this policy shall be brought before the expiration of two months from the filing of proof as aforesaid on account of such loss, nor after the expiration of thirty-six months from the discovery of the aforesaid loss or occurrence."[116] So what's the meaning of "loss" in the context of this provision?

         The term "loss" appears in two different insuring clauses. In Insuring Clause A, pertaining to first-party property coverage, it states that the policy "cover[s] all loss occurring during the period of this insurance, resulting from physical loss or damage to all property of every description."[117] It does not appear in Insuring Clause B, pertaining to third-party liability coverage. Motors contends that this difference is present because the Suit Limitations Clause referring to "loss" only applies to first-party property coverage, not third-party liability coverage. The Court agrees.

         OneBeacon argues that the term "loss" should also apply to this third-party liability coverage because even though the term "loss" only appears in the first- party insuring clause A, it is used elsewhere in RLA35 in a context that refers to both first- and third-party coverage. Maybe so. But while it is true that "loss" is used throughout RLA35, its different meanings therein depend on the context of the particular part of the document in which it is found.

         The several meanings of the term "loss" in RLA35 can only make sense if the term is read on each occasion in context. For instance, as to its use singularly for first-party property coverage, one of RLA35's clauses speaks to other insurance that exists "at the time of the happening of any loss which would, but for the existence of this insurance, insure such loss."[118] RLA35's subrogation provision releases liability given by the insured party "prior to loss."[119]

         But as to third-party liability coverage, one singularly applicable term is "ultimate net loss." That phrase is defined in the context of third-party coverage as "the amount payable in settlement of the liability of the Insured after making deductions for all recoveries and for other valid and collectively insurances . . . ."[120] For first-party coverage, it is defined to mean "the total sum actually paid in final settlement of any claim after making deductions for all recoveries and for other valuable and collectible insurance . . . ."[121] Another one of RLA35's provisions bars coverage for "that part of any loss represented by any deductible or self-insured amount" under a policy.[122] This clearly refers to an amount paid out, not the event causing the insurance to pay.

         These few examples illustrate that "loss" has different meanings throughout RLA35. And the meaning in each instance depends on the context in which it is used. In the clauses where "loss" refers to the event itself, it clearly cannot mean an amount paid. Conversely, in the clauses were "loss" refers to the amount paid, it cannot mean the event.

         4. Reading the Suit Limitations Clause to Apply to Third-Party Liability Coverage Would Produce Absurd Results.

         Here, the Suit Limitations Clause referring to "loss" is tied to a "proof of loss" requirement - something that does not exist in the industry for third-party liability coverage. That is why the term "loss" in that provision must be read as applying to first-party ...


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