MOTORS LIQUIDATION COMPANY DIP LENDERS TRUST, Plaintiff Below, Appellant,
ALLSTATE INSURANCE COMPANY, et al., Defendants Below, Appellees.
Submitted: May 2, 2018
Below: Superior Court of the State of Delaware CA No.
STRINE, Chief Justice; VALIHURA, and VAUGHN, Justices
T. Vaughn, Jr. Justice.
consideration of the parties' briefs, oral argument, and
the record on appeal, it appears that:
is an insurance coverage case involving excess general
liability policies purchased by General Motors for policy
periods spanning from the late 1960's to the
mid-1980's. In 2009, General Motors underwent a
bankruptcy reorganization, and as a result of that proceeding
the rights to any proceeds from the policies were assigned to
the Appellant, Motors Liquidation Company DIP Lenders Trust
("the Trust"). The Appellees are 14 insurance
companies that sold the excess policies to General Motors.
The issue is whether the excess policies provide coverage for
asbestos-related and environmental claims asserted against
General Motors. In three opinions, the Superior Court
determined that they do not and granted summary judgment to
the Appellees. We have concluded that the judgment of the
Superior Court should be affirmed for the reasons given by it
in those opinions.
more than 50 years, General Motors purchased comprehensive
products liability insurance from Royal Insurance Company
("Royal"). Policies issued through 1971 were
"occurrence-based," meaning the coverage responded
to injuries arising from incidents occurring within the time
at risk. The parties then negotiated Endorsement 15, which
shifted policies issued after 1971 to "claims-made"
insurance which covered occurrences reported during the
policy period. Royal is not a party to this litigation.
excess policies involved here are ones that towered above the
Royal policies. General Motors continuously bought layers of
excess coverage that towered over the Royal policies during
the time-frame relevant to this case. These excess policies
were issued by different carriers, covering different time
frames, in different amounts, and with different attachment
points. The pre-1972 excess policies "follow-form"
by adopting the terms of the underlying Royal policy. It
appears that some of the post-1971 excess policies follow
form to the underlying Royal policies, but some contain other
triggering language, such as occurrence- based language, and
some contain other language which differs from the Royal
1977, General Motors received the first of what would become
thousands of claims from plaintiffs alleging they had
sustained personal injury from exposure to General Motors
automotive products containing asbestos. In the years that
followed, more than 40, 000 such claims were filed against
1977 until 1993, when the Royal insurance program was
terminated, almost 2, 000 asbestos suits were filed against
General Motors and tendered to Royal for handling. Royal
handled these claims on a claims-made basis. It registered
these claims only to the year in which the claim was received
and paid each claim off the Royal policy for that year.
Asbestos claims made during the period of Royal coverage are
not the subject of this action. In the early 2000's,
asbestos claims against General Motors increased
dramatically. In 2004, General Motors tendered to Royal, for
defense and indemnity, 60 CDs of asbestos claims. All of
those claims were made after the Royal policy periods had
expired. None were ever submitted to General Motors or Royal
during any policy year. They are the claims for which
coverage is sought in this action. Royal denied coverage and
on January 26, 2005 filed a declaratory judgment action in
the Superior Court in Delaware to determine whether it had
any obligation to General Motors under either the pre-1972
policies or the post-1971 policies for asbestos-related and
environmental claims. Later that same day General Motors
filed a declaratory judgment action in Michigan to determine
Royal's obligations under the pre-1972 policies. In the
Michigan action, General Motors did not seek any
determination regarding the post-1971 policies. General
Motors moved for dismissal or stay of the Delaware action.
The action in Delaware was not dismissed but it was stayed in
favor of the Michigan action. The Michigan action proceeded,
and in 2008 General Motors and Royal entered into a
settlement. The settlement released all of Royal's
general liability policies, both the pre-1972 policies and
the post-1971 policies, from any further liability. None of
the excess general liability carriers were parties to either
the Michigan or Delaware actions, and none were involved in
the 2008 settlement.
mentioned, in 2009 General Motors entered bankruptcy. During
the bankruptcy, General Motors was renamed Motors Liquidation
Corp. On December 1, 2011 Motors Liquidation Corp. filed this
action. Shortly after the action was filed, Motors
Liquidation Corp. assigned its rights to proceeds under its
pre-1986 excess general liability policies to the Trust, as
required by the bankruptcy plan of reorganization.
first Superior Court opinion in the case, dated December 31,
2013, was issued in response to two motions for partial
summary judgment filed by the Trust. In those motions the Trust
argued that all asbestos-related claims were a single
occurrence and "all sums" allocation should apply
to the pre-1972 policies. In the policies, the pertinent
provision relied upon by General Motors provided that the
insurance company agreed:
To pay on behalf of the Insured all sums which the Insured
shall be obligated to pay by reasons 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.
Insurers argued that allocation should be pro rata. With
regard to occurrence, the Insurers argued that the course of
dealing between General Motors and Royal and latent ambiguity
in the policies affected the interpretation of the policy
language, and they should be permitted to conduct discovery.
Superior Court denied both motions for summary judgment. It
concluded that in order to determine whether "all
sums" or "pro rata" allocation applied, it
must first determine whether Michigan law or Delaware law
applied. The court reasoned that choice of law was not the
subject of the motions, had not been fully briefed, and any
decision on choice of law was premature. As to occurrence,
the court concluded that discovery should be permitted to
proceed. The ...