Insurance Law Hawaii

Umbrella Carrier Must Drop Down to Fill Gap in Coverage

    The umbrella insurer was required to drop down when the primary carrier's policy only covered the additional insured when it was vicariously liable for the named insured's operations. Am. States Ins. Co. v. Ins. Co. of the State of Pa., 2020 U.S. App. LEXIS 585 (9th Cir. Jan. 7, 2020).

    Sierra Pacific Industries and Howell's Forest Harvesting were sued for damages caused by the Moonlight Fires. Howell was insured by American States. Sierra was an additional insured under the American States policy, but only to the extent that Sierra was vicariously liable for Howell's operations. Sierra was insured under an excess and umbrella policy issued by Insurance Company of the State of Pennsylvania (ICSOP). 

    Because American's policy did not extend to Sierra's potential non-vicarious liability for the property damage caused by the fire, there was a gap in the scope of American's defense obligation in the underlying suits. The district court noted that when claims were covered by an umbrella policy but not by the underlying primary policy, the umbrella insurer dropped down to provide primary coverage.

    Further, because American and ICSOP shared the same level of obligation on the same risk for the same insured, and American undertook its defense duty while ICSOP did not, the district court correctly held American was entitled to equitable contribution of defense costs from ICSOP. 

    In addition to providing excess coverage, the ICSOP policy included an umbrella clause providing that ICSOP would cover "the total of all damages" resulting from property damage "covered by the [ICSOP] policy but not covered by an underlying policy." The ICSOP policy also created both excess and umbrella defense obligations. Its umbrella defense obligation provided that ICSOP had a "duty to defend any claim or suit seeking damages covered by" the ICSOP policy "but not covered by any underlying insurance."  Since the American policy provided for a duty to defend only with respect to Sierra's vicarious liability, the district court correctly determined that the ICSOP had a duty to drop down and defend the underlying suits in a co-primary capacity with American.

   In apportioning defense costs, the district court determined that the most equitable approach was to split costs equally between American and ICSOP. This was not an abuse of discretion. 

    Finally, the district court should have awarded prejudgment interest to American. The case was remanded with an instruction to award prejudgment interest to American. 

    

Excess Has No Duty To Indemnify Based Upon Primary Policy's Exclusions

    Based upon the primary policy's exclusion, the following form excess policy had no duty to indemnify after the insured reached a settlement in the underlying case. Houston Cas. Co. v. Strata Corp., 2019 U.S. App. LEXIS 3936 (8th Cir. Feb. 6, 2019).

    An employee of Strata fell to his death at a Montana mine. The estate sued, alleging that Strata's intentional failure to maintain a safe workplace triggered an exception to the Workers' Compensation Act, giving the estate a cause of action against Strata.

    Strata had a Workers Compensation and Employers Liability Policy from Liberty Mutual that included a limit of $500,000 for each accident. The policy excluded bodily injury intentionally caused by Strata. The policy also included an Intentional Injury Exclusion Endorsement barring coverage for "bodily injury caused by Strata's intentional, malicious, or deliberate act, whether or not the act was intended to cause injury to the employee injured . . ." Strata also had an excess policy from Houston Casualty Company which had limits of up to $5 million in excess coverage. Houston's policy followed form with the underlying Liberty Mutual policy. 

    Liberty Mutual defended Strata against the estate's wrongful death lawsuit. The case settled and Liberty Mutual contributed a portion of the settlement in exchange for a full release from Strata. Houston Casualty refused to contribute anything to the settlement. 

    Houston Casualty sued, seeking a declaratory judgment that it had no duty to defend or indemnify Strata. Strata counterclaimed. On cross-motions for summary judgment, the district court granted summary judgment to Houston Casualty and denied summary judgment for Strata. Strata appealed.

    The Eighth Circuit concluded that the district court properly granted summary judgment to Houston Casualty because the excess policy did not cover the estate's claims against Strata. The excess policy expressly stated that it was subject to the exclusions in the underlying coverage. Strata argued that the excess policy did not expressly state that it was subject to endorsements to Liberty Mutual's primary policy. But this argument was unavailing.

    Nor was the exclusion ambiguous. The estate alleged that Strata's deliberate and intentional acts caused his death. These allegations brought the estate's lawsuit within the Intentional Acts Exclusion Endorsement. Accordingly, Houston Casualty had no duty to indemnify Strata under the excess policy.

Exhaustion of Primary Policy Triggers Excess Coverage

    The Ninth Circuit affirmed the district court's ruling that the excess policy was triggered by settlements exhausting the primary policy. Westport Ins. Corp. v. California Cas. Management Company, 2019 U.S. App. LEXIS 4889 (9th Cir. Feb. 20, 2019). 

    Doe 1, Doe 2 and Doe 3 filed suit against the insured, Moraga School District, and three of its administrators for alleged sexual abuse by a teacher. The District was insured under primary general liability policies from 1991 through 1997. From October 1, 1994 to October 1, 1997, Westport also issued a series of annual excess policies that covered the District and its employees. California Casualty issued success liability policies to the Association of California School Administrators from July 1, 1986 to July 1, 2000, providing excess liability coverage to the District's school administrators.

    Doe 1 alleged abuse during policy periods 1993-94, 1994-95, and 1995-96; Doe 2 alleged she was molested in the 1995-96 and 1996-97 periods. Does 3 alleged that she was molested in the 1996-97 period. Westport eventually settled the three suits for an aggregate sum of $15.8 million. California Casualty refused to reimburse Westport. Westport sued and secured summary judgment.

    The court divided each Doe's settlement equally across the policy period(s) in which she alleged she was molested. Next, the court reduced each policy period amount by 25 percent to reflect the District's liability. Then, the court deducted $1 million from each policy period in accordance with Wesport's Primary policy limit. Finally, the court assessed liability against California Casualty up to $150,000 for each Administrator in each policy period. In total, the district court found California Casualty liable for $2.6 million of the $15.8 million paid to the Does collectively. Dissatisfied with the result, California Casualty appealed. 

    On appeal, the Ninth Circuit noted that California Casualty's policy was an excess policy requiring only that the "underlying primary collectible insurance or self-insurance" be exhausted before its coverage began. The policy required the exhaustion of only "primary" or "self" insurance as opposed to "all other" insurance or "primary and excess" insurance. Westport's policy, on the other hand, stated, "If there is any other collectible insurance available to the insured . . . this insurance will apply in excess of other collectible insurance. Accordingly, California Casualty's policy applied upon the exhaustion of the $1 million of underlying insurance, not after exhaustion of all other insurance. 

    California Casualty had denied excess coverage in the face of settlement demands far exceeding the primary layer. Therefore, it waived its argument that the lack of contemporaneous allocation of liability in the settlements precluded subsequent apportionment. The three settlement agreements released the District and the Administrators from liability and did not differentiate among the defendants. Given the blended pleadings and working of the settlement agreements, the district court did not abuse its discretion in allocating the liability equally among the District and the three administrators. Therefore, the district court's judgment was affirmed.

    Thanks to Damon Key blogging colleague Mark Murakami for the heads up on this case. 

    

Liability Cap Does Not Exclude Defense Costs for Loss Related to Deep Water Horizon

    The Texas Supreme Court found that Lloyd's endorsement imposing a cap on liability for a joint venture did not exclude coverage for defense costs. Anadarko Petroleum Corp. v. Houston Cas. Co. et al., 2019 Texas LEXIS 53 (Texas Jan. 25 2019j.

    Pursuant to a joint venture agreement, Anadarko held a 25% ownership interest in the Macondo Well in the Gulf of Mexico. When the well blew out, numerous third parties filed claims against BP entities and Anadarko. Many of the claims were consolidated into a multi-district litigation (MDL). The MDL court granted a declaratory judgment finding BP and Anadarko jointly and severally liable. BP and Anadarko reached a settlement in which Anadarko agreed to transfer its 25% ownership interest to BP and pay BP $4 billion. In exchange, BP agreed to release any claims it had against Anadarko and to indemnify Anadarko against all other liabilities arising out of the Deepwater Horizon incident. BP did not agree, however, to cover Anadarko's defense costs.

    Anadarko had a policy through Lloyd's. The policy provided excess-liability coverage limited to $150 million per occurrence. Lloyd's paid Anadarko $37.5 million (25% of the $150 million limit) based upon Anadarko 25% ownership in the joint venture. Anadarko argued that Lloyd's still owed all of Anadarko's defense expenses, up to the $150 million limit. 

    The policy did not obligate Lloyd's to defend Anadarko, but only to reimburse for defense costs. Lloyd's contended that an endorsement, The "Joint Venture Provision" reduced the $150 limit when Anadarko's liability arose out of the operations of a joint venture in which Anadarko had an ownership interest. The endorsement provided that Lloyd's liability was "limited to the product of (a) the percentage interest of Anadarko in the Joint Venture and (b) the total limit afforded Anadarko under the policy." Based on the product of Anadarko's percent interest in the Deepwater Horizon joint venture (25%) and the total coverage limit under the policy ($150 million), Lloyd's argued that the cap on excess liability coverage was $37.5 million, which had already been paid to Anadarko. 

    The trial court granted summary judgment to Anadarko, but the court of appeals reversed.  

    Before, the Texas Supreme Court, Anadarko argued that the phrase "as regards any liability of Anadarko which is insured under the policy" limited Lloyd's liability for Anadarko "liability . . . insured," which did not include its defense expenses. Lloyd's, on the other hand, submitted that the reference to Anadarko's "liability . . . insured" included defense expenses. The Texas Supreme Court concluded that "liability" referred in the policy to an obligation imposed on Anadarko by law to pay for damages sustained by a third party who submitted a written claim. The Joint Venture Provision's reference to "any liability of Anadarko which is insured" under the policy did not refer to Anadarko's defense expenses. Although both Anadarko's liabilities and defense expenses were insured, the policy distinguished between the two and the Joint Venture Provision applied only to liabilities, not to defense expenses. 

    Accordingly, the court of appeal's judgment was reversed, Anadarko's motion for partial summary judgment was granted, and the case was remanded to the trial court for further proceedings. 

    

    

Excess Carrier's Refusal to Approve Settlement or Take Over Defense Results in Bad Faith

    The Ninth Circuit found that under California law, the excess carrier acted in bad faith by refusing to either approve the underlying settlement or take over the defense. Teleflex Med. Inc., v. Nat'l Union Fire Ins. Co., 2017 U.S. App. LEXIS 4996 (9th Cir. March 21, 2017).

    The insured, LMA North America, Inc., distributed laryngeal mask airway products. In 2007, LMA brought a patent infringement suit against Ambu related to certain laryngeal masks. Ambu counterclaimed, demanding $28 million for trade disparagement and false advertising claims. Transcontinental Insurance Company (CNA), the primary carrier, agreed to defend LMA.

    In 2011, the parties mediated. CNA attended the mediation, but National Union, LMA's excess carrier, did not. LMA's counsel gave daily reports to update National Union on the mediation. A conditional settlement was reached under which Ambu would pay LMA $8.75 million for the patent claims while LMA would pay Ambu $4.75 million for the disparagement claims. The settlement was conditioned on LMA's ability to obtain approval from CNA and National Union.

    CNA committed its full $1 million limit, but National Union was reluctant to recognize that Ambu's counterclaims could invade its coverage layer. LMA continued to provide reports and justification to National Union for the settlement amount. LMA's defense counsel felt the risk of damages was substantially in excess of $10 million.

    Eventually, LMA finalized the settlement with Ambu and notified National Union. National Union advised that it would take over the defense of the underlying suit if LMA could "undo" the settlement. LMA responded that the executed settlement could not be undone.

    LMA then sued National Union for breach of contract and bad faith. National Union moved for summary judgment, arguing that it had the absolute right to veto the settlement under the excess policy's "no voluntary payments" and "no action" clauses. The policy provided that the insured could not voluntarily make a payment to settle without the consent of National Union. Further, the "no action" clause provided that "there will be no right of action against us unless. . . the amount you owe has been determined with our consent or by actual trial and final judgment."

    The district court denied National Union's summary judgment motion. The district court relied upon Diamond Heights Homeowners Assoc. v Nat' Am. Ins. Co., 227 Cal. App. 3d 563 (1991). There, the state court ruled that an "excess insurer may waive its rights under a no action clause if it rejects a reasonable settlement and at the same time fails to offer to undertake the defense." Thereafter, the case proceeded to trial and the jury found for LMA on both the breach of contract and bad faith claims, but decided not to award punitive damages.

    The Ninth Circuit affirmed. Although National Union argued that Diamond Heights was not the controlling case, the Ninth Circuit disagreed and believed the California Supreme Court would follow Diamond Heights. The court also disagreed with National Union's contention that LMA should have been required to prove its contract claim by clear and convincing evidence rather than the preponderance of evidence.

    

Following Hawaii's Lead, Excess Carrier Allowed to Pursue Equitable Contribution from Primary

    Citing the Hawaii Supreme Court's decision in St. Paul Fire & Marine Ins. Co. v. Liberty Mut. Ins. Co., 135 Haw. 449, 353 P.3d 991 (2015), the California Court of Appeal determined that the excess carrier could pursue an equitable subrogation action alleging that the primary insurers' unreasonable failure to settle within policy limits resulted in a settlement exceeding policy limits, thereby damaging the excess carrier. Ace Am. Ins. Co. v. Fireman's Fund Ins. Co., 2016 Cal. App. LEXIS 647 (Cal. Ct. App. Aug 5, 2016).

    John Franco suffered serious injury in a special effects accident while working on a film set. He and his wife sued Warner Brothers Entertainment, Inc. and related entities. Fireman's Fund provided primary insurance with a $2 million limit, and an umbrella policy with a $3 million limit. Ace American provided the Warner Brothers entities an excess policy with a $50 million limit.

    Fireman's Fund defended the Warner Brothers entities. Franco made settlement demands within the limits of Fireman's Fund's policies. Fireman's Fund refused such demands. Subsequently, Franco settled the lawsuit for an amount substantially in excess of policy limits. Fireman's Fund consented to the settlement and contributed to it. Ace American funded the amounts in excess of Fireman's Fund's policies' limits.

    Ace American then filed suit against Fireman's Fund for equitable subrogation and breach of the covenant of good faith and fair dealing. Fireman's Fund demurred. Fireman's Fund argued an excess insurer could only sue for equitable subrogation if there was a judgment against the insured that exceeded the limits of the primary policy. Because the Franco lawsuit had settled and there was no judgment against Warner Brothers, Fireman's Fund argued, Ace American could not sue for equitable subrogation.

    The California Court of Appeal noted that an insurer's cause of action for equitable subrogation included the following: Ace American had paid the claim of the insured, Warner Brothers, to protect its own interest and not as a volunteer; Ace American suffered damages caused by Fireman's Fund's act or omission; and Ace American's damages were in a liquidated sum. The appellate court found no reason to hold that either Warner Brothers or its assignee, Ace American, must suffer a loss due to Fireman's Fund's failure to reach a reasonable settlement with no remedy simply because the case settled instead of being litigated through trial. Ace American's alleged damages were clear, liquidated, and certain.

    The court noted that most other jurisdictions that had considered the issue found that an insured or excess insurer that contributes to a settlement can pursue the primary insurer for failing to accept reasonable settlement within primary limits. The court cited the Hawaii Supreme Court's St. Paul decision, noting the case involved a post-verdict settlement in excess of primary limits. The Hawaii Supreme Court stated "the public interest in encouraging reasonable settlement is best serviced by permitting an excess insurer to seek relief under the doctrine of equitable subrogation." St. Paul, 135 Haw. at 456. 

    Therefore, the court reversed the judgment sustaining Fireman's Fund's demurrer, and remanded the case for further proceedings.

Motion to Dismiss Coverage and Defense Under Umbrella Policies Denied

    The court denied National Union's motion to dismiss the insured's suit to compel a defense under the umbrella policies. San Diego Unified Port Dist. v. Nat'l Union Fire Ins. Co., 2016 U.S. Dist. LEXIS 88362 (S. D. Cal. July 6, 2016).

    National Union sold the insured primary and umbrella policies, promising to defend and indemnify against certain property damage liability claims. National Union issued four primary policies, two of which were exhausted. National Union also sold to the insured the first layer of insurance directly above the unexhausted and exhausted policies in the form of four umbrella policies. Coverage under the umbrella policies was triggered once the primary policies were exhausted.    

    According the insured's First Amended Complaint (FAC), the insured tendered and National Union agreed to defend under the unexhausted primary policies certain claims against the insured. National Union, however, subsequently informed the insured that it unilaterally would be assigning payments for one of the insured's defense experts against the unexhausted primary policies' limits. National Union then tendered the asserted remaining policy limits to the insured and considered the unexhausted primary policies to be exhausted. Therefore, National Union would cease defending the insured.

    In filing suit, the insured argued the unexhausted primary policies were not exhausted. Further, even if the unexhausted primary policies were exhausted, National Union was required to drop down under the umbrella policies to defend the insured.

    After the original complaint was filed, National Union acknowledged it had a defense obligation under the umbrella policies. As a result of National Union's failure to defend, however, the insured incurred its own defense costs for which it sought reimbursement.

    The insured's FAC sought a declaratory judgment that the unexhausted primary policies were not exhausted and National Union's duty to defend under these policies continued. A declaratory judgment was also sought to establish that National Union had a duty to defend under the umbrella policies. National Union moved to dismiss.

    National Union argued the FAC's allegations regarding its duty to defend under the umbrella policies in the event of exhaustion of the primary layer of insurance was moot and did not present a controversy ripe for determination. If the primary policies were not exhausted, there was no dispute about the umbrella policies. If the primary policies were exhausted, then National Union had acknowledged that it would defend under the umbrella policies.

    The court disagreed the dispute was moot. The pendency of a decision whether the unexhausted primary policies were exhausted did not moot the need for judicial relief. Whether the primary policies were already exhausted would be decided in this litigation. 

    National Union contended it had no duty to defend under the umbrella policies if the primary layer was exhausted because the umbrella policies only applied to suits, not claims. The insured argued, however, that the umbrella policies stated that "[t]his Insuring Agreement shall also apply to occurrences not covered by any underlying insurance due to exhaustion." And because the primary policies clearly covered claims, the reasonable interpretation of this provision was that the excess coverage included claims.  

    The court found the language ambiguous. The umbrella policies stated the insurer "shall defend any suit, but shall have the right to investigate, negotiate and settle any lawsuit." On the other hand, the policies stated the umbrella insurance applied "to occurrences covered under this policy but not covered by any underlying insurance . . . This policy shall also apply to occurrences not covered by any underlying insurance due to exhaustion." This second sentence conflicted with the language about the insurer's defense duty and created ambiguity that could not be resolved on a motion to dismiss.

Umbrella Policy Deemed Excess Over Pooled Self-Insurance

   The municipal league's argument that an umbrella policy should contribute to a settlement funded by a municipal risk-pooling organization failed before the Illinois Court of Appeal. Illinois Municipal League Risk Management Ass'n v. State Farm Fire and Casualty Co., 2016 Ill. App. LEXIS 45 (Ill. Ct. App. Feb.2, 2016).

   Roel Valle, a city clerk for the Village of Lynwood, was insured under an umbrella policy issued by State Farm. Lynwood belonged to the Illinois Municipal League Risk Management Association (Association), a municipal risk-pooling organization. 

   Valle was involved in an accident while driving a car owned by Lynwood. The other driver sued Valle and Lynwood. Valle and Lynwood notified the Association and State Farm about the lawsuit. The Association defended and settled with the other driver for $5.8 million. State Farm did not assist in the defense and did not contribute to the settlement. 

   The Association, as subrogee of Valle and Lynwood, sued State Farm, alleging State Farm breached its contract by failing to contribute its policy limits to the settlement. Both parties moved for summary judgment.

   The State Farm umbrella policy required Valle to purchase automobile liability insurance as a primary policy. The policy noted under its "Other Insurance" provision that "[t]he coverage provided by this policy is excess over all other insurance and self insurance." The Association's contract with Lynwood provided,

Other Coverage or Insurance: If any other valid and collectible coverage, whether by commercial insurance, self-insurance or other funding mechanism, applicable to any loss or expense covered by the Association is available to the Members, the coverage afforded by the Association shall be in excess of and shall not contribute with such other coverage. 

   The trial court found that the Association, by contract, agreed to pay the liability of Lynwood and Valle, up to the contract limits of $8 million, and State Farm's umbrella policy provided coverage for the accident only if the liability exceeded $8 million. Because the underlying lawsuit settled for less than $8 million, the trial court held that State Farm owed the Association nothing.

   The appellate court affirmed. An umbrella policy, in contrast to a primary policy that contains an other insurance clause, was recognized as providing unique and special coverage.The court construed the umbrella policy to provide insurance coverage only when the loss exceeded available limits of insurance and self-insurance, including pooled self-insurance. 

   State Farm's coverage was "excess over all other insurance and self insurance." Because the Association provided coverage for the accident by self-insurance, the Association provided coverage for the losses up to $8 million, and State Farm's policy would cover losses only in excess of that amount. 

   

New Hampshire Court Holds Primary Must Exhaust Before Excess Must Defend

  In responding to a certified question, the New Hampshire Supreme Court held that the excess carrier's duty to defend is not triggered until the primary's insurer's policy is exhausted. Old Republic Ins. Co. v. Stratford Ins Co., 2016 N.H. LEXIS 8 (N.H. Jan. 26, 2016).

   Old Republic and Stratford each provided coverage for a tractor-trailer that collided with a vehicle. The owner of the tractor, Ryder Truck Rentals, was insured by Old Republic. DAM Express leased the tractor from Ryder. Pursuant to the lease, Ryder was responsible for obtaining a policy from the tractor. DAM, however, also purchased a separate policy from Stratford. When the collision occurred, the driver of the tractor-trailer was employed by DAM. 

   The passengers of the vehicle were injured and sued the driver, DAM and Ryder. Old Republic defended all defendants, but asked Stratford to help pay the defense costs. Stratford refused, contending its coverage for DAM and the driver was excess to Old Republic's policy. 

   Old Republic sued Stratford, seeking a declaratory judgment that Stratford had an obligation, as a co-primary insurer, to provide coverage and pay a portion of the defense costs. The federal district court ruled that Old Republic provided primary coverage and Stratford provided excess coverage. Under New Hampshire law, however, the duty of an insurer to defense was the same whether its potential liability was as a primary or as an excess carrier. Therefore, even though it considered itself an excess carrier, Stratford was obligated to share equally in the defense costs in the underlying action.

   Both parties appealed. The First Circuit certified the question to the New Hampshire Supreme Court, asking when an excess carrier's duty to defend was triggered. 

   The New Hampshire court adopted the majority rule: where an insured was covered by both a primary policy and an excess policy, the excess carrier was not obligated to participate in the defense until the primary policy limits were exhausted. The court's prior statement on the excess carrier's duty to defend was dicta and did not control the issue now before the court. 

 

Dispute on Policy's Aggregate Limits Decided in Insureds' Favor

    The Montana Supreme Court held that ambiguous language in the excess policy regarding aggregates provided an additional $4 million in CGL coverage.  Westchester Surplus Lines Ins. Co. v. Keller Transport, Inc., 2016 Mont. LEXIS 9 (Mont. Jan. 12, 2016).   

    The insureds' tanker truck overturned and spilled 6,380 gallons of gasoline. The gasoline flowed beneath several homeowners' properties. The insureds held a Commercial Transportation Policy issued by Carolina Casualty Insurance Co. (CCIC). The policy had two coverages: (1) commercial automobile with coverage of $1 million per accident; and (2) commercial general liability, with $1 million in coverage for each occurrence, as well as a $2 million "General Aggregate." The CGL policy stated that its "General Aggregate" limit was the most that would be paid under the CGL coverage regardless of the number of insureds or persons making claims.

   Westchester issued an excess liability to insureds. Stated limits were $4 million for each "occurrence" as well as a $4 million "General Aggregate." The term "General Aggregate" was not defined.

   The homeowners sued the insureds alleging negligence for causing the accident and in the manner in which the clean-up efforts had been implemented. 

   CCIC paid for related clean-up expenses and litigation costs under the Auto portion of the policy. CCIC notified the insureds that its duty to defend would end once the Auto coverage had been exhausted. When such limits were exhausted, CCIC referred the matter to Weschester. Westchester undertook the defense pursuant to a reservation of rights, noting that it had no duty to defend under its policy, but that it would defend until its limits were exhausted.

   When Westchester had paid $4 million in clean-up expenses and litigation costs, it referred the defense back to CCIC. CCIC defended, but filed a declaratory judgment suit against Westchester, seeking a declaration of CCIC's and Westchester's responsibilities. The Homeowners then made a claim that the CCIC policy provided an additional $1 million pursuant to the CGL coverage, and that the Weschester policy likewise provided an additional $4 million in excess limits under the CGL coverage.

   In the tort action, the Homeowners secured confessions of judgment against the insureds for $13 million in damages. The insureds assigned their rights under the polices to the Homeowners.

   In the declaratory judgment action, the parties moved for partial summary judgment. The court found that an additional $1 million in limits under the CGL coverage were implicated by the Homeowners' claims. Further, an additional $4 million was available under Westchester's excess policy because the phrase "general aggregate" limit was undefined and ambiguous. The phrase could be read as establishing a "general aggregate" limit for excess payments for each coverage in the underlying policy, rather than only establishing a "general aggregate" limit for the entire policy. 

  On appeal, Westchester argued the term "general aggregate" meant the maximum that applied to all coverages under the entire policy. The Homeowners noted that the term was undefined in the policy. Given the structure of the excess and underlying policies, the maximum must apply individually to each of the underlying coverages, or at least create an ambiguity that made it so. The court agreed with the Homeowners.

   Schedule A of Westchester's policy referred to the underlying insurance. It first described the Auto liability policy with a $1 million limit for each occurrence. It then described the CGL policy with a $2 million "General Aggregate" and a $2 million "Products/Completed Operations Aggregate." Therefore, Schedule A listed two aggregates under the CGL portion of the policy. Further, under the Limits of Insurance section, the policy stated there was a $4 million "General Aggregate," and a $4 million "Products/Completed Operations Aggregate."

   Given the language of the Westchester policy, the $4 million "General Aggregate" and the $4 million "Products/Completed Operations Aggregate" were applicable only to the CGL coverage because this was the only coverage for which those terms were used in the underlying insurance stated in Schedule A. The "$4,000,000 Each Occurrence" stated in the excess policy's Limits of Insurance provision would likewise appear to correspond to the Auto coverage's "$1,000,000 Each Occurrence" stated in Schedule A. Under this logical reading, the insureds would expect to have $4 million in excess insurance per occurrence under the Auto coverage, with no aggregate, and $4 million in excess insurance, with a $4 million aggregate, under the CGL coverage, or a total of $8 million in excess limits for the two coverages.

   Therefore the court upheld the trial court's holding that the Westchester provided an additional $4 million in CGL coverage.