Cannon Electric v. Munich Reinsurance America CA2/5

Filed 2/27/24 Cannon Electric v. Munich Reinsurance America CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

CANNON ELECTRIC, INC. et al., B316109

Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No.
v. BC290354)

MUNICH REINSURANCE
AMERICA, INC.,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of
Los Angeles County, David S. Cunningham III and Ann I. Jones
(Retired), Judges. Affirmed.
Troutman Pepper Hamilton Sanders, Louise M. McCabe
and Elizabeth Holt Andrews for Defendant and Appellant
Allstate Insurance Company.
Musick, Peeler & Garrett, Cheryl A. Orr and Lawrence A.
Tabb; Kennedys CMK and Matthew Thomas Walsh for
Defendant and Appellant Affiliate Insurers.
 Charlston Revich, Harris & Hoffman and Ira Revich for
Defendant and Appellant Munich Reinsurance America, Inc.
Morgan, Lewis & Bockius, Paul A. Zevnik, David S. Cox,
Gerald P. Konkel and Christopher M. Popecki for Plaintiffs and
Respondents.
_________________________

Defendant and appellant Munich Reinsurance America,
Inc., formerly known as American Re-Insurance Company
(American Re), and as the successor-in-interest to Executive Risk
Indemnity, Inc., formerly known as American Excess Insurance
Company (American Excess) (collectively referred to herein as
Munich) appeals from a judgment entered in favor of plaintiff and
respondent ITT LLC, formerly known as ITT Corporation, in this
insurance coverage action concerning the proper allocation of
losses among multiple successive insurers for asbestos-related
personal injury claims. On appeal, Munich contends coverage
under one of its excess insurance policies was limited to ITT’s
liability for damages during the policy period, requiring “pro
rata” allocation of losses among multiple successive insurers. We
conclude that the plain language of the provisions applicable to
this excess policy extended the policy’s protection beyond the
policy period, and therefore, the trial court properly applied the
“all sums” method to allocate losses.
Munich also joins in two contentions by a respondent who
has since settled with ITT and dismissed its appeal. The first
concerns “prior insurance” and “non-cumulation” conditions,
which prevent a policyholder who has a continuous loss across
more than one policy period from recovering under multiple
successive policies. Munich asserts that if coverage for a loss

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existed under a prior policy, the non-cumulation condition
reduces the per occurrence and aggregate limits of the
subsequent policy.
We conclude the non-cumulation condition applies when a
loss is covered by multiple successive policies and the insured
seeks reimbursement from one of the policies that is later in time.
Each policy provides coverage for loss resulting from an
“occurrence.” When an occurrence triggers multiple successive
policies, there is coverage for the loss under multiple policy
periods. For the same loss to be covered under more than one
policy, it must result from the same occurrence. The non-
cumulation condition is implicated if the insured seeks
reimbursement for a loss that is covered under more than one
policy because it results from the same occurrence. It is
undisputed that ITT did not seek reimbursement under Munich’s
policies for any loss that ITT had already received payment from
a prior policy based on the same occurrence. Therefore, the trial
court correctly found the non-cumulation condition was not
implicated by the claims that ITT submitted.
The second contention Munich makes by way of joinder is
that settlement proceeds ITT received should have been assigned
to specific resolved claims. However, Munich did not raise this
issue in the trial court and cannot raise it for the first time on
appeal.
We conclude Munich has failed to demonstrate error, and
therefore, the judgment is affirmed.

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 FACTS AND PROCEDURAL HISTORY

ITT’s Liability Insurance

ITT manufactured and supplied products to a variety of
industries worldwide, including automotive and industrial
components. During the relevant period, from 1959 to 1986, ITT
purchased multiple layers of insurance coverage: (1) primary
policies for different policy periods from various insurers,
including Pacific Employers Insurance Company (PEIC); (2)
umbrella policies from various insurers, including Affiliated FM
Insurance Co. (Affiliated FM); and (3) excess policies from various
insurers, including Munich and United States Fire Insurance
Company (U.S. Fire).
The layers of insurance coverage were structured to operate
as if a single insurer had issued a single policy. If ITT’s primary
insurance coverage were exhausted by a single claim or group of
claims, ITT expected the first layer umbrella policy to take over
as if it were the primary policy. If the umbrella policy were
exhausted by the payment of claims up to the aggregate limit, the
next layer of excess coverage would be activated, exhausting
vertically thereafter until the entire amount of coverage was
exhausted.
ITT purchased “follow form” excess policies that
incorporated the terms and conditions of the lead umbrella policy
for substantially identical coverage terms.
Thousands of product liability actions have been filed
against ITT since the 1990s, seeking compensatory damages for
progressive injury, disease, and death, alleged to have been

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caused by asbestos exposure. Primary insurer PEIC initially
assumed responsibility for product liability lawsuits against ITT
arising from asbestos, paying the costs of defending and resolving
the claims on ITT’s behalf.

Litigation Instituted and Phase III of Trial

PEIC began to dispute the extent of its obligations, leading
ITT to file the instant action for declaratory relief against its
primary, umbrella, and excess insurers in February 2003. Trial
was conducted in six phases, but only phases relevant to the
issues on appeal are described herein. ITT reached agreements
with certain primary insurers requiring payment of ITT’s defense
costs and most of the costs to resolve claims, but ITT’s primary
coverage for the relevant time-period was exhausted by the end of
2013.
Phase III of the trial was held in June 2017. The trial court
issued a statement of decision on August 17, 2017.
It is undisputed on appeal that New York law governs
interpretation of the insurance policies.

A. Trigger of Coverage

The court found asbestos exposure causes a continuous
injurious process. “Bodily injury,” within the meaning of liability
insurance policies, takes place with the initial cellular injury that
occurs upon exposure to asbestos fibers and progresses
continuously as the damage cascades, over time, into disease,
frequently ending in death.

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 The injury begins at the time of the claimant’s exposure to
asbestos and continues thereafter, triggering each policy in effect
from the time of the claimant’s first exposure to asbestos until
the claimant’s diagnosis of an asbestos-related disease or death.
If a claimant’s exposure to asbestos occurred prior to or during an
insurer’s policy period, the policy’s coverage was triggered.

B. Allocation of Loss when Multiple Successive
Policies are Triggered

A loss may start in one policy period, but extend beyond it.
Allocation refers to distributing responsibility for a loss among
multiple policies that have been triggered. The court considered
two general approaches to allocation: all sums and pro rata.
All sums allocation applies when each policy carries a
separate, independent obligation to fully indemnify the insured
up to the policy limits. Under the all sums approach, the insured
can select a single policy year to respond to losses and collapse all
of its costs into a single policy year. The insurers for that policy
year must reimburse the entire loss up to the limits of the
policies, subject to their contribution rights against the other
triggered policies.
Pro rata allocation apportions a loss among all the
triggered policies. Each triggered policy provides coverage only
for the portion of asbestos-related bodily injury occurring during
the policy period, spreading the loss across all the triggered policy
years.

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 C. Policies Containing Non-Cumulation Conditions

The policy language dictates the method of allocating loss
among multiple successive policies. With the exception of one
umbrella policy issued by Affiliated FM, all of the umbrella
policies at issue contain a “non-cumulation condition” or “prior
insurance and non-cumulation of liability condition.” The New
York Court of Appeals has already determined that for policies
with a non-cumulation condition, or a prior insurance and non-
cumulation condition, all sums is the appropriate allocation
method. (In re Viking Pump, Inc. (2016) 27 N.Y.3d 244, 260–261
(Viking Pump).)
Conditions in insurance policies do not expand or restrict
coverage; they are conditions on the promise to pay. A “prior
insurance and non-cumulation of liability condition” in umbrella
and excess policies prevents an insured from asserting a claim
and obtaining indemnity for the same loss occurrence under
horizontally related policies.
The court found the allocation provisions of ITT’s policies
expressly provided for indemnification of “all sums” and non-
cumulation conditions, with the exception of the umbrella policy
issued by Affiliated FM in effect between 1975 to 1977.

D. Affiliated FM Umbrella Policy

With respect to the Affiliated FM umbrella policy, the court
concluded it was an “all sums” policy based on the plain language
of the provisions. Affiliated FM agreed to pay the “ultimate net
loss” for which ITT was found liable. The policy defined “ultimate

7
net loss” to include “all sums” which ITT became legally obligated
to pay as damages and the defense expenses for such claims.
Based on this language, the court found the policy agreed to pay
“all sums.”
The court noted that the Affiliated FM policy contained a
pro rata liability provision, but the provision applied solely to
ITT’s liability for advertising injuries.
The Affiliated FM policy expressly covered personal injury
liability for damages, including death at any time resulting
therefrom, sustained by any person or persons. The policy
defined an “occurrence” to include continuous or repeated
exposure to conditions, which results in personal injury. In the
event of exhaustion of the underlying limits though payment of
losses, the Affiliated FM policy would continue in force as
underlying insurance.
The court found the Affiliated FM policy required
indemnity for all sums that the insured became legally obligated
to pay as damages, including death at any time resulting
therefrom, as shown by the policy definition. The court concluded
the express contract terms promised to protect ITT from liability
for damages arising from injury that took place during, but
continued beyond, the policy period. The promise to pay damages
that continue beyond the policy period, such that multiple
successive insurance policies could indemnify ITT for the same
loss or occurrence, is the same as the inference from a non-
cumulation condition to which the New York Court of Appeals
found all sums allocation was appropriate. Although the
Affiliated FM policy did not contain a “non-cumulation or prior
insurance condition,” this single difference from the other

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umbrella policies, although relevant, did not lead to a different
interpretation with respect to the allocation method.
The court concluded that all of ITT’s umbrella policies,
either through a non-cumulation condition or through the
language of other policy provisions, provided for the possibility
that multiple successive insurance policies might indemnify the
insured for the same loss. Where recoveries on continuing losses
could overlap, the policy terms anticipated and addressed
continuing coverage.

E. Excess Policies

The excess insurance policies either contained express
terms identical to the underlying umbrella policy or “follow form”
provisions adopting the warranties, terms, and conditions of the
underlying umbrella insurance policy. The excess layers
increased the limits of liability without adding to the underlying
coverage.
Munich argued that its excess policies contained their own
insuring agreements and did not follow form to the underlying
umbrella policy. The language of their policies did not support
the argument.
Therefore, all of the excess policies at issue promised to
indemnify ITT for “all sums” that ITT became obligated to pay as
damages due to liability from bodily injury or personal injury
caused by an occurrence. With the exception of the excess
policies following form to the two-year Affiliated FM umbrella, all
of the excess policies included a non-cumulation and/or prior
insurance condition. The excess policies following the Affiliated
FM umbrella policy were reasonably construed to reflect the

9
parties’ mutual intent to provide coverage for the contractually
bargained for policy limits for long-tail losses.
The court concluded, in accordance with New York law,
that non-cumulation conditions were inconsistent with pro rata
allocation. ITT’s losses should be allocated on an all sums
methodology, allowing the insured to collect its total liability
under any policy in effect during the periods that damage
occurred, up to the policy limits. “Once a policy has attached and
is selected by the insured, each triggered policy has a separate
and independent obligation to cover ITT in full for its liability
arising from a given claim, up to the policy’s product liability
limits.”

F. Horizontal and Vertical Exhaustion

The court additionally found, relying on New York law,
that vertical exhaustion of policy limits was consistent with the
all sums allocation method, allowing an insured to seek coverage
through the layers of insurance for a specific year. Therefore,
exhaustion of the available underlying coverage for a particular
policy period triggered the excess policies for the same policy
period.

Phase IV of Trial

Phase IV of the trial was held in November 2018. The trial
court issued a statement of decision on January 9, 2019.
Resolute Management, Inc. administers claims for several
insurer defendants (collectively referred to herein as Resolute).
In Phase IV, the court determined, among other issues, the effect

10
of prior insurance and non-cumulation provisions. Resolute
characterized ITT’s asbestos-related claims as a single loss and
argued that the prior insurance and non-cumulation condition in
the excess policies at issue reduced the aggregate limits
available. The court found the testimony of Resolute’s expert
Barrett Breitung unbelievable that a reimbursement payment for
a single asbestos-related claim under a particular policy would,
as a result of the non-cumulation condition, eliminate any other
claim for asbestos-related liability loss, even claims resulting
from a different occurrence, under later policies issued by
different insurers at the same coverage level.
The applicable non-cumulation condition stated: “It is
agreed that if any loss covered hereunder is also covered in whole
or in part under any other excess policy issued to the Assured
prior to the inception date hereof, other than a policy that is
specifically stated to be in excess of this Policy, the limit of
liability hereon as stated in Item 2 of the Declarations shall be
reduced by any amounts due to the Assured on account of such
loss under prior insurance.”
The court noted that language of the condition standing
alone did not have a definite and precise meaning. The court
found the testimony of defendants’ witnesses about how the non-
cumulation condition operated was confusing and inconsistent.
ITT’s interpretation that each asbestos claim arises out of a
separate occurrence and therefore the term “loss” must be
tethered to an “occurrence” was supported by ample case
authority. Under New York law, each individual plaintiff’s
continuous or repeated exposure to asbestos is a separate
occurrence unless it can be shown that multiple plaintiffs’
exposure was at the same time and place. Based on these

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findings, the trial court concluded the language of the non-
cumulation condition was ambiguous, because ITT and the
insurer defendants proposed reasonable, but inconsistent,
interpretations.
The court noted that an ambiguity must be construed
against the drafter and in favor of coverage. The policy must also
be interpreted to fulfill the reasonable expectations of the
insured.
The provision states that the liability limit shall be reduced
by any amounts due to the insured, but does not explain the
meaning of “amount due.” Because the policyholder can choose
the policy year to cover its liability, the condition cannot mean
that the same amounts are “due” under prior policies.
The court found credible the testimony of expert witness
Peter Wilson that the non-cumulation condition was developed as
part of a new umbrella form in the 1960s to prevent a policy
holder from obtaining a double recovery by pursuing coverage
under two policies for the same liability. The condition was
intended to address situations where an occurrence could be
construed to overlap multiple policy periods and an insured could
seek to collect “loss” arising out of the occurrence in more than
one policy year. Wilson believed the non-cumulation condition
limited the insured to a recovery of one year’s limits for the loss
or occurrence. The insured could not “stack” a single claim or loss
arising from a single occurrence under multiple policies. In the
broadest sense, stacking means treating multiple policies that
apply to a single loss cumulatively. Most often, stacking refers to
the insured’s ability to obtain benefits from a second policy on the
same claim. The drafters did not design the condition to apply to
continuous triggers and all sums allocation.

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 Expert witness Brian Hibbert, who collaborated with
Wilson to write policies for ITT, testified that the non-cumulation
language was intended to address stacking when a single
occurrence or loss could be claimed under more than one
insurance policy. The underwriters did not intend that prior
insurance could eliminate coverage under later-in-time policies
for which the premium was being charged and paid. Only if a
policyholder tried to “stack” policies after obtaining
indemnification for a specific loss from an earlier policy in the
relevant coverage layer would the later policy’s non-cumulation
condition be implicated.
The policy must be viewed as a whole. Viewing the policy
terms as a whole, the court found the only reasonable
interpretation of the loss referred to in the non-cumulation
provision was as tethered to “occurrence.” Each separate claim
alleging exposure to asbestos from an ITT product arises out of a
separate occurrence. Only if ITT attempts to assert definite
claims for reimbursement of the same “loss” under more than
only policy at the same excess layer covering different years does
the non-cumulation provision apply, and in those instances, the
condition limits the “amounts due” on account of that same loss
under the prior insurance. In short, the condition does not apply
until the insured has obtained indemnification for that specific
loss from another policy in the relevant coverage layer.
For the vast majority of settlements, ITT kept the loss for
each occurrence in one policy year. For 76 claims, ITT split the
settlement amount equally between multiple policy years. For
these claims, both policies contribute but neither policy pays out
more than a reasonable proportion, as expected by the
underwriters, brokers, and policyholder.

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 In March 2020, ITT and Resolute entered into a settlement
agreement buying out certain ITT policies. ITT had billed more
than $7 million to these policies, but settled before the amounts
were paid. In exchange for a release of ITT’s claim, the Resolute
settlement transferred $60 million to a qualified settlement fund
(QSF).

Phase V of Trial

Phase V of the trial was held in November 2020. The trial
court considered, among other issues, whether ITT was required
to allocate proceeds from the Resolute settlement to losses
attributable to specific asbestos-related claims, impairing the
policies settled under that agreement, before accessing U.S. Fire
Policy No. XS 2199 for the 1972-1973 policy year. The court
entered a statement of decision for Phase V on January 25, 2021.
The court noted the undisputed evidence showed ITT would
not obtain a windfall as a result of the Resolute settlement. The
evidence showed asbestos claims against ITT would extend to
2054, and many of ITT’s insurers faced insolvency. The
settlement proceeds would be used to provide ITT the liquidity
necessary to advance funds to meet ongoing defense and
settlement obligations in light of the insurers’ chronic failure to
timely pay, disputes over reimbursement standards, insolvencies,
and other delays. ITT’s unreimbursed past settlements greatly
exceeded the proceeds of the Resolute settlement. ITT had
absorbed more than $64 million in unreimbursed settlements
paid between 2005 and 2016, $44 million in unreimbursed
defense costs since 2015, and $22 million in asbestos losses due to
insolvencies of subscribers to the London policies. U.S. Fire had

14
failed to show that the settlement proceeds exceeded ITT’s
obligations for past, present, and future asbestos-related losses,
and therefore failed to show that ITT had been made whole and
any further recovery would be a windfall or multiple recovery,
such that the settlement proceeds were allocable to losses for
which ITT was claiming a right of recovery against U.S. Fire.
The court concluded that ITT’s claims were due and payable
under the U.S. Fire Policy at issue.
In December 2020, ITT entered into a more comprehensive
settlement agreement with certain insurers (the CIP settlement).
In Phase VI, the trial court considered Munich’s cross-
claims for equitable indemnity and equitable contribution. The
trial court explained that Phase V had determined whether ITT
must allocate the Resolute settlement proceeds to losses
attributable to specific asbestos-related claims before accessing
U.S. Fire Policy XS 2199 in the 1972-1973 policy year. The court
noted that Munich was given an opportunity to join with U.S.
Fire in asserting this position, or to articulate its own “offset”
issue with respect to the Resolute settlement, but had declined.
Phase V proceeded without Munich’s participation. At the end of
Phase V, the trial court rejected the contention that U.S. Fire was
entitled to offset or further allocation of the Resolute settlement
proceeds.
The trial court considered Munich’s claims for equitable
contribution or indemnification and concluded Munich had failed
to show it had paid more than its fair share. Munich argued that
every unexhausted policy issued a solvent insurers below the
Munich layer should pay their fair share of payments Munich
made to ITT under 1970 MRAm Policy No M-0083871. The court
found the testimony of Munich’s expert was entitled to no weight.

15
Several of the insurers that Munich sought contribution from
were insolvent or not currently liable to ITT. Munich did not pay
ITT timely under the terms of its own policy, and did not provide
proper notice of its claims to other insurers of its intent to seek
contribution. Allowing equitable contribution from settled
insurers would defeat the purpose of settling and turn equity
upside down. Munich had not paid more than its fair share and
the relief that Munich sought was neither fair, nor equitable.
After Phase VI of the trial, on August 18, 2021, the trial
court entered judgment and a statement of decision resolving all
of the claims and defenses asserted by ITT and its insurers.
Munich filed a timely notice of appeal from the judgment.

DISCUSSION

Standard of Review

“Under New York law, insurance policies are interpreted
according to general rules of contract interpretation.” (Olin
Corporation v. OneBeacon America Insurance Company (2d Cir.
2017) 864 F.3d 130, 147–148 (Olin).) We review contract
interpretation questions de novo. (MPEG LA, LLC v. Samsung
Electronics Co., Ltd. (N.Y. App. Div. 2018) 166 A.D.3d 13, 17.)
“In determining a dispute over insurance coverage, we first
look to the language of the policy [citation].” (Consolidated
Edison Co. of New York, Inc. v. Allstate Ins. Co. (2002) 98 N.Y.2d
208, 221–222 (Consolidated Edison).) “When construing
insurance policies, the language of the ‘contracts must be
interpreted according to common speech and consistent with the
reasonable expectation of the average insured’ [citations].

16
Furthermore, ‘we must construe the policy in a way that affords a
fair meaning to all of the language employed by the parties in the
contract and leaves no provision without force and effect’
[citation]. Significantly, ‘surplusage [is] a result to be avoided’
[citation]. Moreover, while ‘ “ambiguities in an insurance policy
are to be construed against the insurer” ’ [citations], a contract is
not ambiguous ‘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’ [citation].” (Viking
Pump, supra, 27 N.Y.3d at pp. 257–258.)

Allocation of Loss Among Multiple Successive Policies

Munich contends the plain language of the Affiliated FM
umbrella policy and Munich’s following form excess policy
required pro rata allocation of loss. We disagree.

A. Relevant Policy Provisions

1. Affiliated FM Umbrella Policy

The original policy period for the Affiliated FM umbrella
policy was August 1975 to August 1978. Affiliated FM agreed to
provide coverage on behalf of ITT for “ultimate net loss in excess
of the retained limit hereinafter stated, which the insured may
sustain by reason of liability imposed on the insured by law, or
assumed by the insured under contract arising out of: [¶] (a)
Personal Injury Liability [¶] For damages including damages for
care and loss of services, because of personal injury, including

17
death at any time resulting therefrom, sustained by any person
or persons; . . . .”
The policy applied “only to occurrences during the Policy
period anywhere; except that, with respect to Coverage I(c)
[advertising injury], if any such occurrence began prior to the
Policy period and continued during or after that period, the
company’s liability shall be limited to that proportion of the total
damages resulting therefrom which the use of injurious material
or the number of injurious acts during that period bears to the
aggregate use of injurious material or the total number of
injurious acts.”
An “occurrence” was “an accident, including continuous or
repeated exposure to conditions, which results in personal injury
or property damage neither expected nor intended from the
standpoint of the insured.” (The provision did not limit coverage
to personal injury during the policy period.) “There is no limit to
the number of occurrences for which claims may be made
hereunder, provided such occurrences happen during the Policy
period, except as hereinafter provided.”
Personal injury included “bodily injury, sickness, disease,
disability, shock, mental anguish and mental injury[.]” The
definition of personal injury was not limited to injuries occurring
during the policy period.
“Ultimate net loss” was expressly defined as “the total of
the following sums with respect to such occurrence: [¶] (1) all
sums which the insured . . . became legally obligated to pay as
damages, whether by reason of adjudication or settlement,
because of personal injury . . . to which this Policy applies, and
[¶] (2) all expenses incurred by the insured in the investigation,
negotiation, settlement and defense of any claim or suit seeking

18
such damages, . . . provided ‘ultimate net loss’ shall not include
any damages or expense because of liability excluded by this
Policy.” The policy stated that it did not apply to defense,
investigation, settlement or legal expenses covered by underlying
insurance.

2. 1975-1978 AmRe Excess Policy

American Re-Insurance Company Policy No. M-1027596, to
which Munich succeeded, was a following form excess policy
in effect from December 31, 1975, to December 31, 1978 (the
1975-1978 AmRe excess policy). The declarations page of the
1975-1978 AmRe excess policy states that the underlying
insurance is the first layer umbrella provided by Affiliated FM.
The policy also stated, “Ultimate net loss, as used herein,
shall be understood to mean the sums paid in settlement of losses
for which the Insured [is] liable after making deductions for all
recoveries, salvages and other Insurances (other than recoveries
under the underlying insurance policies of co-insurance, or
policies specifically in excess hereof), whether recoverable or not,
and shall exclude all ‘Costs.’ ”
The policy further provided, “This Certificate applies only
to accidents or occurrences happening between the effective and
expiration dates shown in Item 2 of the Declarations, unless
otherwise cancelled.”

3. Substitution of Underlying Insurance

Effective August 5, 1977, the underlying umbrella policy for
the 1975-1978 AmRe excess policy was replaced: “In

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consideration of payment of the premium charged, it is
understood and agreed that Item [Number] 4 – Underlying
Insurance, of this Certificate, is amended in part to read: [¶]
First Layer Umbrella provided by London (Policy No. to be
advised). [¶] And an additional First Layer Umbrella provided by
National Union Insurance Company. Policy Number 1128365.”
The newly substituted umbrella policies contained non-
cumulation provisions. No additional premium amount was
charged.

B. Law Applicable to Allocation of Loss

1. General Principles

Under the “all sums” method of allocating losses, the
insured may recover its total liability under any policy that was
in effect during the period that the damage occurred, up to the
limits of that policy. (Viking Pump, supra, 27 N.Y.3d at p. 255.)
“The burden is then on the insurer against whom the insured
recovers to seek contribution from the insurers that issued the
other triggered policies [citation].” (Id. at pp. 255–256.)
Under the pro rata method of allocation, “an insurer’s
liability is limited to sums incurred by the insured during the
policy period; in other words, each insurance policy is allocated a
‘pro rata’ share of the total loss representing the portion of the
loss that occurred during the policy period [citation].” (Viking
Pump, supra, 27 N.Y.3d at p. 256.) Dividing liability when a
claim alleges gradual and continuing harm reflects that it is
difficult to determine what transpired during any particular
policy period. (Ibid.)

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 “Some jurisdictions have expressed a preference for the all
sums method, usually relying on language in policies obligating
an insurer to pay ‘all sums’ for which an insured becomes liable
[citations]. Others have, instead, utilized the pro rata method,
emphasizing language in the insurance policies that may be
interpreted as limiting the ‘all sums’ owed to those resulting from
an occurrence ‘during the policy period,’ or public policy reasons
supporting pro rata allocation, or a combination of the two
[citations].” (Viking Pump, supra, 27 N.Y.3d at pp. 256–257.)
In determining whether all sums or pro rata allocation
applies to a particular policy, New York courts have focused on
whether the plain language of the policy expressly extends the
protection of the policy beyond the policy period for continuing
injuries, potentially overlapping with coverage under successive
policies, or whether the policy limits liability to only the portion
of the loss within the policy period, such that no two insurance
policies in separate policy periods would indemnify the same loss
or occurrence.

2. Consolidated Edison

The New York Court of Appeals first considered the
appropriate method for allocating loss when a continuous harm
triggers successive insurance policies in Consolidated Edison,
supra, 98 N.Y.2d at p. 221. Consolidated Edison involved
property damage due to decades of environmental contamination,
which triggered coverage under multiple successive policies. (Id.
at p. 215.)
The court’s analysis focused on the policy terms “all sums”
and “during the policy period.” (Id. at p. 222.) The relevant

21
policy provided coverage for all sums that the insured was liable
to pay for damages on account of “ ‘property damage, caused by or
arising out of each occurrence.’ ” (Id. at p. 222.)
But the policy applied only to occurrences “ ‘happening
during the policy period.’ ” (Id. at p. 222.) And an occurrence was
defined as “ ‘an event, or continuous or repeated exposure to
conditions, which causes injury, damage or destruction during the
policy period. All such exposure to or events resulting from
substantially the same general conditions during the policy
period shall be deemed one occurrence’ (emphasis supplied).” (Id.
at p. 222.) In other words, the policy’s definition of an occurrence
limited coverage to liability for injury or damage during the
policy period.
The insured asserted that because the policies at issue
covered liability for “all sums,” it could select any one of the
policies in effect during the 50 years that property damage
occurred and collect its total liability from that insurer, up to the
policy limit. (Consolidated Edison, supra, 98 N.Y.2d at p. 222.)
The insurers argued, however, that the phrase “during the policy
period” limited coverage to all sums incurred during the policy
period. (Consolidated Edison, supra, 98 N.Y.2d at pp. 222–223.)
The Consolidated Edison court concluded that all sums
allocation, which would permit the insured to select a particular
policy to collect the total liability, was not consistent with the
policy language providing indemnification for all sums of liability
resulting from an accident or occurrence “during the policy
period.” (Id. at p. 224.) “Pro rata allocation under these facts,
while not explicitly mandated by the policies, is consistent with
the language of the policies. Most fundamentally, the policies
provide indemnification for liability incurred as a result of an

22
accident or occurrence during the policy period, not outside that
period [citation].” (Ibid.) Focusing solely on the term “all sums”
would read this qualification out of the policies. (Ibid.)
The Consolidated Edison court did not conclude, however,
that pro rata allocation was the appropriate allocation method
among successive insurance policies in every case. (Viking Pump,
supra, 27 N.Y.3d at p. 257.) The court relied on general
principles of contract interpretation and found the language of
the particular policy at issue in a case controls the allocation
method. (Ibid.)

3. Viking Pump

In Viking Pump, the umbrella policies at issue agreed to
indemnify the insured for “ ‘all sums in excess of the retained
limit which the insured shall become legally obligated to pay, or
with the consent of the [insurer], agrees to pay, as damages,
direct or consequential, because of . . . [¶] personal
injury . . . [¶] with respect to which this policy applies and
caused by an occurrence’ (emphasis added).” (In re Viking Pump,
supra, 27 N.Y.3d at pp. 251–252.)
The definition of “occurrence” included “ ‘injurious exposure
to conditions, which results in personal injury,’ ” which, in turn,
is defined as “ ‘personal injury or bodily injury which occurs
during the policy period’ (emphasis added).” (Viking Pump, 27
N.Y.3d at p. 252.)
To determine the limits of the insured’s liability, the
policies provided that all personal injury “ ‘arising out of
continuous or repeated exposure to substantially the same
general conditions . . . shall be considered as the result of one and

23
the same occurrence.’ ” (Viking Pump, supra, 27 N.Y.3d at
p. 252.) The excess policies at issue in Viking Pump either
followed form to these umbrella policy provisions or provided for
substantively identical coverage. (Ibid.)
The umbrella policy contained a non-cumulation provision
stating: “ ‘[i]f the same occurrence gives rise to personal injury,
property damage or advertising injury or damage which occurs
partly before and partly within any annual period of this policy,
the each occurrence limit and the applicable aggregate limit or
limits of this policy shall be reduced by the amount of each
payment made by [the umbrella insurer] with respect to such
occurrence, either under a previous policy or policies of which this
is a replacement, or under this policy with respect to previous
annual periods thereof.’ ” (Viking Pump, supra, 27 N.Y.3d at
p. 252.) Excess policies that did not follow form to the umbrella
policy’s non-cumulation provision contained a similar prior
insurance and non-cumulation provision. (Ibid.)
The New York Court of Appeals concluded that all sums
allocation was the appropriate method for a policy containing a
non-cumulation provision. (Viking Pump, supra, 27 N.Y.3d at
pp. 260–261.) The non-cumulation provision, by acknowledging
and addressing situations where a loss or occurrence may also be
covered under another policy, plainly contemplates that multiple
successive policies could cover the same loss or occurrence. (Id.
at p. 261.) Pro rata allocation would be inconsistent with a non-
cumulation provision and render the non-cumulation provision
surplusage. (Ibid.)
“[T]he very essence of pro rata allocation is that the
insurance policy language limits indemnification to losses and
occurrences during the policy period—meaning that no two

24
insurance policies, unless containing overlapping or concurrent
policy periods, would indemnify the same loss or occurrence. Pro
rata allocation is a legal fiction designed to treat continuous and
indivisible injuries as distinct in each policy period as a result of
the ‘during the policy period’ limitation, despite the fact that the
injuries may not actually be capable of being confined to specific
time periods. The non-cumulation clause negates that premise
by presupposing that two policies may be called upon to
indemnify the insured for the same loss or occurrence.” (Viking
Pump, supra, 27 N.Y.3d at p. 261.)
Several of the excess policies in Viking Pump also
contained “continuing coverage clauses within the non-
cumulation and prior insurance provisions, reinforcing our
conclusion that all sums—not pro rata—allocation was intended
in such policies. The continuing coverage clause expressly
extends a policy’s protections beyond the policy period for
continuing injuries. Yet, under a pro rata allocation, no policy
covers a loss that began during a particular policy period and
continued after termination of that period because that
subsequent loss would be apportioned to the next policy period as
its pro rata share. Using the pro rata allocation would, therefore,
render the continuing coverage clause irrelevant. Thus, presence
of that clause in the respective policies further compels an
interpretation in favor of all sums allocation [citations].” (Viking
Pump, supra, 27 N.Y.3d at p. 262.)
Based on the language of the policy at issue and persuasive
arguments that pro rata allocation is inconsistent with non-
cumulation and non-cumulation/prior insurance provisions, the
Viking Pump court held that all sums allocation is appropriate in

25
policies containing non-cumulation provisions such as the ones at
issue in that case. (Viking Pump, supra, 27 N.Y.3d at p. 264.)

4. American Precision

A third relevant case currently wending its way through
federal court, American Precision Industries, Inc. v. Federal
Insurance Company (W.D.N.Y. 2022) 648 F.Supp.3d 442
(American Precision), also concerns asbestos-related personal
injury lawsuits. The insurer defendants issued primary
comprehensive general liability policies to the plaintiff. (Id. at
p. 443.) The policy language limited coverage to bodily injury or
property damage that occurred “ ‘during the policy period.’ ” (Id.
at p. 445.)
The policies at issue expressly defined bodily injury as
“ ‘bodily injury, sickness or disease sustained by any person
which occurs during the policy period, including death at any
time resulting therefrom,’ ” or they contained functionally
equivalent language. (Id. at p. 446.)
The parties filed cross-motions for summary judgment
concerning the allocation of defense and indemnity costs.
(American Precision, supra, 648 F.Supp.3d at p. 443–444.) The
insured argued that, similar to the non-cumulation provision
relied on in Viking Pump, providing coverage for “death at any
time” extends the policy protection beyond the policy period,
which is inconsistent with the theoretical basis of pro rata
allocation of long-tail claims. (Id. at p. 446.) The magistrate
judge agreed, finding all sums allocation was the appropriate
allocation method for both defense and indemnification costs.
(Id. at p. 445.)

26
 The district court held, however, that the policies required
pro rata allocation of indemnity costs and all sums allocation of
defense costs. (American Precision, supra, 648 F.Supp.3d at
p. 445.) The court concluded the phrase “death at any time” in
the definition of bodily injury did not compel all sums allocation.
(American Precision, supra, 648 F.Supp.3d at pp. 446–447.)
The district court noted that the language at issue was
significantly different from the language of the non-cumulation
provision relied on by the Viking Pump court, which clearly
articulated that multiple successive insurance policies could
indemnify the same loss or occurrence. (American Precision,
supra, 648 F.Supp.3d at p. 447.) “First, the relevant language in
this case does not explicitly refer to any other or additional
policies. Second, even if this Court were to presume that the
parties contemplated potential interaction with other policies
during their negotiations of the definition of bodily injury in each
of the Primary Policies, which it does not, the language at issue
does not explain how any reductions of liability should occur, if at
all, in the event of overlapping coverage by multiple policies.”
(Ibid, fn. omitted.)
The district court did not believe pro rata allocation of
indemnity would render the “death at any time” language
surplusage, although the court acknowledged that pro rata
allocation could complicate the calculations. (American Precision,
supra, 648 F.Supp.3d at pp. 447–448.) The court suggested a
secondary level of pro rata allocation could be used to apportion
liability for damages associated specifically with a death to each
insurer on the risk during the pendency of the injury. (Id. at
p. 448.)

27
 The district court discussed the reasoning of a
Massachusetts appellate court that “ ‘[t]he bodily injury
definition simply sets forth the unremarkable proposition . . .
that in the typical case where the time of injury is easily
determined, the policy in place when the injury occurs will cover
all consequential damages, even those taking place after the
policy period.’ ” (American Precision, supra, 648 F.Supp.3d at
p. 448.) As a result of the district court’s holding that pro rata
allocation applied to indemnity, the court found the insured was
liable for periods that it went without insurance coverage. (Ibid.)
The district court found the policy language providing for
the insurers to pay all costs and expenses arising from defending
any claim seeking damages on account of a covered occurrence
required an all sums allocation of defense costs. (American
Precision, supra, 648 F.Supp.3d at p. 449.) The duty to defend is
broader than the duty to pay. (Ibid.) When a claim triggers
multiple policies, the court may decline to order pro rata
allocation of defense costs, and the insurer may seek contribution
from other applicable policies. (Ibid.) The insured was entitled
to a full defense under the policy terms, while contribution flowed
from equitable principles. (Ibid.)
As a result, the district court granted the insurers’ motion
for summary judgment in part and granted the insured’s cross-
motion for summary judgment in part. (American Precision,
supra, 648 F.Supp.3d at pp. 450–451.) On November 20, 2023,
the district court amended its order to certify several questions
for immediate interlocutory review by the Second Circuit,
including (1) whether Viking Pump precludes pro rata allocation
of indemnification where the insurance policy definition of bodily
injury includes “death at any time” language, and (2) whether

28
insurers can be required to pay defense costs for long-tail claims
on an all sums basis where the policy language limits
indemnification to harms occurring during the policy period.
(American Precision Industries, Inc. v. Federal Insurance
Company (W.D.N.Y., Nov. 20, 2023, No. 14-CV-1050) 2023 WL
8014382, at *8.)

C. Analysis

The question before us in this appeal is whether the
language of the policies at issue limits indemnification to losses
and occurrences during the policy period—meaning that no two
insurance policies, unless containing overlapping or concurrent
policy periods, would indemnify the same loss or occurrence – or
whether the policy agrees to provide coverage for losses extending
beyond the policy period. (See Viking Pump, supra, 27 N.Y.3d at
pp. 261–262.) We agree with the trial court that the Affiliated
FM umbrella policy promised to indemnify losses extending
beyond the policy period, and the 1975-1978 AmRe excess policy
followed form.
Affiliated FM agreed to pay the ultimate net loss for ITT’s
liability for personal injury damages, “including damages for care
and loss of services, because of personal injury, including death
at any time resulting therefrom, sustained by any person or
persons.” “Ultimate net loss” with respect to an occurrence was
expressly defined to include “all sums which the insured . . .
became legally obligated to pay as damages, whether by reason of
adjudication or settlement, because of personal injury . . . to
which this Policy applies[.]”

29
 The insuring agreement expressly promises to pay “all
sums” and extends protection beyond the policy period to include
damages for future care and death at any time. Therefore, in the
context of a continuous harm triggering multiple successive
policies, it is clear that more than one policy may indemnify the
same loss or occurrence.
The insuring agreement does not contain language limiting
coverage to damages during the policy period. Although coverage
is limited to occurrences happening during the policy period, an
occurrence is defined as “an accident, including continuous or
repeated exposure to conditions, which results in personal injury
or property damage neither expected nor intended from the
standpoint of the insured.” Personal injury was defined to
include “bodily injury, sickness, disease, disability, shock, mental
anguish and mental injury[.]” There is no temporal limitation in
the definition of an occurrence or personal injury which restricts
coverage to damages during the policy period.
In comparison, in Consolidated Edison, the policy at issue
limited coverage to occurrences “ ‘happening during the policy
period,’ ” but an occurrence was defined as “ ‘an event, or
continuous or repeated exposure to conditions, which causes
injury, damage or destruction during the policy period.”
(Consolidated Edison, supra, 98 N.Y.2d at p. 222.) This policy
language limiting coverage to damages during the policy period
led the Consolidated Edison court to conclude that the parties did
not intend to extend protection beyond the policy period.
In this case, the provision limiting advertising injuries
supports our conclusion that the Affiliated FM policy is an “all
sums” policy providing coverage for liability extending beyond the
policy period. When an occurrence begins prior to the policy

30
period and continues during or after that period, the policy
expressly limits coverage for advertising injury to a proportion of
the total damages resulting from the occurrence. The policy
contains no similar limitation, however, on coverage for personal
injury liability.
The terms of the policy, read in context, make clear that
the parties intended to extend coverage beyond the policy period
and not limit it to damages occurring during the policy period.
The 1975-1978 AmRe excess policy follows the insuring
agreement and conditions of the underlying Affiliated FM policy
and the successor umbrella policy. Nothing in the 1975-1978
AmRe policy conflicts with the language of the Affiliated FM
policy. Therefore, the trial court properly found that the 1975-
1978 AmRe policy required the insurer to indemnify ITT for
personal injury continuing after the termination of the policy,
and therefore, was also subject to all sums allocation.
Having concluded that the 1975-1978 AmRe excess policy
required all sums allocation based on the language of the policy
provisions, including those of the Affiliated FM umbrella policy,
we need not address the effect of substituting a different
umbrella policy with a non-cumulation provision that was also
subject to all sums allocation.

Impact of Non-Cumulation Provision on Aggregate Limit

Munich joined in the contention of another insurer, who
has since settled and dismissed its appeal, that the trial court did
not properly apply the policies’ prior insurance and non-
cumulation conditions. Specifically, Munich contends that under
the non-cumulation conditions contained in American

31
Reinsurance Company Policy No. M-0083871, effective from
July 1, 1967 to July 1, 1970 (the 1967-1970 AmRe excess policy),
and American Excess Insurance Company Policy No. EUL
5001441, effective from December 31, 1978 to December 31, 1979
(the American Excess policy), the annual aggregate policy limit is
reduced when a loss covered under Munich’s policy is also covered
under a prior policy. Munich contends the term “loss” is used
broadly, referring to the insured’s total aggregate losses in a
policy period, not simply the loss from a single occurrence.
Munich also contends the condition applies to any loss for which
coverage arguably existed under a prior policy, regardless of
whether the insured received payment. Munich similarly
contends that condition applies to any loss that is arguably
covered under the subsequent policy, even if the insured has not
sought reimbursement for that loss under Munich’s policy. Even
assuming that Munich did not waive this issue and has identified
the correct policy language,1 we conclude the policy language is
not reasonably susceptible of Munich’s interpretation.

1 Munich contends the trial court’s finding that the 1967-
1970 AmRe excess policy follows form to Home Insurance Co.
policy number HEC 9555421 is incorrect, because the policy
language of the 1967-1970 AmRe excess policy expressly follows
form to the immediately underlying excess policy, which is
Lamorak Policy No. E16-8324-001. The parties agree, however,
that both underlying policies contain substantially similar non-
cumulation conditions and the analysis is the same under either
policy.

32
 A. Relevant Policy Language

1. 1967-1970 AmRe Excess Policy

The 1967-1970 AmRe excess policy states that there are
two underlying insurance policies: Home Insurance Company
Policy No. HEC 9555421 (the Home policy) and a policy issued by
Employer’s Liability Assurance Corporation, which was
succeeded to by Lamorak Insurance Company (the Lamorak
policy). The declarations of the 1967-1970 AmRe excess policy
provide that the coverage limit is $5 million.
The insuring agreement of the 1967-1970 AmRe policy
states that the insurer will indemnify the insured against
“ultimate net loss in excess of and arising out of the hazards
covered” as defined in the underlying insurance. In addition, it
states that the coverage provided shall follow the insuring
agreements, conditions, and exclusions of the underlying
insurance immediately preceding the layer of coverage.2

2 The policy states in relevant part: “1. The Company
hereby indemnifies the Insured against ultimate net loss in
excess of and arising out of the hazards covered and as defined
and in excess of the underlying Insurance as shown in Item 4 of
the Declarations (hereinafter referred to as ‘underlying
insurance’) but only up to an amount not exceeding the limit(s)
shown in Item 5 of the Declarations. [¶] 2. Except as may be
inconsistent with this Certificate, the coverage provided by this
Certificate shall follow the insuring agreements, conditions and
exclusions of the underlying insurance (whether primary or
excess) immediately preceding the layer of coverage provided by
this Certificate . . . .”

33
 Under the heading “loss payable,” the policy provides in
pertinent part: “The Company’s obligation to pay any ultimate
net loss and costs with respect to any accident or occurrence
falling within the terms of this Certificate shall not attach until
the amount of the applicable underlying limit has been paid by or
on behalf of the Insured on account of such accident or
occurrence.”3

2. The Lamorak Policy

Munich contends the Lamorak policy is the immediately
preceding layer of coverage to which the 1967-1970 AmRe excess
policy follows form. The insuring agreement of the Lamorak
policy promises to indemnify the insured for “all sums which the
Insured shall be obligated to pay . . . [¶] . . . [¶] caused by or
arising out of each occurrence . . . .”
The Lamorak policy contains a prior insurance and non-
cumulation of liability condition: “It is agreed that if any loss
covered hereunder is also covered in whole or in part under any
other excess policy issued to the Insured prior to the inception
date hereof the limits of liability hereon as stated in Items 5 and
6 of the Declarations shall be reduced by any amounts due to the
Insured on account of such loss under such prior insurance.”

3 Ultimate net loss is defined as “the sums paid in
settlement of losses for which the Insured is liable after making
deductions for all recoveries, salvages and other insurances
(other than recoveries under the underlying insurance policies of
co-insurance, or policies specifically in excess hereof), whether
recoverable or not, and shall exclude all ’Costs[.]’ ”

34
 “Subject to the foregoing paragraph and to all the other
terms and conditions of this policy in the event that personal
injury or property damage arising out of an occurrence covered
hereunder is continuing at the time of termination of this policy
the Company will continue to protect the Insured for liability in
respect of such personal injury or property damage without
payment of additional premium.”
The policy additionally stated that ultimate net loss meant
“the sums paid in settlement of losses for which the Insured is
liable after making deductions for all recoveries, salvages and
other insurance (other than recoveries under the Underlying
Insurance or policies specifically in excess hereof), and shall
exclude all ‘Costs’[.]”
The policy stated that it was subject to the same
warranties, terms and conditions, except as otherwise provided,
as were contained in the underlying insurance.

3. American Excess policy

The American Excess policy provides coverage for the
insured’s “ultimate net loss” in excess of the total limits of all
underlying insurance and arising out of the hazards covered in
the underlying insurance up to the policy limits.4 Ultimate net
loss is defined as “the sums paid in settlement of losses for which

4 The relevant provision provides coverage for “ultimate net
loss which is in excess of the total limits of all underlying
insurance . . . and which arises out of the hazards covered and
defined in the underlying insurance as shown in Item 5 of the
Declarations, but only up to an amount not exceeding the limit(s)
shown in Item 6 of the Declarations.”

35
the Insured is liable after making deductions for all recoveries,
salvages and other insurances (other than recoveries under the
underlying insurance, policies of co-insurance, or policies
specifically in excess hereof), whether recoverable or not, and
shall exclude all ‘Costs’.”
The American Excess policy contains its own prior
insurance and non-cumulation of liability condition, which states:
“It is agreed that if any loss covered hereunder is also covered in
whole or in part under any other excess policy or certificate
issued to the Insured prior to the inception date hereof, the limit
of liability hereon as stated in Item 6 of the Declarations of this
Certificate shall be reduced by any amounts due the Insured on
account of such loss under such prior insurance.”

B. Law Applicable to Non-Cumulation Conditions

1. General Principles

“Generally, non-cumulation clauses prevent stacking, the
situation in which ‘an insured who has suffered a long term or
continuous loss which has triggered coverage across more than
one policy period . . . wishes to add together the maximum limits
of all consecutive policies that have been in place during the
period of the loss’ (12 Couch on Insurance 3d § 169:5; see 1 Barry
R. Ostrager & Thomas R. Newman, Handbook on Insurance
Coverage Disputes § 11.02 [e] [16th ed 2013]). Such clauses
originated during the shift from ‘accident-based’ to ‘occurrence-
based’ liability policies in the 1960s and 1970s, and were
purportedly designed to prevent any attempt by policyholders to
recover under a subsequent policy—based on the broader

36
definition of occurrence—for a loss that had already been covered
by the prior ‘accident-based’ policy (see Jan M. Michaels et al.,
The “ ‘Non-Cumulation’ ” Clause: Policyholders Cannot Have
Their Cake and Eat It Too, 61 U Kan L Rev 701, 717 [2013];
Christopher C. French, The “ ‘Non-Cumulation Clause’ ”: An
“ ‘Other Insurance’ ” Clause by Another Name, 60 U Kan L Rev
375, 386 [2011]).” (Viking Pump, supra, 27 N.Y.3d at p. 259.)

2. Hiraldo

In Hiraldo v. Allstate Ins. Co. (2005) 5 N.Y.3d 508, 511
(Hiraldo), the New York Court of Appeals found the non-
cumulation condition limited the insurer’s liability for a single
loss occurring over multiple policy periods by preventing the
policyholder from obtaining the per occurrence limit from
successive policies. The insurer in Hiraldo had issued three
successive liability policies to owners of a building, each
providing $300,000 of coverage. A tenant who was continuously
exposed to lead paint during all three policy periods obtained a
judgment against the landlords for $700,000. (Id. at pp. 511–512)
The insurer paid $300,000, and the landlords brought an action
for the remainder.
The policies at issue stated that they applied only to losses
that occurred during the policy period, and each contained a non-
cumulation condition stating: “ ‘Regardless of the number of
insured persons, injured persons, claims, claimants or policies
involved, our total liability under Business Liability Protection
coverage for damages resulting from one loss will not exceed the
limit of liability for Coverage X shown on the declarations page.
All bodily injury, personal injury and property damage resulting

37
from one accident or from continuous or repeated exposure to the
same general conditions is considered the result of one loss.’
(Emphasis added.)” (Hiraldo, supra, 5 N.Y.3d at pp. 511–512.)
The Hiraldo court noted that the plaintiff’s injuries from
continuous exposure to the same general conditions was
considered “one loss” within the meaning of each policy.
(Hiraldo, supra, 5 N.Y.3d at p. 512.) The court concluded that
under the plain language of the non-cumulation condition,
regardless of the number of policies involved, the insurer’s total
liability resulting from one loss could not exceed the $300,000
liability limit. (Id. at p. 513.)

3. Nesmith

In Nesmith v. Allstate Ins. Co. (2014) 24 N.Y.3d 520, 525
(Nesmith), the New York Court of Appeals found a non-
cumulation provision prevented the policyholder from recovering
the per occurrence limit from multiple successive policies, even
though multiple claims were involved, because the claims
resulted from the same general conditions and were therefore
considered one loss under the terms of the policy.
The liability policy at issue in Nesmith was issued to the
landlord of a house painted with lead paint. (Nesmith, supra, 24
N.Y.3d at p. 523.) The policy provided a $500,000 limit for each
occurrence and contained a non-cumulation condition stating:
“ ‘Regardless of the number of insured persons, injured persons,
claims, claimants or policies involved, our total liability under the
Family Liability Protection coverage for damages resulting from
one accidental loss will not exceed the limit shown on the
declarations page. All bodily injury and property damage

38
resulting from one accidental loss or from continuous or repeated
exposure to the same general conditions is considered the result
of one accidental loss’ (emphasis omitted).” (Id. at pp. 523–524.)
The Young family lived in an apartment in the house from
November 1992 to September 1993, and the Patterson family
lived in the apartment beginning September 1993. Two separate
actions were brought on behalf of the children for personal
injuries caused by lead paint exposure. (Nesmith, supra, 24
N.Y.3d at p. 524.) The Young action was settled in 2006 for
$350,000, which the insurer paid. (Ibid.) The insurer paid
$150,000 on behalf of the Patterson children as the remaining
coverage on the policy. (Ibid.) Nesmith, who brought the action
on behalf of the Patterson children, brought a declaratory relief
action asserting that a separate $500,000 limit applied to each
family’s claim, such that the Patterson children could recover an
additional $350,000. (Ibid.)
The Nesmith court concluded that the renewal of the policy
did not make an additional limit available, and under the plain
terms of the non-cumulation clause, the number of claims and
claimants did not make an additional limit available. (Nesmith,
supra, 24 N.Y.3d at p. 525.) Because all the children were
injured by exposure to the same general condition, their injuries
were considered one accidental loss under the policy definition,
and as a result, only one policy limit was available to the two
families. (Ibid.)

4. Olin

In Olin Corp. v. OneBeacon Am. Ins. Co. (2d Cir. 2017) 864
F.3d 130, 148 (Olin), the Second Circuit found the non-

39
cumulation condition prevented the policyholder from avoiding
the per occurrence limit by making claims under multiple
successive policies for a loss from the same occurrence, even when
the policies were issued by different insurers. In that case, the
plaintiff Olin brought a coverage action seeking indemnification
for environmental contamination at multiple manufacturing
locations. The defendant insurer OneBeacon had issued three
excess policies to plaintiff for the same policy period. (Id. at
p. 137.) The policies provided coverage for “ ‘all sums which the
Insured shall be obligated to pay by reason of the liability . . .
imposed upon the Insured by law . . . for damages, direct or
consequential and expenses . . . on account of . . . Property
Damage . . . caused by or arising out of each occurrence. . . .’ ”
(Olin, supra, 864 F.3d at p. 137.)
An occurrence was defined as “ ‘an accident or a happening
or event or a continuous or repeated exposure to conditions which
unexpectedly and unintentionally result[s] in . . . property
damage . . . during the policy period.’ ” (Olin, supra, 864 F.3d at
p. 137.)
Each excess policy also contained a “prior insurance”
provision and a “continuing coverage” clause in “Condition C” of
the policy, stating: “It is agreed that if any loss covered
hereunder is also covered in whole or in part under any other
excess policy issued to the Insured prior to the inception date
hereof, the limit of liability hereon . . . shall be reduced by any
amounts due to the Insured on account of such loss under such
prior insurance. [¶] Subject to the foregoing paragraph and to all
other terms and conditions of this Policy in the event that
personal injury or property damage arising out of an occurrence
covered hereunder is continuing at the time of termination of this

40
Policy, [the insurer] will continue to protect the Insured for
liability in respect of such personal injury or property damage
without payment of additional premium.” (Olin, supra, 864 F.3d
at pp. 137–138.) “The first paragraph constitutes the prior
insurance provision and the second is the continuing coverage
clause.” (Id. at p. 138.)
Each excess policy was preceded in time by prior insurance
in the same layer of coverage (the prior excess policies) providing
substantially the same coverage for the same manufacturing sites
for all sums the insured became legally obligated to pay for
property damage during the policy period caused by an
occurrence. (Olin, supra, 864 F.3d at p. 138.)
The Olin court concluded the language of the “prior
insurance” provision applied to any other excess policy within the
same layer of coverage and was not limited to prior policies
issued by the same insurer. (Olin, supra, 864 F.3d at p. 148.)
“Rather, the general language of the prior insurance provision
suggests that the clause is designed to apply whenever both
earlier and later polices cover the same loss, just as the focus of
noncumulation clauses is whether more than one policy provides
coverage for identical loss within the same layer, unaffected by
the identity of the insurer.” (Id. at p. 148.) “[T]he critical factor
is whether the loss covered by a policy dictating all sums is also
covered by another policy in the same coverage layer, which itself
has already provided indemnification to the insured for the loss.”
(Id. at p. 149.)
“As Olin argues, application of the all sums method means
that it may attribute the full amount of its loss to a single policy
year and demand coverage from a single insurer up to the
insurer’s policy limits (OneBeacon in this case). Yet, this same

41
principle also limits Olin’s ability to tap multiple insurers for the
same loss. Just as the all sums allocation method allows Olin to
seek recovery from any insurer of its choosing up to the limits of
the relevant policy, by the same token, it also requires reducing
the limits of liability on the OneBeacon policy at issue by
amounts paid under any prior insurance policy at the same level
of coverage that did, in fact, provide coverage to Olin for the same
loss. See Stonewall Ins. Co. v. E.I. du Pont de Nemours & Co.,
996 A.2d 1254, 1260 (Del. 2010) (examining substantially similar
language in light of the all sums approach and concluding that
‘interpreting the noncumulation clause to limit how much [an
insured] may seek from the selected tower of insurance by
subtracting any amounts received by or payable to [the insured]
from prior excess insurers [ ] is the only proper interpretation’).
To conclude otherwise would be to strip the prior insurance
provision of its bargained-for effect, as evinced by its plain
language, and permit Olin to recover multiple times for a single
loss by pursuing multiple insurers within the same layer of
coverage. [Citation.]” (Olin, supra, 864 F.3d at pp. 149–150.)
The Olin court rejected the insurer’s contention, however,
that because the plaintiff “could recover from prior insurers
whose policies provide coverage for loss at these sites and who sit
in the same layer of coverage as OneBeacon, Olin may not
recover under the OneBeacon policies.” (Olin, supra, 864 F.3d at
p. 150.) The court concluded OneBeacon was misreading
Condition C. “As explained earlier, Condition C permits an
insured to pursue indemnification from any insurer whose policy
was triggered (under the framework described above) as a result
of continuing property damage. The prior insurance provision
works in conjunction with the overarching approach dictated by

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Condition C to prevent the insured from stacking policies once it
has already obtained indemnification for that specific loss from
another policy in the relevant coverage layer.” (Id. at p. 150.)
“Thus, under Condition C, the insurer offering coverage for
the selected policy year is generally required to demonstrate the
existence of valid claims against other available policies and to
pursue claims under them. [¶] The prior insurance provision,
however, also offers some contractual protection for the insurer.
This provision allows the insurer to offset its indemnification
obligations by amounts already paid to cover the loss by another
insurer in the same coverage tier.” (Olin, supra, 864 F.3d at
p. 151.)

5. Hopeman

Munich relies on Hopeman Brothers, Inc. v. Continental
Casualty Company (E.D. Va. 2018) 307 F.Supp.3d 433, 441
(Hopeman), a federal district court case applying New York law.
The plaintiff Hopeman purchased multi-layered insurance
coverage from 1971 to 1977. (Id. at p. 439.) Hopeman was
subject to multiple personal injury claims due to asbestos
exposure from its products, and received payments or otherwise
resolved coverage as to all but the defendant insurers. (Id. at
pp. 438–439.)
The Hopeman court concluded that each asbestos-related
claim was a separate “occurrence.” (Hopeman, supra, 307
F.Supp.3d at p. 449.) Based on the decisions in Viking Pump and
Olin, the court found the non-cumulation conditions applied only
to actual payments under prior policies in the same coverage tier.
(Id. at p. 452.) The non-cumulation conditions did not apply

43
simply because the policyholder could theoretically recover a loss
under a prior insurance policy in the same coverage tier, if the
policyholder had not yet received actual payment for that specific
loss. (Id. at pp. 452–453.)
In addition, the Hopeman court concluded the insured was
not required to group any claimants together in that case.
(Hopeman, supra, 307 F.Supp.3d at p. 454.) Although the policy
provided that all personal injury arising out of exposure to the
same general conditions was the same occurrence,5 the court
concluded that “because the injuries in the instant case involved
multiple claimants at multiple locations over multiple years, each
featuring varied and unique exposure patterns, that these claims
constitute separate occurrences under the ‘unfortunate event’
test, and therefore should not be aggregated.” (Ibid.) The
Hopeman court found the non-cumulation condition in the policy
at issue was limited to recoveries involving the same occurrence,
and each individual who alleged bodily injury from exposure to
asbestos was a “separate occurrence” for purposes of the non-
cumulation condition. (Ibid.)
The court also found that the non-cumulation condition did
not require the plaintiff to apply losses to the earliest triggered
policy year or to exhaust policies in chronological order.
(Hopeman, supra, 307 F.Supp.3d at p. 454.) Under Viking Pump
and Olin, the policyholder was allowed to control the order in

5 The relevant policy language stated: “ ‘[f]or the purpose of
determining the limits of the company’s liability: (1) all personal
injury . . . arising out of continuous or repeated exposure to
substantially the same general conditions . . . shall be considered
as the result of one and the same occurrence.’ ” (Hopeman, supra,
307 F.Supp.3d at p. 454, emphasis omitted.)

44
which to seek payment from triggered policies under the all sums
method. (Id. at p. 456.)
The parties disputed whether the term “loss” in the non-
cumulation condition of a different policy should be construed
narrowly or broadly. (Hopeman, supra, 307 F.Supp.3d at pp.457–
458.) The Hopeman court concluded that the plain meaning of
the term “loss” should be construed broadly enough “to mean the
gross amount that a policyholder is seeking in its claim under a
policy.” (Id. at p. 458.) Therefore, the court found the term “loss”
in the non-cumulation conditions unambiguously referred to “the
gross amount Hopeman is seeking under each policy.” (Id. at
p. 459.)
We note that the Hopeman court’s interpretation of the
term “loss” in the non-cumulation condition at issue is not
binding on this court and was rejected by the New York appellate
court in Carrier Corporation v. Allstate Insurance Company (N.Y.
App. Div. 2020) 187 A.D.3d 1616, 1622 [“loss” is defined narrowly
in subject prior insurance and non-cumulation provisions].) In
addition, we note that the Hopeman court was not asked and did
not find that the term “loss” is not related to “an occurrence.”

C. Analysis

It is clear from the policy language and the case law that
the prior insurance and non-cumulation condition applies when
an insured seeks reimbursement for a loss resulting from the
same occurrence under multiple successive policies. The
condition applies when “any loss covered hereunder is also
covered in whole or in part under any other excess policy issued
to the Assured prior to the inception date hereof.” To be covered,

45
a loss must result from an occurrence, and for the loss to be
covered under multiple successive policies, thereby implicating
the non-cumulation condition, it must result from the same
occurrence. In each case discussed above, the court considered
whether a loss paid under a prior policy reduced the policy limits
of a subsequent policy when the policyholder sought payment for
loss from the same occurrence.
As stated above, courts have found that before the non-
cumulation provision applies, the policyholder must have actually
recovered amounts due under the prior policy, not merely
theoretically or arguably covered under the prior policy.
Similarly, the non-cumulation condition does not apply until the
policyholder seeks reimbursement under the subsequent policy
for a loss from the same occurrence that was paid under the prior
policy. In this case, it is undisputed that ITT has not sought
reimbursement from Munich for any loss resulting from an
occurrence that was paid under a prior policy.

Settlement Proceeds

Munich also purported to join in a contention that ITT
should have allocated the Resolute settlement proceeds to specific
asbestos claims before seeking reimbursement from particular
policies. However, Munich declined to join in this issue in the
trial court or assert its own “offset” argument, and therefore, may
not raise the issue for the first time on appeal. (In re Aaron B.
(1996) 46 Cal.App.4th 843, 846 [party is precluded from raising
on appeal any point not raised in the trial court].) Munich has
not challenged the trial court’s ruling on Munich’s equitable
claims.

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 DISPOSITION

The judgment is affirmed. Respondent ITT LLC is awarded
its costs on appeal.
NOT TO BE PUBLISHED.

MOOR, Acting P. J.

We concur:

KIM, J.

LEE, J.*

* Judge of the Superior Court of San Bernardino County,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

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