In re Viking Pump, Inc. and Warren Pumps, LLC Insurance Appeals

Summary

The Delaware Supreme Court reviewed consolidated appeals involving insurance coverage for asbestos-related liabilities arising from businesses formerly owned by Houdaille Industries, Inc. The court addressed the validity of assignments of insurance rights, exhaustion of underlying coverage, allocation of losses, vertical versus horizontal exhaustion, and defense costs under excess insurance policies. The court affirmed in part and reversed in part the judgments of the Superior Court and Court of Chancery.

Holdings

1. The Warren Asset Sale Agreement Amendment unambiguously assigned Warren the insurance coverage in excess of the primary casualty limits, including coverage under the excess policies.
2. The Viking Assignment and Assumption Agreement comprehensively transferred to Viking the assets and liabilities necessary to operate the Viking Pump business, including rights to insurance coverage.
3. Anti-assignment provisions did not bar assignment of insurance rights relating to losses that occurred before the assignments.
4. The 1980-1985 Liberty primary policies were exhausted, and exhaustion did not depend on whether Liberty or the insureds paid the applicable deductibles.
5. The Liberty umbrella policies imposed defense obligations once the underlying primary coverage was exhausted, and defense costs were payable in addition to the umbrella policy limits.
6. Excess policies that truly followed form or followed form by endorsement inherited the Liberty umbrella policies' obligation to pay defense costs in addition to policy limits.
7. The Group One and Group Two policies covered defense costs within their policy limits.
8. The Group Three policies imposed a duty to pay defense costs, contingent on the insurers' consent, and those costs were payable in addition to policy limits.

Questions Presented

1. Whether Houdaille validly assigned its rights under the excess insurance policies to Warren and Viking without obtaining the insurers' consent.
2. Whether the anti-assignment provisions barred transfers of insurance rights relating to losses that occurred before the assignments.
3. Whether the 1980-1985 Liberty primary policies were exhausted despite per-occurrence deductibles.
4. Whether the Liberty umbrella policies imposed obligations to pay defense costs after exhaustion of the underlying primary policies.
5. Whether the excess policies covered defense costs and, if so, whether those costs were payable within or in addition to policy limits.
6. Whether the policies required all-sums or pro-rata allocation and whether vertical or horizontal exhaustion applied.
7. Whether the excess policies were triggered only by policies in place during a claimant's significant asbestos exposure.

Disposition

other