New Jersey Supreme Court Addresses Inter-Insurer Contribution Rights

In a case of first impression, the Supreme Court of New Jersey, in its recent decision in Potomac Ins. Co. of Illinois v. Pennsylvania Manufacturer’s Association Ins. Co., 2013 N.J. LEXIS 847 (N.J. Sept. 16, 2013), had occasion to consider the novel issue of whether an “insurer with an obligation to indemnify and defend an insured has a direct claim for contribution against its co-insurer for defense costs arising from continuous property damage litigation.”

The Potomac decision arose out of an underlying construction defect case brought against Roland Aristone, Inc. (“Aristone”).  Aristone had been hired in 1991 by the Township of Evesham to serve as the general contractor with respect to the construction of a new middle school.  In December 2001, Evasham brought suit against Aristone for alleged construction defects, primarily relating to the school’s roof.  Aristone was insured by five different primary layer general liability insurers during the relevant ten year triggered period: Pennsylvania Manufacturers’ Insurance Company (“PMA”) for two years, Newark Insurance Company (“Newark”) for one year, Royal Insurance Company (“Royal”) for one year, OneBeacon Insurance Company (“OneBeacon”) for one year and Selective Way Insurance Company (“Selective”) for five years.  Selective and OneBeacon agreed from the outset to provide Aristone with a defense in the underlying lawsuit, whereas PMA and Royal/Newark (apparently related companies) denied coverage, thereby prompting Aristone to file suit against those insurers.  PMA eventually settled with Aristone for $150,000 to be used toward Aristone’s settlement of the underlying suit.  In return, Aristone agreed to release PMA from all claims associated with the underlying action.  Days later, the underlying suit was settled for $700,000, with OneBeacon paying $150,000, Selective paying $260,000 and Royal paying $140,000.

Unresolved by the settlement with Evesham was allocation of defense costs.  OneBeacon and Selective paid a combined $528,868 in legal fees and expenses in defending Aristone through resolution of the case.  OneBeacon subsequently demanded that PMA and Royal contribute their proper share of defense costs.  Specifically, OneBeacon argued that under New Jersey law regarding allocation of defense costs for matters involving a continuous trigger, as set forth in cases such as Owens-Illinois Inc. v. United Insurance Co., 138 N.J. 437 (1994), and Carter-Wallace, Inc. v. Admiral Insurance Co., 154 N.J. 312 (1998), the proper allocation of costs, based on the number of years that each insurer was on the risk, was that 50% of total defense costs should be allocated to Selective, 10% should be allocated to OneBeacon, 20% should be allocated to PMA and the remaining 20% should be allocated to Royal/Newark.  While Royal/Newark ultimately settled with OneBeacon, PMA rejected OneBeacon’s demand, arguing among other things, that its release with Aristone precluded OneBeacon’s right to contribution for defense costs.  The matter later was the subject of a three day bench trial that eventually concluded in OneBeacon’s favor.  The trial court agreed that PMA’s settlement with Aristone did not preclude OneBeacon’s contribution claim for defense costs, and thus assigned PMA an allocated share of costs consistent with the approach outlined in Carter-Wallace.  On appeal, the New Jersey Appellate Division acknowledged the lack of New Jersey case law addressing OneBeacon’s right to recover defense costs from PMA.  The court nevertheless relied on California case law, in particular the decision in Fireman's Fund Insurance Co. v. Maryland Casualty Co., 77 Cal. Rptr. 2d 296 (Ct. App. 1998), for the proposition that a coinsurer has a direct right of action against another for defense costs arising out of the same risk. 

On appeal to the Supreme Court of New Jersey, PMA argued that the Appellate Division created a novel cause of action by permitting an insurance company that had already settled with its insured to be sued for a share of defense costs by a co-insurer.  OneBeacon, on the other hand, argued that the decision by the Appellate Division was consistent with decades of New Jersey case law concerning allocation of costs in matters involving a continuous trigger. 

In considering the issue, which it acknowledged was novel, the Supreme Court revisited its decision in Owens-Illinois wherein it adopted a continuous trigger theory for cases involving progressive or individual injury, and wherein it established a pro rata methodology for allocating loss among multiple insurers during the triggered period based on policy limits and years on the risk.  The court noted that its decision in Owens-Illinois “envisioned the litigation of direct claims between co-insurers to ensure that the policyholder's losses would be equitably allocated among its carriers.”  While Owens-Illinois and its progeny concerned allocation of indemnity amounts among insurers and their respective insured, the court reasoned that it should also apply in the context of claims for reimbursement of defense costs:

We concur with the Appellate Division that recognizing an insurer's cause of action for contribution against a co-insurer for allocation of defense costs comports with Owens-Illinois and its progeny. Although the Court in Owens-Illinois considered an issue not raised by this case -- co-insurers' obligations to indemnify their common insured -- it envisioned a judicial determination of "the portion allocable [to each carrier] for defense and indemnity costs." …  The Court recognized in Owens-Illinois that the insurer's obligation to indemnify the policyholder may engender contribution claims between insurers that share the same insured, independent of any right of subrogation to the claims of the insured. …  Like the obligation to indemnify the insured addressed in Owens-Illinois and Carter-Wallace, the obligation of successive insurers to pay the policyholder's defense costs can be readily determined by equitable allocation. Absent a right of contribution, a carrier that pays defense costs as they are incurred might alone bear a burden that should be shared. An inequitable allocation of the cost of defense, like an unfair allocation of the obligation to indemnify, may justify a judicial remedy.

The court found several justifications for its holding.  Allowing such a contribution claim, explained the court, fosters a “strong incentive for prompt and proactive involvement of all responsible carriers.”  The court also reasoned that the right to contribution may promote early settlement and create an incentive for insureds to purchase sufficient coverage in every year.  Perhaps just as important to the court is that permitting a contribution claim under the circumstances “serves the principle of fairness recognized in Owens-Illinois.”  In this connection, the court noted that:

… an insurer that refuses to share the burden of a policyholder's defense is rewarded for its recalcitrance, at its co-insurer's expense, unless the insurer who pays more than its share of the costs has an effective remedy. Recognition of an insurer's contribution claim against its co-insurer serves "the demands of simple justice." … In short, an insurer's direct claim for allocation, asserted by an insurer that pays a disproportionate amount of the defense costs against other insurers of the same policyholder, promotes the principles underlying this Court's decisions in Owens-Illinois and Carter-Wallace.

California’s Supreme Court Addresses Trigger of Coverage and Stacking of Limits

By decision dated August 9, 2012, the Supreme Court of California handed down its long-anticipated holding in State of California v. Continental Insurance Company, 2012 Cal. LEXIS 7324, a ruling that now further defines California law concerning trigger of coverage, allocation of loss, and stacking of policy limits in matters involving continuous or progressive loss.

The State of California decision relates to insurance coverage for environmental contamination emanating from the Stringfellow Acid Pits waste site, which had been operated by the State from 1956 through 1972.  The insurance coverage dispute involved the State’s right to coverage under excess general liability policies issued during the period 1964 to 1976.  The State estimated site remediation costs could reach $700 million.  Each of the State’s insurers had policies requiring them “to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of liability imposed by law … for damages … because of injury to or destruction of property, including loss of use thereof.”  Relevant to the State of California decision was a trial court ruling that each of the insurers on the risk during the period 1964 to 1976 was liable for the total amount of the State’s loss, subject to its particular policy limits.  The court based its ruling on the “all sums” language in the policies.  The trial court further held, however, that the State could not recover insurance proceeds in each policy period, nor could it stack policy limits across multiple periods.  In other words, the trial court held that the State was confined to a single policy period in which to recover the entire loss.  On appeal, the California Court of Appeal reversed the lower court’s ruling with respect to stacking of policy limits, allowing the State to recover insurance proceeds in multiple policy years.

On appeal, the Supreme Court first addressed the issue of trigger of coverage, looking to its decisions in Montrose Chemical Corp. v. Admiral Ins. Co., 10 Cal. 4^th 645 (1995) and Aerojet-General Corp. v. Transport Indem. Co., 17 Cal. 4^th 38 (1997).  These decisions, noted the court, addressed issues of continuous or progressive damage happening during several policy periods.  Montrose, explained the court, articulated the general rule that as long as there is any damage during the policy period, i.e., an occurrence, then each insurer’s indemnity obligation persists until the loss is complete or terminates.  Aerojet, in turn, set forth the “all sums” rule that any insurer on the risk at the time of a continuous or progressive loss is obligated to pay the entire loss, not just the loss limited to the insurer’s specific policy period.  The State of California court held that while these decisions arose in the context, they also apply in the context of the insurers’ respective duties to indemnify.  In doing so, the court rejected the insurer’s argument that they should only be responsible for the loss that happened during their respective policy periods.  The court found no justification for a pro rata allocation methodology favored by the insurers, concluding that the phrase “all sums” in the policies’ respective insuring agreements required the insurers to pay all amounts for which the insured became legally liable, not just for property damage happening during their respective policy periods.  As the court stated:

We therefore conclude that the policies at issue obligate the insurers to pay all sums for property damage attributable to the Stringfellow site, up to their policy limits, if applicable, as long as some of the continuous property damage occurred while each policy as “on the loss.”  The coverage extends to the entirety of the ensuing damage or injury and best reflects the insurers’ indemnity obligation under the respective policies, the insured’s expectations, and the true character of the damages that flow from a long-tail injury.  (Internal citations omitted)

Turning to the issue of stacking of policy limits, the court noted the potential for a shortfall in insurance proceeds if the insured is limited to a recovering proceeds of only a single policy period.  Stacking limits across multiple policy periods, the court observed, avoids this problem:

The all-sums-with-stacking indemnity principle properly incorporates the Montrose continuous injury trigger of coverage rule and the Aerojet all sums rule, and “effectively stacks the insurance coverage from different policy periods to form on giant ‘uber-policy’ with a coverage limit equal to the sum of all purchased insurance policies.  Instead of treating a long-tail injury as though it occurred in one policy period, this approach treats all the triggered insurance as though it were purchased in one policy period.

The court further explained that:

The all-sums-with-stacking rule means that the insured has immediate access to the insurance it purchased.  It does not put the insured in the position of receiving less coverage than it brought.  It also acknowledges the uniquely progressive nature of long-tail injuries that cause progressive damage throughout multiple policy periods.  (Emphasis in original.)

In reaching its holding, the court rejected disapproved the decision in FMC Corp. v. Plaisted & Companies, 61 Cal.App.4^th 1132 (Cal. App. 1998) which held that stacking of policy limits was not permitted.  Thus, as a result of the California Supreme Court’s decision, stacking of policy limits across multiple policy periods is permissible and will be allowed absent specific anti-stacking language within a policy, or a statute to the contrary.  The court explained that such an approach is both equitable and fulfills the insured’s reasonable expectations.  The court further observed that an all-sums-with-stacking approach “ascertains each insurer’s liability with a comparatively uncomplicated calculation that looks at the long-tail injury as a whole rather than artificially breaking it into distinct periods of injury.”  The court did acknowledge, however, that insurers can avoid this allocation methodology by incorporating specific anti-stacking provisions into their policies.

4th Circuit Applies Pro Rata Allocation

In its recent decision in Pennsylvania National Mutual Cas. Ins. Co. v. Roberts, 2012 U.S. App. LEXIS 2084 (4^th Cir. Feb. 3, 2012), the United States Court of Appeals for the Fourth Circuit, applying Maryland law, had occasion to consider allocation of loss arising out of a lead paint bodily injury lawsuit.

Plaintiff in the underlying matter was diagnosed with elevated blood lead levels in September 1992, when she was twenty (20) months old.  She continued to exhibit elevated blood levels through August 1995.  Plaintiff’s suit named as a defendant Attsgood, which owned and managed the property where plaintiff lived from the time of her birth through November 1, 1993.  Plaintiff’s complaint also named as a defendant the subsequent property owner, who defaulted.  Attsgood was insured through Penn National under consecutive general liability policies covering the period January 13, 1992 (subsequent to plaintiff’s birth) through January 13, 1994. The underlying suit eventually resulted in an award to plaintiff in the amount of $850,000, and a finding that Attsgood and the subsequent property manager were jointly and severally liable for the amount.

Following the verdict, Penn National sought a declaratory judgment against Attsgood and the plaintiff, arguing that it was responsible only for 22 months of the entire period in which plaintiff was exposed to lead, that period being from January 13, 1992 through November 1993 when Attsgood sold the property. While Attsgood defaulted in the declaratory judgment action, plaintiff contested Penn National’s allocation theory, arguing that in light of the joint and several finding as to both defendants, Penn National should be responsible for paying the entirety of the $850,000 award. The Maryland federal district court rejected plaintiff’s argument.  Instead, applying a continuous trigger theory, the lower court held Penn National was responsible for 24 months (i.e., the full two years of the policies) of the 55 months that plaintiff was exposed to lead conditions (from her January 1991 birth through August 1995 when her blood lead levels normalized). Thus, the court concluded, Penn National was responsible for 24/55 of the underlying award, or $370,600.

On appeal, the Fourth Circuit affirmed the lower court’s ruling that Penn National should not be responsible for paying the entirety of the underlying judgment.  Any other outcome, noted the court, would be contrary to the plain language of Penn National’s policies, which applied to “bodily injury” happening during the respective policy periods.  As the court explained, “the contract does not cover damages Attsgood became legally obligated to pay for injuries that occurred outside of the policy period.”  (Emphasis supplied.)  Moreover, plaintiff’s argument ran contrary to well-established Maryland law applying a pro rata by time on the risk allocation of liability in lead paint liability matters.  Plaintiff argued that these cases should not apply because they did not involve multi-defendant cases. The Fourth Circuit found this distinction “entirely unpersuasive,” concluding that the pro rata methodology stems from the language of the insurance policy, not from the number of defendants involved.  Finally, the court found that as a matter of public policy, it would simply be unfair to saddle Penn National with losses that happened outside the periods of its policies.

While the court agreed that pro rata allocation was proper, it nevertheless concluded that the lower court erred in determining Penn National’s allocated share of the loss.  The court agreed that the trigger period was 55 months, running from plaintiff’s date of birth through the date that her blood lead levels normalized.  The Fourth Circuit held, however, that the proper numerator was not 24 months, but instead 22 months, representing the period of time in which the Attsgood owned the property at which plaintiff resided.  Thus, the court found Penn National responsible for 22/55 of the underlying loss rather than 24/55.

Supreme Court of Utah Addresses Allocation of Defense Costs Among Insurers

In a question certified by the United States Court of Appeals for the Tenth Circuit, the Supreme Court of Utah in The Ohio Casualty Ins. Co. v. Unigard Ins. Co., 2102 Utah LEXIS 1 (Utah Jan. 6, 2012) recently addressed the issue of whether allocation among successive insurers is determined by the insurers’ respective “other insurance” clauses or by a time-on-the-risk methodology.

The insured, Cloud Nine, had general liability coverage from Ohio Casualty for a one-year period, and then from Unigard for the next three years.  Cloud Nine was sued for an alleged advertising injury which allegedly took place during the last three months of the Ohio Casualty policy, continued throughout the entire period of the Unigard policy, and extended into a period of time in which Cloud Nine was not insured.  Ohio Casualty denied coverage and commenced a declaratory action in which Unigard eventually was a party.  The Utah federal district court held that Ohio Casualty indeed had a duty to defend Cloud Nine and that defense costs must be shared equally with Unigard as a result of their policies’ respective “other insurance” clauses.  Ohio Casualty appealed the question of allocation to the Tenth Circuit, which in turn certified the question to the Supreme Court of Utah.

Ohio Casualty argued on appeal that pursuant to the decision by the Supreme Court of Utah in Sharon Steel Corp v. Aetna Casualty & Surety Co., 931 P.2d 127 (Utah 1997), defense costs should be allocated based on a time-on-the risk methodology, and that Cloud Nine should be allocated a percentage of defense costs for its uninsured period.  Unigard, on the other hand, argued that allocation should be determined by the policies’ other insurance clauses, both of which stated that in the event of other insurance, the policies provide primary coverage on an equal shares basis. 

The court rejected Unigard’s argument, concluding that “other insurance” clauses do not apply to successive insurers, but only to concurrent insurers.  As such, the court explained, the matter was governed by its prior holding in Sharon Steel, which applied a time-on-the-risk methodology in the context of an environmental claim, rather than an equal shares methodology.  In explaining the basis for its prior holding, the court noted that such an allocation scheme “was the most equitable because it fairly related both to the time each insurer spent on the risk and the degree of risk each insurer contracted to assume.”  Thus, while the court agreed with Unigard that Ohio Casualty had an absolute duty to defend Cloud Nine, it noted that the “duty to defend and the apportionment of defense costs between two insurers that have an equal duty to defend are distinct issues.”  As such, the court concluded that defense costs should be apportioned based on time-on-the risk, subject to policy limits.

The court did, however, reject Ohio Casualty’s argument that Cloud Nine should be made to participate in its own defense.  The basis for the court’s reasoning was that both Ohio Casualty and Unigard, pursuant to their respective policies, assumed complete control over Cloud Nine’s defense.  As a result, the court concluded, “it would be inequitable to apportion any defense costs to an insured who has no power to select counsel or negotiate rates and no voice in deciding whether to settle the suit.”  Thus, the court held that defense costs would be divided between Ohio Casualty and Unigard based on their respective times on the risk and that “the portion of defense costs attributable to periods during which the insured lacked coverage” would be divided among the two insurers “in the same proportions.”

New York Court Addresses Number of Occurrences for Molestation Claim

In its recent decision Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2011 N.Y. App. Div. LEXIS 6432 (2d Dep’t. Sept. 20, 2011), a New York appellate level court had occasion to consider various coverage issues arising out of a sexual molestation claim; specifically, number of occurrences and allocation of loss.

The claimant in the underlying suit alleged that she had been molested for a period of seven years “at different times during the day and week, and at multiple locations.” While the insured had primary general liability coverage available for each of these years, each of the policies had a sizable self-insured retention.  This prompted the insured to contend to the position that the underlying matter, which settled for $2 million, could be allocated solely to two of the triggered policy periods, based on a “joint and several” allocation theory.  The trial court held against the insured, holding that the loss was properly allocated among all triggered policy years, and that the insured was responsible to pay the fully retention amount in each of those years.

On appeal, the court agreed with the lower court, noting that a “joint and several” theory of allocation had long since been rejected by New York courts (see e.g., Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 746 N.Y.S.2d 622 (N.Y. 2002)) and was “inconsistent with the unambiguous language of the … policies providing coverage for bodily injury that resulted from an occurrence ‘during the policy period.’”  The court explained that it was not possible to isolate what extent of the underlying plaintiff’s injury happened during any single policy period, and as such, the appropriate method of allocation was on a pro rata basis across each of the policy periods.   Central to the court’s decision in this regard was its finding that the molestation could not be considered a single occurrence, but rather multiple occurrences since “it cannot be said that there was a close temporal and spatial relationship between the acts of sexual abuse.”  As such, the court concluded, each of the insured’s policies over the entire seven-year period was triggered and the insured was be responsible for satisfying a full self-insured retention in each of these periods.

Vermont Supreme Court Rejects Joint and Several Liability Theory

In its recent decision Bradford Oil Company, Inc. v. Stonington Ins. Co., 2011 Vt. LEXIS 102 (Vt. Sept. 11, 2011), the Supreme Court of Vermont had occasion to revisit the issue of whether a time-on-the-risk allocation methodology should apply to pollution condition that occurred over a period of several decades.

The site in Bradford Oil was a filing station that was the source of an underground petroleum leak believed to have commenced in the 1960s or 1970s and continued through the 1990s.  The station was placed on the Vermont Hazardous Waste Sites List in 1997 when the petroleum contamination was first discovered.  The insured undertook an investigation and clean up, the majority of which costs were paid through the Vermont Petroleum Cleanup Fund (“VPCF”).   Bradford had four general liability policies through Stonington covering the period 1994 through 1997.  While Stonington agreed that the policies provided coverage for the cleanup, a coverage dispute arose as to extent of coverage afforded under the policies.

In the ensuing coverage litigation, in which the State of Vermont was a party, Stonington argued that based on the decision in Towns v. Northern Security Ins. Co., 964 A.2d 1150 (Vt. 2008), the proper methodology for allocation in Vermont is time-on-the-risk.  As such, Stonington contended that based on a simple time-on-the-risk allocation, it should only be responsible for 4/27, or 15% of total cleanup costs.  The State, however, argued that a joint and several liability methodology should apply, leaving Stonington responsible for the all cleanup costs up to the limits of its policies.  Specifically, the State contended that Towns should not apply to a situation where the insured’s liability, by statute, is joint and several.  The State also claimed that Towns should not apply where the VPCF is a party to the litigation.  The Vermont Supreme Court rejected both of the State’s arguments. 

First, the court refused to expand the policies’ coverage merely because the insured’s statutory liability was joint and several.  The court concluded that because the policies required that the “property damage” occur during the policy periods, it would be an inequitable result if Stonington was held responsible for cleanup costs associated with contamination pre-dating the policies.  Further, the mere fact that the insured’s liability was described by the statute as joint and several was irrelevant, since “the contribution of insurers is different from the tort concept of contribution among joint tortfeasors.”  The court also rejected the State’s position that Towns should not apply when the VPCF is the plaintiff in interest, explaining that coverage is based on the terms of the policy, not any statutory or public policy rationale.  In passing, the court held that the insurer should not have the burden of showing that the insured elected to be self-insured for any gaps in coverage rather than placing the burden on the insured to show that it could not obtain coverage for such periods.  In doing so, the court explained “we do not want to adopt a methodology that rewards inaction, failure to obtain appropriate coverage, or failure to keep track of insurance policies.” 

Rhode Island Court Holds Settlement Does Not Preclude Equitable Contribution Claim

In its recent decision in Century Indemnity Co. v. Liberty Mutual Ins. Co., 2011 U.S. Dist. LEXIS 100088 (D.R.I. Sept. 6, 2011), the United States District Court for the District of Rhode Island had occasion to consider whether an insurer’s settlement with its insured had the effect of barring an equitable contribution claim by a co-insurer.

Liberty Mutual and Century both insured Emhart, which was alleged to have contaminated a site in Rhode Island.  Emhart filed a coverage action against Liberty and Century, seeking a declaration of coverage with respect to any claims, administrative proceedings and lawsuits arising from the release of hazardous materials at the site.  Liberty Mutual opted to settle with Emhart, paying $250,000 for a full release of any coverage obligations under several policies it had issued to Emhart.  Century, on the other hand, took the matter to trial and ultimately prevailed on the issue of whether it had a duty to indemnify.  The jury, however, held that Century had a duty to defend Emhart with respect to the various underlying matters.  As a result, Century became obligated to reimburse Emhart for over $6 million in defense costs.

Century subsequently brought suit against Liberty on a theory of equitable contribution.  Liberty Mutual argued that it had no duty to defend Emhart and that even if it did, its settlement with Emhart satisfied its defense obligation such that Century did not have a valid claim for equitable contribution.  After an initial finding that Liberty Mutual did have a duty to defend, the court considered what it described as “two difficult and important issues regarding risk allocation among insurers, particularly in large-scale environmental claims like this one,” namely, the effect of Liberty Mutual’s settlement with Emhart and how defense costs should be allocated between the two insurers.

With respect to the first issue, Liberty Mutual argued that allowing an equitable contribution claim despite the settlement would frustrate the important public policy of favoring early settlements.  The court noted that courts and commentators to have considered the issue “roundly rejected Liberty Mutual’s proposed bright line rule that ‘one insurer’s settlement with the insured is [always] a bar to a separate action against that insurer by the other insurer or insurers for equitable contribution or indemnity.’” The court acknowledged, however, that there was no bright line rule to the contrary.  Rather, the prevailing sentiment, explained the court, was to uphold equity and prevent unjust enrichment.   Toward this end, the court found that Liberty Mutual’s settlement with Emhart did not advance any public policy goals pertaining to settlements since the terms of the settlement reflected a mutual understanding that no settlement would occur between Emhart and Century since Liberty Mutual’s settlement payment was so disproportionately small in comparison to the entirety of Emhart’s defense costs.  Thus, concluded the court, “[f]ar from being a litigation killer, Liberty Mutual’s settlement essentially ensured that this litigation would not die.”  Given this, and given the fact that Liberty Mutual had substantially larger policy limits at interest than Century, the court concluded that the equities favored allowing Century’s contribution claim.

The court next considered how Emhart’s defense costs should be allocated.  Liberty Mutual argued that defense costs should be divided equally between it and Century as a result of their policies’ respective other insurance clauses.  Century, on the other hand, argued in favor of a time on the risk allocation, which would result in Liberty Mutual being required to pay the majority of defense costs since Liberty Mutual insured Emhart for a period of eighty-six months whereas Century insured Emhart for only thirteen months. The court held that Liberty Mutual’s argument concerning other insurance clauses only applied to insurers covering the same risk, not to insurers that issued successive policies.  Relying on case law from other jurisdictions, the court concluded that the most equitable means of allocations would be a time on the risk allocation that it explained “serves to align insurers’ defense costs expectations with the proportion of risk that they assume based on the duration of their policy.”  As a result, the court held that in light of the number of years that Liberty Mutual insured Emhart, as comparison to the number of years that Century insured Emhart, Liberty was required to pay 86% of Emhart’s defense costs, or approximately $5.2 million of the defense costs, less the $250,000 it initially paid pursuant to its settlement agreement.