Danaher Corporation v. The Travelers Indemnity Company et al

Filing 667

OPINION AND ORDER: re: 503 MOTION for Joinder in Continental Casualty Company's Motion for Summary Judgment Based on Lack of Justiciability . filed by North River Insurance Company, 529 MOTION for Partial Summary Judg ment . filed by Century Indemnity Company, 551 MOTION for Partial Summary Judgment . filed by Liberty Mutual Fire Insurance Company, 531 MOTION to Dismiss Travelers Claim for Contribution against North River an d Dismiss All Claims to the Extent they Seek Defense Costs Under Certain Policies for Non-Covered Claims. filed by North River Insurance Company, 510 MOTION for Partial Summary Judgment . filed by The Travelers Indemnity Comp any, Travelers Casualty and Surety Company, 483 MOTION for Summary Judgment . filed by Continental Casualty Company, 519 MOTION for Partial Summary Judgment . filed by Danaher Corporation, 515 MOTION for Joi nder in Continental Casualty Companys Motion for Summary Judgment Based on Lack of Justiciability. filed by National Union Fire Insurance Company Of Pittsburgh, PA, Granite State Insurance Company, 498 MOTION for Summary Judgmen t . filed by Employers Insurance Company of Wausau, 496 MOTION for Joinder in Continental Casualty Company's Motion for Summary Judgment Based on Lack of Justiciability. filed by Employers Commercial Union Insurance C ompany, 520 MOTION for Summary Judgment . filed by Unigard Mutual Insurance Company Inc., 504 MOTION for Summary Judgment . filed by Trygg-Hansa Insurance Company, LTD., 492 MOTION for Summary Judgment . fil ed by Allianz Underwriters Insurance Company, 488 MOTION for Summary Judgment . filed by International Insurance Company, 517 MOTION for Summary Judgment . filed by Zurich Insurance plc. The Court has considered all of the arguments of the parties. To the extent not specifically addressed above, the parties arguments are either premature, moot, or without merit. For the foregoing reasons, Plaintiff Danaher and Third-Party Defendant Atlas Copco's motion for pa rtial summary judgment (Dkt. No. 519) is GRANTED in part and DENIED in part; Defendant and Third-Party Plaintiff Travelers' motion for partial summary judgment (Dkt. No. 510) is GRANTED in part and DENIED in part; the Excess Insurers' motio ns for summary judgment (Dkt. Nos. 483, 488, 492, 496, 498, 503, 515, 520, 531) are DENIED; and the Post-Acquisition Insurers motions for summary judgment (Dkt. Nos. 504, 517, 529, 551) are GRANTED.The parties are directed to meet and confer regardin g further proceedings. On or before November 8, 2019, the parties shall submit a joint status letter not exceeding ten (10) pages addressing the parties' proposals regarding further proceedings. Any such status letter shall address Danaher, Atla s Copco, and Travelers' joint suggestion (Dkt. No. 522 at 24; Dkt. No. 618 at 16) that the Court at this time refer this matter for supplemental allocation proceedings, to be conducted in a manner consistent with this opinion. The Clerk of Court is directed to close the motions at Docket Numbers 483, 488, 492, 496, 498, 503, 504, 510, 515, 517, 519, 520, 529, 531, and 551.SO ORDERED. (Signed by Judge J. Paul Oetken on 10/10/2019) (js) Modified on 10/10/2019 (js).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DANAHER CORPORATION,
Plaintiff,
10-CV-121 (JPO)
-vOPINION AND ORDER
THE TRAVELERS INDEMNITY COMPANY,
et al.,
Defendants.

THE TRAVELERS INDEMNITY COMPANY
and TRAVELERS CASUALTY AND SURETY
COMPANY,
Third-Party Plaintiffs,
-vATLAS COPCO NORTH AMERICA, INC.
(as successor to CHICAGO PNEUMATIC
TOOL COMPANY), et al.,
Third-Party Defendants.

J. PAUL OETKEN, District Judge:
This action was initiated by Plaintiff Danaher Corporation (“Danaher”) to resolve
disputes concerning insurance coverage for silica- and asbestos-related claims brought against
one of Danaher’s former subsidiaries, Chicago Pneumatic Tool Company (“Chicago
Pneumatic”). Danaher brings state-law contract and declaratory judgment claims against
Defendants the Travelers Indemnity Company and the Travelers Casualty and Surety Company
(together, “Travelers”). (Dkt. No. 22 ¶¶ 3–5, 34–48.) Danaher’s claims against Travelers stem
from Travelers’ alleged refusal to comply with the terms of a number of primary and excess

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insurance policies that Travelers had issued to Chicago Pneumatic in the years prior to Danaher’s
1987 sale of Chicago Pneumatic to Third-Party Defendant Atlas Copco North America, Inc.
(“Atlas Copco”) (Dkt. No. 22 ¶¶ 16, 20, 33; see also Dkt. No. 619 ¶ 1; Dkt. No. 564-2). Danaher
also brings breach of contract and declaratory judgment claims against one of Chicago
Pneumatic’s excess insurers from this period, Defendant North River Insurance Company
(“NR”). (Dkt. No. 22 ¶¶ 6, 21, 34–43; Dkt. No. 604 ¶ 1; see also Dkt. Nos. 578-1, 578-2.)
Finally, Danaher seeks a declaratory judgment adjudicating the obligations of nine other of
Chicago Pneumatic’s excess insurers from the period prior to Danaher’s sale of Chicago
Pneumatic to Atlas Copco (together with NR, the “Excess Insurers”). (Dkt. No. 22 ¶¶ 34–40.) 1
In addition to answering Danaher’s allegations and asserting counterclaims and
crossclaims against all parties in this action (see Dkt. No. 13), Travelers has impleaded as ThirdParty Defendants in this action Atlas Copco, the current owner of Chicago Pneumatic, as well as
the issuers of various of Atlas Copco’s primary and excess liability insurance policies in the
years following Atlas Copco’s acquisition of Chicago Pneumatic (collectively, the “PostAcquisition Insurers”) 2 (Dkt. No. 455). Travelers seeks a declaratory judgment adjudicating the

1

The Excess Insurers other than NR are: (1) the American Home Assurance Company
(“American Home”); (2) Unigard Mutual Insurance Company (“Unigard”); (3) Employers
Insurance Company of Wausau (“Wausau”); (4) Continental Casualty Company (“Continental
Casualty”); (5) Employers Commercial Union Insurance Company (“OneBeacon”);
(6) International Insurance Company (“TIG”); (7) Granite State Insurance Company (“Granite
State”); (8) National Union Fire Insurance Company of Pittsburgh, P.A. (“National Union”); and
(9) Allianz Underwriters Insurance Company (“Allianz”). (Dkt. No. 22 ¶¶ 7–15.) Among the
Excess Insurers, only American Home has not filed a summary judgment motion seeking the
dismissal of all claims against it.
2
The Post-Acquisition Insurers, i.e., Atlas Copco’s insurers that have been impleaded by
Travelers as Third-Party Defendants in this action, are: (1) Century Indemnity Company
(“Century”); (2) Liberty Mutual Fire Insurance Company (“Liberty Mutual”); (3) Trygg-Hansa
Insurance Company, Ltd. (“Trygg-Hansa”); (4) Industria Insurance Company Ltd. (“Industria”);
and (5) Zurich Insurance plc (“Zurich”). (Dkt. No. 455 ¶¶ 14–17.) Although Zurich Insurance
Company was initially impleaded as an additional Third-Party Defendant (see Dkt. No. 455
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scope of its obligations to Atlas Copco with respect to indemnifying and defending against the
underlying asbestos and silica claims brought against Chicago Pneumatic. (Dkt. No. 455 ¶¶ 40–
49.) In addition, Travelers seeks an allocation as between itself and the Third-Party Defendants
of the costs of defending the underlying claims, as well as an order mandating that the ThirdParty Defendants pay contribution to Travelers for any indemnification payments Travelers
might make on behalf of Chicago Pneumatic. (Dkt. No. 455 ¶¶ 50–62.)
Before the Court now are the parties’ cross-motions for summary judgment. (See Dkt.
Nos. 483–656.) Specifically, the following motions are now pending before the Court: Plaintiff
Danaher and Third-Party Defendant Atlas Copco’s motion for partial summary judgment (Dkt.
No. 519); Defendant and Third-Party Plaintiff Travelers’ motion for partial summary judgment
(Dkt. No. 510); the Excess Insurers’ motions for summary judgment (Dkt. Nos. 483, 488, 492,
496, 498, 503, 515, 520, 531); and the Post-Acquisition Insurers’ motions for summary judgment
(Dkt. Nos. 504, 517, 529, 551). For the reasons that follow, Danaher and Atlas Copco’s motion
is granted in part and denied in part, Travelers’ motion is granted in part and denied in part, the
Excess Insurers’ motions are denied, and the Post-Acquisition Insurers’ motions are granted.
I.

Background
Familiarity with this case’s long history is presumed based on this Court’s prior opinions

in this action. See, e.g., Danaher Corp. v. Travelers Indem. Co., No. 10 Civ. 121, 2013 WL
150027 (S.D.N.Y. Jan. 10, 2013) (Francis, Mag. J.); Danaher Corp. v. Travelers Indem. Co., No.
10 Civ. 121, 2014 WL 1133472 (S.D.N.Y. Mar. 21, 2014); Danaher Corp. v. Travelers Indem.
Co., No. 10 Civ. 121, 2014 WL 7008938 (S.D.N.Y. Dec. 12, 2014); Danaher Corp. v. Travelers

¶ 16), it has since been voluntarily dismissed by stipulation (Dkt. No. 464). Among the
remaining Post-Acquisition Insurers, only Industria has not filed a motion for summary
judgment.
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Indem. Co., No. 10 Civ. 121, 2016 WL 1255739 (S.D.N.Y. Mar. 30, 2016). The Court provides
below a summary of the facts and procedural history most relevant to the resolution of the
present motions. The following facts are drawn primarily from the parties’ Local Rule 56.1
statements and attached exhibits and, unless otherwise noted, are not subject to genuine dispute.
Chicago Pneumatic was the manufacturer of various products that have been and
continue to be the subject of asbestos-related bodily injury claims (the “Asbestos Claims”) and
silica-related bodily injury claims (the “Silica Claims,” and together with the Asbestos Claims,
the “Underlying Claims”). (Dkt. No. 607 ¶ 1.) As of the briefing of these motions, Danaher and
Atlas Copco, on behalf of Chicago Pneumatic, had incurred more than $8.7 million in fees and
costs defending the Underlying Claims, 3 and more than $2 million in settling those claims. (Dkt.
No. 607 ¶ 57; Dkt. No. 619 ¶ 5; Dkt. No. 612 ¶¶ 11, 13, 15.) In addition, Travelers has incurred
over $7.1 million in costs and fees in the defense of the Underlying Claims, and Travelers
continues to incur defense costs defending live claims. (Dkt. No. 607 ¶ 56; Dkt. No. 565 ¶¶ 10–
11.) No new Silica Claims have been filed against Chicago Pneumatic since 2006. (Dkt. No.
612 ¶ 14; see also Dkt. Nos. 485-9 at 1–2, 485-10 at 12–13, 485-11 at 12–13 (demonstrating
stagnation in number of Silica Claims against Chicago Pneumatic).) However, new Asbestos
Claims continue to be filed against Chicago Pneumatic, and current trends indicate that new
Asbestos Claims may well be filed at a similar rate for the foreseeable future. (Dkt. Nos. 485-9

3

The amount of costs and fees incurred by Chicago Pneumatic in defending against the
Underlying Claims was previously the subject of dispute among Travelers and Danaher and
Atlas Copco, but upon a review of the relevant billing records, this Court affirmed that the
approximately $8.7 million figure cited above represented Chicago Pneumatic’s reasonably
incurred “fees and costs arising from [defending against] the [U]nderlying [C]laims.” Danaher
Corp. v. Travelers Indem. Co., No. 10 Civ. 121, 2015 WL 1647435, at *7 (S.D.N.Y. Apr. 14,
2015).
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at 3–9, 485-10 at 2–11, 485-11 at 2–11, 485-12; Dkt. No. 484 at 12 (noting that an average of 70
new Asbestos Claims per year have been filed in each of the last three years); Dkt. No. 611 ¶ 6.)
Danaher acquired Chicago Pneumatic in 1986. (Dkt. No. 607 ¶ 5.) On April 22, 1987,
Danaher sold Chicago Pneumatic to Atlas Copco pursuant to a Stock Purchase Agreement
(“SPA”), and Danaher no longer maintains any ownership interest in Chicago Pneumatic. (Dkt.
No. 607 ¶¶ 6–7; see also Dkt. No. 564-2.) Section 11(a) of the SPA, the “Indemnification
Clause,” provides that:
[Danaher] shall defend, indemnify and hold harmless, [Atlas Copco], its
successors, assigns and affiliates against and in respect of: . . .
(iv) any and all losses, damages, deficiencies or liabilities in excess of applicable
reserves of [Chicago Pneumatic] . . . resulting from any claims against [Chicago
Pneumatic] or any Subsidiary arising in connection with death, personal injury,
other injury to persons, property damage, losses or deprivation of rights (whether
based on statute, negligence, breach of warranty, strict liability or any other
theory) caused by or resulting from, directly or indirectly, any defect or claimed
defect in or with respect to any products manufactured or services performed for
customers on or before the Closing Date with respect to the businesses of
[Chicago Pneumatic] or any of its Subsidiaries or any violation of applicable
law or regulation before the Closing Date, provided, however, that any such
amount will be net of any amounts received pursuant to Section 11(h) hereof. . . .
(Dkt. No. 564-2 at 11, 13 (emphasis omitted).) Section 11(h) of the SPA provides that:
[Atlas Copco] will cause [Chicago Pneumatic] to indemnify and hold [Danaher]
harmless from and against all damages covered by the insurance policies owned
by the [Chicago Pneumatic] Group prior to the Closing Date, arising from the
business and operations of the [Chicago Pneumatic] Group and [Danaher] and its
affiliates prior to the Closing Date but only to the extent of any amounts received,
after the Closing Date, pursuant to and in accordance with the terms of, the
insurance policies covering such damages.
(Dkt. No. 564-2 at 24.) In the years following Danaher’s sale of Chicago Pneumatic to Atlas
Copco, Danaher tried unsuccessfully to enlist the aid of Chicago Pneumatic’s pre-acquisition
insurers in the defense and indemnification of losses stemming from the Underlying Claims, and
Danaher initiated this action in order to compel Travelers and the Excess Insurers to fulfill their
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alleged obligations under the insurance policies they had issued to Chicago Pneumatic prior to its
acquisition by Atlas Copco. (See Dkt. No. 22 ¶¶ 20–22, 31, 33; see also Dkt. No. 575-6 at 18.)
Danaher is now suing two categories of Chicago Pneumatic’s pre-acquisition insurers:
(1) Chicago Pneumatic’s primary insurer from this period; and (2) Chicago Pneumatic’s excess
insurers from this period. 4 The sole member of the first group is Travelers, which Danaher
alleges issued primary insurance policies to Chicago Pneumatic from 1936 through 1987. (Dkt.
No. 22 ¶ 20.) Travelers does not dispute, for purposes of these motions, that it did in fact issue
or is responsible for providing coverage pursuant to primary insurance policies issued to Chicago
Pneumatic for the calendar year 1961 and for the period between January 1, 1963 and April 1,
1986. (Dkt. No. 607 ¶¶ 14–15; Dkt. No. 619 ¶¶ 1–2; see also, e.g., Dkt. Nos. 527-4 to 527-7
(excerpting selected Travelers policies from the 1970 to 1986 period).) However, the parties
disagree with respect to whether and to what extent Travelers is responsible for indemnifying or
defending Chicago Pneumatic under any primary insurance policies for the calendar years 1946
through 1960, as well as the calendar year 1962; the parties also disagree about the meaning of
certain terms and the scope of coverage provided under the other primary policies issued by
Travelers and its predecessor to Chicago Pneumatic. (See, e.g., Dkt. No. 607 ¶¶ 13–15, Dkt. No.
619 ¶¶ 7–9, 19; see also Dkt. No. 618 at 16–25; Dkt. No. 648 at 4–10.)

4

“In this context, ‘primary’ insurance refers to the first layer of insurance coverage that
attaches immediately upon the occurrence of a policy-defined liability or loss. ‘Excess liability
policies, by contrast, . . . provide an additional layer of coverage for losses that exceed the limits
of a primary liability policy. Coverage under an excess policy thus is triggered when the liability
limits of the underlying primary insurance policy have been exhausted.’” Ali v. Fed. Ins. Co.,
719 F.3d 83, 90 (2d Cir. 2013) (omission in original) (citation omitted) (quoting Horace Mann
Ins. Co. v. Gen. Star Nat’l Ins. Co., 514 F.3d 327, 329 (4th Cir. 2008)); see also Olin Corp. v.
Am. Home Assurance Co., 704 F.3d 89, 93 & n.6 (2d Cir. 2012) (describing how excess liability
policies operate).
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At least some of the Travelers primary policies issued to Chicago Pneumatic ―
specifically those covering the policy periods of April 1, 1979 to April 1, 1985 ― were fully
exhausted by the time of the briefing of these motions. (Dkt. No. 565 ¶ 8; Dkt. No. 607 ¶ 16.) A
number of the other Travelers policies were at that time substantially impaired; however, each
impaired policy retained coverage limits in excess of at least a quarter-million dollars. (Dkt. No.
624 ¶¶ 4–6; see also Dkt. No. 485-7 (January 7, 2009 letter providing year-by-year assessment of
remaining limits on Travelers’ policies spanning January 1, 1973 through April 1, 1987 as of that
date).)
The second category of Chicago Pneumatic’s pre-1987 insurers sued by Danaher in this
action are the Excess Insurers, the issuers of excess insurance policies to Chicago Pneumatic
prior to Danaher’s sale of Chicago Pneumatic to Atlas Copco. (Dkt. No. 22 ¶¶ 6–15, 21–22; see
also Dkt. No. 622 at 5–13 (surveying Chicago Pneumatic’s excess insurance policies from the
years 1972 to 1986).) Among the Excess Insurers’ policies, the NR policy that sits directly
above the exhausted 1979 to 1982 Travelers policies has already been eroded. (See Dkt. No. 574
¶ 19; see also, e.g., Dkt. No. 564-8 (evidencing NR’s 1979 to 1982 excess policy issued to
Chicago Pneumatic).) NR’s policies contain what is known as a non-cumulation provision,
which provides that:
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.
(Dkt. No. 527-3 at 3.) Many of the Excess Insurers’ policies contain provisions comparable to
the non-cumulation provision found in NR’s policies. (See, e.g., Dkt. No. 485-4 at 5 (American
Home’s 1972 to 1975 policy’s non-cumulation provision); 494-2 at 12 (Allianz’s 1985 to 1986
policy’s non-cumulation provision); Dkt. No. 523-1 at 4 (Unigard’s 1974 to 1977 policy’s non7

cumulation provision); see also generally Dkt. No. 522-1 (surveying the non-cumulation
provisions in each of the Excess Insurers’ policies).)
Relatively early on in this case’s long life, Danaher and Atlas Copco moved for summary
judgment on the issue of Travelers’ duty to defend the Underlying Claims against Chicago
Pneumatic. (Dkt. No. 53.) On September 6, 2012, this Court held that Travelers had a duty to
defend the Underlying Claims and that Travelers was responsible for reimbursing Danaher and
Atlas Copco for the defense costs they had incurred to that point in defending the Underlying
Claims. (Dkt. No. 575-6 at 57–61; see also Dkt. No. 98.) The Court did not then decide whether
and to what extent Chicago Pneumatic’s other insurers could be held liable for contribution for
Travelers’ defense costs, leaving that question “for another day.” (Dkt. No. 575-6 at 59.) In
accordance with the Court’s September 6, 2012 order, Travelers has been incurring and
continues to incur defense costs in connection with the Underlying Claims. (Dkt. No. 607 ¶ 55.)
Travelers, in addition to answering Danaher’s allegations and asserting counterclaims and
crossclaims against all parties named by Danaher in this action (see Dkt. No. 13), has at different
times impleaded or sought to implead numerous additional parties as third-party defendants in
this action (see, e.g., Dkt. Nos. 123, 192, 430). Travelers’ attempts to do so have been the
subject of frequent dispute and numerous decisions by this Court. (See, e.g., Dkt. Nos. 121, 189,
278, 429.) Travelers’ currently operative Third-Party Complaint impleads Third-Party
Defendants Atlas Copco, the current owner of Chicago Pneumatic, and the Post-Acquisition
Insurers, the issuers of various primary and excess liability insurance policies to Atlas Copco in
the years following Atlas Copco’s acquisition of Chicago Pneumatic. (Dkt. No. 455.)
When, in March 2016, the Court granted Travelers leave to reassert its claims against
Post-Acquisition Insurer Trygg-Hansa (Dkt. No. 429), discovery had already closed with respect

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to this action’s other claims, and a number of parties had filed motions for summary judgment
(see Dkt. Nos. 327, 329, 331, 341–42, 345, 360, 362–63, 375). In order to align the discovery
schedules for all claims in this action, as well as to allow the parties to address intervening
developments in the case law, the Court denied the parties’ then-pending motions for summary
judgment without prejudice to renewal of the arguments therein following the conclusion of
discovery with respect to all claims in this action. (Dkt. No. 443; Dkt. No. 445 at 5–9.)
Discovery has now closed (see Dkt. No. 472), and the following motions for summary
judgment are currently pending before the Court: Defendant and Third-Party Plaintiff Travelers’
motion for partial summary judgment (Dkt. No. 510); Plaintiff Danaher and Third-Party
Defendant Atlas Copco’s motion for partial summary judgment (Dkt. No. 519); motions for
summary judgment by all Excess Insurers except American Home (Dkt. Nos. 483, 488, 492, 496,
498, 503, 515, 520, 531); and motions for summary judgment by all Post-Acquisition Insurers
except Industria (Dkt. Nos. 504, 517, 529, 551). The motions have been fully briefed (see Dkt.
Nos. 483–656), and the Court is now prepared to rule.
II.

Legal Standards
A.

Summary Judgment Standard

A “court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). “An issue of fact is genuine if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the
suit under the governing law.” SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d
Cir. 2009) (quoting Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir. 2008)).
In reviewing a motion for summary judgment, a court must consider the evidence “in the
light most favorable to the non-moving party and draw all reasonable inferences in its favor.”
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Allen v. Coughlin, 64 F.3d 77, 79 (2d Cir. 1995). “It is well established that ‘[c]redibility
assessments, choices between conflicting versions of the events, and the weighing of evidence
are matters for the jury, not for the court on a motion for summary judgment.’” Curry v. City of
Syracuse, 316 F.3d 324, 333 (2d Cir. 2003) (alteration in original) (quoting Fischl v. Armitage,
128 F.3d 50, 55 (2d Cir. 1997)). Accordingly, “the trial court’s task at the summary judgment
motion stage of the litigation is carefully limited to discerning whether there are any genuine
issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point
to issue-finding; it does not extend to issue-resolution.” Gallo v. Prudential Residential Servs.,
Ltd. P’ship, 22 F.3d 1219, 1224 (2d Cir. 1994). Finally, in cases involving cross-motions for
summary judgment, “the court must evaluate each party’s motion on its own merits, taking care
in each instance to draw all reasonable inferences against the party whose motion is under
consideration.” Coutard v. Mun. Credit Union, 848 F.3d 102, 114 (2d Cir. 2017) (quoting
Schwabenbauer v. Bd. of Educ., 667 F.2d 305, 314 (2d Cir. 1981)).
B.

Governing Law
1.

Principles of Contract Interpretation

The parties largely agree that New York law governs the coverage disputes at issue.
Under New York law, “[i]t is well established that” courts “determining a dispute over insurance
coverage [must] first look to the language of the policy.” Roman Catholic Diocese of Brooklyn
v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 21 N.Y.3d 139, 148 (2013) (second quoting
Consol. Edison Co. of N.Y. v Allstate Ins. Co., 98 N.Y.2d 208, 221 (2002)). The language of the
policy is then to be “interpreted according to general rules of contract interpretation.” Olin Corp.
v. Am. Home Assurance Co., 704 F.3d 89, 98 (2d Cir. 2012) (applying New York law). Doing so
mandates that “the language of the ‘contracts . . . be interpreted according to common speech and
consistent with the reasonable expectation of the average insured.’” In re Viking Pump, Inc., 27
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N.Y.3d 244, 257 (2016) (quoting Dean v. Tower Ins. Co. of N.Y., 19 N.Y.3d 704, 708 (2012)).
In addition, courts “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.” Id. (quoting Roman Catholic Diocese of Brooklyn, 21 N.Y.3d at 148).
Ambiguities in contract language must be construed in favor of the insured. Id. But “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.’” Id. at 258 (alteration in original) (quoting
Selective Ins. Co. of Am. v. Cty. of Rensselaer, 26 N.Y.3d 649, 655 (2016)). “The determination
of whether an insurance policy is ambiguous is a matter of law for the court to decide.”
Commercial Union Ins. Co. v. Flagship Marine Servs., Inc., 190 F.3d 26, 33 (2d Cir. 1999)
(quoting In re Prudential Lines Inc., 158 F.3d 65, 77 (2d Cir. 1998)) (collecting cases applying
New York law). “If a contract is unambiguous, courts are required to give effect to the contract
as written and may not consider extrinsic evidence to alter or interpret its meaning.” Liberty.
Mut. Ins. Co. v. Fairbanks Co., 170 F. Supp. 3d 634, 642–43 (S.D.N.Y. 2016) (quoting Consarc
Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 573 (2d Cir. 1993)) (collecting cases
applying New York law).
2.

Allocation of Insurance Coverage for Long-Tail Claims

Courts applying New York law have in recent years struggled to resolve insurance
coverage and allocation disputes in the context of so-called “long-tail claims,” and in particular,
coverage disputes involving claims premised on “personal injuries due to toxic exposure and
property damage resulting from gradual or continuing environmental contaminations.” In re
Viking Pump, 27 N.Y.3d at 255. The difficulty with coverage disputes involving long-tail claims
arises from the fact that “[t]hese types of claims . . . often involve exposure to an injury-inducing
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harm over the course of multiple policy periods, spawning litigation over which policies are
triggered in the first instance, how liability should be allocated among triggered policies and the
respective insurers, and at what point insureds may turn to excess insurance for coverage.” Id.
Courts have generally adopted either of two competing methods of allocation for these
types of claims: all sums or pro rata. Under the “all sums” method, which is also sometimes
referred to as the joint-and-several method, an insured is entitled “to collect its total liability . . .
under any policy in effect during the periods that the damage occurred,” and is limited in its
ability to recover from any single insurer only by that insurer’s specific policy limits. Id.
(alteration in original) (quoting Roman Catholic Diocese of Brooklyn, 21 N.Y.3d at 154)
(internal quotation marks omitted). In contrast, under the “pro rata” method, “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.” Id. (emphasis added). “Pro rata shares are often,
although not exclusively, calculated based on an insurer’s ‘time on the risk,’ a fractional amount
corresponding to the duration of the coverage provided by each insurer in relation to the total
loss.” Keyspan Gas E. Corp. v. Munich Reinsurance Am., Inc., 31 N.Y.3d 51, 58 (2018).
Unlike the courts of the many states that have adopted a preference for either pro rata or
all sums allocation, see In re Viking Pump, 27 N.Y.3d at 256–57 (surveying cases), “New York
[courts] have not adopted a strict pro rata or all sums allocation rule,” Keyspan Gas, 31 N.Y.3d
at 58. Instead, “the method of allocation is governed foremost by the particular language of the
relevant insurance policy.” Id. Accordingly, in a case governed by New York law, different
insurance policies may dictate the application of either the pro rata or the all sums methods of
allocation, and the method of allocation to be applied under any given policy is to be determined

12

based on an assessment of the particular policy language agreed upon by the insured and the
insurer. See id. at 58–59; see also In re Viking Pump, 27 N.Y.3d at 257.
Recent New York Court of Appeals cases provide some guidance to courts seeking to
divine party intent with respect to either all sums or pro rata allocation from boilerplate insurance
policy language. As is relevant here, the New York Court of Appeals
held in Consolidated Edison Co. of N.Y. v[.] Allstate Ins. Co. that policy language
restricting an insurer’s liability to all sums incurred and occurrences happening
“during the policy period” generally supports a pro rata allocation. [See Consol.
Edison Co. of N.Y., 98 N.Y.2d at 224]. As [the Court of Appeals in Consolidated
Edison] explained, the policies at issue there contained such language providing
“for liability incurred as a result of an accident or occurrence during the policy
period, not outside that period,” and [the Court of Appeals] concluded that
“[p]roration of liability . . . acknowledges the fact that there is uncertainty as to
what actually transpired during any particular policy period[.]” [Id.]
[The New York Court of Appeals] subsequently distinguished the policy language
in Consolidated Edison from that presented in Matter of Viking Pump, Inc. and
held, in the latter case, that the presence of noncumulation and prior insurance
provisions “plainly contemplate that multiple successive insurance policies can
indemnify the insured for the same loss or occurrence” and, therefore, require all
sums allocation[.] [In re Viking Pump, 27 N.Y.3d at 261]. Such provisions are
inconsistent with pro rata allocation because “the very essence of pro rata
allocation is that the insurance policy language limits indemnification to losses
and occurrences during the policy period,” such that no two insurance policies
indemnify the same loss or occurrence absent overlapping or concurrent policy
periods[.] [Id.]
Keyspan Gas, 31 N.Y.3d at 58–59 (cleaned up). Finally, and most recently, the New York Court
of Appeals in Keyspan Gas explained that application of the pro rata approach mandates that an
insured bear the risk of loss for any periods in which it went without insurance or where its
insurers have become insolvent, regardless of whether or not other insurance was available on
the market during those periods. Id. at 60–63. The Keyspan Gas court reasoned that allocating
such losses to an insurer for periods where it was not “on the risk” would violate the terms of the
parties’ agreements, as well as the insured’s coverage expectations. See id.

13

III.

Travelers’ Motion
The Court first addresses Travelers’ motion for partial summary judgment. (See Dkt. No.

510.) Travelers chiefly seeks a declaration that under governing New York law, and most
particularly under Keyspan Gas, Travelers may be held responsible for costs stemming from the
Underlying Claims only to the extent that those costs are allocable to it under the pro rata, timeon-the-risk method of allocation. (Dkt. No. 562 at 13–16.) Moreover, to the extent that
Travelers has borne a disproportionate share of such costs to date, Travelers seeks the equitable
remedy of contribution from the other parties in this action, in proportion to each party’s pro rata
obligations with respect to the Underlying Claims. (Dkt. No. 562 at 16–23.) Danaher and Atlas
Copco (Dkt. No. 605), NR (Dkt. No. 573), Zurich (Dkt. No. 581), Trygg-Hansa (Dkt. No. 629),
Unigard (Dkt. No. 593), and Wausau (Dkt. No. 592) have each filed oppositions to Travelers’
motion.
A.

Method of Allocation of Indemnity Costs

Travelers seeks a declaration that the pro rata, time-on-the-risk method of allocation
should be applied with respect to the allocation of indemnity costs to Travelers under any of its
policies that provide coverage for only those bodily injuries that “occur[] during the policy
period” at issue and that do not contain non-cumulation clauses. (See Dkt. No. 643 at 1–5.) The
Travelers policies at issue in this suit almost all define a covered “bodily injury” as a “bodily
injury, sickness or disease sustained by any person which occurs during the policy period,
including death at any time resulting therefrom[.]” (See, e.g., Dkt. No. 565-1 at 4 (emphasis
added).) The Court agrees with Travelers that the pro rata method of allocation is called for
under New York law for the Travelers policies containing the “occurs during the policy period”
language, at least where the policy does not contain a non-cumulation clause or other similar

14

language evidencing the understanding that two or more insurance policies that do not overlap in
time might indemnify the insured with respect to the same loss or occurrence.
As the New York Court of Appeals has explained, “policy language restricting an
insurer’s liability to all sums incurred and occurrences happening ‘during the policy period’
generally supports a pro rata allocation.” Keyspan Gas, 31 N.Y.3d at 58. To the extent that
Travelers’ policies contain such language and do not also contain a non-cumulation clause, the
only plausible reading of those policies is that they provide coverage “for liability incurred as a
result of an accident or occurrence during the policy period, not outside that period.” Id.
(quoting Consol. Edison Co. of N.Y., 98 N.Y.2d at 224). Importantly, this conclusion holds
regardless of whether or not Chicago Pneumatic either has or had access to coverage under other
insurance policies during any particular period of time. Allowing Chicago Pneumatic to obtain
coverage from Travelers under the sort of policies described here for occurrences outside of the
periods for which Chicago Pneumatic in fact paid premiums and retained coverage from
Travelers would be “inconsistent with the contract language that provides the foundation for the
pro rata approach — namely, the ‘during the policy period’ limitation — [because] to allocate
risk to the insurer for years outside the policy period would be to ignore the very premise
underlying pro rata allocation.” Id. at 61.
Danaher and Atlas Copco concede that all but one of Travelers’ policies fit this
description and thus should be subject to pro rata allocation. (See Dkt. No. 522 at 9.) Danaher
and Atlas Copco contend, however, that one of Travelers’ policies does contain a noncumulation clause or its equivalent. (See id.; see also Dkt. No. 605 at 15–16.) The Court
addresses that contention below in connection with its discussion of Danaher and Atlas Copco’s
motion for summary judgment. See infra Section IV.A.

15

Applying the pro rata method here in order to allocate indemnity costs to Travelers’
policies may be effectuated with the use of a relatively simple formula that has been employed
effectively by a number of other courts presiding over allocation disputes involving long-tail
claims: Travelers’ pro rata share of indemnity costs stemming from the Underlying Claims will
be “determined by multiplying the judgment or settlement by a fraction that has as its
denominator the entire number of years of the claimant’s injury, and as its numerator the number
of years within that period when the policy was in effect.” Stonewall Ins. Co. v. Asbestos Claims
Mgmt. Corp., 73 F.3d 1178, 1202 (2d Cir. 1995); see also Keyspan Gas, 31 N.Y.3d at 58 (“Pro
rata shares are often, although not exclusively, calculated based on an insurer’s ‘time on the
risk,’ a fractional amount corresponding to the duration of the coverage provided by each insurer
in relation to the total loss.”); Consol. Edison Co. of N.Y., 98 N.Y.2d at 224–25 (approving of the
use of this method).
Accordingly, to the extent that Chicago Pneumatic obtained primary coverage from
Travelers with occurrence-based policies that lack non-cumulation clauses or other language
evidencing the parties’ understanding that any given occurrence could trigger more than one
successive policy, Travelers may be allocated indemnification costs under those policies with
respect to the Underlying Claims only to the extent that Travelers was in fact “on the risk” for
such costs. Determining the extent to which Travelers was “on the risk” will be done by
“multiplying the judgment or settlement” associated with a given Underlying Claim “by a
fraction that has as its denominator the entire number of years of the claimant’s injury, and as its

16

numerator the number of years within that period when the policy was in effect.” 5 Stonewall Ins.
Co., 73 F.3d at 1202.
B.

Contribution for Indemnification and Defense Costs

Travelers moves for a contribution award compensating Travelers to the extent that it has
borne or will bear a disproportionate share of either defense or indemnification costs associated
with the Underlying Claims. (Dkt. No. 562 at 19–23.)
“New York law recognizes a cause of action for pro rata contribution when a co-insurer
pays more than its fair share for a loss covered by multiple insurers.” Nat’l Cas. Co. v. Vigilant
Ins. Co., 466 F. Supp. 2d 533, 540 (S.D.N.Y. 2006) (collecting cases). An insurer’s right to
contribution from others responsible for insuring the same risks as the insurer is rooted not in
contract law, but rather “flow[s] from equitable principles.” Md. Cas. Co. v. W.R. Grace & Co.,
218 F.3d 204, 211 (2d Cir. 2000). Accordingly, “[w]here more than one insurer has issued
policies covering the same risk, a court of equity will exercise jurisdiction over the entire
controversy to resolve the rights of all the interested parties.” Id.
The right to contribution may be applied in the context of an insurer’s overpayment of
both indemnification and defense costs. See, e.g., Nat’l Cas. Co., 466 F. Supp. 2d at 540
(allowing contribution “when a co-insurer pays more than its fair share for a loss covered by
multiple insurers”); Avondale Indus., Inc. v. Travelers Indem. Co., 774 F. Supp. 1416, 1436–37
(S.D.N.Y. 1991) (applying a pro rata allocation methodology under New York law to determine
proportion of contribution to defense costs); Fed. Ins. Co. v. Atl. Nat’l Ins. Co., 25 N.Y.2d 71,
78–79 (1969) (“As both policies assumed the same risk, both were obligated to defend [the

5

The Court discusses below the method that will be employed for determining the
denominator of the aforementioned equation, namely the trigger date for the “number of years of
the claimant’s injury” for any given Underlying Claim. See infra Section III.C.
17

insured] in a suit brought against [it] and both must contribute, pro rata, toward payment of the
cost of the settlement and legal fees and other expenses of the litigation.”); cf. Cont’l Cas. Co. v.
Rapid-Am. Corp., 80 N.Y.2d 640, 655–56 (1993) (“When more than one policy is triggered by a
claim, pro rata sharing of defense costs may be ordered, but we perceive no error or unfairness in
declining to order such sharing, with the understanding that the insurer may later obtain
contribution from other applicable policies.”). With respect to calculating contribution for
defense costs, courts often deem the most “workable and equitable approach [to be to mandate
that] apportionment of defense costs . . . follow the method for apportionment of indemnification
costs.” Avondale Indus., 774 F. Supp. at 1437.
As the foregoing authorities make clear, Travelers is entitled to contribution from any
other parties in this action that may also be allocated responsibility for defending or
indemnifying the Underlying Claims, up to the extent that Travelers has expended or will expend
either indemnification or defense costs in excess of its pro rata share of responsibility for the
Underlying Claims. The parties responsible for contribution for any given Underlying Claim
thus may include Chicago Pneumatic’s excess insurers for the years in which Chicago
Pneumatic’s underlying primary insurance has been or becomes exhausted, or Danaher and Atlas
Copco, pursuant to Keyspan Gas and sections 11(a) and 11(h) of the SPA, for years in which
Chicago Pneumatic was uninsured or where its insurers have become insolvent. The Court
explains in greater detail below the extent to which any other parties may or may not be
responsible for pro rata contributions to Travelers for costs incurred in connection with the
Underlying Claims allocable to any given year.
Danaher and Atlas Copco object to Travelers’ attempts to obtain contribution from them
for defense costs. The Court finds their objections to this aspect of Travelers’ contribution claim

18

unavailing. Danaher and Atlas Copco primarily argue that Travelers’ request for contribution for
defense costs amounts to a request for reconsideration of this Court’s September 2012 summary
judgment order declaring that Travelers has a duty to defend Chicago Pneumatic against the
Underlying Claims. (See Dkt. No. 605 at 2–3, 6–7; see also Dkt. No. 575-6 at 57–61.) But at
issue in this motion is not whether Travelers continues to be responsible for defending the
Underlying Claims in the first instance. To the extent there is any doubt, the Court now
reaffirms its prior summary judgment order holding that Travelers, as the primary insurer of the
risks of loss posed by the Underlying Claims for a number of years with respect to which
Travelers maintains unexhausted primary policies, has a continuing duty to defend the
Underlying Claims in the first instance. (See Dkt. No. 575-6 at 59.)
Instead, what is at issue here is a question the Court has not yet answered, and one it
could not have answered until an allocation methodology for the Underlying Claims had been
adopted: whether Travelers may obtain contribution after the fact for defense costs it expends in
fulfillment of its duty to defend against the Underlying Claims, particularly where those claims
involve injuries that span across years for which other parties are to be allocated some share of
the risk. The answer to that question is “yes.” Indeed, the Court expressly held in its prior ruling
with respect to Travelers’ duty to defend that Travelers’ obligation to bear defense costs “would
[obviously not] apply to those years” where Travelers’ policies had been exhausted. (Dkt. No.
575-6 at 61.) And a court may, as this Court has, order only one insurer to provide for an
insured’s defense costs in the first instance with the “understanding that the insurer may later
obtain contribution from other applicable policies” also responsible for the underlying claims.
Rapid-Am. Corp., 80 N.Y.2d at 655–56. Travelers, which has been and continues to be fulfilling
its duty to defend, is thus entitled to seek contribution from other parties for their share of the

19

defense costs incurred by Travelers in connection with claims for which multiple parties will
ultimately bear shared responsibility. Now that the Court has assessed how and to what extent
other parties to this suit will be allocated such responsibilities, Travelers’ request for contribution
for defense costs has become ripe.
Danaher and Atlas Copco also argue that they cannot be made to contribute to Travelers’
defense costs because they stand in the shoes of an insured rather than an insurer. (Dkt. No. 605
at 10–13.) But if Danaher and Atlas Copco, as owners and/or indemnifiers of the insured
Chicago Pneumatic, are themselves to be among the parties responsible for indemnifying the
Underlying Claims by virtue of Chicago Pneumatic’s failure to obtain insurance for any given
period of time, see Keyspan Gas, 31 N.Y.3d at 60–63, the Court can identify no compelling basis
for excusing them from contributing to defense costs for those periods as well. Cf. Avondale
Indus., 774 F. Supp. at 1437 (“In the absence of a binding legal rationale or a compelling logical
one, we see no reason to encourage even greater complexity and confusion in multiple insurer
coverage litigation by applying to one dispute between the same insurers different apportionment
rules for indemnification payments and defense costs.”).
Instead, the Court finds persuasive the reasoning of those cases that under similar
circumstances have required an “insured [to] pay its fair share for the defense of the non-covered
risk,” at least so long as “defense costs can be readily apportioned.” Generali-U.S. Branch v.
Caribe Realty Corp., No. 25499/91, 1994 WL 903279, at *2 (N.Y. Sup. Ct. Dec. 5, 1994); see
also, e.g., Ins. Co. of N. Am. v. Forty-Eight Insulations, Inc., 633 F.2d 1212, 1224–25 (6th Cir.
1980) (“An insurer contracts to pay the entire cost of defending a claim which has arisen within
the policy period. The insurer has not contracted to pay defense costs for occurrences which
took place outside the policy period. Where the distinction can be readily made, the insured

20

must pay its fair share for the defense of the non-covered risk.”). And here, defense costs can be
readily apportioned, as “apportionment of defense costs [may] follow the method for
apportionment of indemnification costs” described above. Avondale Indus., 774 F. Supp. at
1437. The Court declines Danaher and Atlas Copco’s invitation to complicate this
apportionment, particularly in a manner that would be inconsistent with the principle from
Keyspan Gas that an insured must bear the risk of loss allocable to any years in which the
insured went without coverage.
The Excess Insurers also object to Travelers’ motion for summary judgment to the extent
that Travelers seeks a declaration of its right to contribution from them. The Excess Insurers,
and chiefly NR, argue that under New York law they cannot be made to contribute to defense
costs incurred by Travelers, a primary insurer, due to their status as excess insurers. (See Dkt.
No. 573 at 7–8; Dkt. No. 592 at 10–11 (Wausau’s argument that its status as an excess insurer
precludes Travelers from seeking contribution for defense costs); Dkt. No. 593 (Unigard’s partial
joinder in NR’s motion).) It is certainly true that a primary insurer “generally has no entitlement
to contribution from an excess insurer.” Fieldston Prop. Owners Ass’n, Inc. v. Hermitage Ins.
Co., 16 N.Y.3d 257, 265 (2011) (internal quotation marks and citation omitted). The Court does
not question the propriety or correctness of that principle. Applying that principle to the
circumstances of this case, the Excess Insurers are correct in arguing that to the extent that any
given Excess Insurer’s policy goes untriggered, Travelers will not be entitled to contribution
from that Excess Insurer with respect to the indemnification or defense costs associated with the
Underlying Claims.
However, by the time of the briefing of these motions, the primary Travelers policies
covering Chicago Pneumatic from April 1, 1979 to April 1, 1982 had been exhausted, thus

21

triggering the NR excess policy that sits directly above them. (See Dkt. No. 565 ¶ 8; Dkt. No.
574 ¶ 19; Dkt. No. 604 ¶ 1; Dkt. No. 607 ¶ 16; Dkt. No. 610-1, 610-2.) NR is thus no longer
able to take shelter from Travelers’ contribution claims by virtue of its status as an excess
insurer. Instead, NR now sits in the position of a primary insurer of the risks of loss stemming
from the Underlying Claims, at least for losses allocable to the years 1979 to 1982. See Ali v.
Fed. Ins. Co., 719 F.3d 83, 90 (2d Cir. 2013) (“Coverage under an excess policy thus is triggered
when the liability limits of the underlying primary insurance policy have been exhausted.”
(quoting Horace Mann Ins. Co. v. Gen. Star Nat’l Ins. Co., 514 F.3d 327, 329 (4th Cir.2008))).
The terms of the relevant triggered NR policy confirm that this is the case. Specifically,
NR’s triggered excess policy provides that once all underlying primary insurance is exhausted,
the NR policy “shall apply as underlying insurance, notwithstanding anything to the contrary in
the terms and conditions of th[e] policy.” (Dkt. No. 575-2 at 7 (emphasis added).) And the NR
policy sitting directly above the exhausted 1979 to 1982 Travelers policies expressly provides
that NR will “[d]efend any suit against the Insured [i.e., Chicago Pneumatic] seeking damages on
account of personal injuries” covered by the NR policies. (Dkt. No. 575-2 at 4.) Based on the
plain and unambiguous terms of these policies, and notwithstanding NR’s attempts to insert
ambiguity into the meaning of these contract provisions in briefing these motions (see Dkt. No.
573 at 5–7), the Court concludes that NR now stands in the shoes of a primary insurer of
Chicago Pneumatic for the years 1979 to 1982. And because NR’s policy includes a promise to
defend claims premised on injuries occurring during the years that NR now insures (Dkt. No.
575-2 at 4), Travelers is presently entitled to contribution from NR for both defense and
indemnity costs paid by Travelers and allocable to those years. Indeed, Travelers confirms that it
seeks no more than that at this stage. (See Dkt. No. 606 at 8 n.3 (confirming that Travelers seeks

22

immediate contribution from NR only “under the 1979-82 [NR] Umbrella Policy, where it
cannot be disputed that the underlying primary Travelers Policies have been exhausted”).)
Accordingly, at this moment in time, both Danaher and Atlas Copco, pursuant to Keyspan
Gas and sections 11(a) and 11(h) of the SPA, as well as NR, pursuant to its triggered 1979 to
1982 excess policy sitting directly above the exhausted Travelers policies, may be held
responsible for providing contribution to Travelers. Danaher, Atlas Copco, and NR shall be
responsible for contributing a pro rata share of both defense and indemnity costs incurred by
Travelers in connection with the Underlying Claims where those costs are allocable to claims
involving injuries occurring during periods for which those parties are “on the risk.” The same
will hold true for any other Excess Insurer whose policy may become triggered with respect to
the Underlying Claims. 6
C.

Trigger Date for the Underlying Claims

Now that the Court has determined that the costs borne or to be borne by Travelers
defending and indemnifying the Underlying Claims shall be allocated on a pro rata basis among
those other parties also on the risk for any of those claims, the Court is left with the task of
determining what constitutes a triggering event in the context of a long-tail claim. Travelers
suggests that the Court apply the “injury-in-fact” trigger of coverage endorsed by the New York
Appellate Division, First Department in Continental Casualty Co. v. Employers Insurance Co. of
Wausau (“Keasbey”), 871 N.Y.S.2d 48 (App. Div. 1st Dep’t 2008), for purposes of allocating
costs stemming from Underlying Claims (Dkt. No. 562 at 23–25). However, the Court agrees
with Danaher and Atlas Copco that this Court is bound to apply the triggering analysis endorsed
6

To the extent that any of the Post-Acquisition Insurers contest Travelers’ claims for
contribution against them (see, e.g., Dkt. Nos. 581, 629), the Court addresses the substance of
their arguments in the context of the Post-Acquisition Insurers’ motions for summary judgment,
see infra Section VI.
23

by the Second Circuit in Stonewall Insurance Co. v. Asbestos Claims Management Corporation,
73 F.3d 1178 (2d Cir. 1995), which the Court now holds is applicable to both the asbestos- and
silica-based bodily-injury lawsuits comprising the Underlying Claims.
In Stonewall, the Second Circuit was called on to determine the trigger date for asbestos
claims under certain “‘occurrence-based’ policies [that] respond[ed] to [the insured’s] liabilities
arising out of ‘bodily injury’ . . . that took place during the time that such policies were in effect,
even [where] the claim [was] not made until years after the termination of the policy.” Id. at
1192. The Stonewall court ultimately held that under New York law, “triggering can be shown
by competent evidence to result at successive points where ‘identifiable injuries’ have occurred,”
including “at any or all points from exposure to manifestation, on the ground that identifiable
injuries have been proved to have occurred at each point to a reasonable degree of medical
certainty.” Id. at 1194 (second quoting Am. Home Prods. Corp. v. Liberty Mut. Ins. Co., 565 F.
Supp. 1485, 1498 (S.D.N.Y. 1983)). Applying that standard, the Stonewall court affirmed a
jury’s finding that an insurer’s policies were triggered by underlying asbestos bodily-injury
claims “from the date of first exposure to the date of death or claim, whichever is earlier.” Id. at
1199; see also id. at 1191 (summarizing these holdings).
Travelers urges this Court to instead apply the Keasbey court’s “injury-in-fact test[,]
[which] rests on when the injury, sickness, disease or disability actually began.” Keasbey, 871
N.Y.S.2d at 63. But Keasbey is inapposite, and may not even be binding on this Court to the
extent that it contradicts Stonewall. Keasbey involved a group of underlying plaintiffs who had
prosecuted certain asbestos claims for years exclusively as products-liability claims, but then
elected to shift gears once the underlying defendant’s insurance policy limits on productsliability claims had been reached, and then began to prosecute their claims only as negligent-

24

installation claims. Id. at 51–52. The Keasbey court was thus called upon to consider whether
the underlying plaintiffs could establish the requisite triggering of the relevant insurance policies
by what were purportedly operations-liability claims rather than products-liability claims. See id.
at 63–64. The Keasbey court then expressly distinguished its injury-in-fact analysis for those
operations-liability claims from the analysis applicable to “[r]ecovery under products liability
claims[,] [which] is not dependent, as” was the analysis of the operations-liability claims of the
plaintiffs in Keasbey, “on the timing of the actual injury nor the particular stage of installation
projects at which actual injury may have taken place.” Id. at 64. The Keasbey court thus had no
occasion to reach the question that matters with respect to the triggering of the products-liability
Underlying Claims here: namely, whether first exposure might suffice as a triggering “injury in
fact” for silica- or asbestos-based bodily injury claims premised on products liability.
Stonewall’s answer to that question in the affirmative remains unassailed by Keasbey.
In any event, even if Keasbey’s triggering analysis did apply to the products liability
Underlying Claims, which it does not, this Court would still be constrained to follow Stonewall.
See, e.g., Musah v. Houslanger & Assocs., PLLC, No. 12 Civ. 3207, 2012 WL 5835293, at *3
(S.D.N.Y. Nov. 16, 2012) (“[A]bsent a contrary holding by the New York Court of Appeals, the
Second Circuit’s holding[s] . . . [are] binding authority . . . for federal district courts within the
Circuit.”); Petrosky v. N.Y. State Dep’t of Motor Vehicles, 72 F. Supp. 2d 39, 65 (N.D.N.Y.
1999) (“[T]he most important precedential authority presented [as between lower New York
courts and Second Circuit case law] is that from the Second Circuit as this Court is bound by its
decisions of law.”). But see In re E. & S. Dists. Asbestos Litig., 772 F. Supp. 1380, 1391
(S.D.N.Y. 1991) (“Where a conflict exists between holdings of the Second Circuit and more
recent determinations of state appellate courts, this court will follow the outcome it believes the

25

New York Court of Appeals would reach, without giving binding authority to the Second
Circuit’s construction of the state statute.”), rev’d in part on other grounds, In re Brooklyn Navy
Yard Asbestos Litig., 971 F.2d 831 (2d Cir.1992).
Finally, the Court also agrees with Danaher and Atlas Copco that it would be
inappropriate to require Chicago Pneumatic to prove a case against itself in order to establish a
triggering event sufficient to establish its right to coverage for the Underlying Claims. (See Dkt.
No. 609 at 20–21.) To the extent that any of the Underlying Claims are settled without factual
findings regarding dates of first exposure, the parties shall be guided by the Second Circuit’s
maxim that an “insured need not establish actual liability to the party with whom it has settled
‘so long as . . . a potential liability on the facts known to the [insured is] shown to exist,
culminating in a settlement in an amount reasonable in view of the size of possible recovery and
degree of probability of claimant’s success against the [insured].’” Luria Bros. & Co. v. All.
Assurance Co., 780 F.2d 1082, 1091 (2d Cir. 1986) (alterations in original) (quoting Damanti v.
A/S Inger, 314 F.2d 395, 397 (2d Cir. 1963)). Any other conclusion would put Atlas Copco and
Danaher in the “hopelessly untenable position of having to refute liability in the underlying
action until the moment of settlement, and then of turning about face to prove liability in the
insurance action.” Uniroyal, Inc. v. Home Ins. Co., 707 F. Supp. 1368, 1378 (E.D.N.Y. 1988).
In sum, the Court holds that a triggering injury in fact for the Underlying Claims may be
found as early as the time of first exposure to asbestos or silica, and may continue progressively
through the claimant’s death or the date of filing the claim, whichever occurs earlier.
IV.

Danaher and Atlas Copco’s Motion
The Court turns now to Danaher and Atlas Copco’s joint motion for partial summary

judgment. (Dkt. No. 519.) Their motion seeks rulings establishing the methodology by which
the costs associated with the Underlying Claims are to be allocated among Chicago Pneumatic’s
26

pre-1987 insurers (Dkt. No. 522 at 6–12), the lack of aggregate limits for coverage of bodilyinjury claims in the Travelers policies covering the years 1970, 1971, and 1972 (Dkt. No. 522 at
12–16), and the existence and terms of certain yet-unlocated primary policies allegedly issued by
Travelers’ predecessor to Chicago Pneumatic covering the years prior to 1961 and the year 1962
(Dkt. No. 522 at 16–24). Danaher and Atlas Copco’s motion is opposed in whole or in part by
NR (Dkt. No. 576), Unigard (Dkt. No. 579), Allianz (Dkt. No. 585), TIG (Dkt. No. 588),
Wausau (Dkt. No. 591), and Travelers (Dkt. No. 618). It is joined in part by Excess Insurers
American Home, Granite State, National Union, and OneBeacon. (Dkt. Nos. 541–42.)
A.

Method of Allocation

Danaher and Atlas Copco contend that there is no genuine dispute that governing New
York law mandates the application of the “all sums” method of allocation when distributing
indemnification costs among Chicago Pneumatic’s pre-1987 insurers whose policies contain
non-cumulation clauses. (Dkt. No. 522 at 6–12.) The Court agrees.
As the New York Court of Appeals has explained, it is “inconsistent with the language
of . . . non-cumulation clauses to use pro rata allocation.” In re Viking Pump, 27 N.Y.3d at 261.
This is because “[s]uch policy provisions plainly contemplate that multiple successive insurance
policies can indemnify the insured for the same loss or occurrence by acknowledging that a
covered loss or occurrence may ‘also [be] covered in whole or in part under any other excess
[p]olicy issued to the [insured] prior to the inception date’ of the instant policy.” Id. (alterations
in original). Thus, a “non-cumulation clause negates th[e] premise [underlying pro rata
allocation] by presupposing that two policies may be called upon to indemnify the insured for the
same loss or occurrence.” Id. Accordingly, when allocating coverage costs under New York law
among insurance “policies containing non-cumulation clauses or non-cumulation and prior
insurance provisions, . . . all sums is the appropriate allocation method.” Id. at 260–61.
27

Applying that reasoning here, the Court concludes that the “all sums” method of
allocation must be used to allocate costs among Chicago Pneumatic’s insurers from the years
prior to Danaher’s sale of Chicago Pneumatic to Atlas Copco whenever an insurer’s triggered
policy contains a non-cumulation clause comparable to the clauses that the New York Court of
Appeals interpreted in Viking Pump. A number of the Excess Insurers’ policies contain noncumulation clauses that substantively mirror, and indeed match nearly word-for-word, key
portions of the Viking Pump non-cumulation clauses, in that the clauses all clearly contemplate
the possibility of the same loss triggering multiple prior or successive policies. For example,
NR’s policy covering the period from April 1, 1976 to April 1, 1979 provides that:
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.
(Dkt. No. 527-3 at 3 (emphases added).) Many other of the Excess Insurers’ policies contain
non-cumulation clauses nearly identical to the one in NR’s 1976 to 1979 policy. (See, e.g., Dkt.
No. 485-4 at 5 (American Home’s 1972 to 1975 policy’s nearly identical non-cumulation
provision); 494-2 at 12 (Allianz’s 1985 to 1986 policy’s nearly identical non-cumulation
provision which also guarantees coverage for injuries that are “continuing at the time of
termination” of the policy); Dkt. No. 523-1 at 4 (Unigard’s 1974 to 1977 policy’s nearly
identical non-cumulation provision which also which also guarantees coverage for injuries that
are “continuing at the time of termination” of the policy).) And these clauses each mirror the
language of the non-cumulation clauses that were before the New York Court of Appeals in
Viking Pump when it determined that the presence of such a non-cumulation clause in an excess
insurer’s policy warrants the application of “all sums” allocation. Specifically, each of these
clauses uses temporal language and references prior or successive policies, thereby evincing the
28

parties’ understandings that the same injury or occurrence could trigger multiple prior or
successive policies covering different periods. See In re Viking Pump, 27 N.Y.3d at 252
(considering policy language also providing that “[i]t 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” (emphases added) (alterations
in original)). This Court thus also “hold[s] that all sums allocation is appropriate in policies
containing such provisions, [just] like the ones at issue” in Viking Pump. Id. at 264.
But because “New York[] [courts] have not adopted a strict pro rata or all sums allocation
rule,” and as “the method of allocation is [to be] governed foremost by the particular language of
the relevant insurance policy,” Keyspan Gas, 31 N.Y.3d at 58, a different conclusion is
warranted with respect to Chicago Pneumatic’s pre-1987 insurance policies that do not contain
non-cumulation clauses, see supra Section III.A. For example, with one exception, Danaher and
Atlas Copco concede that none of Chicago Pneumatic’s unexhausted pre-1987 primary insurance
policies contain non-cumulation clauses or other comparable provisions indicating the possibility
that a given loss could be covered by more than one insurance policy. (See Dkt. No. 522 at 9.)
And Danaher and Atlas Copco agree with Travelers that these policies all should be subject to
pro rata allocation. (See id.; see also Dkt. No. 643 at 3.) Accordingly, allocation of
indemnification costs under these Travelers primary policies will be done pursuant to the pro rata
method, and will be calculated in the manner directed by the Court above. See supra Section
III.A.
Danaher and Atlas Copco contend, however, that one of Travelers’ unexhausted policies
does contain a non-cumulation clause or its equivalent, and that the presence of that clause

29

warrants applying all sums allocation of costs under that policy pursuant to Viking Pump. (See
Dkt No. 522 at 8–9.) That clause is a “Limits of Liability, Two or More Policies” clause from
the Travelers policy in effect from April 1, 1985 through April 1, 1986, and it provides that
[i]n the event of an injury, damage or loss covered by this policy and any other
policy containing this provision or a similar provision issued by [Travelers] to
[Chicago Pneumatic], the maximum that will be paid under all such policies
combined for such injury, damage or loss is the highest applicable limit of
liability of any one of such policies. This provision does not apply with respect to
any policy issued by [Travelers] which has a policy number containing [certain]
letters . . . or any personal liability policy issued by [Travelers.]
(Dkt. No. 527-4 at 3 (emphasis added).) According to Danaher and Atlas Copco, “[t]he
italicized language above, although not identical to the non-cumulation clauses quoted in Viking
Pump,” serves a similar purpose, because it “presupposes that [a] loss will be covered by more
than one policy and one policy period, making this provision a non-cumulation clause and
subjecting the policy to an all sums allocation.” (Dkt. No. 522 at 9.)
The Court disagrees. Contrary to Danaher and Atlas Copco’s contentions, the “Two or
More Policies” clause contains no language indicating the possibility of a loss being “covered by
more than . . . one policy period.” (Id. (emphasis added).) Importantly, unlike the noncumulation clauses at issue in Viking Pump, each of which explicitly referenced the possibility of
injuries occurring “partly before and partly within any annual period of this policy” or “prior
insurance” that had been “issued to the Insured prior to the inception date” of the relevant
policies, there is no similar temporal language in the “Two or More Policies” provision
indicating the parties’ understanding “that multiple successive insurance policies can indemnify
the insured for the same loss or occurrence.” In re Viking Pump, 27 N.Y.3d at 252, 261
(emphases added). The absence of any such temporal language leads to the conclusion that the
“Two or More Policies” language was intended to prevent Chicago Pneumatic’s stacking of

30

concurrent policies issued by Travelers. Given that pro rata allocation is generally appropriate
where, as here, insurance “policies provide indemnification for liability incurred as a result of an
accident or occurrence during the policy period, not outside that period,” Consol. Edison Co. of
N.Y., 98 N.Y.2d at 224, Danaher and Atlas Copco’s failure to identify a clause in the April 1,
1985 to April 1, 1986 Travelers policy that clearly contemplates the policy’s coverage of risks
also covered by other prior or successive policies defeats their contention that Travelers and
Chicago Pneumatic had agreed that Travelers would assume joint and several liability for all
losses covered by that policy. Instead, notwithstanding the policy’s “Two or More Policies”
provision, this policy, like all of Travelers’ other unexhausted primary policies, is subject to pro
rata allocation.
Finally, to the extent that the Excess Insurers present any other arguments in opposition
to Danaher and Atlas Copco’s proposed allocation methodology (see, e.g., Dkt. No. 591 at 5–8
(Wausau arguing that the claims against it should be dismissed because there is no practical
likelihood its policies will be reached); Dkt. No. 576 at 3–4 (NR arguing that Travelers is
responsible for all defense costs associated with the Underlying Claims)), those arguments are
addressed elsewhere in this opinion, see supra Section III.B; infra Section V.A.
B.

The Disputed Aetna Policies

Danaher and Atlas Copco move for summary judgment with respect to the existence and
terms of various yet-unlocated insurance policies allegedly issued by Aetna, Travelers’
predecessor-in-interest, providing Chicago Pneumatic with primary coverage from December 31,
1946 through January 1, 1961, and from January 1, 1962 to January 1, 1963. (Dkt. No. 522 at
16–24.) Travelers opposes this aspect of Danaher and Atlas Copco’s motion, arguing that the
secondary evidence Danaher and Atlas Copco have produced to establish the existence and terms
of these policies is insufficient as a matter of law. (Dkt. No. 618 at 16–23.)
31

New York law holds that an insured “may rely on secondary evidence (i.e., evidence
other than the policy itself) to prove the existence and terms” of an unlocated insurance policy,
provided that the insured has conducted a “diligent but unsuccessful search and inquiry” for the
missing policy. Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83, 91 (2d Cir.
2002) (second quoting Burt Rigid Box Inc. v. Travelers Prop. Cas. Corp., 126 F. Supp. 2d 596,
612 (W.D.N.Y. 2001)). Courts are split with respect to whether the purportedly insured party in
such a scenario carries the burden of proving the existence and terms of a lost policy by a
preponderance of the evidence or by clear and convincing evidence. Compare Fulton Boiler
Works, Inc. v. Am. Motorists Ins. Co., 828 F. Supp. 2d 481, 490 (N.D.N.Y. 2011) (“[T]he proper
standard of proof [of the terms of a lost insurance policy] appears to be by clear and convincing
evidence.”) and Boyce Thompson Inst. for Plant Research, Inc. v. Ins. Co. of N. Am., 751 F.
Supp. 1137, 1140 (S.D.N.Y. 1990) (“Because lost insurance instruments are a common problem,
a party seeking to recover upon a lost instrument must prove its former existence, execution,
delivery and contents by clear, satisfactory and convincing evidence.”), with Bianchi v. Florists
Mut. Ins. Co., 660 F. Supp. 2d 434, 437 (E.D.N.Y. 2009) (applying the preponderance of the
evidence standard) and Gold Fields Am. Corp. v. Aetna Cas. & Sur. Co., 661 N.Y.S.2d 948,
949–51 (Sup. Ct. 1997) (same). The Second Circuit has noted this split but has declined to
decide the appropriate standard of proof. Burt Rigid Box, Inc., 302 F.3d at 91.
In Burt Rigid Box, the Second Circuit affirmed a summary judgment award in favor of an
insured with respect to the existence and terms of lost insurance policies that had allegedly been
issued by Aetna. Id. at 93. The evidence cited by the Second Circuit as providing a basis for this
decision included: business documents providing Aetna policy numbers and dates of coverage;
an Aetna representative’s acknowledged familiarity with the relevant policy numbers; financial

32

statements indicating the insured’s retention of the policies; Aetna’s records of payments under
the policies; copies of correspondence between Aetna and the insured referencing claims under
the policies; testimony from the insured that it had always retained insurance during the relevant
periods; excess insurance policies referencing the Aetna policies; and testimony from a number
of employees of the insured corroborating all of this evidence. Id. at 92–93. The Second Circuit
deemed this “overwhelming documentary and testimonial evidence . . . establishing the existence
of the policies” sufficient to “prove[] the existence and terms of the policies by clear and
convincing evidence.” Id. at 93.
As in Burt Rigid Box, the Court here need not decide the appropriate standard of proof
with respect to establishing the existence and terms of lost insurance policies. See also Fulton
Boiler Works, 828 F. Supp. 2d at 490 n.10 (“[T]he issue of which standard applies [for proving
the existence or terms of a lost insurance policy] is immaterial because, as explained below, [the
purported insured] cannot meet either standard.”). This is because, with the exception of the
period spanning from January 1, 1954 to January 1, 1956, discussed separately below, Danaher
and Atlas Copco have produced evidence sufficient to establish the existence and terms of all of
the alleged Aetna policies beyond any genuine dispute, even under the stricter “clear and
convincing evidence” standard. (See generally Dkt. No. 648-1 (summarizing evidence produced
by Danaher and Atlas Copco).)
With respect to the existence of the alleged Aetna policies providing coverage for the
period spanning December 31, 1946 through January 1, 1954, Danaher and Atlas Copco have
produced the following unrebutted evidence: (1) Travelers’ own policy list referencing the
relevant Aetna policies, with Chicago Pneumatic as the insured (Dkt. No. 527-12); (2) the
deposition testimony of Travelers’ designee describing this list (Dkt. No. 527-8 at 34:9–15);

33

(3) the deposition testimony of Chicago Pneumatic’s former treasurer confirming that Chicago
Pneumatic obtained insurance from Aetna “[e]very year” he was with the company (Dkt. No.
527-11 at 25:13; see also id. at 25:20–27:19), a period that spanned from 1942 to 1966 (Dkt. No.
521-11 at 19:17–19, 25:17–19); (4) certain “Binding Advices” produced by Travelers describing
Aetna as having issued “Product Bodily Injury Liability” insurance to Chicago Pneumatic
covering each of these years with coverage limits of $100,000 per person and $300,000 in the
aggregate (Dkt. No. 527-14); and (5) correspondence from an Aetna insurance broker to Chicago
Pneumatic in 1947 indicating that Aetna was Chicago Pneumatic’s insurer during this period and
referencing Chicago Pneumatic’s “renewal” of its Aetna policies (Dkt. Nos. 527-15, 527-16).
Travelers produces no evidence contradicting any of the foregoing. Instead, Travelers argues
only that this evidence insufficient to meet Danaher and Atlas Copco’s burden. (See Dkt. 618 at
18–20.) The Court is unpersuaded by Travelers’ contentions. Danaher and Atlas Copco’s
unrebutted evidence demonstrating the existence of the Aetna policies providing coverage from
December 31, 1946 through January 1, 1954, much of which was produced from Travelers’ own
records, and which is comparable in terms of both breadth and content to the types of evidence
the Second Circuit deemed sufficient to satisfy the clear and convincing evidence standard at the
summary judgment stage, see Burt Rigid Box, Inc., 302 F.3d at 92–93, is sufficient to warrant
summary judgment in favor of Danaher and Atlas Copco as to the existence of these policies.
A similar conclusion is called for with respect to the Aetna policies allegedly issued to
Chicago Pneumatic and providing coverage from January 1, 1956 to January 1, 1961, and from
January 1, 1962 to January 1, 1963. Danaher and Atlas Copco have introduced into the summary
judgment record uncontradicted evidence, in the form of Travelers’ own “Loss Records,”
identifying specific Aetna policy numbers covering Chicago Pneumatic for all of these periods

34

and indicating that Aetna even processed claims under these policies. (Dkt. No. 527-17.) In
addition, Danaher and Atlas Copco cite a May 25, 1989 letter from Danaher’s treasurer to Aetna
identifying by number the policies that Aetna issued to Chicago Pneumatic for many of the years
in question. (Dkt. No. 527-18.) Finally, this documentary evidence is again corroborated by the
deposition testimony of Chicago Pneumatic’s former treasurer confirming that Chicago
Pneumatic obtained insurance from Aetna “[e]very year” he was with the company. (Dkt. No.
527-11 at 25:13; see also id. at 25:20–27:1.) Travelers introduces no facts or evidence rebutting
what its own records confirm: that Aetna in fact issued insurance policies to Chicago Pneumatic
during the relevant years. The Court thus concludes that the record contains clear and
convincing evidence establishing beyond genuine dispute that Aetna issued policies to Chicago
Pneumatic providing coverage from January 1, 1956 to January 1, 1961, and from January 1,
1962 to January 1, 1963.
In contrast, the Court agrees with Travelers that a different conclusion is warranted with
respect the existence of any Aetna policies providing coverage from January 1, 1954 to January
1, 1956. (See Dkt. No. 618 at 20.) Atlas Copco and Danaher concede that they have produced
no documentary evidence establishing the existence of these policies. (Dkt. No. 648 at 7.)
Instead, they rely entirely on the deposition testimony of Chicago Pneumatic’s former treasurer,
who testified that he recalled that Chicago Pneumatic purchased product liability insurance from
Aetna every year during his employment from 1942 to 1966. (Dkt. No. 527-11 at 25:9-27:1.)
While this deposition testimony effectively corroborated the documentary evidence produced by
Atlas Copco and Danaher with respect to Aetna’s issuance of coverage for other periods, Atlas
Copco and Danaher point to no case that has deemed the testimony of one employee of an
alleged insured sufficient to establish the existence of a lost insurance policy. To the contrary,

35

Chicago Pneumatic’s former treasurer’s testimony, standing alone, is insufficient to establish as a
matter of law the existence of the Aetna policies providing coverage from January 1, 1954 to
January 1, 1956, even under the laxer preponderance of the evidence standard advocated for by
Atlas Copco and Danaher. Their motion for summary judgment with respect to the existence of
Aetna insurance policies providing Chicago Pneumatic with primary coverage from January 1,
1954 to January 1, 1956 is therefore denied.
The Court’s inquiry with respect to the aforementioned policy years is not yet finished.
Having concluded that Danaher and Atlas Copco have produced evidence sufficient to establish
the existence of some of these policies as a matter of law, the Court still must assess whether the
record sufficiently demonstrates the terms of each of these policies. Instructive in this regard is
the opinion of the New York Appellate Division, First Department, in Estee Lauder Inc. v.
OneBeacon Insurance Group, LLC, 873 N.Y.S.2d 592 (App. Div. 1st Dep’t 2009), abrogated on
other grounds, Keyspan Gas E. Corp. v. Munich Reinsurance Am., Inc., 23 N.Y.3d 583, 590 n.2
(2014). In Estee Lauder, the court concluded that the alleged insured had “c[o]me forward with
sufficient secondary evidence of [a lost] disputed [policy] . . . to establish the existence of the
policy” for purposes of summary judgment. Id. at 597–98. This secondary evidence included “a
renewal policy issued to [the insured] by [the insurer’s] predecessor stating in the declaration
page that the policy being renewed is the disputed policy . . . and two certificates of insurance
signed by the predecessor . . . , both certifying, among other things, that the policy . . . was issued
to [the insured]” during the relevant periods. Id. In addition, the court emphasized that the
insurer had not “com[e] forward with evidentiary facts sufficient to raise any material issues of
fact that would require denial of [the insured’s] motion.” Id. at 598.

36

The Estee Lauder court then also concluded that this same evidence was sufficient “to
invoke the presumption[] that the terms of the renewal policy [were] identical to the terms of the
policy being renewed,” and the court thus relied on the terms of the renewal policy to establish
the terms of the unlocated policy. Id. In support of the applicability of this presumption, the
Estee Lauder court cited case law from the New York Court of Appeals:
Clearly, a policy which renews an old policy must renew the terms of that policy
as they stood at the moment of expiration. An agreement to renew a policy,
implies that the terms of the existing policy are to be continued . . . in the absence
of evidence, that a change was intended.
Id. (omission in original) (quoting L. Lewitt & Co. v. Jewelers’ Safety Fund Soc’y, 249 N.Y.
217, 222 (1928)). Other courts around the country have similarly concluded that an alleged
insured “can meet its burden of proof [with respect to the terms of a lost insurance policy] by
introducing evidence that the unavailable policies are renewal policies because ‘the renewal
agreement is presumed to adopt and have reference to the terms of the existing or expiring
policy.’” Ne. Utils. v. Century Indem. Co., No. X03CV 990495495S, 1999 WL 476274, *4
(Conn. Super. Ct. June 21, 1999) (quoting Westchester Fire Ins. Co. v. Tantalo, 273 F. Supp. 7,
17 (D. Conn. 1967)) (collecting cases).
Drawing guidance from these cases, the Court concludes that Danaher and Atlas Copco’s
unrebutted evidence showing that Chicago Pneumatic continuously obtained primary insurance
policies from Aetna in the periods spanning from December 31, 1946 to January 1, 1954, from
January 1, 1956 to January 1, 1961, and from January 1, 1962 to January 1, 1963, allows it “to
invoke the presumption[] that the terms of the renewal policy are identical to the terms of the
policy being renewed.” Estee Lauder Inc., 873 N.Y.S.2d at 598. Thus, as in Estee Lauder, here
too it is reasonable to expect that the terms of subsequent policies, repeatedly issued by the same
insurer year after year, would contain the same terms found in other policies issued for adjacent
37

years. Moreover, Danaher and Atlas Copco may rely on the form Aetna policies they have
introduced (see, e.g. Dkt. No. 527-13) to supply the terms of the lost policies, as courts have
permitted the “use[] [of] a specimen policy introduced by the plaintiff as evidence of the terms of
the lost policies” under similar circumstances, Glew v. Cigna Grp. Ins., 590 F. Supp. 2d 395, 413
(E.D.N.Y. 2008). In sum, absent any evidence from Travelers sufficient to support any contrary
conclusion, Atlas Copco and Danaher’s unrebutted evidence of Chicago Pneumatic’s nearcontinuous retention of primary insurance from Aetna may be used to establish, even under the
stricter clear and convincing evidentiary standard, that the terms of lost policies would have been
the same as those contained in policies from adjacent years or in form policies from the relevant
periods.
C.

Aggregate Limits in Select Travelers Policies

Danaher and Atlas Copco move for a summary judgment ruling establishing the lack of
aggregate limits for coverage of bodily-injury claims in the Travelers policies covering the years
1970, 1971, and 1972. (Dkt. No. 522 at 12–16.) This portion of Danaher and Atlas Copco’s
motion is joined by Excess Insurers American Home, Granite State, National Union, and
OneBeacon. (Dkt. Nos. 541–42.) Travelers opposes this portion of Danaher and Atlas Copco’s
motion. (Dkt. No. 618 at 23–25.)
“Under New York law, ‘an insurance contract is interpreted to give effect to the intent of
the parties as expressed in the clear language of the contract’” and “[t]he initial interpretation of
a contract ‘is a matter of law for the court to decide.’” Morgan Stanley Grp. Inc. v. New Eng.
Ins. Co., 225 F.3d 270, 275 (2d Cir. 2000) (first quoting Vill. of Sylvan Beach v. Travelers
Indem. Co., 55 F.3d 114, 115 (2d Cir. 1995); second quoting K. Bell & Assocs. v. Lloyd's
Underwriters, 97 F.3d 632, 637 (2d Cir. 1996)). “Insurance contracts must be interpreted
according to common speech and consistent with the reasonable expectations of the average
38

insured.” Cragg v. Allstate lndem. Corp., 17 N.Y.3d 118, 122 (2011). Unambiguous policy
provisions are to be “given their plain and ordinary meaning.” Vigilant Ins. Co. v. Bear Stearns
Cos., 10 N.Y.3d 170, 177 (2008) (quoting White v. Cont’l Cas. Co., 9 N.Y.3d 264, 267 (2007)).
Policy language is unambiguous if it “provides a definite and precise meaning, unattended by
danger of misconception in the purport of the contract itself, and concerning which there is no
reasonable basis for a difference of opinion.” Atl. Cas. Ins. Co. v. Value Waterproofing, Inc.,
918 F. Supp. 2d 243, 253 (S.D.N.Y. 2013) (quoting Olin Corp., 704 F.3d at 99). By way of
contrast, “[a]n ambiguity exists where the terms of an insurance contract could suggest ‘more
than one meaning when viewed objectively by a reasonably intelligent person who has examined
the context of the entire integrated agreement and who is cognizant of the customs, practices,
usages and terminology as generally understood in the particular trade or business.’” Morgan
Stanley Grp., 225 F.3d at 275 (quoting Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d
Cir. 1997)). A court may rely on extrinsic evidence when interpreting an insurance provision
only where the court has concluded that the provision is ambiguous. Id. at 275–76. If extrinsic
evidence fails to resolve the ambiguity and the contract has been drafted by the insurer, “any
ambiguity in [the] . . . policy should be resolved in favor of the insured.” Id. at 276 (alterations
in original) (quoting McCostis v. Home Ins. Co. of Ind., 31 F.3d 110, 113 (2d Cir. 1994)).
The Travelers policies for these years provide in a “Comprehensive General Liability
Insurance Coverage Part” that “the total liability of the company for all damages because of (1)
all bodily injury included within the completed operations hazard and (2) all bodily injury
included within the products hazard shall not exceed the limit of bodily injury stated in the
declarations as ‘aggregate.’” (Dkt. No. 527-5 at 7–8; see also, e.g., Dkt. No. 527-6 at 8–9.) The
declarations pages for each of these policies in turn provide no aggregate limit for coverage of

39

bodily-injury claims. (See Dkt. No. 527-5 at 2; Dkt. No. 527-6 at 2; Dkt. No. 527-7 at 2.)
Instead, they provide strikethrough marks where aggregate limits for bodily-injury claims might
otherwise be listed. (See id.)
Travelers points to no other provision of the relevant policies providing an aggregate
limit for coverage of bodily-injury claims. To the contrary, Travelers’ own designated
representative testified at his deposition upon reading the relevant policies that they revealed no
aggregate limit for bodily-injury liability. (Dkt. No. 527-8 at 109:19–22, 111:2–12.) Travelers
points to Travelers’ designee’s surprise at the lack of any such limit in the contracts, and some
extrinsic evidence of an aggregate limit of $1 million for the policy covering the year 1972, such
as the reference to an aggregate limit in certain excess insurance policies overlaying this
Travelers policy. (See Dkt. No. 618 at 24–25.) But the strikethrough marks in the places
designated by the Travelers policies themselves to provide aggregate limits for bodily-injury
claims, coupled with the policies’ otherwise total silence with respect to the amount or existence
of any aggregate limit, unambiguously provide that the policies contain no such limits. The
Court thus “determines that the terms at issue are unambiguous, [so] the terms are given their
plain and ordinary meaning and the court will not consider extrinsic evidence in aid of assigning
meaning to these terms.” Atl. Cas. Ins. Co., 918 F. Supp. 2d at 253. Because Travelers cannot
establish any ambiguity in the underlying policy terms themselves, Travelers’ extrinsic evidence
must be disregarded. See Morgan Stanley Grp., 225 F.3d at 275–76. Danaher and Atlas
Copco’s motion for a summary judgment ruling declaring that Travelers’ primary policies
covering January 1, 1970 through January 1, 1973 contain no aggregate limits of liability for
bodily injuries is therefore granted.

40

V.

The Excess Insurer Motions
A.

Justiciability

Excess Insurer Continental Casualty moves pursuant to Federal Rules of Civil Procedure
12(b)(1) and 56(a) for dismissal of all claims against it for lack of standing, asserting that no
party in this action has produced evidence sufficient to show a practical likelihood of triggering
its policies. (Dkt. Nos. 483, 484 at 13–20.) Continental Casualty’s motion has been joined in
full by each Excess Insurer with respect to its own policies, with the lone exception of American
Home. (See Dkt. Nos. 488, 492, 496, 498, 503, 515, 520.) These motions have been opposed by
Travelers, Atlas Copco, and Danaher. (Dkt. Nos. 609, 622.)
As Continental Casualty correctly notes (see Dkt. No. 484 at 14 n.7 & 15 n.8), there is
currently some uncertainty in the Second Circuit with respect to the proper motion by which to
present a fact-based jurisdictional or justiciability challenge to declaratory judgment claims
premised on an excess insurer’s coverage obligations, see, e.g., E.R. Squibb & Sons, Inc. v.
Lloyd’s & Cos., 241 F.3d 154, 177 (2d Cir. 2001) (per curiam); Certain Underwriters at Lloyd’s,
London v. St. Joe Minerals Corp., 90 F.3d 671, 675–76 (2d Cir. 1996). That said, “[t]he legal
principles governing [such a] challenge are well-established.” E.R. Squibb & Sons, 241 F.3d at
177. “A party seeking a declaratory judgment bears the burden of proving that the district court
has jurisdiction,” and “[j]urisdiction exists only if there is an ‘actual controversy.’” Id. (second
quoting 28 U.S.C. § 2201)). The party seeking a declaratory judgment with respect to another
insurer’s obligations “bears the burden of proving subject matter jurisdiction by a preponderance
of the evidence.” Ill. Nat’l Ins. Co. v. Tutor Perini Corp., No. 11 Civ. 431, 2011 WL 4712079,
at *2 (S.D.N.Y. Oct. 7, 2011) (quoting Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d
635, 638 (2d Cir. 2005)).

41

Showing an “actual controversy” in the insurance-coverage context in a suit against an
excess insurer requires a showing that “there [is] a ‘practical likelihood’ that [an] . . . excess
carrier[’s] policies [will] be reached.” E.R. Squibb & Sons, 241 F.3d at 177. Because making
such an assessment often requires some speculation as to the extent of liability for yet-unresolved
underlying claims, the Second Circuit has explained that the fact that
liability may be contingent does not necessarily defeat jurisdiction of a
declaratory judgment action. Rather, courts should focus on the practical
likelihood that the contingencies will occur[]. Indeed, litigation over insurance
coverage has become the paradigm for asserting jurisdiction despite future
contingencies that will determine whether a controversy ever actually becomes
real.
Id. (alterations in original) (quoting Associated Indem. Corp. v. Fairchild Indus., Inc., 961 F.2d
32, 35 (2d Cir. 1992)). In assessing whether a “practical likelihood” exists under the New York
laws governing insurance allocation, courts consider “the worst case or ‘highest estimate of
damages’” in order “to ascertain whether or not a claim is justiciable against a particular excess
insurer’s policy.” Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 826 N.Y.S.2d 55,
56 (App. Div. 1st Dep’t 2006) (quoting Consol. Edison, 98 N.Y.2d at 225)).
Each of the moving Excess Insurers issued excess policies to Chicago Pneumatic sitting
above at least one primary insurance policy, and, in some cases, the Excess Insurers have issued
upper-level excess policies that also sit above lower levels of excess insurance. (See generally
Dkt. No. 622 at 5–13 (surveying Excess Insurer policies).) For example, the Continental
Casualty policy at issue, which provides coverage from April 7, 1972 to April 7, 1975, is a
second-layer excess policy with a liability limit of “$5,000,000 per occurrence [and] $5,000,000
aggregate which is excess of primary coverage.” (Dkt. No. 485-1.) According to Continental
Casualty’s survey of the primary and first-layer excess insurance coverage underlying its policy,
there is a “a total of $18 million in underlying coverage, for the three-year policy period of the
42

Continental [Casualty] Policy” at issue. (Dkt. No. 484 at 6.) But even assuming the accuracy of
this figure, Danaher and Atlas Copco have made a sufficient showing of the existence of a
practical likelihood of Continental Casualty’s policy being triggered for purposes of maintaining
a declaratory-judgment claim against it. This is true for two interrelated reasons.
First, the uncertainties attendant to the risks posed by the Underlying Claims, which
include hundreds of live and unresolved claims and innumerable more claims still likely to be
filed, precludes the Court from concluding that there is no practical likelihood that any of the
Excess Insurers’ policies will be triggered. Continental Casualty performs numerous
calculations based on different allocation methods that show that the likeliest trigger dates for its
policy lie centuries into the future — but these calculations are, of necessity, based exclusively
on existing liabilities resulting from already settled claims. (See generally Dkt. No. 484 at 16–
20.) Accordingly, Continental Casualty’s data fails to account for the contingencies inherent in
the ongoing litigation of the hundreds of live asbestos suits against Chicago Pneumatic, suits that
are continuously being filed and will likely continue to be filed for years to come. (Dkt. Nos.
485-9, 485-10, 485-11, 485-12 (surveying claims data in recent years); Dkt. No. 484 at 12
(calculating approximately 70 new Asbestos Claims per year based on that data); Dkt. No. 611
¶ 6.) Continental Casualty’s calculations also fail to account for the possibility of new outlier
claims, such as the 2010 claim against Chicago Pneumatic that settled for $650,000 and itself
accounts for nearly one-third of the net settlement funds expended in connection with the
Asbestos Claims to date. (See Dkt. No. 485-9 at 7; see also Dkt. No. 611 ¶¶ 23–24 (noting that
another Danaher subsidiary recently lost an asbestos case with a jury verdict of $25 million).)
The Second Circuit has made clear that the fact that “liability may be contingent does not
necessarily defeat jurisdiction of a declaratory judgment action,” and instead that “courts should

43

focus on the practical likelihood that the contingencies will occur.” E.R. Squibb & Sons, 241
F.3d at 177 (quoting Associated Indem. Corp., 961 F.2d at 35). Here, the ever-growing number
of Underlying Claims, and the extent of Chicago Pneumatic’s exposure to those claims,
precludes the Court from holding that there is no practical likelihood that any Excess Insurer’s
policy will be reached by any single Underlying Claim, let alone all of them together once finally
resolved.
This decision accords with the manner in which the Second Circuit has assessed similar
attacks on subject-matter jurisdiction of declaratory judgment claims brought against insurers.
Those cases cited by Continental Casualty in which declaratory judgment claims against insurers
have been dismissed for a want of “practical likelihood” involve closed universes of underlying
claims with a definitive and finite level of exposure, or cases where there were serious defenses
to the underlying liability that could be assessed on the merits. See, e.g., Certain Underwriters
at Lloyd's, London, 90 F.3d at 673–74 (dismissing dispute over coverage for environmental
contamination claims where the insured faced claims involving a known set of twenty
contaminated sites, where the insured “produced little evidence to demonstrate the likely
magnitude of [its] liability at these sites,” and where the insured had specific and known viable
defenses to the underlying liability); Olin Corp. v. Consol. Aluminum Corp., 5 F.3d 10, 17 (2d
Cir. 1993) (“Other than the controversy over the Pennsylvania site, we can find no mention of
any pending environmental claim as to any third-party site in the pleadings or record.”). In
contrast, the Second Circuit has found an actual case or controversy where there were hundreds
of “claims . . . still pending against [an insured], and [the insured’s] expert averred that it was
reasonable to predict that [the insured] would incur . . . additional . . . indemnity and defense
expenses in the future” at twice the highest trigger point of any of the insured’s excess policies.

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E.R. Squibb & Sons, 241 F.3d at 177–78. Here, the history of the Underlying Claims, the
number of such claims remaining unsettled, and Danaher and Atlas Copco’s expert evidence
outlining the uncertainty of Chicago Pneumatic’s future obligations, together satisfy Danaher and
Atlas Copco’s burden of demonstrating a practical likelihood of future liabilities in excess of the
trigger points for any one of Chicago Pneumatic’s pre-acquisition insurance policies. (See, e.g.
Dkt. No. 485-12, 611 (demonstrating millions of dollars of existing liability, hundreds of
pending claims, the likelihood of hundreds of new claims being filed in years to come, and the
possibility of individual outlier claims resulting in millions of dollars of new liability).)
Second, the New York Court of Appeals’ recent decision in Viking Pump, and even more
particularly, the Second Circuit’s interpretation of Viking Pump’s implications for excess
insurers whose policies with non-cumulation clauses sit above primary policies lacking such
clauses, buttress this conclusion. 7 See Olin Corp. v. OneBeacon Am. Ins. Co., 864 F.3d 130,
144–45 (2d Cir. 2017). As relevant here, the New York Court of Appeals in Viking Pump
endorsed what is known as “vertical exhaustion” for purposes of an insured’s ability to access
higher level excess policies subject to all sums allocation, at least where an excess policy’s
trigger point is explicitly tied to the limits of specific underlying policies. In re Viking Pump, 27
N.Y.3d at 267. “Vertical exhaustion” allows an insured to “access each excess policy once the
immediately underlying policies’ limits are depleted, even if other lower-level policies during
different policy periods remain unexhausted.” Id. at 264, 267.

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Danaher and Atlas Copco provide a survey of each of the Excess Insurers’ policies’
non-cumulation clauses, and each such policy contains language comparable to the noncumulation clause language analyzed by the New York Court of Appeals in Viking Pump. (Dkt.
No. 522-1.) No Excess Insurer contends that any of its own policies, if triggered, would be
subject to pro rata allocation under Viking Pump.
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Olin, a subsequent Second Circuit case applying Viking Pump, involved an excess insurer
whose policy was deemed to be subject to all sums allocation under Viking Pump, because the
Olin insurer’s policy contained a non-cumulation provision identical to the provision at issue in
Viking Pump. Compare Olin Corp., 864 F.3d at 137–38, 144, with In re Viking Pump, 27
N.Y.3d at 252–53. The Second Circuit in Olin was then called upon by that excess insurer to
address the insurer’s proposal of a new so-called “‘hybrid’ allocation/exhaustion scheme,” on the
grounds that the primary policy underlying that excess insurer’s policy was subject to pro rata
allocation. Olin Corp., 864 F.3d at 144. The excess insurer in Olin contended that because the
court was required to “use pro rata allocation to determine whether the underlying primary
policies [had] been exhausted (and thus whether [the excess insurer’s own] policies [had]
attached),” an excess insurer’s policies could not be triggered until every primary policy that
bore some pro rata share of the expenses incurred during the relevant policy period had been
exhausted. Id. Only once it had been so triggered could “all sums allocation apply to [the]
excess policies.” Id.
The Second Circuit in Olin flatly rejected the “hybrid” proposal sought by the excess
insurer before it, and held instead that “the New York Court of Appeals’ decision in Viking
Pump dictates vertical exhaustion where the all sums approach is the proper method for
allocation.” Id. In other words, the fact that some primary policies that are subject to pro rata
allocation have not yet been exhausted cannot be used by an excess insurer whose own policy
calls for all sums allocation and is triggered to avoid assuming joint and several liability for any
covered losses. Id. Instead, where an excess insurer’s policy calls for all sums allocation, “an
insured may simply tap a particular tower of its insurance program triggered by an occurrence
and proceed up the tower upon depletion of the policies within each layer of coverage.” Id. at

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145. In practice, this allows an insured to collect from any excess insurer up to its “total
remediation costs, less [the coverage limits of the directly underlying policies], . . . with [the
insured’s] total recovery capped only by the relevant policy limits” in the excess policy. Id. at
147.
The availability of this method of recovery to Danaher and Atlas Copco, a method of
recovery referred to by the parties in briefing the instant motion as “spiking” (see Dkt. No. 484 at
22–23; Dkt. No. 609 at 11–12), heightens the practical likelihood of any given Excess Insurer’s
policies being triggered. Rather than needing to wait for each and every one of Chicago
Pneumatic’s primary policies or lower-level excess policies to exhaust prior to having its own
policies triggered, any higher-level Excess Insurer is subject to having its policies triggered via
the “spiking” of any single loss exceeding the remaining limits of any policies upon which the
Excess Insurer’s policies rest. Continental Casualty notes that should Danaher or Atlas Copco
choose to so “spike” one Excess Insurer policy, that insurer could then “flatten the spike” by
seeking contribution from other Excess Insurers similarly exposed by the relevant loss. (Dkt.
No. 484 at 22–23.) While a spiked Excess Insurer may in effect flatten the spike by “seek[ing]
contribution from the insurers that issued the other triggered policies,” Olin Corp., 864 F.3d at
151 (quoting Viking Pump, 27 N.Y.3d at 256), flattening the spike does not undo the initial
triggering of the spiked policy. By the time an Excess Insurer “flattens the spike,” its own policy
will necessarily have already been triggered, and it will be entitled to seek contribution pursuant
to Viking Pump only if it has already paid any losses assigned to its policy. The right to “flatten
the spike” thus has no bearing on the Court’s “practical likelihood” analysis.
In sum, the fact that Chicago Pneumatic at this moment in time faces hundreds of
ongoing litigations, any one of which may trigger tens of millions of dollars of liability, in

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conjunction with the ability of Danaher and Atlas Copco to assign all of that liability to any
single Excess Insurer whose policy contains a non-cumulation clause so long as the liability at
issue exceeds the coverage limits of the lower-level policy upon which the excess policy sits, is
sufficient to establish a practical likelihood of triggering sufficient to establish this Court’s
subject matter jurisdiction over the declaratory judgment claims against the Excess Insurers.
Accordingly, the Excess Insurers’ motions to have all such claims against them in this action be
dismissed due to the lack of a justiciable controversy are denied.
B.

NR’s Motion

NR, in addition to joining Continental Casualty’s motion with respect to NR’s
untriggered policies, separately moves for summary judgment with respect to the methods of
allocation and extent of contribution it might owe to Travelers pursuant to its currently triggered
policies. (Dkt. No. 532 at 1.) Ultimately, most of NR’s contentions have been resolved by the
Court in addressing Travelers’ and Danaher and Atlas Copco’s motions for partial summary
judgment. See supra Sections III.A–C, IV.A. To avoid any confusion, the Court briefly reviews
its disposition of the contentions in NR’s motion here.
NR first contends that Travelers, as a primary insurer, has no right to contribution from
NR, because NR is an excess insurer. (Dkt. No. 532 at 6–9.) For reasons already explained, see
supra Section III.B., Travelers has an immediate right to contribution for both indemnity and
defense costs from NR for those years in which NR’s policy has been triggered, because NR no
longer stands in the shoes of an excess insurer for those years. The terms of the triggered NR
policy provide that once the primary insurance policies underlying it has been exhausted, the NR
policy “shall apply as underlying insurance, notwithstanding anything to the contrary in the
terms and conditions of th[e] polic[ies]” (Dkt. No. 575-1 at 6 & Dkt. No. 575-2 at 7 (emphasis
added)), confirming the propriety of this conclusion. The triggered NR policy also provides that
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NR will “[d]efend any suit against the Insured [i.e., Chicago Pneumatic] seeking damages on
account of personal injuries” covered by the policy. (Dkt. No. 575-2 at 4.) Based on the plain
and unambiguous terms of the triggered NR policy, the Court concludes that NR at this moment
stands in the shoes of a primary insurer of Chicago Pneumatic from April 1, 1979 to April 1,
1982 with respect to its obligation to defend and indemnify the Underlying Claims. See E.R.
Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., No. 82 Civ. 7327, 1992 WL 133899, at *8
(S.D.N.Y. Apr. 21, 1992) (“[W]here a clause in an [excess insurer’s] policy provides that
coverage ‘shall apply as underlying insurance, notwithstanding anything to the contrary in the
terms and conditions of this policy,’ no prohibition on liability for legal defense costs in that
policy shall be applicable where the conditions for applicability of the quoted clause are met.”).
Travelers is thus presently entitled to contribution from NR for defense and indemnity costs paid
by Travelers and allocable to the years covered by the triggered NR policy.
To the extent that NR argues that it should not be required to reimburse Travelers for
defense costs incurred prior to the time NR’s policies are triggered (Dkt. No. 532 at 9), the Court
agrees. Indeed, so does Travelers. (See Dkt. No. 606 at 8 n.3 (confirming that Travelers “does
not seek contribution from [NR] for any such defense costs).) Travelers may seek contribution
for defense costs from NR only to the extent that NR is or was at the time those costs were
expended “on the risk” for any liability posed by the claims being defended.
NR also argues that the “Ultimate Net Loss” provision in its policies requires that it
reimburse Travelers only for those defense costs associated with Travelers’ defense of
“occurrences” covered by NR’s policies. (Dkt. No. 532 at 10–14.) The “Ultimate Net Loss”
provisions in NR’s policies specifically provide that NR will be responsible for its insured’s legal
fees only where those fees “are paid as a consequence of any occurrence covered” by the

49

policies, and the NR policies in turn define covered occurrences as those shown to actually
“result[] in personal injury.” (See, e.g., Dkt. No. 538-1 at 12; Dkt. No. 538-2 at 15.) In support
of its argument that this language places an enforceable limitation on the extent of NR’s
contribution to defense costs, NR relies on the Stonewall court’s holding that “under policies
containing a duty to reimburse defense costs but not a duty to defend, . . . [i]nsurers have a duty
to reimburse defense costs for claims that are established to be covered through judgment and
settlement, and not for claims only potentially falling within the policy’s coverage.” Stonewall,
73 F.3d at 1219. But while Stonewall did involve insurance policies with “Ultimate Net Loss”
provisions similar to NR’s, Stonewall is inapposite by virtue of the clear and unambiguous duty
to defend contained in NR’s policies. (Dkt. No. 575-2 at 4.) NR’s policy is thus not one that can
be said to “contain[] a duty to reimburse defense costs but not a duty to defend.” Stonewall, 73
F.3d at 1219. Instead, NR’s policies, like those from E.R. Squibb, provide that they are to
“function as underlying insurance under certain circumstances, [and] for legal defense or defense
costs to be payable in certain instances,” and “these provisions override any conflicting
provisions in the same policy excluding legal defense or legal expense coverage.” E.R. Squibb,
1992 WL 133899, at *8.
In sum, because NR’s triggered policy contains a duty to defend and because NR’s
triggered policy at this time “assume[s] the same risk” as Travelers’ unexhausted policies, “both
must contribute, pro rata, toward payment of . . . legal fees and other expenses of the litigation.”
Fed. Ins. Co., 25 N.Y.2d at 78–79. Pursuant to the New York Court of Appeals’ decision in
Continental Casualty Company v. Rapid-American Corp., 80 N.Y.2d 640, 655–56 (1993),
holding that “when more than one policy is triggered by a claim, pro rata sharing of defense costs
may be ordered,” but also allowing that courts may “declin[e] to order such sharing, with the

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understanding that the insurer may later obtain contribution from other applicable policies,” id.,
this Court has ordered Travelers to defend all of the Underlying Claims in the first instance, with
the understanding that Travelers might eventually obtain contribution from excess insurers with
triggered policies (Dkt. No. 575-6 at 58–61.) For the reasons explained above, the Court now
holds that NR may indeed be held liable to provide contribution to Travelers for NR’s pro rata
share of defense costs that Travelers has expended to date in connection with claims for which
NR now sits in the shoes of a primary insurer. See supra Section III.B.
Finally, to the extent that NR would have the Court require that Danaher and/or Atlas
Copco demonstrate a triggering “injury-in-fact” for each Underlying Claim under the Keasbey
injury-in-fact framework (Dkt. No. 532 at 14–15), the Court rejects those arguments for the
reasons explained above, see supra Section III.C.
C.

Wausau’s Motion

In addition to its joinder in Continental Casualty’s motion, Wausau makes an additional
argument that it should be dismissed from this case on the basis of an asbestos exclusion
contained in one of its policies. (See Dkt. No. 499 at 16–18.) The exclusion at issue is found in
one of Wausau’s policies providing Chicago Pneumatic with excess coverage from April 1,
1985, to April 1, 1986, and it provides: “It is agreed that this policy does not apply to any claim
arising from asbestos or any other materials containing asbestos. It is further agreed that the
underlying insurance will not be diminished by any asbestos related losses.” (Dkt. No. 500-8 at
4.)
The Court agrees with Wausau that this clause unambiguously excludes asbestos claims
from the scope of coverage provided by the policy reproduced at Docket Number 500-8, referred
to by the parties as Policy Number 5276-00-102661. (See Dkt. No. 622 at 13 n.8.) However,
Wausau also issued two other excess policies to Chicago Pneumatic, each of which also provided
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Chicago Pneumatic with excess coverage for the period spanning from April 1, 1985, to April 1,
1986. (Dkt. Nos. 500-9, 500-10.) Neither of these latter two policies contains an asbestos
exclusion. Because either of these two Wausau-issued policies would provide coverage for the
Asbestos Claims if triggered, the presence of an asbestos exclusion in another of Wausau’s
policies provides no basis for dismissing Wausau from this case.
VI.

The Post-Acquisition Insurer Motions
Post-Acquisition Insurers Trygg-Hansa, Zurich, Century, and Liberty Mutual have each

filed motions for summary judgment on a variety of different grounds with respect to Travelers’
claims against them. (See Dkt. Nos. 504, 517, 529, 551.) The Court need only address one,
which is dispositive as to all of Travelers’ claims against the Post-Acquisition Insurers: that
Travelers’ claims would lead only to what Judge Learned Hand has termed the “‘complete
circuity of action’ . . . defense to a judgment in an insurance action.” Wal-Mart Stores, Inc. v.
RLI Ins. Co., 292 F.3d 584, 594 (8th Cir. 2002) (quoting Md. Cas. Co. v. Emp’rs Mut. Liab. Ins.
Co. of Wis., 208 F.2d 731, 733 (2d Cir. 1953)). “Generally, courts will not allow parties to
engage in circuitous action when the foreseeable end result is to put the parties back in the same
position in which they began.” Id. To that end, courts have dismissed contribution claims where
the claimant-insurer’s insured had previously agreed to indemnify the insured of the party
against whom contribution is sought. Id. at 593–95; see also, e.g., Wallace v. Nat’l R.R.
Passenger Corp., 5 F. Supp. 3d 452, 482 (S.D.N.Y. 2014) (“[C]ourts have consistently held that
an indemnitor (and thus its insurer) bears full responsibility for covered indemnification
payments, even if the indemnitee has other insurance covering the same loss.”) (collecting
cases); Indem. Ins. Co. of N. Am. v. St. Paul Mercury Ins. Co., 900 N.Y.S.2d 24, 26 (App. Div.
1st Dep’t 2010) (holding that an indemnitee’s insurance would not attach until indemnitor’s and

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indemnitor’s insurers’ obligations had been exhausted, as indemnitor had “unconditionally and
without reservation agreed to defend and indemnify the” indemnitee).
The Post-Acquisition Insurers all insure a party (Atlas Copco) that is indemnified for the
losses at issue by another party in this action (Danaher) pursuant to the SPA’s Indemnification
Clause. (Dkt. No. 564-2 at 11, 13, 24.) Pursuant to Section 11(h) of the SPA, Danaher may seek
to offset its indemnification obligations with respect to the Underlying Claims by recovering
from Chicago Pneumatic the net amount of “all damages covered by the insurance policies
owned by the [Chicago Pneumatic] Group prior to the Closing Date” of the SPA. (Dkt. No.
564-2 at 24 (emphasis added).) The Post-Acquisition Insurers do not fall within the group of
insurers against which Danaher’s indemnification obligations are offset. It would thus be
circuitous to allow Travelers to obtain contribution from the Post-Acquisition Insurers, only to
have the Post-Acquisition Insurers in turn seek indemnification from Danaher pursuant to
Danaher’s obligations under the SPA, and for Danaher to then seek that same amount from
Travelers or the Excess Insurers pursuant to their insurance-coverage obligations to Chicago
Pneumatic. Such a “litigation [would] clearly [be] circular and would not ultimately change the
parties’ obligations from their pre-suit positions.” Wal-Mart Stores, Inc., 292 F.3d at 594. To
permit Travelers to pursue such circular claims would be to “allow parties to engage in circuitous
action when the foreseeable end result is to put the parties back in the same position in which
they began.” Id.
Instead, the appropriate course is to allocate any costs stemming from the Underlying
Claims attributable to years following Atlas Copco’s acquisition of Chicago Pneumatic to
Danaher, Travelers, or the Excess Insurers in the first instance, pursuant to Danaher’s obligations
to indemnify Atlas Copco for such losses net of Chicago Pneumatic’s pre-acquisition insurance,

53

rather than encroach upon Atlas Copco’s insurance limits. Indeed, both Danaher and Atlas
Copco also agree that “because it would be inconsistent with the intent of their indemnity
agreement, . . . Travelers cannot seek contribution from the post-acquisition insurance purchased
by the indemnitee,” namely Atlas Copco. (Dkt. No. 600 at 4.) And this conclusion is
particularly justified here, because Atlas Copco negotiated and purchased its coverage from the
Post-Acquisition Insurers in explicit reliance on this understanding of the SPA, namely that the
losses at issue in this suit would fall to Danaher in the first instance, and not to Atlas Copco or
the Post-Acquisition Insurers. (See, e.g., Dkt. No. 644-2 (letter from Atlas Copco to TryggHansa explaining that Trygg-Hansa’s “encumbrance from [Chicago Pneumatic] will be minimal
in the early years” due to the fact that Danaher would “be liable for damages that occur with
products that were manufactured before [Atlas Copco’s] acquisition” (formatting omitted)).)
This conclusion suffices to resolve both of Travelers’ causes of action against the PostAcquisition Insurers. First, Travelers asserts contribution claims against the Post-Acquisition
Insurers with respect to defense costs. (Dkt. No. 455 ¶¶ 50–57.) Travelers’ contribution cause
of action is not based upon contract; rather, it is based upon equitable principles. See Md. Cas.
Co., 218 F.3d at 210–11. And the “controlling inquiry under [this] equitable analysis is whether
one party is unjustly enriched at the expense of another — the law abhors unjust enrichment.”
Id. at 212. Here, as the Court’s explication of the priorities of the parties’ varying obligations
makes clear, the Post-Acquisition Insurers have not been unjustly enriched by Travelers’
payment of defense and indemnity costs in connection with the Underlying Claims. To the
contrary, because the Post-Acquisition Insurers sit far below all other parties in this action with
respect to each’s respective obligations, no Post-Acquisition Insurer may be said to have “money

54

which it should not retain, but should under equitable principles turn over to another.” Id.
Travelers’ contribution claim against the Post-Acquisition Insurers thus fails as a matter of law.
Second, Travelers seeks to allocate indemnity costs to the Post-Acquisition Insurers, and
to that end seeks a declaration of the Post-Acquisition Insurers’ obligations with respect to
indemnifying the Underlying Claims. (Dkt. No. 455 ¶¶ 58–62.) As the Court has already
explained, this Court may adjudicate such a declaratory judgment claim only if there is a
“practical likelihood” that the Post-Acquisition Insurers’ obligations will be triggered by the
Underlying Claims. E.R. Squibb & Sons, 241 F.3d at 177. No such practical likelihood can be
said to exist here. The Post-Acquisition Insurers’ obligations can be triggered at the earliest
upon the exhaustion of Danaher’s indemnity obligation to Atlas Copco, which could total as
much as the more than $88 million purchase price Atlas Copco paid to Danaher for Chicago
Pneumatic. (Dkt. No. 564-2 at 11, 13; Dkt. No. 533-1 at 2–3.) Furthermore, Danaher’s
indemnity obligation is itself net of Chicago Pneumatic’s pre-acquisition insurers’ obligations
with respect to the Underlying Claims (Dkt. No. 564-2 at 24), meaning that Travelers’ and the
Excess Insurers’ combined hundreds of millions of dollars of obligations with respect to the
Underlying Claims must exhaust and Danaher’s approximately $88 million indemnification
obligation with respect to the Underlying Claims must exhaust prior to the Post-Acquisition
Insurers’ obligations being triggered. While the possibility of some outlier claims in the tens of
millions of dollars, combined with Danaher and Atlas Copco’s legal right to “spike” all of those
losses into a single Excess Insurer’s policy, sufficed to create a practical likelihood of reaching
any of the Excess Insurers’ policies, see supra Section V.A., a different conclusion is warranted
here. Because the Post-Acquisition Insurers’ obligations with respect to the Underlying Claims
will not attach until all pre-acquisition insurance and Danaher’s own indemnification obligations

55

have lapsed, even a number of outlier claims would likely be insufficient to trigger any of the
Post-Acquisition Insurers’ policies. And there is no evidence in the summary judgment record
sufficient to establish a “practical likelihood” of there being the many dozens of such outlier
claims that would be necessary to exhaust all the obligations preceding those of the PostAcquisition Insurers with respect to the Underlying Claims. Travelers’ declaratory judgment
claims against the Post-Acquisition Insurers are therefore dismissed for want of subject matter
jurisdiction.
VII.

Conclusion
The Court has considered all of the arguments of the parties. To the extent not

specifically addressed above, the parties’ arguments are either premature, moot, or without merit.
For the foregoing reasons, Plaintiff Danaher and Third-Party Defendant Atlas Copco’s motion
for partial summary judgment (Dkt. No. 519) is GRANTED in part and DENIED in part;
Defendant and Third-Party Plaintiff Travelers’ motion for partial summary judgment (Dkt. No.
510) is GRANTED in part and DENIED in part; the Excess Insurers’ motions for summary
judgment (Dkt. Nos. 483, 488, 492, 496, 498, 503, 515, 520, 531) are DENIED; and the PostAcquisition Insurers’ motions for summary judgment (Dkt. Nos. 504, 517, 529, 551) are
GRANTED.
The parties are directed to meet and confer regarding further proceedings. On or before
November 8, 2019, the parties shall submit a joint status letter not exceeding ten (10) pages
addressing the parties’ proposals regarding further proceedings. Any such status letter shall
address Danaher, Atlas Copco, and Travelers’ joint suggestion (Dkt. No. 522 at 24; Dkt. No. 618
at 16) that the Court at this time refer this matter for supplemental allocation proceedings, to be
conducted in a manner consistent with this opinion.

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The Clerk of Court is directed to close the motions at Docket Numbers 483, 488, 492,
496, 498, 503, 504, 510, 515, 517, 519, 520, 529, 531, and 551.
SO ORDERED.
Dated: October 10, 2019
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

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