In Polar-Mohr Maschinenvertriebsgesellschaft GMBH Co. KG v. Zurich, No. 17-1804 (N.D. Calif. March 15, 2018) – discussed above in “Trust Me: You Gotta See The Name Of This Insured In a Coverage Case” -- the California federal court was called upon to address whether “all sums” or “pro-rata” applied to Zurich’s obligation for an asbestos death caused by mesothelioma. At issue was a claim involving alleged asbestos exposures from 1964 to 1999, diagnosis/death in 2013-14 and a single Zurich primary policy in effect from 1984-85.

Zurich argued that pro-rata applied because, based on the express language of its policy, Zurich is “only responsible for liabilities arising out of bodily injuries that occurred during the policy period.” Polar-Mohr, the insured, countered that “the definition of ‘bodily injury’ acknowledges the policy’s continuing coverage for bodily injury claims,” which makes it “inconsistent with pro rata allocation.”

The applicable law was either NY or California. The court concluded that the law was the same in both states and adopted “all sums.” But here’s the rub. In doing so, the court addressed the New York Court of Appeals’s decision in In the Matter of Viking Pump, Inc., 27 N.Y.3d 244 (2016) and held that the Zurich policy’s definition of “bodily injury” as “bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom” (emphasis added) was “precisely the type of language that the court in Viking Pump found inconsistent with the pro rata method of allocation.”

In reaching this decision, the court rejected Zurich’s argument that the phrase “including death at any time resulting therefrom” does not mandate “all sums” allocation. Such language, Zurich maintained, “does not signify that Zurich will provide coverage for bodily injuries that occur outside of the policy period but rather acknowledges that the policy will cover consequential damages, even those taking place after the policy period.”

The clear question that arises from the Polar-Mohr decision is this: Is the inclusion of the phrase “including death at any time resulting therefrom,” in the Zurich policy’s definition of “bodily injury,” really “precisely the type of language that the New York high court in Viking Pump found inconsistent with the pro rata method of allocation?”

There is only one way to find out – look at Viking Pump. The answer is clearly no. Viking Pump adopted “all sums” – and distinguished itself from New York’s pro-rata allocation rule as set out in Consol. Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208 (2002) -- on the basis that Viking Pump involved policies containing non-cumulation clauses or non-cumulation and prior insurance provisions. The Viking Pump court was clear on this, stating that “it would be inconsistent with the language of the non-cumulation clauses to use pro rata allocation here. Such 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.”

It is hard to see how the phrase “including death at any time resulting therefrom,” in the Zurich policy’s definition of “bodily injury,” was “precisely the type of language that the court in Viking Pump found inconsistent with the pro rata method of allocation,” when the word “death” doesn’t even appear in the Viking Pump decision.

On one hand, the phrase “including death at any time resulting therefrom,” is a common one in the definition of “bodily injury.” It appears in the definition of “bodily injury” in ISO’s standard commercial general liability policy. On the other hand, an unpublished California federal court decision, interpreting New York law, is hardly a strong decision, yet alone binding precedent on any court. But despite that, unless the Ninth Circuit says otherwise – I do not know the possible appeal situation -- expect to see Polar-Mohr cited by policyholders in support of their argument that Viking Pump’s all sums approach to allocation goes beyond simply policies with non-cumulation clauses.