In re Viking Pump, Inc.

At issue in this case was whether two companies (the Insureds) were entitled to coverage under additional excess policies issued to their predecessor by the Excess Insurers and, if so, how indemnity should be allocated across the triggered policy periods. The Delaware Court of Chancery granted summary judgment for the Insureds with respect to the availability of coverage and the allocation of liability under the excess policies, concluding that New York law applied to the dispute, that the Insureds were each entitled to coverage under the excess policies, and that the proper method of allocation was the all sums approach, as compared with the pro rata allocation method propounded by the Excess Insurers. After a trial, the Delaware Superior Court entered judgment largely in the Insureds’ favor. On appeal, the Delaware Supreme Court concluded that resolution of the parties’ disputes over allocation and exhaustion depended on unsettled questions of New York law. The Court of Appeals answered (1) under New York law, the contract language of the applicable insurance policies controlled the questions certified to the Court; (2) all sums allocation was appropriate based on the language of the policies at issue here; and (3) vertical, rather than horizontal, exhaustion was required before the excess policies attached. View "In re Viking Pump, Inc." on Justia Law