Asbestos Exclusion (WI): Wisconsin Supreme Court finds Asbestos Exclusion Applies.shoke2013
The Wisconsin Supreme Court found an asbestos exclusion precluded coverage to the sellers of an apartment building accused of failing to disclose that the structure had ducts that were insulated with asbestos. Contractors renovating the building after the sale worked on the ducts, causing the release of asbestos in the building and making it uninhabitable. Ultimately, the purchasers were foreclosed upon and lost the building, allegedly due to the asbestos issues. The purchasers argued that the asbestos exclusion did not apply because there was no “causal nexus” between the alleged loss and asbestos. The Court rejected this argument, finding that the language of the exclusion did not depend on the kind of tort alleged. Instead, it found that the language of the exclusion was very broad and comprehensive in scope and barred coverage for any damage “arising out of” exposure to or use of asbestos.
Wisconsin has generally been policyholder friendly in long-tail coverage cases, applying an “All Sums” allocation methodology. Plastics Eng’g Co. v. Liberty Mut. Ins. Co., 315 Wis. 2d 556, 759 N.W.2d 613 (2009). Wisconsin also rejected the requirement of horizontal exhaustion of all primary policies before the insured is able to access its umbrella and excess layers. Westport Ins. Corp. v. Appleton Papers, Inc., 327 Wis. 2d 120, 787 N.W.2d 894 (2010). However, in this new case, the Court sided with the insurer and found no ambiguity in the asbestos exclusion and its application in an arguably common factual application. On the other hand, the Court did seem to leave open the possibility that an asbestos exclusion with narrower language might not apply in the same factual situation.