WI Sup. Ct. / Post-Loss Assignmentmiqbal
Inability to Muster Majority Leaves Appellate Ruling Permitting Assignment Stand
In a per curiam decision, the Supreme Court of Wisconsin affirmed the
The Court of Appeals of Wisconsin, in an opinion by Judge Kornblum applying Wisconsin law, held the anti-assignment clause in the insurer’s policies did not prohibit the post-loss assignment of insurance rights, the chain of transfer of insurance rights was unbroken, and the underlying complaint was sufficient to invoke the insurer’s duty to defend.
Following a series of corporate successions, Pepsi-Cola Metropolitan Bottling Company, Inc. (“Pepsi”) was assigned claims to insurance proceeds under several liability insurance policies that Employers Insurance Company of Wausau (“Wausau”) issued from 1963 to 1971 to two Waukesha foundry companies. Pepsi claims that Wausau has a duty to defend it against asbestos exposure allegations of the underlying complaint raised by a mesothelioma claimant who claimed the foundry companies’ pump products caused asbestos injuries.
Wausau argued that the anti-assignment clauses in its policies precluded coverage because the right to insurance was assigned to successor companies without Wausau’s consent. The appellate court disagreed and upheld long-standing Wisconsin law that the anti-assignment provisions were not enforceable because the assignments were “post-loss,” so insurer consent for an assignment of insurance recovery rights was not required. The appellate court noted that the purpose of a non-assignment clause is to protect the insurer from increased liability, but after the loss has occurred, the assignment of the right to recover only changes the identity of the entity entitled to assert claims for defense and indemnity and it does not increase the insurer’s liability.
Wausau also contended that even if the anti-assignment provision is unenforceable, there were two breaks in the assignment during the chain of corporate succession that precluded coverage. The appellate court concluded that the insureds’ rights under the insurance policies were continuously assigned through each corporate succession and the duty to defend was unbroken. Pepsi-Cola Metro. Bottling Co., Inc. v. Employers Ins. Co. of Wausau, 2023 WI 42 (May 24, 2023); Pepsi-Cola Metro. Bottling Co., Inc. v. Employers Ins. Co. of Wausau, 2022 WI App 45, (July 8, 2022).