Santa Fe Braun, Inc. v. Insurance Co. of North AmericaAnnotate this Case
Braun sought coverage for numerous asbestos-related claims under various excess insurance policies. In phased proceedings lasting over 10 years, the trial court entered judgment in favor of the excess insurers based on Braun’s failure to establish that the primary and, in some cases, underlying layers of excess insurance had been exhausted.
Braun challenged the interpretation of the policies as requiring exhaustion of all underlying layers of insurance (horizontal exhaustion) rather than exhaustion of only policies specified in each policy (vertical exhaustion). Braun also argued the court abused its discretion in refusing to consider additional evidence of exhaustion presented four years after the trial's evidentiary phase was completed. The California Supreme Court subsequently decided “Montrose,” addressing the sequence in which the insured could access its excess insurance policies for coverage of claims for continuous environmental damage caused in 1947-1982. Interpreting the language of those excess policies, the Montrose court held the insured “is entitled to access otherwise available coverage under any excess policy once it has exhausted directly underlying excess policies for the same policy period.”
After considering Montrose, the court of appeal reversed. The trial court erred in interpreting the Braun policies to require horizontal exhaustion of all primary and underlying excess insurance coverage before accessing coverage under the excess policies at issue. The trial court abused its discretion in refusing to consider Braun’s new evidence of exhaustion.