MURPHY-BROWN, LLC v. ACE AM. INS. CO., 2023 NCBC 52

STATE OF NORTH CAROLINA
WAKE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
19 CVS 02793
MURPHY-BROWN, LLC and
SMITHFIELD FOODS, INC.,
Plaintiffs,
ORDER AND OPINION ON MOTIONS
FOR PARTIAL SUMMARY
JUDGMENT ON INDEMNITY
ALLOCATION ISSUES
v.
ACE AMERICAN INSURANCE
COMPANY; ACE PROPERTY &
CASUALTY INSURANCE COMPANY;
AMERICAN GUARANTEE &
LIABILITY INSURANCE COMPANY;
GREAT AMERICAN INSURANCE
COMPANY OF NEW YORK; XL
INSURANCE AMERICA, INC.; and XL
SPECIALTY INSURANCE COMPANY,
Defendants.
THIS 	MATTER 	comes before the Court on Defendants ACE American
Insurance Company, ACE Property & Casualty Insurance Company, American
Guarantee & Liability Insurance Company, and Great American Insurance Company
of New York’s (collectively, “Certain Insurers”) Amended Motion for Partial Summary
Judgment on the Issue of Indemnity Allocation (ECF No. 681) and Defendants XL
Insurance America, Inc. (“XLIA”) and XL Specialty Insurance Company’s (“XL
Specialty”) Amended Motion for Summary Judgment on Indemnity Allocation Issues
(ECF No. 690) (collectively, the “Motions” or “Motions for Summary Judgment”).1
1 XLIA and XL Specialty are referred to in this opinion collectively as the “XL Defendants.”
Murphy-Brown, LLC v. Ace Am. Ins. Co., 2023 NCBC 52.

THE COURT, having considered the Motions, briefs, exhibits, arguments of
counsel, and all appropriate matters of record, concludes that Certain Insurers’
Amended 	Motion 	for 	Partial 	Summary 	Judgment 	on 	the 	Issue 	of 	Indemnity
Allocation should be GRANTED and the XL Defendants’ Amended Motion for
Summary Judgment on Indemnity Allocation Issues should be DENIED.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Michael
W. Mitchell, and Reed Smith, LLP, by Evan T. Knott, John D. Shugrue,
Andrew M. Barrios, David Cummings, and Ashley B. Jordan, for
Plaintiffs Murphy-Brown, LLC, and Smithfield Foods, Inc.
Bailey & Dixon, LLP, by John T. Crook and David S. Coats, and Clyde
& Co. US LLP, by Marianne May, Shane Calendar, Daren McNally,
Luke Barlow, and Thomas Carruthers, for Defendants ACE American
Insurance Company and ACE Property & Casualty Insurance Company.
Maynard Nexsen, PC, by James W. Bryan, Brett Becker, and David S.
Pokela, 	for 	Defendant 	American 	Guarantee 	& 	Liability 	Insurance
Company.
Phelps Dunbar, LLP, by Thomas Contois, Justine Tate, Robert M.
Kennedy, and Christy M. Maple, for Defendants XL Insurance America,
Inc., and XL Specialty Insurance Company.
Cranfill Sumner & Hartzog, LLP, by Theodore B. Smyth, and Clyde &
Co. US, LLP, by Bruce D. Celebrezze and Jason Chorley, for Great
American Insurance Company of New York.
Davis, Judge.
FACTUAL AND PROCEDURAL BACKGROUND
1. 	“The Court does not make findings of fact on motions for summary
judgment; 	rather, 	the 	Court 	summarizes 	material 	facts 	it 	considers 	to 	be
uncontested.” 	Hyosung USA Inc. v. Travelers Prop. Cas. Co. of Am., 2021 NCBC
LEXIS 115, at **3 (N.C. Super. Ct. Dec. 16, 2021) (cleaned up).

2. 	The core set of facts underlying this litigation are not in dispute.
3. 	The Plaintiffs in this lawsuit are Smithfield Foods, Inc. (“Smithfield”)
and Smithfield’s wholly owned subsidiary Murphy-Brown, LLC (“Murphy-Brown”).2
(Sec. Am. Compl. [“SAC”], ECF No. 444.2, ¶¶ 12–13.) “Smithfield is the largest hog
and pork producer in the world.” (SAC ¶ 13.)
4. 	In 2013, property owners in eastern North Carolina who lived close to
Smithfield’s farming operations began filing lawsuits against Plaintiffs3—first in
state court in 2013 and later in federal court beginning in 2014.4 	(SAC ¶¶ 28–31.)
Each of these lawsuits consisted of similar allegations—that is, the assertion by the
property owners that Plaintiffs’ hog farming operations had resulted in both physical
invasions of their property and the loss of the use and enjoyment of that property.
(SAC ¶¶ 33–35.) The property owners alleged that Plaintiffs’ hog farming operations
had resulted in nuisance conditions such as odor, dust, noise, insects and pests, and
buzzards. (SAC ¶ 34.) The property owners also asserted that Plaintiffs’ trucks had
caused excessive traffic, odor, noise, dust, and light. (SAC ¶ 35.)
5. 	The United States District Court for the Eastern District of North
Carolina conducted five “bellwether” trials. 	(SAC ¶¶ 40–47.) 	Each of these trials
resulted in verdicts for the property owners against Smithfield and Murphy-Brown.
2 In this Opinion, Smithfield and Murphy-Brown are often referred to collectively as
“Plaintiffs.”
3 Those lawsuits are occasionally referred to herein as the “Underlying Lawsuits.”
4 Shortly before the filing of the federal suits, the property owners’ state court actions were
voluntarily dismissed. (SAC ¶ 30.)

(SAC ¶¶ 40–47.) 	On appeal from one of the resulting judgments, the United States
Court of Appeals for the Fourth Circuit largely affirmed the judgment entered by the
district court.5 	McKiver v. Murphy-Brown, LLC, 980 F.3d 937 (4th Cir. 2020).
Smithfield and Murphy-Brown subsequently entered into a global settlement with all
of the property owners. (SAC ¶ 47.)
6. 	In the present lawsuit, Plaintiffs have sued various insurers who
provided primary and excess insurance coverage for their operations between 2010
and 2015. Plaintiffs contend that these insurers should be held liable for the amounts
Plaintiffs paid to settle the Underlying Lawsuits as well the attorneys’ fees and other
costs Plaintiffs expended in defending the actions.
7. 	In order to analyze the present Motion, it is necessary to understand the
layers of insurance coverage that Plaintiffs possessed during the years at issue.
A. Primary Coverage
8. 	Plaintiffs’ first layer of coverage during the relevant policy periods
consisted of commercial general liability policies and business auto policies.6 Each of
the Primary Policies is described below.
9. 	Defendant 	ACE 	American 	Insurance 	Company 	(“ACE”) 	issued 	a
commercial general liability policy (“GL Policy”) and a business auto policy to
5 The district court’s punitive damages award was vacated due to an evidentiary error, and
the case was remanded for rehearing on that issue. 	But in all other respects the district
court’s judgment was affirmed. McKiver, 980 F.3d at 977.
6 The policies comprising the primary layer of insurance coverage are on occasion referred to
herein collectively as the “Primary Policies.”

Plaintiffs for the policy period of 30 April 2010 through 30 April 2011. 	(“ACE Auto
Policy,” ECF No. 515.1; “ACE GL Policy,” ECF No. 515.2.)
10. 	Old Republic Insurance Company (“ORIC”) issued a GL policy and a
business auto policy to Plaintiffs for four consecutive policy years from 30 April 2011
to 30 April 2015. 	(“ORIC Policies,” ECF Nos. 515.3–10.) 	Although ORIC was
originally named as a defendant in this lawsuit, it ultimately entered into a
settlement with Plaintiffs, resulting in a dismissal of all claims asserted by Plaintiffs
against it. (ECF No. 508.)
11. 	The ACE GL Policy and the ORIC GL Policies (collectively, the “Primary
GL Policies”) were essentially “fronting policies,” meaning that they constituted a
form of self-insurance in which the insured’s deductible amount equaled the policy
limits of $5 million. (ACE GL Policy; ORIC GL Policies, ECF Nos. 515.7–10.)
12. 	The ACE Auto Policy and the ORIC Auto Policies (collectively, the
“Primary Auto Policies”) each have policy limits of $2 million with a deductible of $1
million, with the exception of one ORIC policy for the period of 30 April 2014 through
30 April 2015, which has a policy limit of $3 million and a deductible of $1 million.
(ACE Auto Policy; ORIC Auto Policies, ECF Nos. 515.3–6.)
B. Excess Coverage
1. 	Zurich First-Layer Excess Policies
13. 	Defendant 	American 	Guarantee 	& 	Liability 	Insurance 	Company
(“Zurich”) issued first-layer excess policies (the “Zurich Policies”) to Plaintiffs for four
consecutive annual policy periods spanning from 30 April 2010 through 30 April 2014.

(“Zurich Policies,” ECF Nos. 515.11–14.) The Zurich Policies have a $25 million policy
limit. (ECF Nos. 151.11–14, at p. 2; ECF Nos. 151.13–14, at p. 5.)
14. 	The Zurich Policies provide excess coverage that follows form to the
underlying Primary Policies “to the extent such terms and conditions are not
inconsistent or do not conflict with the terms and conditions” in the Zurich Policies.
(See, e.g., ECF No. 515.12, at p. 35.)7 	Furthermore, the Zurich Policies contain the
following language:
Notwithstanding anything to the contrary . . . , if underlying insurance
does not apply to damages, for reasons 	other than exhaustion of
applicable limits of insurance by payment of loss, then [the Zurich
Policies] do[ ] not apply to such damages.
(See, e.g., ECF No. 515.12, at p. 35.)
2. 	XL Specialty First-Layer Excess Policy
15. 	Defendant XL Specialty Insurance Company issued a first-layer excess
policy to Plaintiffs for the policy period 30 April 2014 through 30 April 2015. (“XL
Specialty Policy,” ECF No. 515.25.) The XL Specialty Policy has a $25 million policy
limit. (ECF No. 515.25, at p. 11.)8
7 A “follow-form” excess insurance policy “covers a liability loss that exceeds the underlying
limits [of the underlying policy] only if the loss is covered by the underlying insurance.” 	1
LNPG: N EW APPLEMAN N ORTH CAROLINA I NSURANCE Litigation § 10.09[2] (LexisNexis
2022). Unless the policy specifies otherwise, a follow-form policy “is subject to the exact same
provisions of the underlying policy.” Id. at [1].
8 The Zurich Policies and the XL Specialty Policy are collectively referred to as the “First
Layer Excess Policies.”

3. 	Great American Second-Layer Excess Policy
16. 	Defendant Great American Insurance Company of New York (“Great
American”) issued second-layer excess policies to Plaintiffs for five consecutive
annual policy periods spanning from 30 April 2010 through 30 April 2015. 	(“Great
American Excess Policies” or “Second Layer Excess Policies,” ECF Nos. 515.15–19.)
The Second-Layer Excess Policies provide excess coverage that follows form to the
First Layer Excess Policies and cover losses up to $25 million in excess of the First
Layer Excess Policies’ limits. (See, e.g., ECF No. 515.15, at p. 14.)
4. 	ACE P&C Third-Layer Excess Policies
17. 	Defendant ACE Property & Casualty Insurance Company (“ACE P&C”)
issued third-layer excess policies to Plaintiffs for five consecutive annual policy
periods spanning from 30 April 2010 through 30 April 2015. 	(“ACE P&C Excess
Policies” or “Third Layer Excess Policies,” ECF Nos. 515.20–24.) 	The Third Layer
Excess Policies provide excess coverage that follows form to the First Layer Excess
Policies and cover losses up to $25 million in excess of the Second Layer Excess
Policies. (See, e.g., ECF No. 515.20, at p. 5.)
5. XL Insurance Fourth-Layer Excess Policies
18. 	Defendant 	XL 	Insurance, 	America, 	Inc. 	issued 	fourth-layer 	excess
commercial general liability and business auto policies to Murphy-Brown for four
consecutive annual policy periods spanning from 30 April 2010 through 30 April 2014.
(“XL Excess Policies” or “Fourth Layer Excess Policies,” ECF Nos. 515.26–29.) 	The
Fourth Layer Excess Policies provide excess coverage that follows form to the First

Layer Excess Policies and cover losses up to $25 million in excess of the Third Layer
Excess Policies. (See e.g., ECF No. 515.29, at p. 14.)
C. Lawsuit
19. 	Plaintiffs filed an initial Complaint in this action on 5 March 2019.
(ECF No. 4.) 	On the following day, this lawsuit was designated as a mandatory
complex business case. (ECF No. 3.)
20. 	Plaintiffs filed an Amended Complaint on 19 March 2019. (ECF No. 9.)
On 12 January 2021, the Court granted leave for Plaintiffs to file a Second Amended
Complaint, which is currently the operative pleading in this matter. (ECF No. 453.)
21. 	The SAC contains seven claims: (1) a breach of contract claim against
ACE for breach of its duty to defend the Underlying Lawsuits under the ACE Auto
Policy; (2) a breach of contract claim against ORIC for breach of its duty to defend the
Underlying Lawsuits under the ORIC Auto Policies; (3) a claim seeking a declaratory
judgment 	that 	ACE 	and 	ORIC 	are 	“obligated 	to 	defend 	and/or 	reimburse
the . . . defense costs incurred by [Plaintiffs]” from the Underlying Lawsuits; (4) a
claim seeking a declaratory judgment that “ACE is estopped from asserting any
coverage defenses” under the ACE Auto Policy; (5) a claim seeking a declaratory
judgment that “ORIC is estopped from asserting any coverage defenses” under the
ORIC Auto Policies; (6) a breach of contract claim against all Defendants for breach
of their duty to indemnify Plaintiffs “under their respective Policies in connection
with the settlement made by [Plaintiffs] with the [Underlying] Claimants”; and (7) a
breach of contract claim against all Defendants with respect to their duty to

indemnify for “fail[ing] and refus[ing] to make the full limits of their respective
policies available so as to enable [Plaintiffs] to settle the [Underlying Lawsuits].”
(SAC ¶¶ 73–121.)
22. 	On 22 December 2020, this Court entered partial summary judgment
for Plaintiffs on their first and second claims, ruling that ORIC and ACE’s “failure to
provide 	a 	defense 	[in 	the 	Underlying 	Lawsuits] 	constitutes 	a 	breach 	of 	their
respective duties to defend.” Murphy-Brown, LLC v. ACE Am. Ins. Co., 2020 NCBC
LEXIS 154, at **4–25 (N.C. Super. Ct. Dec. 22, 2020). The Court concluded “that a
duty to defend exists under Defendants’ Primary Auto Polices[.]” Id. at **54.
23. 	On 5 August 2022, the Court entered an Order and Opinion that
addressed various motions for summary judgment filed by the parties on a variety of
issues in this case. 	(ECF No. 646.) 	In its Order and Opinion, the Court made the
following rulings: (1) the Court granted Plaintiffs’ Motion requesting a ruling that
ACE9 was estopped from asserting coverage defenses based on its breach of the duty
to defend; (2) the Court denied Defendants’ Motion for Partial Summary Judgment
requesting a ruling that coverage under any policy was barred by a lack of an
“accident” or “occurrence” based on the Court’s determination that a genuine issue of
material fact existed on that issue; (3) the Court granted, in part, and denied, in part,
Plaintiffs’ and Defendants’ Motions for Partial Summary Judgment based on the
“Pollution Exclusion” contained in Defendants’ various insurance policies; and (4) the
Court granted, in part, and denied, in part, XL Specialty’s Motion for Partial
9 By this time, ORIC was no longer a party to this litigation by virtue of its settlement with
Plaintiffs.

Summary Judgment based on the “Known Injury” provision contained within its
policy. (ECF No. 646, at pp. 60–61.)
24. 	On 3 January 2023, the Court entered an Order denying Plaintiffs’ Rule
54(b) Motion for Reconsideration/Clarification and Rule 59(e) Motion to Amend
Regarding Summary Judgment Ruling. (ECF No. 669.)
25. 	On 3 March 2023, Certain Insurers and the XL Defendants filed the
Motions for Summary Judgment currently before the Court. (ECF Nos. 681, 690.)
26. 	The Motions came before the Court for a hearing on 18 July 2023. The
Motions are now ripe for decision.
LEGAL STANDARD
I. 	Summary Judgment
27. 	It 	is 	well 	established 	that 	“[s]ummary 	judgment is 	proper 	‘if 	the
pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact
and that any party is entitled to a judgment as a matter of law.’ ” Morrell v. Hardin
Creek, Inc., 371 N.C. 672, 680 (2018) (quoting N.C. R. Civ. P. 56(c)). 	“[A] genuine
issue is one which can be maintained by substantial evidence.” 	Kessing v. Nat'l
Mortg. Corp., 278 N.C. 523, 534 (1971). 	“Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion and
means more than a scintilla or a permissible inference.” 	Daughtridge v. Tanager
Land, LLC, 373 N.C. 182, 187 (2019) (citation and internal quotation marks omitted).

28. 	On a motion for summary judgment, “[t]he evidence must be considered
‘in a light most favorable to the non-moving party.’ ” McCutchen v. McCutchen, 360
N.C. 280, 286 (2006) (quoting Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470
(2004)). 	“[T]he party moving for summary judgment ultimately has the burden of
establishing the lack of any triable issue of fact.” 	Pembee Mfg. Corp. v. Cape Fear
Constr. Co., 313 N.C. 488, 491 (1985).
29. 	The party moving for summary judgment may satisfy its burden by
proving that “an essential element of the opposing party’s claim does not exist, cannot
be proven at trial, or would be barred by an affirmative defense, or by showing
through discovery that the opposing party cannot produce evidence to support an
essential element of [the] claim[.]” Dobson v. Harris, 352 N.C. 77, 83 (2000) (citations
omitted). “If the moving party satisfies its burden of proof, then the burden shifts to
the non-moving party to ‘set forth specific facts showing that there is a genuine issue
for trial.’ ” Lowe v. Bradford, 305 N.C. 366, 369–70 (1982) (quoting N.C. R. Civ. P.
56(e)). If the nonmoving party does not satisfy its burden, then “summary judgment,
if appropriate, shall be entered against [the nonmovant].” United Cmty. Bank (Ga.)
v. Wolfe, 369 N.C. 555, 558 (2017) (quoting N.C. R. Civ. P. 56(e)).
II. 	Rules of Construction — Contracts of Insurance
30. 	“An insurance policy is a contract[,] and its provisions govern the rights
and duties of the parties thereto.” C. D. Spangler Constr. Co. v. Indus. Crankshaft &
Eng’g Co., 326 N.C. 133, 142 (1990) (citing Fidelity Bankers Life Ins. Co. v. Dortch,
318 N.C. 378, 380 (1986)). 	Thus, general contract interpretation rules apply when

interpreting an insurance policy. Accardi v. Hartford Underwriters Ins. Co., 373 N.C.
292, 295 (2020). 	“In North Carolina, determining the meaning of language in an
insurance policy presents a question of law for the Court.” Id.
31. 	“[I]t is well settled in North Carolina that insurance policies are
construed strictly against insurance companies and in favor of the insured.” 	State
Cap. Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 546 (1986) (citations omitted).
Accordingly, “a contract of insurance should be given that construction which a
reasonable person in the position of the insured would have understood it to mean[.]”
Grant v. Emmco Ins. Co., 295 N.C. 39, 43 (1978). In addition,
[t]hose provisions in an insurance policy which extend coverage to the
insured must be construed liberally so as to afford coverage whenever
possible by reasonable construction. However, the converse is true when
interpreting 	the 	exclusionary 	provisions 	of 	a 	policy; 	exclusionary
provisions are not favored and, if ambiguous, will be construed against
the insurer and in favor of the insured.
N.C. Farm Bureau Mut. Ins. Co. v. Stox, 330 N.C. 697, 702 (1992) (citation omitted).
32. 	An ambiguity exists when “in the opinion of the court, the language of
the policy is fairly and reasonably susceptible to either of the constructions for which
the parties contend.” Wachovia Bank & Tr. Co. v. Westchester Fire Ins. Co., 276 N.C.
348, 354 (1970). In those circumstances, our Supreme Court has instructed that “any
ambiguity or uncertainty as to the words used in the policy should be construed
against the insurance company and in favor of the policyholder or beneficiary.”
Accardi, 373 N.C. at 295; see also Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500,
506 (1978). 	Further, when otherwise unambiguous policy language “become[s]
ambiguous as applied to the various causes of loss set forth in the policy, the

ambiguity will be construed against the insurer.” 	Pleasant v. Motors Ins. Co., 280
N.C. 100, 102 (1971).
33. 	Nevertheless, “[i]f a court finds that no ambiguity exists, . . . the court
must construe the document according to its terms.” 	Accardi, 373 N.C. at 295; see
also Woods, 295 N.C. at 506 (“[I]f the meaning of the policy is clear and only one
reasonable interpretation exists, the courts must enforce the contract as written; they
may not, under the guise of construing an ambiguous term, rewrite the contract or
impose liabilities on the parties not bargained for and found therein.”); Cowell v.
Gaston Cty., 190 N.C. App. 743, 746 (2008) (stating that “the language used in the
policy is the polar star that must guide the courts”) (quoting McDowell Motor Co. v.
New York Underwriters Ins. Co., 233 N.C. 251, 253 (1951)).
ANALYSIS
34. 	The two Motions currently before the Court (one filed by Certain
Insurers and one filed by the XL Defendants) both address a common issue. 	That
issue concerns the proper method that should be utilized to allocate indemnity
liability in this action among the various insurers in light of the fact that the nuisance
injuries giving rise to the Underlying Lawsuits crossed over into multiple policy
periods for which—as detailed above—coverage was provided by various insurers.
35. 	Our Supreme Court recently explained the nature of this inquiry as
follows:
[C]ourts across the country have grappled with so-called “long-tail”
claims—such as those seeking to recover for personal injuries due to
toxic 	exposure 	and 	property 	damage 	resulting 	from 	gradual 	or
continuing environmental contaminations—in the insurance context.

These types of claims present unique complications because they often
involve exposure to an injury-inducing harm over the course of multiple
policy periods, spawning litigation over which policies are triggered in
the first instance, how liability should be allocated among triggered
policies and the respective insurers, and at what point insureds may
turn to excess insurance for coverage.
Radiator Specialty Co. v. Arrowood Indem. Co., 383 N.C. 387, 389–90 (2022) (quoting
In re Viking Pump, Inc., 27 N.Y. 3d. 244, 255 (2016)).
36. 	As an initial matter, the Court is satisfied that no genuine issue of
material fact exists regarding this issue and that this issue is instead purely a
question of law. The Court, in its discretion, concludes that a ruling at the summary
judgment stage is appropriate. Duke Energy Carolinas, LLC v. AG Ins. SA/NV, 2020
NCBC LEXIS 70, at **13 (N.C. Super. Ct. Jun. 5, 2020) (“In the circumstances of this
case, 	the 	Court 	concludes 	that 	addressing 	[the 	Motion 	for 	Partial 	Summary
Judgment] at this time will not result in an advisory opinion and is instead a prudent
use of the Court’s time and resources.”).
37. 	Because the arguments of Certain Insurers and the XL Defendants
differ in key respects, the Court will analyze them separately.
A. Certain Insurers’ Motion for Summary Judgment
38. 	Certain Insurers argue that any indemnity amounts that Plaintiffs may
ultimately recover in this action should be allocated among the applicable insurers
on a “pro rata” basis based on the amount of time each insurer provided coverage to
Plaintiffs.10 	Plaintiffs, conversely, urge the Court to apply an “all sums” allocation
10 Despite making these arguments, Certain Insurers (and the XL Defendants) have
expressly reserved their right to argue at trial that no coverage at all exists under their
respective policies based on their contention that the Underlying Lawsuits did not arise from

method in which Plaintiffs may recover the entirety of their loss from any individual
insurer that provided coverage during the period in which the nuisance injuries
occurred.
39. 	Our Supreme Court has explained the difference between these two
approaches. 	“Under a pro rata, or time-on-the-risk, allocation approach, each
triggered policy bears a share of the total damages proportionate to the number of
years it was on the risk, relative to the total number of years of triggered coverage.”
Radiator Specialty, 383 N.C. at 406–07. “By contrast, all sums, or joint and several,
liability allows recovery in full under any triggered policy of the policyholders’
choosing and leaves the selected insurer to pursue cross-claims against other carriers
whose policies were also available. 	This means that any policy on the risk for any
portion of the period in which the insured sustained property damage or bodily injury
is jointly and severally obligated to respond in full, up to its policy limits, for the loss.”
Id. (cleaned up).
40. 	The arguments asserted by Certain Insurers and Plaintiffs are analyzed
in detail below but can be broadly summarized as follows: Certain Insurers rely on a
provision in their policies stating that the policy solely covers injuries for accidents
occurring during the stated temporal period of the policy—that is, the dates listed
therein during which the policy is effective. Based on this provision, Certain Insurers
any “accident” or “occurrence” as defined in their policies (based on their contention that the
underlying nuisance injuries were either intentional or substantially certain to occur from
the standpoint of Plaintiffs).

contend, they have contracted to provide coverage only for injuries occurring during
their limited “time on the risk.”
41. 	Plaintiffs, on the other hand, rely on a separate provision in Certain
Insurers’ policies stating that a covered injury also includes “any continuation,
change, or resumption” of that injury after the policy period has ended. Based on the
latter provision, Plaintiffs assert that each insurer’s indemnity liability is not, in fact,
limited to their “time on the risk.” Alternatively, Plaintiffs contend, the policies are
ambiguous and should therefore be construed in their favor as insureds—meaning
that an “all sums” allocation method should be utilized in lieu of a pro rata method.
42. 	Therefore, it is necessary to examine the provisions of the policies at
issue that are pertinent to the parties’ respective arguments on this issue.
43. 	Both ACE and ORIC issued Primary Auto Policies that contain the same
functionally identical provision providing that coverage was being afforded for
accidents occurring “during the policy period.” That provision states as follows:
We will pay all sums an “insured” legally must pay as damages because
of “bodily injury” or “property damage” to which this insurance applies,
caused by an “accident” and resulting from the ownership, maintenance
or use of a covered “auto”
. . .
Under this Coverage Form, we cover “accidents” and “losses” occurring
a. 	During the policy period shown in the Declarations; and
b. 	Within the coverage territory.
(E.g., ECF No. 515.1, at pp. 16, 23 (emphasis added).)11
11 By virtue of the First Layer Excess Policies’ follow form provisions, the above-quoted
language also became part of the Excess Policies.

44. 	In addition, all of the Zurich Policies for the period from 2010 through
2014 contain a “Continuing Coverage” provision stating as follows:
Bodily injury or property damage which occurs during the policy
period . . . includes any 	continuation, 	change or resumption 	of 	that
bodily injury or property damage after the policy period[.]
(E.g., ECF No. 515.11, at p. 37 (emphasis added).)12
45. 	Certain Insurers argue that the inclusion of the “during the policy
period” language in the relevant policies mandates a pro rata approach to allocating
the indemnifiable damages from the Underlying Lawsuits between the applicable
insurance policies. According to Certain Insurers, this language means just what it
says—they have contracted to provide coverage only for accidents occurring during
the time period in which their policies were in effect.
46. 	Plaintiffs, conversely, contend that Certain Insurers are ignoring the
“Continuing Coverage” provision, which—in Plaintiffs’ view—should be construed as
allowing coverage under these policies even for injuries that occur outside the
designated policy periods because those injuries were a “continuation, change or
resumption” of the very same injuries that did occur during the policy period. 	As a
result, 	Plaintiffs 	assert 	that 	the 	“Continuing 	Coverage” 	provision 	precludes
application of pro rata allocation and instead mandates allocation based on the “all
sums” approach. In the alternative, Plaintiffs argue that the simultaneous inclusion
of these two provisions results in an ambiguity, which must be resolved in favor of
the insured.
12 All of the other excess policies “follow form” in all relevant respects to the Primary Auto
Policies and the First Layer Excess policies.

47. 	Before determining how the “Continuing Coverage” provision should be
interpreted, the Court must first decide the threshold issue of whether it even applies.
Certain Insurers take the position that the provision does not apply—asserting that
“[b]ecause 	the 	underlying 	[claimants] 	asserted 	recurrent 	nuisance 	claims, 	the
Underlying Lawsuits did not involve the ‘continuation, change or resumption’ of any
bodily injury.” (ECF No. 682, at p. 23 (emphasis added).)
48. 	The Court disagrees and finds that Certain Insurers’ argument on this
issue is largely based on semantics. Based on the undisputed evidence of record, it is
clear that the nuisance injuries at issue were not one-time injuries and instead
reappeared on a recurring basis for a period of years. 	The phrase “continuation,
change or resumption” is broad enough to encompass the type of recurrent injuries at
issue in this case. 	See McKiver, 980 F.3d at 954 (“Here, maintenance of odiferous,
noisy, and pest-ridden farm operations resulted in repeated -- i.e., recurrent --
invasions 	of 	[landowners’] 	properties.”). 	The 	Court 	rejects 	Certain 	Insurers’
contention that additional wording would need to be included within the Continuing
Coverage provision in order for it to apply to the type of injuries at issue here.
49. 	However, the Court’s determination that the Continuing Coverage
provision applies does not end the analysis. The Court must next address the extent,
if any, to which the “during the policy period” language (relied upon by Certain
Insurers) is affected by the Continuing Coverage provision (relied on by Plaintiffs) for
purposes of deciding whether a pro rata or an all sums approach to indemnity
allocation should be used on these facts.

50. 	In their various briefs, the parties have cited numerous cases from
outside North Carolina addressing this question. However, although these cases are
informative and demonstrate that different jurisdictions have adopted differing
approaches to this issue, the Court, of course, is bound by controlling North Carolina
law.
51. 	Our Supreme Court very recently addressed a virtually identical issue
in Radiator Specialty. 	Although, as discussed below, the specific type of injury at
issue in that case was different than the recurring nuisance injuries existing here,
the Court finds that the Supreme Court’s analysis is nevertheless controlling in the
present case.13
52. 	In 	Radiator 	Specialty, 	a 	manufacturer 	whose 	products 	contained
benzene was named as a defendant in “hundreds of personal injury lawsuits seeking
damages for bodily injury allegedly caused by repeated exposure to benzene over
time.” 	Radiator Specialty, 383 N.C. at 389. 	The ensuing litigation resulted in
approximately 	$45 	million 	in 	liability 	and 	defense 	costs. 	Id. 	at 	390. 	The
manufacturer’s insurance structure consisted of over one-hundred policies and
twenty-five individual insurers. 	Id. at 389. 	The manufacturer subsequently filed a
lawsuit seeking a determination of the respective obligations of fifteen insurers in
connection with the benzene litigation. Id. at 391.
53. 	In its opinion, the Supreme Court addressed a number of coverage-
related issues, one of which concerned the proper method of allocation of the insurers’
13 For this reason, the Court deems it appropriate to quote extensively from the Supreme
Court’s opinion in Radiator Specialty.

indemnity liability. 	Much like Plaintiffs in the present case, the manufacturer in
Radiator 	Specialty 	contended 	that 	certain 	language 	in 	the 	applicable 	policies
mandated an all sums—rather than a pro rata—allocation despite the inclusion of
the phrase “during the policy period” in the policies. 	Id. at 410–11. 	The Supreme
Court summarized the manufacturer’s argument as follows:
Similarly, [the manufacturer] argues that there is language in the
policies that is “antithetical to pro rata allocation, including continuing
coverage, non-cumulation, and prior-insurance provisions,” which all
presuppose that (1) multiple policies may be called upon to indemnify
[the manufacturer] for a single loss or occurrence, and (2) insurers may
be required to indemnify the insured for losses arising outside of the
policy period. 	For example, [the manufacturer] notes that all three of
the insurers’ policies “extend coverage beyond the policy period to
liability 	for 	‘death 	resulting 	at 	any 	time 	from 	the 	bodily 	injury,”
provisions which other courts “have found incompatible with pro rata
allocation.” 	At the same time, [the manufacturer] emphasizes “the
glaring absence of any express pro rata limitation[,]” an omission that is
“particularly notable given that the Insurers have been aware of the
hotly contested issue of ‘all sums’ vs. pro rata allocation for decades.”
Id. at 411.
54. 	The Supreme Court stated that “[l]anguage indicating that an insurer
will cover ‘all sums’ must be present in the policy to warrant application of all sums
allocation.” Id. at 412. 	Although acknowledging that the policies did, in fact, contain
language essentially agreeing to pay “all sums” arising from certain types of liability,
the Supreme Court observed that the insurers were able to point to other policy
language overtly seeking to limit the coverage contained therein to injury “sustained
during the respective policy periods.” Id. at 412–13 (cleaned up). The Supreme Court
then stated the following:
As the insurers argue, the modern trend is to apply pro rata allocation
when limiting language like “during the policy period” exists, even when

the policy contains a reference to paying “all sums” arising out of certain
liabilities. See, e.g., Rossello, 468 Md. at 119, 226 A.3d 444 (holding that,
where “during the policy period” language was present, “the pro rata
approach [was] unmistakably consistent with the language of standard
... policies”); Crossmann Cmtys. of N.C., 395 S.C. at 62, 717 S.E.2d 589
(applying pro rata allocation where “during the policy period” limiting
language was present and explaining that this interpretation “give[s]
effect to each part of the insuring agreement (rather than focusing solely
on the terms ‘all sums’ or ‘those sums’), [and] . . . is consistent with the
objectively reasonable expectations of the contracting parties”).
. . .
Pursuant to the limiting language of Fireman’s Fund’s policies then,
Fireman’s Fund will only indemnify [the manufacturer] for the costs of
such occurrences that take place “during the policy period.” See, e.g.,
Bos. Gas Co. v. Century Indem. Co., 454 Mass. 337, 360, 910 N.E.2d 290,
307–08 (2009). 	Thus, even if a policy contains language promising to
pay for “all sums” that [the manufacturer] “shall be obligated to pay ...
because of” personal or bodily injury, contractual language that limits
this phrase to either bodily injuries that occur during the policy period
or occurrences that take place during the policy period makes clear that
the insurer’s obligation is not without limits.
. . .
[U]sing Fireman’s Fund’s policies as an example, the insurer agreed to
pay for all of the sums (1) arising from bodily injuries; (2) resulting from
occurrences; and (3) that took place during the policy periods. 	The
language “during the policy period” therefore cabins the phrase “all
sums” to a finite period of time. It follows that the insurers did not agree
to cover all sums arising out of benzene exposure without regard to the
policy periods during which incidents of exposure took place. 	Instead,
“[c]onsistent with the policy language limiting coverage to that which
occurs ‘during the policy period,’ the timing of the [occurrence/injury]
dictates ... the portion of damages for which each policy is responsible.”
See Rossello, 468 Md. at 119, 226 A.3d 444.
Id. at 413–14.
55. 	The Supreme Court noted that courts in some jurisdictions had applied
all sums allocation “even where the limiting language of ‘during the policy period’
appears.” Id. at 414 n.12. But the Supreme Court stated that “[t]hese cases . . . tend
to represent an outdated view of the proper interpretation of ‘pro rata’ language” and

that “[t]he truncated contractual interpretation they apply fails to full[y] consider the
limiting effect of the phrase ‘during the policy period.’ ” Id.
56. 	In reaching its conclusion that a pro rata (as opposed to all sums)
allocation was proper, the Supreme Court distinguished two cases reaching an
opposite conclusion—one of which was from this Court. 	See id. at 415 (citing Duke
Energy, 2020 NCBC LEXIS 70, at **15–16). 	The Supreme Court stated that Duke
Energy was distinguishable because
[t]he [B]usiness [C]ourt’s application of all sums allocation was based on
the presence of non-cumulation provisions in the policy at issue, which
“recognize[d] that damage may extend beyond the policy period in which
the triggering property damage first occurs and reflect the parties’
agreement that such damage shall be treated as if all damage occurred
in a single premium period, subject to a single policy limit.” 	Duke
Energy, 2020 WL 3042168, at *8. 	Indeed, the [B]usiness [C]ourt
“conclude[d] that the non-cumulation provisions make plain that the
parties’ Insuring Agreement in the Policies ... obligates the insurer to
pay all sums which Duke becomes legally obligated to pay because of
‘property damage.’ ” Id.
Radiator Specialty, 383 N.C. at 415.14
57. 	The Supreme Court similarly distinguished Viking Pump, a case that
likewise concerned policies containing non-cumulation provisions. Id. (citing Viking
Pump, 27 N.Y.3d. at 251).
58. 	Finally, 	the 	Supreme 	Court 	further 	rejected 	the 	manufacturer’s
argument that the policies at issue contained a continuing coverage provision that
14 As one court has explained, a non-cumulation clause “presuppose[es] that two policies may
be called upon to indemnify the insured for the same loss or occurrence,” meaning that said
policy language is inconsistent with a pro rata allocation which by “legal fiction . . . treat[s]
continuous and indivisible injuries as distinct in each policy period as a result of the ‘during
the policy period’ limitation[.]” Viking Pump, 27 N.Y.3d at 261.

had the effect of requiring all sums allocation. That provision—which was virtually
identical to the Continuing Coverage provision relied upon by Plaintiffs here—stated
that “ ‘[b]odily injury’ . . . which occurs during the policy period . . . includes any
continuation, change or resumption of that ‘bodily injury’ . . . after the end of the
policy period.” 	Id. at 417 n.15. 	In addressing that provision, the Supreme Court
stated the following:
[The manufacturer] similarly misinterprets the “continuing coverage”
provisions it points to in [the insurer’s] policies. 	The language [the
manufacturer] emphasizes describes [the insurer’s] obligations for a
continuous 	injury. 	Even 	assuming 	the 	health 	effects 	of 	benzene
exposure can be described in this manner, which [the insurer] disputes,
the provision does not suggest that [the insurer] agrees to assume
responsibility for all liabilities from any policy period. 	This language
“simply sets forth the unremarkable proposition . . . [that] the policy in
place when the injury occurs will cover all consequential damages, even
those taking place after the policy period.” As such, the non-cumulation
and continuing coverage provisions that [the insured] points to do not
counsel against pro rata allocation in the context of this case.
Id. at 417 (internal citation omitted). Thus, the Supreme Court concluded that based
on its review of the continuing coverage provision “we are not convinced that [the
insurers] contemplated the possibility that they would be liable for ‘all sums’ arising
from liabilities that occurred during any policy period.” Id. at 416.
59. 	Faced with the fact that the Supreme Court’s analysis in Radiator
Specialty is inconsistent with their argument, Plaintiffs contend that the analysis in
that case is inapplicable to the present action due to differences between the
recurrent nuisance injury here as opposed to the benzene exposure injury in Radiator
Specialty. The Court disagrees.

60. 	Although certain aspects of the Supreme Court’s decision focus on the
unique characteristics of benzene-related injury, acceptance of Plaintiffs’ argument
would require the Court to ignore key portions of the Supreme Court’s analysis that
are more broadly applicable. Although the Supreme Court was addressing indemnity
allocation in the context of liability stemming from benzene exposure, the scope of its
analysis extends beyond the specific facts of that case. Critically, the Supreme Court
clearly stated that “the modern trend is to apply pro rata allocation when limiting
language like ‘during the policy period’ exists, even when the policy contains a
reference to paying ‘all sums’ arising out of certain liabilities.” 	Id. at 413. 	The
Supreme Court then proceeded to address the indemnity allocation issue based on its
review of policy language that is virtually identical to the key policy provisions
existing in the present case. The Supreme Court gave effect to the “during the policy
period” limitation contained in the insurers’ policies and dismissed the notion that a
continuing 	coverage 	provision 	that 	is 	essentially 	a 	word-for-word 	copy 	of 	the
Continuing Coverage provision here mandated a different result—holding that the
latter provision “simply sets forth the unremarkable proposition that the policy in
place when the injury occurs will cover all consequential damages, even those taking
place after the policy period.” See id. at 417 (cleaned up).
61. 	Plaintiffs nevertheless contend that the Supreme Court’s analysis “did
not decide or explain how it would apply Continuing Coverage Provisions in a
continuous injury case . . . .” 	(ECF No. 735, at p. 15.) 	However, this argument is
incorrect. 	It ignores the above-quoted portion of the Supreme Court’s opinion

expressly stating that the virtually identical continuing coverage provision there
simply meant that “the policy in place when the injury occurs will cover all
consequential damages, even those taking place after the policy period . . . [e]ven
assuming the health effects of benzene exposure can be described [as resulting in a
continuous injury].” Radiator Specialty, 383 N.C. at 417 (emphasis added).15
62. 	To be sure, the Supreme Court acknowledged that a different result
would exist in cases in which—as in Duke Energy and In re Viking Pump—the
applicable policies contained non-cumulation provisions. 	See id. at 415–16. 	Here,
however, the policies at issue (as in Radiator Specialty) lack any such non-cumulation
provisions.
63. 	The Court has carefully considered the remaining arguments asserted
by Plaintiffs and finds them to be similarly lacking in merit.
64. 	Plaintiffs contend, in the alternative, that these policy provisions are
ambiguous and therefore should be interpreted in their favor. 	But Plaintiffs have
failed to persuasively show how any such ambiguity actually exists.16 Indeed, their
argument ignores the fact that the Supreme Court’s indemnity allocation analysis in
Radiator 	Specialty 	interpreted 	policy 	provisions 	containing 	virtually 	identical
language without making any finding of ambiguity.
15 This same logic would apply equally to the type of recurrent injuries at issue in the present
case.
16 Although Plaintiffs contend that the existence of such an ambiguity is demonstrated by the
differing interpretations offered by Certain Insurers and the XL Defendants as to the effect
of the Continuing Coverage provision, the mere fact that those insurers have asserted
arguments seeking to minimize their own exposure hardly suffices to establish an ambiguity.

65. 	Plaintiffs’ attempt to rely on a so-called “Aggregation Provision” in the
policies fares no better. That provision states as follows:
All “bodily injury,” “property damage” and “covered pollution cost or
expense” 	resulting 	from 	continuous 	or 	repeated 	exposure 	to
substantially the same conditions will be considered as resulting from
one “accident[.]”
(E.g., ECF No. 515.1, at p. 19.)
66. 	However, Plaintiffs offer no valid argument as to why this provision
mandates the application of all sums allocation. 	Instead, as the wording suggests,
this provision relates to the entirely separate issue of how the policy term “accident”
should be defined—an issue that bears no relevance to the indemnity allocation issue
raised in the present Motion.
67. 	Accordingly, Certain Insurers’ Amended Motion for Partial Summary
Judgment on the Issue of Indemnity Allocation is GRANTED on the issue of whether
pro rata allocation is the appropriate indemnity allocation method in this case.
B. XL Defendants’ Motion for Summary Judgment
68. 	The XL Defendants’ Motion for Summary Judgment contains two
related arguments. 	First, the XL Defendants contend that the XL Specialty policy
provides no coverage in this case because the allocation method they urge the Court
to adopt would result in a determination that all excess coverage would be provided
by Zurich. 	Second, they argue that XLIA likewise faces no liability because—by
virtue of that allocation method—the XLIA policy is “too far down” in the tower of
excess coverage to be triggered. Both arguments lack merit.

1. 	XL Specialty Policy
69. 	The XL Defendants’ Motion regarding the issue of indemnity allocation
in this case is based on a different argument than that asserted by Plaintiffs,
although—like Plaintiffs’ argument—it rests on an expansive interpretation of the
Continuing Coverage provision contained in Zurich’s policies.
70. 	XL Specialty argues, in a nutshell, that it has no liability in this case
because the application of Zurich’s Continuing Coverage provision means that the
indemnity liability of the excess insurers should be based exclusively on the coverage
that existed for the first two policy periods triggered by the Underlying Lawsuits.17
Conveniently for XL Specialty, it only provided coverage for the 2014–15 policy year,
meaning that, under such a telescoping approach, Zurich (as the lead excess insurer
for 	policy 	years 	2010–12) 	would 	be 	solely 	responsible 	for 	all 	excess 	coverage
obligations in this case and XL Specialty would get off scot-free.
71. 	XL Specialty bases this argument on the Continuing Coverage provision
in Zurich’s policies, claiming that because the nuisance injuries at issue began during
the first two years the Zurich policies were in effect, all such injuries that occurred
over the remaining years at issue were due to a “continuation, change, or resumption”
of those earlier injuries such that Zurich is responsible for all of them. (E.g., ECF No.
515.11 at p. 37.)
72. 	The Court need not spend much time on this argument. 	Simply put,
neither Radiator Specialty nor any other decision from North Carolina’s appellate
17 The Court adopts the term utilized by Plaintiffs to describe this approach—that is,
“telescoping.”

courts have ever recognized this type of telescoping theory. 	Moreover, the XL
Defendants’ argument is flatly inconsistent with the Court’s analysis earlier in this
Opinion granting Certain Insurers’ Motion for Summary Judgment based on the
Court’s accompanying interpretation as to the limited effect of the Continuing
Coverage provision in Zurich’s policies.18
73. 	Finally, the Court observes that XL Specialty’s argument is anything
but equitable. 	It would result in XL Specialty having received a premium payment
from Plaintiffs for the 2014–15 policy period yet avoiding any liability at all despite
the fact that nuisance injuries occurred during its policy period. 	As such, XL
Specialty’s argument fails on both legal and equitable grounds.
2. 	XLIA Policies
74. 	With regard to XLIA, the XL Defendants argue as follows: “Given the
allocation of any covered settlement amounts to the first two policy years—the 2010-
11 and 2011-12 policy years—there can be nothing for XLIA to pay. . . . 	[E]ven if
coverage were to exist for the entire settlement amount . . . neither the portion of the
settlement that would be allocated to the 2010-2011 policy period nor the portion that
would be allocated to the 2011-2012 policy period would be enough to reach the XLIA
layer of coverage.” (ECF No. 713, at pp. 19–20.)
75. 	Thus, 	XLIA’s 	argument—like 	XL 	Specialty’s—is 	premised 	on 	the
Court’s acceptance of the telescoping approach to indemnity allocation in this case.
18 Indeed, the adoption of XL Specialty’s argument would expose Zurich to coverage
obligations that it did not agree to assume in its insurance contracts with Plaintiffs.

Because the Court has rejected that approach, the XL Defendants’ Amended Motion
for Summary Judgment on Indemnity Allocation Issues is DENIED.
CONCLUSION
THEREFORE, IT IS ORDERED as follows:
1. 	Certain Insurers’ Amended Motion for Partial Summary Judgment on the
Issue of Indemnity Allocation is GRANTED on the issue of whether pro rata
allocation is the appropriate indemnity allocation method in this case.
2. 	The XL Defendants’ Amended Motion for Summary Judgment on Indemnity
Allocation Issues is DENIED.
SO ORDERED, this the 7th day of August, 2023.
/s/ Mark A. Davis
Mark A. Davis
Special Superior Court Judge for
Complex Business Cases