Montrose Chemical Corporation of California v. S.C. (Canadian Universal Insurance Company)

On November 29, 2017, the California Supreme Court granted Montrose Chemical Corporation of California’s Petition for Review of the California Court of Appeal’s decision affirming the trial court’s denial of Montrose’s motion for summary adjudication arguing that it was entitled to “electively stack” excess policies in any triggered years as long as the lower-lying policies for the same policy year have been exhausted. The trial court had rejected Montrose’s “elective stacking” arguments in favor of a “horizontal exhaustion” approach and ordered that high level excess policies could not be accessed until lower level policies had been exhausted for all implicated policy years. The Court of Appeal agreed with the trial court in connection with its rejection of Montrose’s elective stacking theory. However, the Court of Appeal also held that a general rule requiring horizontal exhaustion does not apply. Rather, an individual analysis of the policy language in each of the 115 excess policies at issue in the litigation is required in order to determine if such policies afford vertical or horizontal coverage. (See, summary of Montrose Chemical Corporation decision set forth in our Summer / Fall 2017 Insurance Coverage and Bad Faith Newsletter).

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