Anti-assignment in Wisconsin

9 authorities

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  We conclude that consistent with long- standing Wisconsin law, the anti-assignment provisions in Wausau’s policies are not enforceable as to these assignments because the assignments are “post-loss.” We hold that notwithstanding the language in the anti-assignment clauses requiring insurer consent, such consent is not required for an assignment of insurance recovery rights made after a “loss” has occurred under an occurrence-based policy.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  [A]lthough the policy provides that an assignment thereof, without the consent of the company, will avoid the contract, yet the law is well settled that this only applies to an assignment before a loss under it. After a loss, the claim, like any other chose in action, may be assigned without affecting the insurer’s liability.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  Here, Huff’s alleged asbestos exposure was the “occurrence,” and because it took place during the relevant coverage periods, the loss had already occurred prior to any transfer.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  The “loss” referred to in an occurrence-based policy is the actual “occurrence”; here, the “loss” is the asbestos exposure that allegedly took place during the Wausau policy periods.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  Since 1880, Wisconsin case law has applied this general rule. In a case involving a post-loss assignment, the Wisconsin Supreme Court held that rights under an insurance policy are freely assignable after a loss with or without insurer consent:

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  Accordingly, we reaffirm Wisconsin’s longstanding rule that an anti- assignment clause in an occurrence-based policy is unenforceable when the assignment is made post-loss.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  Under these standards, we conclude that the language in Red Arrow regarding the effect of the anti-assignment clause is dicta.

• case2022 WI App 45Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis. Ct. App.decided 2022read it at the source ↗
  The words that state the rule

  Accordingly, we reverse the circuit court’s decision granting summary judgment to Wausau and denying summary judgment to Pepsi. On remand, the circuit court should grant Pepsi’s motion for summary judgment on its Declaratory Judgment-Duty to Defend claim and conduct further proceedings as necessary and consistent with this opinion. BACKGROUND A. The Policies ¶2 This is an insurance dispute arising out of a history of assignments and transfers going back more than half a century. The history begins in 1963, when Wausau issued primary and umbrella liability insurance policies to Waukesha Foundry Company (Old Waukesha). These policies were in effect from 1963 to 2 No. 2021AP635 1968. The Wausau policies generally provide that Wausau “will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of … bodily injury or … property damage … caused by an occurrence.” The policy defines “occurrence” as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” ¶3 The policies require Wausau to defend any suit against the insured seeking damages on account of such bodily injury or property damage, “even if any of the allegations of the suit are groundless, false or fraudulent.” The policies further contained what is commonly referred to as an anti-assignment clause, stating in relevant part that “[a]ssignment of interest under this policy shall not bind the company until its consent is endorsed hereon[.]” B. The Corporate Succession and Assignment History ¶4 In August 1968, Old Waukesha assigned and transferred all of its assets and liabilities to Illinois Central Industries, Inc. (I.C.). The parties entered into an “Agreement and Plan of Reorganization” (Reorganization Agreement) on August 16, 1968, whereby I.C. acquired substantially all of the assets and liabilities of Old Waukesha through a new wholly-owned subsidiary, to be called Waukesha Foundry Company, Inc. (New Waukesha). New Waukesha was to take over the Old Waukesha business, and Old Waukesha would dissolve. According to the Reorganization Agreement, New Waukesha acquired “substantially all of the property, assets and business” of Old Waukesha, as well as “all the liabilities … other than those expressly excepted.” Regarding assumption of liabilities, the agreement states as follows: 3 No. 2021AP635 At the Closing I.C. shall cause [New Waukesha] by appropriate written instrument or instruments to assume and agree to pay, perform and discharge when due all of the debts, liabilities, obligations and contracts of [Old Waukesha] existing on the Closing Date, except the following: (a) liabilities against which [Old Waukesha] is insured or otherwise indemnified to the extent of such insurance or indemnification. The closing was set for August 30, 1968. ¶5 The reorganization was accomplished by closing on August 30, 1968. At the closing, Old Waukesha and New Waukesha signed two documents concerning the liabilities and assets transferred between the two companies. An “Assumption and Liabilities” agreement required New Waukesha to “assume and agree to pay, perform and discharge when due all of the debts, liabilities, obligations and contracts of [Old Waukesha] existing” as of the closing date. Consistent with the Reorganization Agreement, the Assumption and Liabilities agreement excepted “liabilities against which [Old Waukesha] is insured or otherwise indemnified to the extent of such insurance.” A separate agreement, a “Bill of Sale and General Assignment,” conveyed, among other things, “all” of Old Waukesha’s “rights under contracts, insurance policies … claims, rights, [and] choses in action” to New Waukesha. Wausau issued new policies to New Waukesha which ran from 1968 through 1971. As to the provisions at issue here, the new policies contained the same language as the policies issued to Old Waukesha. ¶6 In 1974, New Waukesha merged with Abex Corporation (Abex). The merger left Abex as the surviving corporation, with Abex succeeding to all the assets and liabilities of New Waukesha by operation of law, including rights as a successor in interest to New Waukesha’s insurance policies. 4 No. 2021AP635 ¶7 On August 23, 1990, Abex entered into an Assignment and Assumption Agreement whereby it assigned all of its assets and rights to PA Holdings Corporation, its sole stockholder. Abex then dissolved. Under the agreement, Abex transferred “all of [Abex’s] right, title and interest in, to and under all of the assets, properties and rights of [Abex] of every type and description, of every kind and nature, owned or held by [Abex].” The agreement stated further that the general assignment of Abex’s assets did not include those that were “not capable of being Transferred … without the consent, approval or waiver of a third person or entity.” On November 1, 1990, PA Holdings Corporation changed its name to Pneumo Abex Corporation. ¶8 Pneumo Abex Corporation remained as the surviving corporate entity from 1990 until 2004, when it merged with and into Pneumo Abex, LLC. Pneumo Abex Corporation then ceased to exist. Pneumo Abex, LLC, is the successor in interest to Abex, which in turn is the successor in interest to New Waukesha. ¶9 In 2019, Pneumo Abex, LLC and Pepsi entered into assignment agreement, whereby Pneumo Abex, LLC stated that it was the successor in interest to the Waukesha foundry companies, that Pepsi is the “net-of-insurance” indemnitor of Pneumo Abex, LLC for numerous asbestos suits relating to the Waukesha entities, and that Pneumo Abex, LLC assigned its rights under the Wausau policies to Pepsi.1 1 “Net of insurance” indemnification means that, with respect to liability for qualifying claims, including the Waukesha asbestos lawsuits, Pepsi is entitled to Pneumo Abex, LLC’s insurance recoveries applicable to claims for which Pepsi indemnifies Pneumo Abex, LLC. It is undisputed that Pepsi’s indemnification of Pneumo Abex, LLC would not bar recovery. 5 No. 2021AP635 C. The asbestos suits and summary judgment motions ¶10 Over 100 plaintiffs alleged injurious asbestos exposure attributed to a pump manufactured by the Waukesha foundry companies (Waukesha asbestos lawsuits). As relevant to this appeal, in 2017, Huff, a mesothelioma claimant, filed a lawsuit in Missouri state court against “Pneumo Abex, LLC, as Successor in Interest to Abex Corporation,” among other defendants. The complaint alleged that Huff was exposed to asbestos during the Wausau policy periods and that the defendants “manufactured, designed, labeled, distributed, supplied, or sold” the asbestos products which caused his injury. The complaint alleged, among other things, claims for negligence, strict liability, and conspiracy against the defendants. ¶11 Pepsi tendered defense to Wausau, asserting that Pneumo Abex, LLC was entitled to coverage under the Old Waukesha and New Waukesha polices. Wausau denied coverage, stating, as relevant to this appeal, that “it appears that Pneumo Abex, LLC is being sued not for any liabilities related to Waukesha Pump, but for the historical liabilities of Abex Corporation.” ¶12 Pepsi then paid defense and settlement costs relating to some of the Waukesha asbestos lawsuits, including Huff’s action. In 2019, Pneumo Abex, LLC, assigned to Pepsi the right to pursue and keep insurance proceeds for the Waukesha asbestos lawsuits under the Wausau policies. Pepsi then commenced this action seeking a determination of Wausau’s duties to defend the Waukesha asbestos lawsuits and to indemnify Pepsi. As relevant to this appeal, Pepsi moved for partial summary judgment as to the Huff complaint, arguing that Pneumo Abex, LLC, was a successor to insurance rights under the Wausau policies, thus triggering Wausau’s duty to defend the Huff complaint. Pepsi further alleged that Wausau previously defended other asbestos-related lawsuits in which Pneumo Abex, LLC, was a named 6 No. 2021AP635 defendant. Wausau opposed the motion and filed a cross-motion for summary judgment seeking to dismiss Pepsi’s claims not only with respect to the Huff complaint, but to all of the Waukesha asbestos lawsuits on the grounds that Pneumo Abex, LLC, was not a successor in interest to rights under either the Old Waukesha or the New Waukesha policies and, accordingly, could not claim the rights of an “insured.” Specifically, Wausau argued that in order for Pepsi to succeed on its claims, it had to prove an unbroken chain of transferred policy rights from Old Waukesha to New Waukesha and then through the transaction history to Pneumo Abex, LLC, which it could not do pursuant to the policies’ anti-assignment provision. ¶13 The circuit court, relying on our decision in Red Arrow Products Co., Inc. v. Employers Insurance of Wausau, 2000 WI App 36, 233 Wis. 2d 114, 607 N.W.2d 294, agreed with Wausau. Specifically, the court found that the anti- assignment provisions in the Wausau policies prevented any transfer of insurance rights without Wausau’s consent. The court also found that Pepsi had failed to demonstrate a transfer of insurance rights from either Old Waukesha to New Waukesha or from Abex to PA Holdings. Consequently, the court denied Pepsi’s motion for partial summary judgment and granted Wausau’s motion for summary judgment. Pepsi now appeals. DISCUSSION I. Standard of Review ¶14 “We review de novo a circuit court’s ruling on summary judgment, and apply the same legal principles.” Chapman v. B.C. Ziegler & Co., 2013 WI App 127, ¶2, 351 Wis. 2d 123, 839 N.W.2d 425. Summary judgment is appropriate where “the pleadings, depositions, answers to interrogatories, and admissions on 7 No. 2021AP635 file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” WIS. STAT. § 802.08(2) (2019-20). The purpose of summary judgment is “to avoid trials when there is nothing to try.” Tews v. NHI, LLC, 2010 WI 137, ¶42, 330 Wis. 2d 389, 793 N.W.2d 860. II. The Anti-Assignment Clauses ¶15 We begin with the question at the center of this appeal: whether the anti-assignment provisions in Wausau’s policies preclude coverage because those rights could not be transferred from Old Waukesha to New Waukesha in 1968, and again from Abex to PA Holdings in 1990. We conclude that consistent with long- standing Wisconsin law, the anti-assignment provisions in Wausau’s policies are not enforceable as to these assignments because the assignments are “post-loss.” We hold that notwithstanding the language in the anti-assignment clauses requiring insurer consent, such consent is not required for an assignment of insurance recovery rights made after a “loss” has occurred under an occurrence-based policy. Here, Huff’s alleged asbestos exposure was the “occurrence,” and because it took place during the relevant coverage periods, the loss had already occurred prior to any transfer. See, e.g., Plastics Eng’g Co. v. Liberty Mutual Ins. Co., 2009 WI 13, ¶31, 315 Wis. 2d 556, 759 N.W.2d 613. Accordingly, the anti-assignment provisions did not relieve Wausau of the duty to defend Huff’s case. ¶16 Wausau’s policies at issue in this case were issued to Old Waukesha from 1963-1968, and then to New Waukesha from 1968-1971. Huff alleges his exposure occurred during the Wausau policy periods. The policies are substantially the same, providing coverage for an “occurrence,” which is defined as “an accident, including injurious exposure to conditions, which results, during the policy period, 8 No. 2021AP635 in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” Occurrence-based policies are “triggered” by the occurrence of property damage or bodily injury during the policy period, even if the damage or injury is not discovered until much later. See id., ¶53. As relevant to this appeal, “exposure to asbestos falls within an exposure to conditions” as referenced in the policies because “[w]ithout exposure, no bodily injury takes place.” See id., ¶31.2 ¶17 As noted above, the Waukesha foundry companies went through a series of transfers that purported to assign the right to insurance with those transfers. The occurrence-based policies at issue here contain an “anti-assignment” clause, which provides as follows: “Assignment of interest under this policy shall not bind the company until its consent is endorsed hereon[.]” The purpose of a non- assignment clause is to protect the insurer from increased liability. After the loss has occurred, assignment of the right to recover under the policy does not increase the insurer’s risk. See 3 STEVEN PLITT ET AL., COUCH ON INSURANCE § 35:8 (3d ed. 1995). In this case, the assignment was after the loss already had occurred (post- loss). ¶18 Wisconsin has been among the majority of states following the general maxim that policies prohibiting assignments of the policy, except with the consent of the insurer, apply only to assignments before loss, and do not prevent an assignment after loss, for the obvious reason that the clause by its own terms ordinarily prohibits merely the assignment of the policy, as distinguished from a claim arising under the policy, and the assignment before loss involves a transfer of a contractual 2 A claims-made-and-reported policy provides that the policy only provides coverage if the policy holder makes the claim during the policy period. Anderson v. Aul, 2015 WI 19, ¶3, 361 Wis. 2d 63, 862 N.W.2d 304. 9 No. 2021AP635 relationship while the assignment after loss is the transfer of a right to a money claim. Id. (footnote omitted). Thus, an anti-assignment provision “prohibiting an assignment after loss has occurred is generally regarded as void, in that it is against public policy to restrict the relation of debtor and creditor by restricting or rendering, subject to the control of the insurer, an absolute right in the nature of a chose in action.” Id., § 35:9. The “loss” referred to in an occurrence-based policy is the actual “occurrence”; here, the “loss” is the asbestos exposure that allegedly took place during the Wausau policy periods. See Plastics Eng’g Co., 315 Wis. 2d 556, ¶31; COUCH ON INSURANCE § 35:8 (equating loss with “events giving rise to the insurer’s liability”). ¶19 Since 1880, Wisconsin case law has applied this general rule. In a case involving a post-loss assignment, the Wisconsin Supreme Court held that rights under an insurance policy are freely assignable after a loss with or without insurer consent: [A]lthough the policy provides that an assignment thereof, without the consent of the company, will avoid the contract, yet the law is well settled that this only applies to an assignment before a loss under it. After a loss, the claim, like any other chose in action, may be assigned without affecting the insurer’s liability. Dogge v. Northwestern Nat’l Ins. Co., 49 Wis. 501, 503, 5 N.W. 889 (1880). The supreme court revisited this issue a year later, in Alkan v. New Hampshire Ins. Co., 53 Wis. 136, 147, 10 N.W. 91 (1881), another post-loss assignment case, when it held that “the assignment of the policy to the plaintiff after the loss does not render the policy void.” Similarly, the supreme court in Max L. Bloom Co. v. United States Casualty Co., 191 Wis. 524, 210 N.W. 689 (1926), yet another post-loss assignment case, drew upon its previous opinions in holding: 10 No. 2021AP635 [T]he language of the policies, prohibiting assignment of the policies, refers only to assignments before loss, and does not refer to assignments of the choses in action after loss. If such be the construction, we should hold that the provision of the policy would be contrary to public policy and void. Id. at 535.3 ¶20 Indeed Wisconsin has long been regarded as a jurisdiction that has never applied anti-assignment clauses to bar post-loss assignment of rights. By 1926, Wisconsin was one of the states adhering to the “universally accepted rule” that after a loss, the claim to recover that loss may be effectively assigned by the insured, so as to vest in the assignee the absolute right to the insurance, provided, of course, the insured himself had that right at the time when the loss was incurred, and that the assignment itself was otherwise valid. Annotation, Claim under contract of property insurance as assignable after loss, 56 A.L.R. 1391 (1928). 3 That these Wisconsin cases involved first-party liability claims by the insureds does not change the analysis. As noted above, the purpose underlying an anti-assignment provision is to protect the insurer from increased liability. In the case of a first-party claim, an assignment of a claim for the right to recover after a loss does not increase the insurer’s liability, it merely changes the identity of the person or entity to whom the insurer’s duty to indemnify is owed. So too in the context of a third-party liability claim. If the facts giving rise to the claim place it within the scope of the liability policy, then the insurer’s duties to defend and indemnify are triggered. An assignment of rights to recover under the policy that occurs after the loss or “occurrence” that exposes the insured to liability does not increase the insurer’s liability but instead changes the identity of the person or entity entitled to assert claims for defense and indemnity under the policy. As the supreme court has repeatedly held, “[a]fter a loss, the claim, like any other chose in action, may be assigned without affecting the insurer’s liability.” Dogge v. Northwestern Nat’l Ins. Co., 49 Wis. 501, 503, 5 N.W. 889 (1880). Thus, we see no legal support for distinguishing between the assignment of claims for defense versus indemnity—both claims can be assigned post-loss. Moreover, in this case, and as is well-established under Wisconsin law, the duty to defend is dependent upon the duty to indemnify, which Wausau clearly recognizes with its arguments that the anti-assignment provisions preclude indemnity coverage, and therefore, there is no duty to defend. In short, a holding that an anti-assignment clause is not enforceable for purposes of an indemnity claim, but is enforceable for purposes of duty to defend claim finds no support in Wisconsin law. 11 No. 2021AP635 ¶21 The Supreme Court of California aptly explained the purpose of anti- assignment clauses and the policy implications of enforcing such clauses after a loss has occurred: The recognized rationale for enforcing a consent-to- assignment clause is to protect an insurer from bearing a risk or burden relating to a loss that is greater than what it agreed to undertake when issuing a policy. It is undisputed that an insured may not transfer the policy itself to another without the insurer’s consent, and in this sense all parties agree. But the “postloss exception” to the general rule restricting assignability … is itself a venerable rule that arose from experience in the world of commerce. The rule has been acknowledged as contributing to the efficiency of business by minimizing transaction costs and facilitating economic activity and wealth enhancement. Fluor Corp. v. Superior Ct., 354 P.3d 302, 329-30 (Cal. 2015) (citation omitted). The court went on: “[A] major rationale for commercial insurance is to facilitate economic activity and growth by providing risk management protection for economic actors .... In the modern American economy, mergers, acquisitions, and sales are part of corporate life. For the most part, economists approve of this activity because it allows the marketplace to allocate resources to their most profitable uses. To the extent that insurance protection (for past but possibly unknown losses) may be more freely assigned as part of corporate recombinations, this lowers transaction costs and facilitates economic activity and wealth enhancement. Consequently, the general rule permitting post-loss assignment is a good rule—which is why the courts have crafted it over the years even though it appears to contradict the clear text of many insurance policies and the courts’ expressed fidelity to contract language. The post-loss exception to the general rule of restricted insurance assignability is a venerable rule borne of experience and practicality. That is why courts have adopted it.” The post-loss rule prevents an insurer from engaging in unfair or oppressive conduct—namely, precluding assignment of an insured’s right to invoke coverage under a policy attributable to past time periods for which the insured had paid premiums. 12 No. 2021AP635 Id. at 330 (alteration in original, citation omitted); see also Ocean Accident & Guar. Corp. v. Southwestern Bell Tel. Co., 100 F.2d 441, 446 (8th Cir. 1939) (a post-loss assignment is not the assignment of the policy itself but rather “the assignment of a claim, or debt, or chose in action”).4 ¶22 Wausau argues that our decision in Red Arrow controls this case. Based on Red Arrow, Wausau contends that without its consent, “there could be no transfer of insurance rights in 1968 from Old Waukesha to New Waukesha, or in 1990 from Abex (New Waukesha’s successor by merger) to PA Holdings, even if the applicable transactional documents attempted to transfer those rights.” In Red Arrow, we wrote that the anti-assignment provision in Wausau’s policies “makes clear that without Wausau’s permission, no assignee or transferee has any rights to any benefits under the Wausau policies.” 233 Wis. 2d 114, ¶21. This is the statement upon which Wausau hangs its hat. 4 We rest our holding firmly on long-established Wisconsin law. However, we are mindful that Wisconsin has long been a leader in this area of insurance law. In Ocean Accident & Guarantee Corp. v. Southwestern Bell Telephone Co., 100 F.2d 441 (8th Cir. 1939), the Eighth Circuit Court of Appeals reviewed the law regarding enforceability of insurance clauses prohibiting assignment without consent. The court cited our decision in Dogge as one of the cases in the “great weight of authority” settling the law that once an insurer’s liability has become fixed, it, “like any other chose in action was assignable regardless of the conditions of the policy in question.” Id. at 445. In Fluor Corp. v. Superior Court, 354 P.3d 302 (Cal. 2015), the California Supreme Court followed Ocean Accident, and thoughtfully traced the precepts from that case to present day supporting the general rule that an anti-assignment clause is not enforceable post-loss. Fluor, 354 P.3d at 325-328. The court then interpreted the California statute consistently with that general rule. Id. at 329-330. We find the court’s analysis to be a useful reminder that routine business transactions include the transfer of a predecessor’s historical liabilities accompanied by the transfer of claims for the predecessor’s right to recover under its insurance policies for those historical losses. The transfer of liabilities and the corresponding assets (the right to recover insurance for those liabilities) has been firmly embedded in corporate law, and as applicable here, the black letter law recognized in the above-cited three Wisconsin Supreme Court cases. 13 No. 2021AP635 ¶23 We disagree that Red Arrow changed Wisconsin law regarding the enforceability of anti-assignment clauses for post-loss assignments. That sentence is extraneous to the holding based on the facts underlying Red Arrow. Unlike the present case, we were not called upon to examine the enforceability of an anti- assignment clause in Red Arrow because both parties in that case agreed that there had been no transfer of the recovery rights under the insurance policies to begin with. 233 Wis. 2d 114, ¶¶7, 14. As we noted, “New Red Arrow does not dispute that the Wausau policies were not … included in the sale.” Id., ¶7. Thus, the court did not need to decide whether there was as assignment of the rights to recover under the policies—the parties stipulated to the fact that there was not. It follows that whether the terms of the policies precluded an assignment was not at issue; the provision was irrelevant. The only issue before the court was whether the successor was entitled to coverage by operation of law, when it had no contractual right to coverage. Id., ¶¶7, 20, 22. The Red Arrow court’s answer was no. Id., ¶35. ¶24 Because there was no assignment of rights under the insurance policies in Red Arrow, our undeveloped comment about a hypothetical effect of the anti-assignment provision in Wausau’s policies had no bearing on the issue actually litigated in the case and certainly did not (and could not) overrule a century of Wisconsin Supreme Court precedent, none of which it even mentioned. ¶25 Indeed, the only case we cited in Red Arrow on this point, Loewenhagen v. Integrity Mutual Insurance Co., 164 Wis. 2d 82, 473 N.W.2d 574 (Ct. App. 1991), involved an alleged assignment of benefits that occurred before the loss for which coverage was claimed. Red Arrow, 233 Wis. 2d 114, ¶21. In Loewenhagen, 164 Wis. 2d at 86, the buyer of a used car had an accident with Loewenhagen on the evening of the same day he purchased the car. The buyer had obtained (but had not registered) title to the car and had not obtained his own 14 No. 2021AP635 insurance. Id. The seller’s policy was in effect at the time of the accident merely because the seller had not called his insurance agent to cancel it. Id. Loewenhagen sought coverage from the seller’s insurance company on several grounds, including that the seller’s insurance agent had “agree[d] to an assignment of the policy” by making cancellation of the seller’s policy effective several days after the sale, rather than on the date of sale. Id. at 92. The court of appeals rejected Loewenhagen’s argument based on the policy language prohibiting assignment “without [the insurer’s] written consent.” Id. Thus, the passing reference to anti-assignment clauses in Red Arrow is grounded in Loewenhagen’s analysis of a purported pre- loss assignment, a situation that is materially distinguishable from the present case. ¶26 Notwithstanding the factual and legal distinctions between the present case and Red Arrow, Wausau argues that we must follow it. We disagree that we must interpret the language in Red Arrow as binding precedent that implicitly overrules a century of Wisconsin law. ¶27 As our supreme court observed in Zarder v. Humana Insurance Co., 2010 WI 35, ¶52 n.19, 324 Wis. 2d 325, 782 N.W.2d 682, Wisconsin courts have formulated two definitions of dicta. Under one line of cases, dicta has been defined as “a statement or language expressed in a court’s opinion which extends beyond the facts in the case and is broader than necessary and not essential to the determination of the issues before it.” State v. Sartin, 200 Wis. 2d 47, 60 n.7, 546 N.W.2d 449 (1996). The other definition holds that a court’s discussion of a question that is germane to a controversy is not dictum even if it is “not necessarily decisive of … the controversy” but rather is “a judicial act of the court which it will thereafter recognize as a binding decision.” State v. Picotte, 2003 WI 42, ¶61, 261 Wis. 2d 249, 661 N.W.2d 381 (citation omitted). 15 No. 2021AP635 ¶28 Under these standards, we conclude that the language in Red Arrow regarding the effect of the anti-assignment clause is dicta. Under the definition set forth in Sartin, the statement about the anti-assignment clause extended beyond the facts in Red Arrow because it was undisputed that the rights to recover under the insurance contracts were not assigned. Thus, the statement was “broader than necessary and not essential to” determine whether there had been an assignment by operation of law. Sartin, 200 Wis. 2d at 60 n.7. Under the definition set forth in Picotte, the statement in Red Arrow was not “germane to … the controversy” because there was no controversy with respect to the anti-assignment clause in that case. Picotte, 261 Wis. 2d 249, ¶61. For these reasons, we conclude that Red Arrow does not control the outcome in this case.5 ¶29 Accordingly, we reaffirm Wisconsin’s longstanding rule that an anti- assignment clause in an occurrence-based policy is unenforceable when the assignment is made post-loss. Old Waukesha and New Waukesha already paid the premiums for these policies to protect against the loss that is claimed here. The assignment of Old Waukesha and New Waukesha’s rights to assert claims seeking recovery under the policies did not increase Wausau’s coverage risks because the alleged occurrences had already taken place. While the loss that took place during the policy periods may not be known for many years, it allegedly occurred during Wausau’s policy periods. In reliance on longstanding Wisconsin law, the right to 5 The dissent cites Judge Brown’s concurring opinion in State v. Sanders, 2007 WI App 174, ¶41, 304 Wis. 2d 159, 737 N.W.2d 44 (Brown, J., concurring) but that opinion supports our determination that Paragraph 20 in Red Arrow is dicta. Dissent, ¶4. In Sanders, Judge Brown separately expressed his view that lawyers too frequently attempt to avoid language unfavorable to their positions by labelling it dicta, and that that term should apply only to “those situations where a court notes, in passing, that a certain issue is lurking in the background, gives its off-the-cuff opinion without analysis and leaves it at that.” Sanders, 304 Wis. 2d 159, ¶41 (Brown, J., concurring). In Red Arrow, the anti-assignment provision was not even lurking in the background, and the off-the-cuff statement lacked supporting analysis, as evidenced by the citation to a pre-loss case. 16 No. 2021AP635 make claims under the insurance was assigned post-loss to subsequent entities. Such assets would prove illusory if post-loss assignments made in reliance on longstanding Wisconsin law are retroactively disallowed. ¶30 Wausau raises an additional argument, that an assignment is not post- loss unless the loss has actually been reported, and the insurance company knows that it will have liability. Wisconsin law is clear under the “known loss doctrine” that the loss arises at the time of the injury, not when a lawsuit is filed. The known loss doctrine holds that insurers are not obligated under third-party liability policies to provide coverage for injury or damage which was already occurring when the coverage is written or which has already occurred, and about which the insured knew. American Fam. Mut. Ins. Co. v. American Girl, Inc., 2004 WI 2, ¶86, 268 Wis. 2d 16, 673 N.W.2d 65; American Fam. Mut. Ins. Co. v. Bateman, 2006 WI App 251, ¶26, 297 Wis. 2d 828, 726 N.W.2d 678. Wausau’s interpretation of an “occurrence” under its policy also is contrary to the plain language of the policy. An “occurrence” under the policy is “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured.” Nothing in the policy refers to an “occurrence” as requiring notice of potential legal liability. In addition, the policy does not distinguish between bodily injury and property damage. We reject this attempt to avoid coverage by redefining the terms of the policy. The insurer’s liability is established by the occurrence of the actual injury, not by the reporting of the injury prior to assignment. ¶31 We therefore affirm Wisconsin’s longstanding rule, agreeing with the majority of jurisdictions, that post-loss assignments of insurance rights under an occurrence policy do not require consent to assignment. 17 No. 2021AP635 III. Corporate Succession ¶32 Wausau contends that even if the anti-assignment provision is unenforceable, Pepsi still cannot succeed on its claims because Old Waukesha’s rights under the Wausau policies were never assigned to New Waukesha, and subsequently Pneumo Abex, LLC, via corporate transactional documents. Specifically, Wausau argues that Pepsi failed to produce evidence showing a specific list of insurance policies that were transferred from Old Waukesha to New Waukesha as part of the 1968 Reorganization Agreement. Wausau also contends that Pepsi failed to produce evidence that the Wausau policies, or any rights thereunder, were transferred to PA Holdings as part of the 1990 dissolution of Abex. We disagree. A. 1968 Transfer of Rights from Old Waukesha to New Waukesha ¶33 As relevant to this appeal, the Reorganization Agreement stated the following regarding Old Waukesha’s insurance policies: [Old Waukesha] has delivered to I.C. a Schedule of Contracts listing and summarizing the pertinent terms of all of the ... insurance policies ... and any other material contracts or proposals to which [Old Waukesha] is a party ... and all material amendments thereof …. All of said contracts, agreements and commitments are assignable to [New Waukesha], except as specified in the Schedule, and at the Closing Date [Old Waukesha] shall deliver to I.C. any consents to assignment that may be required. ¶34 Wausau contends that because Pepsi did not produce a complete Schedule containing the Old Waukesha policy, we cannot conclude that either the policy or the rights to recovery transferred to New Waukesha. We disagree. The language of the Reorganization Agreement, dated and signed on August 16, 1968, expressly states that the transfer includes all liabilities unless they are expressly 18 No. 2021AP635 excepted. New Waukesha would also receive all assets, “tangible and intangible, real, personal and mixed.” The agreement excepted “liabilities against which [Old Waukesha] is insured or otherwise indemnified to the extent of such insurance or indemnification.” Certain documents were required to be transferred at closing. ¶35 On the date of closing, August 30, 1968, Old Waukesha and New Waukesha signed a Bill of Sale, which applies to the parties as well as their respective successors and assigns. The Bill of Sale assigned “all the property and assets, tangible and intangible, of every kind, nature and description and wherever situated, owned, possessed or held by [Old Waukesha],” including its “rights under contracts, insurance policies … claims, rights, [and] choses in action.” The Bill of Sale transferred to New Waukesha “all of [Old Waukesha’s] right, title and interest in, to and under each of said contracts, agreements, commitments and arrangements,” including, but not limited to, “insurance policies” and “group insurance policies.” New Waukesha expressly accepted this transfer. ¶36 Wausau argues that the Bill of Sale’s language is more general than that of the Reorganization Agreement and therefore we should accept the Reorganization Agreement as the operational document. We disagree. The contents of the schedule referenced in the Reorganization Agreement would only be relevant if the Bill of Sale stated that New Waukesha only acquired the contract rights identified on the Schedule. The use of the term “all” in the Bill of Sale expressed Old Waukesha’s intent to transfer all contract rights to New Waukesha. In short, the Bill of Sale is the operative agreement that actually effectuated the transfer of all of Old Waukesha’s rights—including its rights under the Wausau policies—to New Waukesha. See Bank of America NA v. Neis, 2013 WI App 89, ¶48, 349 Wis. 2d 461, 835 N.W.2d 527 (citing McDonald v. Nat’l Enters., Inc., 547 S.E.2d 204, 210 (Va. 2001)) (noting that a bill of sale and assignment of loans was “an operative 19 No. 2021AP635 legal document that embodies and evidences [a] conveyance”) (alteration in original). B. 1990 Transfer of Rights from Abex to PA Holdings and Pneumo Abex LLC ¶37 Wausau also contends that another break in the chain of corporate succession precluded the transfer of insurance rights to Pneumo Abex, LLC. 6 This was the 1990 transfer of Abex’s assets to PA Holdings. We conclude that the right to recovery under the Wausau policies was similarly assigned. The assignment agreement notes that PA Holdings, prior to the assignment, was the sole shareholder of Abex. As a result of the assignment, Abex dissolved and PA Holdings became the surviving corporation. The assignment agreement between Abex and PA Holdings transferred “all of [Abex’s] right, title and interest in, to and under all of the assets, properties and rights of [Abex] of every type and description, of every kind and nature, owned or held by [Abex] ….” The only limitation on this broad assignment concerned assets that were “not capable of being Transferred … without the consent, approval or waiver of a third person or entity.” Wausau argues that the anti-assignment provisions of its policies preclude the transfer here. We already have discussed that argument and reject Wausau’s position for the reasons stated above. ¶38 Accordingly, we conclude that the insureds’ rights under the Wausau policies were continuously assigned through each of the corporate transactions and mergers, including the 1968 transition from Old Waukesha to New Waukesha, the 6 Wausau does not dispute that New Waukesha merged into Abex, nor does it challenge the transfer of rights under the insurance policies from New Waukesha to Abex. 20 No. 2021AP635 1990 assignment of rights from Abex to PA Holdings, and later to Pneumo Abex, LLC. IV. The Huff Complaint ¶39 Finally, Wausau argues that even if the insurance rights transferred to Pnuemo Abex, LLC—and subsequently, to Pepsi—it has no duty to defend the Huff lawsuit. The crux of Wausau’s argument is that Huff’s complaint does not allege claims that are covered by either the Old Waukesha or New Waukesha polices. Wausau also contends that the complaint only names Pneumo Abex, LLC, rather than either Old Waukesha or New Waukesha. Because Pneumo Abex, LLC, did not obtain rights under the Wausau policies, Wausau contends, it has no duty to defend Pneumo Abex. Again, we disagree. ¶40 When an insurance policy creates a duty to defend an insured, that duty is broader than the insurer’s obligation to indemnify the insured. Fireman’s Fund Ins. Co. v. Bradley Corp., 2003 WI 33, ¶20, 261 Wis. 2d 4, 660 N.W.2d 666. The duty to defend hinges on the nature, not the merits, of the plaintiff’s claim. Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 266, 593 N.W.2d 445 (1999). We determine whether an insurance company has a duty to defend by comparing the allegations in the plaintiff’s complaint to the terms of the insurance policy. See Fireman’s Fund, 261 Wis. 2d 4, ¶19. An insurer has a duty to defend its insured if the allegations contained within the four corners of the complaint would, if proved, result in a covered loss. Id. We “must liberally construe the allegations contained in the underlying complaint, assume all reasonable inferences from the allegations made in the complaint, and resolve any ambiguity in the policy terms in favor of the insured.” Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins. Co., 2016 WI 54, ¶15, 369 Wis. 2d 607, 881 N.W.2d 285. “If the policy, 21 No. 2021AP635 considered in its entirety, provides coverage for at least one of the claims in the underlying suit, the insurer has a duty to defend its insured on all the claims alleged in the entire suit.” Id., ¶16.7 ¶41 We start with the “four corners of the complaint and compare it to the policy to see if there is any potential for coverage—any such potential would trigger the duty and end further inquiry.” 5 Walworth, LLC v. Engerman Contracting, Inc., 2021 WI App 51, ¶22, 399 Wis. 2d 240, 963 N.W.2d 779. We look to determine whether the policy, in its entirety, provides coverage for at least one claim in the underlying suit. See Water Well Sols., 369 Wis. 2d 607, ¶16. This is different from a coverage analysis, where “the parties are not necessarily bound by the four corners of the complaint in determining whether there is coverage.” 5 Walworth, 399 Wis. 2d 240, ¶22. The parties can “introduce evidence showing the true facts (as opposed to those alleged in the complaint), and we can review such evidence in determining whether coverage exists, or at least may exist, if the evidence results in liability against the insured following a trial on the merits of the underlying claims.” Id. ¶42 In looking at Huff’s complaint to determine whether any potential for coverage exists, it is clear from the entirety of the complaint that Huff alleged facts connecting his injury to asbestos exposure incurred during the Wausau policy periods. Huff, a mesothelioma claimant, alleged that he was exposed to asbestos in the 1950s through the 1980s in various capacities. One of the named defendants 7 If an insurer refuses to defend, and the claim succeeds and is later determined to be covered by the policy, the insurer must not only indemnify the insured and pay the resulting judgment, but is liable as well for the insured’s legal expenses, as well as “any additional costs that the insured can show naturally resulted from the breach.” Maxwell v. Hartford Union High Sch. Dist., 2012 WI 58, ¶54, 341 Wis. 2d 238, 814 N.W.2d 484. Thus, an insurer often brings a declaratory judgment action to determine its duty to defend. See Liebovich v. Minnesota Ins. Co., 2008 WI 75, ¶55, 310 Wis. 2d 751, 751 N.W.2d 764. 22 No. 2021AP635 was Pneumo-Abex, LLC, as successor in interest to Abex. Wausau admitted to Pepsi in pre-suit correspondence that it issued policies to Old Waukesha and New Waukesha, from 1963 to 1971, which covers time periods named in the complaint. Wausau further admitted that New Waukesha effectively became Abex. Wausau argues that by requiring it to defend this lawsuit, it will be required to defend claims related to asbestos-containing pump products that were not manufactured by Old Waukesha or New Waukesha, thus posing an increased liability risk. In addition, Wausau objected to increased liability based on an allegation in the complaint that Pneumo Abex, LLC, was part of a conspiracy. These concerns about potential issues for which Wausau may or may not be required to indemnify are inappropriate considerations at this point. When Wausau makes coverage determinations it can evaluate each individual claim and determine what the policy does and does not cover. However, when evaluating its duty to defend, it is clear that the allegations in the Huff complaint are sufficient. ¶43 Wausau also contends that the Huff complaint “fails to implicate any liability of Old or New Waukesha” because it “[m]erely name[s] ‘Pneumo Abex’ as successor to ‘Abex’” without pointing to any actual liability. We have already established that Abex was the direct successor of rights under the Old Waukesha and New Waukesha insurance policies. Old Waukesha and New Waukesha were the manufacturers of the pump products implicated in the complaint. Wausau points to no Wisconsin authority requiring a plaintiff to name with specificity the entire chain of corporate succession leading to a named defendant’s responsibility.8 In his 8 The only authority that Wausau cites for the proposition that the complaint must specifically name the successor to the product is a federal case interpreting Minnesota law. Continental Ins. Co. v. Daikin Applied Americas Inc., 998 F.3d 356, 360–61 (8th Cir. 2021). We disagree with Wausau’s interpretation of the case, and find that it actually supports Pepsi’s position. However, we do not rely on it. 23 No. 2021AP635 complaint, Huff named numerous defendants and various sources of injury. Our task is to search the complaint for any possibility of coverage, not to exclude coverage for a covered company when other companies are named who are not insured. “An insurer’s duty to defend is broader than its duty to indemnify because the duty to defend exists when it is merely arguable that the policy in question provides coverage.” Red Arrow, 233 Wis. 2d 114, ¶17. ¶44 Because Wausau knew that the product was manufactured by Old or New Waukesha, which merged into Abex, then into Pneumo Abex, LLC, it should come as no surprise that it has a duty to defend the lawsuit which involves products made by a company that it insured at the time the products were manufactured. CONCLUSION ¶45 In conclusion, based on the reasoning above, we hold that: (1) the anti-assignment clause in the Wausau policies did not prohibit the post-loss assignment of insurance rights from the Waukesha companies through to Pneumo Abex, LLC; (2) the chain of transfer of insurance rights, specifically the duty to defend, was unbroken from Old Waukesha to New Waukesha and Abex to PA Holdings; and (3) the Huff complaint is sufficient to invoke Wausau’s duty to defend. Accordingly, we reverse the circuit court’s decision granting Wausau’s cross-motion for summary judgment and denying Pepsi’s motion for partial summary judgment. On remand, the circuit court should grant Pepsi’s motion for summary judgment on the Declaratory Judgment-Duty to Defend claim and conduct further proceedings consistent with this opinion. By the Court.—Order reversed and cause remanded with directions.

• case2023 WI 42Pepsi-Cola Metropolitan Bottling Company, Inc. v. Employers Insurance Company of WausauWis.decided 2023read it at the source ↗
  The words that state the rule

  No three justices reach agreement to either affirm, reverse, or affirm in part and reverse in part the court of appeals decision. Because the court did not reach a majority as to the mandate, the decision of the court of appeals is affirmed.