US Update: Developments in complex insurance claims and coverage litigation – ANTI-ASSIGNMENT CLAUSE

Pepsi-Cola Metro. Bottling Co. v. Emp’rs Ins. Co., 2022 Wisc. App. LEXIS 598 (Wisc. Ct. App. July 8, 2022)

Wisconsin Court of Appeals (in a divided decision) holds that a “post-loss” assignment of rights under a liability insurance policy is valid despite lack of insurer consent. The majority believed an insurer’s consent to an assignment after “loss” occurs is not required on the basis that the assignment does not increase the insurer’s risk. It referred to Wisconsin’s “longstanding rule” that an anti-assignment clause in an occurrence-based policy is “unenforceable” when the assignment follows the “loss,” which, in this case, was the underlying claimant’s exposure to asbestos. Previously, the court (in Red Arrow Prods. Co. v. Emp’rs Ins., 607 N.W.2d 294 (Wisc. Ct. App. 2000)) rejected claims by a successor under a predecessor’s policies, but the majority distinguished that case as involving an alleged transfer of rights by operation of law (a sale of assets and liabilities) rather than a purported assignment.

The dissenting judge disagreed that Red Arrow was inapposite, explaining that the decision addressed the issue of transfer by operation of law after concluding that the sale agreement at issue did not reference the predecessor’s insurance policies. “We are bound by Red Arrow unless or until our supreme court decides otherwise,” the dissent said.

The insurer petitioned to appeal to the Wisconsin Supreme Court on August 8.

By White and Williams, US, a Transatlantic Law International Affiliated Firm. 

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