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The Wisconsin Court of Appeals Reverses A $68 Million Judgment In An Environmental Insurance Coverage Case

Johnson Controls, Inc. v. Central National Insurance Company of Omaha, No. 2014AP2050, unpublished slip op. (Wis. App. Apr. 25, 2018)

In Johnson Controls, Inc. v. Central National Insurance Company of Omaha, No. 2014AP2050, unpublished slip op. (Wis. App. Apr. 25, 2018), the Wisconsin Court of Appeals unanimously held that Central National Insurance Company of Omaha and Westchester Fire Insurance Company (collectively "Central National") owed no duty to defend Johnson Controls, Inc. against environmental contamination claims, reversing a $68 million judgment against Central National in a case that is nearly 30 years old.

In the 1980s, Johnson Controls was identified as a potentially responsible party in connection with environmental contamination at numerous sites across the country. The court of appeals affirmed a circuit court order granting summary judgment to Johnson Controls' primary, umbrella, and excess insurers on the grounds that the policies did not provide coverage pursuant to the Wisconsin Supreme Court decision in City of Edgerton v. General Casualty Co. of Wisconsin, 184 Wis. 2d 750, 517 N.W.2d 463 (1994).

The City of Edgerton decision was overturned in 2003, and Johnson Controls began resurrecting its previously dismissed claims. In 2012, the circuit court, relying on general concepts instead of specific policy language, ruled in favor of Johnson Controls on summary judgment. The circuit court entered judgment against Central National in the amount of $68 million.

Central National appealed, contending that its policies included a contingent and limited defense provision that applied only when occurrences covered by its policies were not covered by underlying insurance. Because it was undisputed the scope of coverage for environmental liabilities under the applicable primary and excess policies was identical, Central National argued it could never have a duty to defend the subject claims. Johnson Controls argued that the court of appeals should ignore the relevant policy language and instead look to generalized concepts and the results in other cases with different policy language.

Following Wisconsin Supreme Court precedent, the court of appeals found the "duty to defend analysis must be driven by policy language — not generalizable concepts about the role of excess insurance." Since the scope of coverage for environmental liabilities was co-extensive under the relevant policies, the court determined "it was logically impossible" to trigger Central National's duty to defend. Accordingly, the court concluded that Central National owed no duty to defend Johnson Controls and ordered judgment to be entered in Central National's favor.

Central National was represented by Attorneys Heidi L. Vogt and Jason R. Fathallah of von Briesen & Roper, s.c., Jonathan D. Hacker and Bradley N. Garcia of O'Melveny & Myers LLP, and Harry P. Cohen and Michael K. Robles of Crowell & Moring LLP.

©2019 von Briesen & Roper, s.c

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About this Author

Heidi Vogt, von Briesen Roper Law Firm, Milwaukee, Insurance and Litigation Law Attorney

Heidi Vogt is a Shareholder and Co-Chair of the Litigation and Risk Management Practice Group as well as the Chair of the Insurance Coverage and Risk Management Section. Her practice focuses on insurance coverage litigation, commercial disputes, constitutional law, and complex litigation. She has represented insurance companies in Wisconsin and across the country in both state and federal courts in complex insurance coverage matters for more than 20 years.

She represents and counsels insurance clients on a wide variety of...

414-287-1258
Jason R. Fathallah, Von Briesen Roper Law Firm, Milwaukee, Corporate, Incurance and Litigation Law Attorney

Jason is a Shareholder in the firm’s Litigation and Risk Management Practice Group. He works with clients to provide creative dispute resolution outcomes that avoid litigation, minimize business interruption and reduce costs. When litigation cannot be avoided, Jason draws on his substantial experience successfully litigating numerous cases in state and federal courts throughout the country. Jason has achieved favorable results for clients in a broad range of insurance coverage matters, commercial and business disputes, product liability claims, intellectual property disputes and general litigation matters.

Jason previously spent nine months as in-house legal counsel at a publicly traded, Fortune 150 corporation. Jason’s in-house experience gives him a unique business perspective on the issues his clients deal with both internally and externally.

Jason is recognized as one of Wisconsin’s Rising StarsSM. He is a member of the State Bar of Wisconsin, American Bar Association, Milwaukee Bar Association and Outagamie County Bar Association. Jason is also licensed to practice in Michigan.

414-287-1510