Wisconsin’s Supreme Court on Wednesday denied a bid by American International Group Inc. units to avoid defense costs in more than 200,000 asbestos suits targeting a Coca-Cola Co. subsidiary, letting stand an appeals court’s order increasing the insurers' share of the costs.

The state high court denied AIG units AIU Insurance Co., Lexington Insurance Co. and National Union Fire Insurance Co. of Pittsburgh, Pa.'s petition to review the appeals court’s decision, which found that the insurers must pay simultaneously, not sequentially. The coverage dispute stems from a slew of suits over injuries and deaths caused by asbestos in the packaged boilers that Coca-Cola unit Cleaver-Brooks Inc. manufactured.

According to a Wisconsin Court of Appeals ruling, AIU, Lexington and National Union insured Cleaver-Brooks under six excess policies from January 1979 though January 1981. The trio provided a $35 million block of coverage for each year, which would be triggered after the $15 million in underlying coverage was exhausted. The policies issued by National Union and AIU provided for defense and indemnification costs, while the Lexington policies only included a duty to indemnify, the opinion said.

Cleaver-Brooks successfully argued to the appeals court that Lexington, AIU and National Union must pay their policy obligations simultaneously, which allows the AIU and National Union policies to be exhausted at the same time as the Lexington policy. In the meantime, Cleaver-Brooks would be able to snag more defense coverage under the National Union and AIU policies because it would take longer to exhaust those policies.

The carriers contended that their policies should be triggered sequentially because a 2007 judgment in earlier coverage litigation involving Cleaver-Brooks allowed the policyholder to choose only one of the three insurers to indemnify it at a time.

However, the appeals court ruled that Cleaver-Brooks' method was correct considering Wisconsin case law, the policy language and the 2007 judgment. Because the 2007 judgment unambiguously imposed joint and several liability on the insurers, Cleaver-Brooks could choose more than one of the insurers at a time for indemnification, the ruling said.

“Even if the phrase 'joint and several liability' in the 2007 judgment was ambiguous, the language of the insurance policies and Wisconsin case law support the circuit court's conclusion that the 2007 judgment permits simultaneous, as opposed to sequential, payment,” the appeals court held.

Representatives for the parties involved were not immediately available for comment Monday.

Cleaver-Brooks is represented by Robert Horkovich of Anderson Kill PC and by Paul Hoefle of The Schroeder Group SC.

Coca-Cola is represented by Martin McNerney and Jack Fontham of King & Spalding.

The insurers are represented by Mary Beth Forshaw and Bryce Friedman of Simpson Thacher & Bartlett LLP.

The case is Cleaver Brooks Inc. et al. v. AIU Insurance Co. et al., case number 2011CV10292, in the Supreme Court of Wisconsin.