Ace American Insurance Company v. Walmart, Inc.

Cite as 2026 Ark. App. 476 ARKANSAS COURT OF APPEALS DIVISION IV No. CV-24-417 ACE AMERICAN INSURANCE COMPANY; ACE Opinion Delivered October 7, 2026 PROPERTY & CASUALTY INSURANCE COMPANY; ALLIANZ GLOBAL RISKS US INSURANCE APPEAL FROM THE BENTON COUNTY CIRCUIT COMPANY; AMERICAN GUARANTEE & LIABILITY COURT INSURANCE COMPANY; AMERICAN HOME [NO. 04CV-22-2835] ASSURANCE COMPANY; AMERICAN INTERNATIONAL GROUP, INC.; AIG SPECIALTY INSURANCE COMPANY; ARROWOOD INDEMNITY HONORABLE JOHN R. SCOTT, JUDGE COMPANY; CHICAGO INSURANCE COMPANY; CONTINENTAL CASUALTY COMPANY; THE CONTINENTAL INSURANCE COMPANY; ENDURANCE AMERICAN INSURANCE COMPANY; FEDERAL INSURANCE COMPANY; GENERAL SECURITY INDEMNITY COMPANY OF ARIZONA; GENERAL SECURITY NATIONAL INSURANCE COMPANY; GREAT AMERICAN ALLIANCE INSURANCE COMPANY; GREAT AMERICAN ASSURANCE COMPANY; GREAT AMERICAN INSURANCE COMPANY; GREAT AMERICAN INSURANCE COMPANY OF NEW YORK; GREAT AMERICAN SPIRIT INSURANCE COMPANY; INDEMNITY INSURANCE COMPANY OF NORTH AMERICA; THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; LIBERTY INSURANCE UNDERWRITERS, INC.; LIBERTY MUTUAL INSURANCE COMPANY; NATIONAL SURETY CORPORATION; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; THE OHIO CASUALTY INSURANCE COMPANY; PRINCETON EXCESS AND SURPLUS LINES INSURANCE COMPANY; QBE INSURANCE CORPORATION; ST. PAUL FIRE & MARINE INSURANCE COMPANY; STARR INDEMNITY & LIABILITY COMPANY; TIG INSURANCE COMPANY; TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA; THE TRAVELERS INDEMNITY COMPANY; TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA; WESTCHESTER FIRE INSURANCE COMPANY; XL INSURANCE AMERICA, INC.; ZURICH AMERICAN INSURANCE COMPANY; AND ZURICH INSURANCE COMPANY APPELLANTS V. WALMART, INC. APPELLEE AFFIRMED  CINDY GRACE THYER, Judge This case involves a dispute over insurers’ duty to defend Walmart, Inc. (“Walmart”), in cases involving the sale and dispensing of opioid medications. Two groups of insurers argue about the definition of certain terms within the policies, and a separate insurer argues that this coverage dispute should be arbitrated. The circuit court granted Walmart’s motion for partial summary judgment, ordering the insurers to defend Walmart in the underlying cases. We affirm. The circuit court also denied a motion to compel arbitration. We affirm. I. Factual and Procedural Background Beginning in 2017, plaintiffs began filing lawsuits throughout the United States alleging that Walmart contributed to the opioid crisis by selling and dispensing opioid medications (collectively, the “Opioid Lawsuits”). The merits of the cases in the Opioid Lawsuits are not relevant here. Instead, this appeal concerns whether Walmart’s insurance providers are required under their policies to pay the cost of defending the Opioid Lawsuits. There are several types of cases that make up the Opioid Lawsuits. There are lawsuits filed by individuals or their family members in which the specific individual alleges he or she was harmed by Walmart’s dispensing opioid medication. There are also lawsuits filed by various state attorneys general alleging that public resources were used to deal with the opioid crisis and that those resources were expended, at least in part, because of opioid medications dispensed by Walmart. Other municipalities and healthcare entities have filed similar lawsuits. There are more than 2,400 Opioid Lawsuits. Some of the lawsuits are pending in state courts. Others were filed in federal courts and have been grouped into a multidistrict-litigation 2 case in the Northern District of Ohio. In 2022, Walmart reached a settlement agreement with certain states and governing subdivisions. In this settlement agreement, Walmart set up a fund with “money expressly earmarked for the costs of treatment, care, and related services for those injured individuals.” Before proceeding, it is important to explain how some companies structure their insurance programs. It is common for a company to create layers of insurance policies such that one layer (otherwise known as a “tranche”) will provide coverage for losses that were not fully covered in the tranche below. This is exactly what Walmart did in its insurance program. First is a layer of “primary insurers” that provide commercial general liability insurance (“CGL policies”). In this appeal, the primary insurers are American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, PA (collectively, the “AIG Insurers”). The next tranche is the excess or umbrella insurance layer and is made of policies issued by many entities that are appealing together as the “Excess Insurers.” Those policies cover loses above the policy limits on the primary-insurance level. There may be several layers of excess or umbrella policies, though for this appeal, they are grouped together. There is also a layer at issue in this case called a “quota share layer.” This is a type of excess insurance that comes into play if the first two layers of coverage are exhausted. In a quota share layer, the insurers will pay a percentage of loss assigned to that layer. Here, QBE Insurance Corporation (“QBE”) was to pay 50 percent and another insurer, Endurance Specialty Insurance Ltd. (“Endurance”),1 would pay the remaining 50 percent. 1 Endurance is not a party to this appeal. 3  On November 7, 2022, Walmart filed a declaratory-judgment action in the Benton County Circuit Court against more than thirty insurance companies, asking the circuit court to declare that the insurers were obligated to pay for Walmart’s defense in the Opioid Lawsuits. Policies issued by these insurers make up the various layers in Walmart’s insurance program. Walmart sought other declarations and damages, but the duty to defend is the specific focus of this appeal. On April 5, 2023, Walmart filed a partial motion for summary judgment regarding AIG’s duty to defend. In that motion, Walmart argued that three exemplar insurance policies gave rise to the AIG Insurers’ duty to defend. Walmart attached to its motion for summary judgment representative complaints from the Opioid Lawsuits. AIG responded on June 20, 2023, and filed a cross-motion for partial summary judgment, arguing that the representative suits did not give rise to a duty to defend. Similarly, on June 30, the Excess Insurers moved for partial summary judgment, arguing that the policies did not provide coverage or a duty to defend the Opioid Lawsuits. That same day, QBE moved to compel arbitration. In its motion, QBE argued that it had incorporated an arbitration clause from Endurance’s policies and that arbitration was, therefore, required. Several months later, the circuit court held a hearing on the motions for partial summary judgment and the motion to compel arbitration. In an order dated nunc pro tunc to December 29, 2023, the circuit court denied QBE’s motion to compel arbitration, granted Walmart’s motion for partial summary, and denied the AIG Insurers’ and Excess Insurers’ motions for partial summary judgment. A valid Rule 54(b) certificate was attached to the order after the judge’s signature. The appellants all filed timely notices of appeal. 4  The issues on appeal can be divided into two categories—the duty to defend under the policies and the arbitrability of the QBE policy. This opinion will first address the circuit court’s grant of partial summary judgment on the duty-to-defend issues and will next address the circuit court’s denial of QBE’s motion to compel arbitration. II. Duty to Defend The duty to defend is broader than the duty to indemnify. Am. Ins. Co. v. Red Apple Enters. Ltd. P’ship, 2025 Ark. App. 11, at 7, 704 S.W.3d 329, 335. An insurer has a duty to defend “when the ‘mere possibility of coverage’ exists.” Id. (quoting Murphy Oil USA, Inc. v. Unigard Sec. Ins. Co., 347 Ark. 167, 176–78, 61 S.W.3d 807, 812–14 (2001)). To determine whether a duty to defend exists, the court looks at the allegations in the underlying complaint. Id. There is no duty to defend “[w]hen there is no possibility that the damage alleged in the complaint may fall within the policy coverage[.]” Id. The law regarding the interpretation of insurance contracts is well settled. First, the court looks to the language of the policy itself and construes that language “in its plain, ordinary, and popular sense.” Id. at 8, 704 S.W.3d at 335. When the language of the policy is plain, the court does not use the rules of construction. If the court determines that coverage exists, then the court looks to any exclusionary language in the policy to decide whether it eliminates the coverage. Id. Any doubts about whether a complaint states a claim within policy coverage are resolved in favor of the insured. Id. Walmart, the AIG Insurers, and the Excess Insurers filed competing motions for partial summary judgment on the duty to defend. “Summary judgment may be granted by a circuit 5 court only when there are no genuine issues of material fact to litigate and when the case can be decided as a matter of law.” Red Apple, 2025 Ark. App. 11, at 7, 704 S.W.3d at 334. The essential facts in this duty-to-defend case are derived from the policy language and the allegations in the complaint. In support of their respective arguments, the parties rely on representative insurance policies applicable to the Opioid Lawsuits and complaints from ten Opioid Lawsuits (collectively, the “Representative Lawsuits”). The parties agree that the Representative Lawsuits represent a fair cross-section of the Opioid Lawsuits. In cases “where the parties do not dispute the essential facts, we simply determine whether the moving party was entitled to judgment as a matter of law.” Id. A. “Occurrence” The AIG Insurers argue that they are not required to defend the Opioid Lawsuits because none of the lawsuits allege an “accident.” Although the wording varies slightly in inconsequential ways, the AIG Insurers’ policies all contain the following language: We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. . . . This insurance applies to “bodily injury” and “property damage” only if: 1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”; and 2) The “bodily injury” or “property damage” occurs during the policy period.” 6  In all these policies, “occurrence” is defined more or less 2 as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The word “accident” is not defined in the policies. However, Arkansas courts have defined “accident” on many occasions as “an event that takes place without one’s foresight or expectation—an event that proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected.” Columbia Ins. Grp., Inc. v. Cenark Project Mgmt. Servs., Inc., 2016 Ark. 185, at 7, 491 S.W.3d 135, 139; see also Cont’l Ins. Co. v. Hodges, 259 Ark. 541, 542, 534 S.W.2d 764, 765 (1976); Norris v. State Farm Fire & Cas. Co., 341 Ark. 360, 364, 16 S.W.3d 242, 245 (2000); Red Apple, 2025 Ark. 11, at 12, 704 S.W.3d at 337. “The fact that a term is not defined in a policy does not necessarily render it ambiguous.” Essex Ins. Co. v. Holder, 370 Ark. 465, 537, 261 S.W.3d 456, 458 (2007). This is especially true for a word like “accident” that has been addressed extensively by our courts. 1. Gravamen of the Opioid Lawsuits To determine whether there is a duty to defend, the court must consider whether a “mere possibility of coverage exists.” Red Apple, 2025 Ark. 11, at 7, 704 S.W.3d at 335. To determine this, the court must consider the gravamen of the complaint and not simply the labels the plaintiff assigned to its claims. Id. at 12, 704 S.W.3d at 337. 2 There might be slight differences in the wording, but they all contain the word “accident” and are similar enough that this court’s analysis applies to all the policies. This is true for the definitions of “bodily injury” and “property damage” as well. Even though there might be slight differences among the policies, they are the same in all the ways that are important to this analysis. 7  The AIG Insurers argue that because the plaintiffs in the Opioid Lawsuits allege intentional malfeasance, the gravamen of the complaints shows that there is no “accident.” Indeed, “‘[k]nowing and intentional malfeasance’ cannot take place ‘without foresight or expectation.’” Id. (quoting Geurin Contractors, Inc. v. Bituminous Cas. Corp., 5 Ark. App. 229, 233– 34, 636 S.W.2d 638, 640 (1982)). Continuing that logic, if there is foresight or expectation, then there is no “accident” alleged as defined in Arkansas’s cases. This means that if the gravamen of the Opioid Lawsuits is based in intentional malfeasance, then there is no “accident,” and no possibility of coverage exists. The gravamen of the complaint was discussed in the context of the duty to defend by this court just last year in Red Apple, 2025 Ark. App. 11, 704 S.W.3d 329. Red Apple involved competing developers in the Eden Isle Subdivision in Cleburne County. The developer, Windsong, filed a complaint against Red Apple alleging “that Red Apple had intentionally misrepresented the amount of acreage it owned in Eden Isle Subdivision for the purpose of controlling development within the subdivision.” Id. at 2, 704 S.W.3d at 332. While the case was still pending, Red Apple’s insurance company, American Insurance Company, withdrew its defense. Once the litigation with Windsong was finished, Red Apple sued American Insurance Company for its defense costs. The circuit court ruled in Red Apple’s favor, finding that the insurance company had a duty to defend. This court reversed, holding that the underlying complaint did not allege property damage caused by an “occurrence.” Id. at 12, 704 S.W.3d at 337. As in this appeal, the policy at issue in Red Apple defined an occurrence as an “accident.” 8  As stated above, to determine whether an accident occurred, we look to the “gravamen” of the complaint, which is the essence of the alleged conduct. See id. In Red Apple, the court held that the essence of the underlying complaint was “that Red Apple fraudulently misrepresented and concealed the amount of acreage it owned in Eden Isle Subdivision to intentionally induce property owners into adopting amendments to the subdivision’s bill of assurance.” Id. This was true even though there was a negligence claim in the complaint. The simple use of one key word did not change the character of the liability that was alleged. Id. at 13, 704 S.W.3d at 337. Instead, it was “evident from the allegations that Windsong’s lawsuit sought damages for Red Apple’s intentional harmful conduct.” Id. Turning back to the issues in this appeal, it is true that the plaintiffs in the Opioid Lawsuits allege some intentional malfeasance, especially against the developers and manufacturers of opioid medications. However, the gravamen of the allegations against Walmart is that the retail pharmacy failed to put proper controls in place to find and report suspicious opioid orders. The complaints in the Opioid Lawsuits are lengthy and contain a multitude of allegations. Several of the complaints have the following or similar language: The failure of the Defendants to maintain effective controls, and to investigate, report, and take steps to halt orders that they knew or should have known were suspicious, as well as to maintain effective policies and procedures to guard against diversion from their retail stores, breached both their statutory and common law duties. Throughout the complaints, there are references to duties, reasonable care, and breaching a duty. The essence or gravamen of these allegations is that Walmart did not exercise reasonable care in the development, marketing, and wholesale distribution of opioids and that that they 9 failed to maintain effective controls in the dispensation of those pharmaceuticals. Unlike the Red Apple case discussed above, the gravamen of the opioid complaints is not intentional malfeasance. Under the gravamen test, even if the underlying plaintiffs call the allegedly tortious behavior intentional, if the crux of the complaints is a lack of reasonable care, then the essence of the alleged conduct is still negligence. Because the essence of the Opioid Lawsuit complaints is not intentional malfeasance, we now turn to whether the harm was expected and, therefore, whether there is an alleged accident. 2. Expectation of harm The AIG Insurers also argue that there is no possibility of coverage because the harm was objectively expected. Talley v. MFA Mutual Insurance Co., 273 Ark. 269, 620 S.W.2d 260 (1981), is instructive on this point. In Talley, three teenagers—Davis, Evans, and Talley—were attending a party where an altercation arose. Davis, who had consumed “considerable alcohol,” left the party and returned with a shotgun. Id. at 271, 620 S.W.2d at 261. He began shooting at the vehicles belonging to Evans and Talley, though they were still inside. Evans and Talley procured shotguns as well and went outside to an area near their cars. Davis fired again toward the vehicles, and Talley and Evans were both hit, sustaining injuries to their eyes. Id. Talley and Evans filed an action to determine Davis’s liability under a policy for homeowner’s insurance. Id. As we have in this case, the insurance policy in Talley defined an “occurrence” as “an accident.” Id. The Talley court granted summary judgment in favor of the insurance company. Our supreme court reversed. Id. at 274, 620 S.W.2d at 263. 10  Clearly, the conduct itself—shooting a shotgun toward vehicles parked outside a party— was intentional. However, there was evidence, including Talley’s own affidavit, establishing that Davis did not “expect or intend to harm [Talley and Evans].” Id. at 272, 620 S.W.2d at 262. The supreme court went on to reverse summary judgment against Davis, holding that “[m]any acts are intentional in one sense or another; however, unintentional results often flow from intentional acts.” Id. at 274, 620 S.W.2d at 263. The AIG Insurers advocate for a standard that is similar to a tort standard. Crucially, that standard was rejected by the supreme court in Talley. Id.; see also U.S. Fire Ins. Co. v. Reynolds, 11 Ark. App. 141, 148, 667 S.W.2d 664, 667–68 (1984) (noting that in Talley, “it was held that insurance coverage would be allowed for the unintended results of an intentional act, and the court rejected, in this regard, the tort concept of intending the natural and foreseeable consequences of one’s acts.”). In other words, an action by an insured can simultaneously satisfy the standard for negligence and still be an accident. Talley states that outright—“The short of it is that if Tony Davis intended to shoot Talley and Evans, then there is no coverage. If he did not and it was mere negligence on his part, as he contends, then there is coverage.” Talley, 273 Ark. at 274, 620 S.W.2d at 263 (emphasis added). Further, the insured’s intent is a factual question. See id.; Reynolds, 11 Ark. App. at 148, 667 S.W.2d at 667–68 (finding coverage existed and holding, “The trial court found that [the insured] did not intend to injure [the plaintiff] and that injury to [the plaintiff] was not expected by [the insured] when the shot was fired. We hold that those 11 findings are not clearly contrary to the preponderance of the evidence.”). Reynolds is similar to Talley in that the insured did not intend to shoot the injured person. Note that this is different from the “intentional malfeasance” discussed in the section above. There is a distinction between intentionally performing an action and intentionally performing an action that has an intended injurious effect. The AIG Insurers argue that a reasonable person would have known that Walmart’s actions would result in the opioid crisis and that, therefore, there is no scenario in which the Opioid Lawsuits are covered by the policies. In support of their argument that a reasonable- person standard be applied to whether a result is “without foresight or expectation,” the AIG Insurers cite three cases: Farmers Insurance Co. v. Suiter, 61 Ark. App. 99, 964 S.W.2d 408 (1998); CNA Insurance Co. v. McGinnis, 282 Ark. 90, 666 S.W.2d 689 (1984); and Fireman’s Insurance Co. v. Smith, 13 Ark. App. 250, 683 S.W.2d 234 (1985). Those cases pose a slightly different scenario to those in Reynolds and Talley, discussed above. Suiter, McGinnis, and Smith all involved situations in which the insured intended the conduct toward the injured party. In Suiter, the insured intentionally called and harassed the plaintiff. In McGinnis, the insured intentionally committed sexual abuse toward the plaintiff. In Smith, the insured intentionally shot the plaintiff. Contrast this to Reynolds and Talley. In both of those cases, a reasonable person could have foreseen that the plaintiffs would be injured, even though the result itself was not intended. In Reynolds, the insured shot a round that hit the ground in front of the plaintiff. In Talley, the insured was firing a gun toward the vehicles of the injured people at a house party. But the appellate courts still held that the resultant injuries were 12 without foresight or expectation. Here, even if it is true that Walmart intentionally filled prescriptions and did not have proper procedures in place to recognize and report suspicious opioid prescriptions, the alleged result—a nationwide crisis in which people became addicted to and injured in other ways by heroin and fentanyl—could have been without foresight or expectation. For these reasons, we affirm the circuit court’s finding that the complaints in the Opioid Lawsuits allege an accident that gives rise to the duty to defend. B. “Bodily Injury” The duty-to-defend analysis does not end there. The policies in question provide coverage “because of ‘bodily injury’ or ‘property damage’ to which this insurance applies[.]” Therefore, to determine whether there is a duty to defend, we must determine whether the complaints in the Opioid Lawsuits allege “bodily injury” for which there is a “mere possibility” of coverage.3 The policies define “bodily injury” as “bodily injury, sickness, disease or shock, sustained by a person, including death resulting from any of these at any time.” There is no question that death, addiction, and diseases such as hepatitis and HIV are bodily injuries. However, the Excess Insurers argue that the damages sought in the Opioid Lawsuits are not “because of ‘bodily injury’” and that there is no “mere possibility” of coverage. We disagree. 3 Because we affirm the circuit court’s finding that the Opioid Lawsuits allege “bodily injury” that gives rise to the duty to defend, we do not need to reach the issue of “property damage.” 13  There are three different types of plaintiffs in the Opioid Lawsuits: governmental entities, healthcare entities, and individuals. At oral argument, the Excess Insurers stated that the individual lawsuits are personal-injury suits and allege covered bodily injuries. We agree. Whether the governmental and healthcare entities allege the type of “bodily injury” covered by the policies is a closer question. These make up the majority of the Representative Lawsuits. Those complaints do not allege a specific bodily injury to a specific person at a specific time due to the dispensing of a specific prescription. Instead, they claim that Walmart created and maintained an environment that caused addictions, illnesses, deaths, and other injuries that the entities had to address. The governmental entities are seeking damages to compensate for necessary and costly responses to the opioid crisis include the handling of emergency responses to overdoses, providing addiction treatment, handling opioid-related investigations, arrests, adjudications, and incarceration, treating opioid-addicted newborns in neonatal intensive care units, burying the dead, and placing thousands of children in foster care placements, among others. The healthcare entities are seeking damages as compensation for unreimbursed and uncompensated costs of treating and caring for patients who are either under the influence of opioids or who have been addicted to or affected by opioids in various ways. The healthcare entities are not seeking reimbursement for specific patients, but instead for the general increase in costs allegedly caused by the opioid crisis. The policies state, We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. . . . This insurance applies to “bodily injury” and “property damage” only if: 14  1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”; and 2) The “bodily injury” or “property damage” occurs during the policy period. The policies further state that “[d]amages because of ‘bodily injury’ include damages claimed by any person or organization for care, loss of services, loss of support or death resulting at any time from the ‘bodily injury.’” (Emphasis added.) The Excess Insurers interpret this provision to cover only specific injuries to a specific person, while Walmart views the provision more broadly. There are a couple of Arkansas cases that are informative: Unigard Security Ins. Co. v. Murphy Oil USA, Inc., 331 Ark. 211, 962 S.W.2d 735 (1998), and Columbia Ins. Grp., Inc. v. Cenark Project Mgmt. Servs., Inc., supra. Unigard was an insurance-coverage declaratory-judgment action involving a series of losses over a number of years. In that case, the Blakely Corporation (“Blakely”) leased an island in the Mobile River to Murphy Oil for operating a petroleum-storage facility. Id. at 215, 962 S.W.2d at 736. Following the lease’s inception in 1961, Murphy Oil routinely spilled petroleum products during maintenance of its tanks at the facility and transport of the oil stored thereon. Id. There were also three “major spills” on the island. Id. at 215, 962 S.W.2d at 737. Murphy Oil ended the lease in 1983 but never reported any of the spills (minor or major) to Blakely, never tested the soil for contamination, and never engaged in any clean-up efforts. Id. at 216, 962 S.W.2d at 737. Blakely eventually sued Murphy Oil in Alabama. By the time of trial, the surviving claims 15 were trespass and breach of the lease,4 and the jury was instructed on punitive damages. Id. The case was submitted to the jury on interrogatories. The jury found that Murphy Oil had trespassed but did not award any damages on Blakely’s trespass claim. The jury also found that Murphy Oil had breached the lease “and that Murphy Oil’s ‘actions in breach of the lease’ had caused the contamination on the island.” Id. at 218, 962 S.W.2d at 738. The jury awarded $3.4 million in compensatory damages and $4.6 million in punitive damages for the breach, although the circuit court ultimately reduced the punitive damages award to $2 million. Id. Murphy Oil then filed a declaratory-judgment action in Union County, Arkansas, against Unigard and multiple other insurance carriers, seeking a declaration that the carriers were obligated under certain commercial general liability (“CGL”) policies to indemnify Murphy Oil for the judgment rendered against it in Alabama. Id. at 219, 962 S.W.2d at 738. The policies at issue provided coverage “‘for all sums’ that Murphy Oil ‘shall be obligated to pay by reason of the liability imposed upon him by law . . . for damages . . . because of . . . property damage’ which damages ‘are paid as a consequence of any occurrence covered hereunder.’” Id. (emphasis added). The insurance companies moved for directed verdict at trial, arguing that Murphy Oil’s damages were assessed due to its breach of a lease, not due to property damage, and thus, there was no coverage under their respective policies. The circuit court denied that motion for directed 4 As originally brought, the complaint also alleged “that Murphy Oil had ‘failed to use reasonable care to prevent the disposal, discharge and/or release’ of the petroleum products and was thus negligent in its ‘use, operation and/or occupation of the leased premises.’” Id. at 216, 962 S.W.2d at 737. This negligence claim was subsequently dismissed on statute-of-limitations grounds. 16 verdict, and the supreme court reversed. Id. at 220–21, 962 S.W.2d at 739. The supreme court held that the coverage provision was “unambiguous[.]” Id. at 222, 962 S.W.2d at 740. The supreme court stated: In light of the instructions given to the jury by the District Court, the award of $3.4 million constitutes “contract damages,” rather than damages awarded “because of property damage,” as it is the amount that was necessary to place the Blakely Corporation in the position it would have occupied had Murphy Oil honored its obligations under the lease agreement. The unambiguous policies issued by the insurance carriers simply afford no coverage for contract damages. Id. at 224, 962 S.W.2d at 741–42. However, the supreme court also noted, “The case would arguably be different, of course, had the jury based its award of compensatory damages on the negligence claim originally brought by the Blakely Corporation.” Id. at 222, 962 S.W.2d at 740. More recently, in Cenark, supra, the supreme court held that a CGL policy did not cover losses for breach of contract. In Cenark, a group of homeowners sued a contractor, alleging that the contractor had not properly built concrete pads on which the owners’ homes were built. After “[f]ocusing on the nature and type of liability asserted in the underlying suit,” the court held that the lawsuit was about whether the contractor had followed the specifications set out by the engineer who designed the homes; it was not, by its “nature,” a lawsuit for damaged property. Id. at 10, 491 S.W.3d at 140. The court ultimately held, “Although the underlying litigation touches upon damage to property, this does not alter the nature of the lawsuit, which is strictly a claim for breach of contract. As in Unigard, we hold that coverage is not provided for the claim.” Id. at 10, 491 S.W.3d at 141. The underlying claims here are not for breach of contract, which present clear cases in Unigard and Cenark. Indeed, as indicated above, the supreme court in Unigard wrote, “The case 17 would arguably be different, of course, had the jury based its award of compensatory damages on the negligence claim originally brought by the Blakely Corporation.” Unigard, 331 Ark. at 222, 962 S.W.2d at 740. As discussed above in the gravamen analysis, there is a possibility that the jury would award damages for negligence, which is all that is required to give rise to a duty to defend. Further, the policies state, “Damages because of ‘bodily injury’ include damages claimed by any person or organization for care, loss of services, loss of support or death resulting at any time from the ‘bodily injury.’” It is clear from this language, italicized above, that there is coverage for damages suffered by people or entities who may not have directly suffered a bodily injury. That would have to include financial damages since an “organization” does not have a corporeal body. The policies do provide coverage for bodily injuries that are not specifically identifiable because they state that Walmart must notify the insurer “to the extent possible” of “any injured persons[.]” These provisions are important because “[d]ifferent clauses of an insurance contract must be read together and the contract construed so that all of its parts harmonize, if that is at all possible[.]” Phila. Indem. Ins. Co. v. Austin, 2011 Ark. 283, at 7, 383 S.W.3d 815, 820. The policies at issue here also contain certain exclusions that must be harmonized. An insurance policy grants coverage, and an exclusion in the policy eliminates certain coverage. See, e.g., Nationwide Mut. Ins. Co. v. NWA Restore-It, Inc., 2025 Ark. App. 218, at 3, 710 S.W.3d 475, 476. Some policies contain language excluding lawsuits “on behalf of any local, state or federal governmental entity or agency that arises out of” the sale of “a ‘firearm[.]’” Some of the policies also contain language excluding damages in a claim or suit “by or on behalf of a governmental 18 authority” for certain circumstances involving pollution. Any exclusion must be written in clear and unambiguous language. Soto-Abarca v. Trexis Ins. Co., 2026 Ark. App. 192, at 4, 732 S.W.3d 789, 792. Harmonizing the exclusions with the rest of the policy language, it is clear that there is coverage for certain claims brought by governments or other entities. There are exclusions that clearly state there is no coverage for certain firearm or pollution claims brought by governments. However, there is no clear and unambiguous language excluding claims relating to governmental lawsuits for damages because of bodily injuries in contexts outside of pollution and firearms. For these reasons, we affirm the circuit court’s finding that the Opioid Lawsuits are seeking damages because of bodily injury. The portion of the circuit court’s order about the duty to defend is, therefore, affirmed. III. Arbitrability of Disputes Under the QBE Policy We now move to the issue of arbitration. QBE moved to compel arbitration, arguing to the circuit court that its policies incorporate the choice-of-law and arbitration provisions from the Endurance policies. The circuit court applied Arkansas law to deny that motion, finding that the arbitration provision was not clearly incorporated into the contract and that, if the provision had been incorporated, it would be unenforceable. We agree. A. Standard of Review This court reviews the denial of a motion to compel arbitration de novo on the record. Hickory Heights Health & Rehab, LLC v. Cook, 2018 Ark. App. 409, at 5, 557 S.W.3d 286, 289. Arbitration provisions are contracts, so the general principles of contract interpretation and construction apply. Id. The first inquiry when examining a motion to compel arbitration is whether the arbitration agreement exists at all. Id. at 5, 557 S.W.3d at 290. 19  B. Determining Arbitrability The “question of arbitrability” is “[t]he question whether the parties have submitted a particular dispute to arbitration.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (interpreting the Federal Arbitration Act). There are two types of arbitrability questions— substantive and procedural. Procedural arbitrability questions include “whether prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met[.]” Id. at 85. On the other hand, substantive arbitrability includes whether an arbitration agreement is valid. Oliver v. Sw. Homes of Ark., Inc., 732 F. Supp. 3d 982, 987 (W.D. Ark. 2024). In general, a court will use the forum state’s laws when a question is procedural and may, under certain circumstances, use a different law (federal or a different state) if the question is substantive. Mo. Pac. R.R. Co. v. Diffee, 212 Ark. 55, 56, 205 S.W.2d 458, 459 (1947). 1. Choice of law The validity of an arbitration agreement is a question of substantive arbitrability. The circuit court in this case applied Arkansas law. QBE, however, argues the court’s application of Arkansas law was erroneous and that New York law should have applied. Therefore, we must first determine which state’s law applies. QBE is a Pennsylvania corporation with its principal place of business in New York. Endurance is an insurance company with a Bermuda address. Both QBE and Endurance issued excess policies to Walmart, and these policies form a quota share layer. Again, in a quota share 20 layer, the insurers pay a percentage of loss assigned to that layer. In this instance, QBE is to pay 50 percent, and Endurance will pay the remaining 50 percent. There are two QBE policies in the record. Neither contains a choice-of-law provision. There are two Endurance policies in the record. Both the Endurance policies state that the substantive law of New York applies to the policy. QBE argues that it adopted Endurance’s choice-of-law provision through the following incorporation clause: The Named Insured has represented to the Insurer that this insurance is subject to the same warranties, terms, conditions, exclusions and limitations (except as regards the limits of the liability) as are contained or as may be added to the respective policies of any insurers who participate in the same quota share layer (insurers contributing to a combined limit of insurance known as a layer) of coverage as the Insurer, hereinafter referred to as Quota Share Participant Policies. In the event that the warranties, terms, conditions, exclusions or limitations of the Quota Share Participant Policies further limit or restrict coverage, this insurance will be subject to such further limiting or restricting warranties, terms, conditi