Century Indem. Co. v. OneBeacon Ins. Co.

• Decision Date: 17 October 2017
• Docket Number: No. 1280 EDA 2016,1280 EDA 2016
• Citation: 173 A.3d 784
• Parties: CENTURY INDEMNITY COMPANY, as successor to CCI Insurance Company, as successor to Insurance Company of North America and Pacific Employers Insurance Company, Appellee v. ONEBEACON INSURANCE COMPANY f/k/a CGU Insurance Company f/k/a General Accident Insurance Company of America, Appellant
• Court: Pennsylvania Superior Court

173 A.3d 784

CENTURY INDEMNITY COMPANY, as successor to CCI Insurance Company, as successor to Insurance Company of North America and Pacific Employers Insurance Company, Appellee

v.ONEBEACON INSURANCE COMPANY f/k/a CGU Insurance Company f/k/a General Accident Insurance Company of America, Appellant

No. 1280 EDA 2016

Superior Court of Pennsylvania.

Argued January 24, 2017

Filed October 17, 2017

Reargument Denied December 22, 2017

Ira J. Belcove, Chicago, IL, for appellant.

Jonathan D. Hacker, Washington, DC, for appellee.

BEFORE: OTT, J., RANSOM, J., and FITZGERALD, J.^*

OPINION BY OTT, J.:

OneBeacon Insurance Company F/K/A CGU Insurance Company F/K/A General Accident Insurance Company of America (hereinafter "OneBeacon"), appeals from the judgment entered on April 26, 2016,¹ in the Philadelphia County Court of Common Pleas in this action seeking reinsurance² coverage for defense expenses. Following a non-jury trial, the court entered judgment against OneBeacon and in favor of Century Indemnity Company, as successor to CCI Insurance Company, as successor to Insurance Company of North America (hereinafter "Century"), in the amount of $4,772,520.44, plus prejudgment interest, and in favor of Pacific Employers Insurance Company (hereinafter "PEIC"), in the amount of $2,426,478.42, plus prejudgment interest.³ On appeal, OneBeacon challenges the ruling of the trial court that the reinsurance facultative certificates⁴ at issue provided coverage for defense expenses in excess of the liability cap, and that Century/PEIC were entitled to interest on certain proofs of loss issued prior to early 2013. For the reasons below, we affirm.

The relevant facts and procedural history underlying this appeal are as follows. In 1983, Century's predecessor issued an Excess Blanket Catastrophe Liability Policy to a subsidiary of Formosa Plastics Corporation that provided $25,000,000.00 in umbrella liability for covered losses. During the same period, PEIC issued a similar policy to Gould Pumps, Inc.⁵ Both of the underlying policies included a "second obligation to provide coverage for defense costs." Trial Court's Findings of Fact and Conclusions of Law, 2/23/2016, at 2. Thereafter, Century's predecessor and PEIC both obtained facultative certificates from OneBeacon's predecessor to reinsure a certain layer of the underlying Formosa and Gould policies. Both the underlying policies and the facultative certificates were renewed the following year; Century's certificate was renewed via an endorsement, and PEIC was issued a new certificate.

Each of the certificates at issue consists of a double-sided, pre-printed form and contains the identical, relevant, policy language. The front of the certificate names the reinsured, i.e. Century's predecessor or PEIC, and thereafter states: "In consideration of the payment of the premium and subject to the general conditions set forth on the reverse side hereof, the reinsurer does hereby reinsure" the underlying policy. Complaint, 7/23/2012, Exhibit A, Certificate 4513 (hereinafter "Certificate") (emphasis added).⁶ After providing information regarding the underlying policy, the certificate includes four sections under the heading, "Details of Reinsurance Afforded." Id. Section I, II, and III list the type of insurance, the underlying policy limits, and the ceding company's retention. See id. Section IV is entitled "Reinsurance Accepted" and provides the reinsurance policy limit for the certificate.⁷ Id.

The back of each certificate lists nine general conditions, three of which are relevant to this appeal:

1. The [Reinsured] Company [Insurance Company of North America] warrants to retain for its own account, subject to Treaty Reinsurance, the amount of liability specified in Section III, and the liability of the Reinsurer [OneBeacon] specified in Section IV shall follow that of the Company and expect as otherwise specifically provided herein, shall be subject in all respects to all the terms and conditions of the Company's policy. The Company shall furnish the Reinsurer with a copy of its policy and all endorsements thereto which in any manner affect this certificate, and shall make available for inspection and place at the disposal of the Reinsurer at reasonable times any of its records relating to this reinsurance or claims in connection therewith.

* * * *

3. All claims involving this reinsurance, when settled by the Company, shall be binding on the Reinsurer, who shall be bound to pay its proportion of such settlements, and in addition thereto, in the ratio that the Reinsurer's loss payment bears to the Company's gross loss payment, its proportion of expenses, other than Company salaries and office expenses, incurred by the Company in the investigation and settlement of such claims or suits and, with the prior consent of the Reinsurer to trial court proceedings, its proportion of court costs and interest on any judgment or award.⁸

4. Payment of its proportion of loss and expense paid by the Company will be made by the Reinusurer to the Company promptly following receipt of proof of loss.

Id. at 2 (emphasis supplied).

Both Century and PEIC paid significant amounts in losses to their underlying insureds for asbestos-related claims pursuant to the 1983 and 1984 underlying policies. When OneBeacon failed to promptly pay Century/PEIC under the facultative certificates, the companies jointly filed a breach of contract and declaratory judgment action against OneBeacon on July 23, 2012. While the action was pending, OneBeacon paid Century/PEIC the limits listed in the "Reinsurance Accepted" section of the facultative certificates, but refused to pay any amount above that limit for defense expenses.

The case proceeded through discovery. On January 20, 2015, OneBeacon filed a motion for summary judgment. It argued that it had already paid Century/PEIC "$11 million, a sum equal to the total dollar amounts stated as the ‘Reinsurance Accepted’ in the facultative reinsurance certificates at issue in this case[,]" and that under authoritative case law, and the unambiguous language of the certificates at issue, it was not obligated to pay defense expenses "in excess of the stated Reinsurance Accepted amount[.]" OneBeacon's Motion for Summary Judgment, 1/20/2015, at ¶¶ 1–2. OneBeacon further argued: (1) Century/PEIC were collaterally estopped from seeking defense costs in excess of the Reinsurance Accepted limits as a result of "prior adverse decisions" rendered against them, and (2) it owed no interest to Century/PEIC on the $11 million previously submitted because it "had no duty to pay either [company] prior to the respective dates of OneBeacon's actual payments." Id. at ¶¶ 3–4. On January 21, 2015, Century/PEIC filed a motion for partial summary judgment on the issue of prejudgment interest.⁹

The trial court entered two orders disposing of the motions on March 27, 2015: (1) denying OneBeacon's motion for summary judgment, and (2) granting Century/PEIC's motion for partial summary judgment. See Orders, 3/27/2015. With regard to OneBeacon's motion, the trial court determined: (1) the certificates were ambiguous, and, consequently, Century/PEIC could present extrinsic evidence at trial, and (2) Century/PEIC were not collaterally estopped from asserting their claims based on prior decisions. See Trial Court Opinion, 3/27/2015 (OneBeacon's Motion), at 5–8. The court granted Century/PEIC's motion for partial summary judgment, concluding OneBeacon had a duty to pay Century/PEIC promptly following receipt of proof of loss. See Trial Court Opinion, 3/27/2015 (Century/PEIC's Motion), at 4–6. Accordingly, the court found both Century and PEIC were entitled to prejudgment interest, Century in the amount of $275,760.45 and PEIC in the amount of $152,071.35. See id. at 6. Judgment was entered on these amounts in favor of Century/PEIC and against OneBeacon on April 9, 2015.

On April 27, 2015, OneBeacon filed two motions, requesting the trial court amend each of its March 27, 2015, orders to certify them for an interlocutory appeal pursuant to 42 Pa.C.S. § 702(b). The trial court denied OneBeacon's motions to amend on May 21, 2015, and this Court subsequently denied OneBeacon's petition for review. See Century Indemnity Co. et al. v. OneBeacon Insurance Co. et. al., 95 EDM 2015, Order, 7/29/2015. A three-day, non-jury trial commenced on January 11, 2016. On February 23, 2016, the trial court entered an order, accompanied by findings of fact and conclusions of law, finding in favor of Century/PEIC, and against OneBeacon. See Order, 2/23/2016.¹⁰ OneBeacon filed post-trial motions on March 3, 2016, which the trial court denied on March 15, 2016. This timely appeal followed.^{11 ,12}

In its first issue, OneBeacon argues the trial court erred in denying its motion for summary judgment and finding the facultative certificates at issue were ambiguous as to whether the "Reinsurance Accepted" amount capped OneBeacon's liability for both losses and defense expenses. See OneBeacon's Brief at 17–32.

Our review of a trial court's order denying a motion for summary judgment is well-established:

We view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Pennsylvania State University v. County of Centre, 532 Pa. 142, 615 A.2d 303, 304 (1992). Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered. Skipworth v. Lead Industries Ass'n, Inc., 547 Pa. 224, 690 A.2d 169, 171 (1997). Our scope of review of a trial court's order granting or denying summary judgment is plenary, O'Donoghue v. Laurel Savings Ass'n, 556 Pa. 349, 728 A.2d 914, 916 (1999), and our standard of review is clear: the trial court's order will be reversed only where it is established that the court committed an error of law or abused its discretion.

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