Employers Reinsurance v. Jefferson Pilot Financial
| Decision Date | 20 November 2001 |
| Docket Number | No. CIV.A. 01-2123-KHV.,CIV.A. 01-2123-KHV. |
| Parties | EMPLOYERS REINSURANCE CORPORATION, Plaintiff, v. JEFFERSON PILOT FINANCIAL INSURANCE COMPANY, f/k/a Chubb Life Insurance Company of America, Defendant. |
| Court | U.S. District Court — District of Kansas |
Charles W. German, David J. Rempel, Rouse Hendricks German May PC, Kansas City, MO, for plaintiff.
Jeffrey J. Simon, Patrick D. Kuehl, Jr., Blackwell Sanders Peper Martin LLP, Kansas City, MO, for defendant.
Employers Reinsurance Corporation ("ERC") brings suit against Jefferson Pilot Financial Insurance Company ("Jefferson Pilot"), formerly known as Chubb Life Insurance Company of America ("Chubb"), to recover adjusted professional liability insurance premium payments. Jefferson Pilot has filed counterclaims for injurious falsehood and recoupment. This matter comes before the Court on Defendant's Motion To Dismiss For Failure To State A Claim And Memorandum In Support ("Defendant's Motion") (Doc. # 7) filed June 25, 2001 and Plaintiff's Cross-Motion For Summary Judgment And Motion To Dismiss Counterclaim (Doc. # 12) filed August 1, 2001.1 Because Jefferson Pilot presents matters outside the pleadings, the Court treats its motion as one for summary judgment. See Rule 12(b), Fed. R.Civ.P.2 For reasons stated below, the Court grants summary judgment in favor of ERC on its claim for recovery of adjusted professional liability insurance premium payments.
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56(c), Fed.R.Civ.P.; accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir.1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252, 106 S.Ct. 2505.
The moving party bears the initial burden of showing the absence of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Hicks v. City of Watonga, Okla., 942 F.2d 737, 743 (10th Cir.1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Secs., Inc., 912 F.2d 1238, 1241 (10th Cir.1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The nonmoving party may not rest on its pleadings but must set forth specific facts. See Applied Genetics, 912 F.2d at 1241.
The Court must view the record in a light most favorable to the party opposing the motion for summary judgment. See Deepwater Invs., Ltd v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991). Summary judgment may be granted if the non-moving party's evidence is merely colorable or is not significantly probative. See Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505. "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.
The following facts are undisputed.
ERC is incorporated under the laws of the State of Missouri. Its statutory home office is in Jefferson City, Missouri, where Nicholas Monaco, its registered agent in Missouri, is located. ERC maintains its principal administrative and executive office in Overland Park, Kansas. ERC is not registered with the Kansas Secretary of State, but it is registered with the Kansas Department of Insurance and it is authorized to do business in the State of Kansas.
Until 1997, Chubb was a New Hampshire corporation with its principal place of business in Concord, New Hampshire. In 1997, Jefferson Pilot acquired Chubb. Jefferson Pilot is a Nebraska corporation. The record contains no evidence regarding Jefferson Pilot's principal place of business.3
In 1991, Chubb purchased a professional liability insurance policy from ERC, Policy No. LEO-80093 ("the policy") effective April 16, 1991 to April 16, 1992. Chubb renewed the policy for two consecutive annual periods before it terminated on April 16, 1994.
As part of the policy, ERC and Chubb executed a Retrospective Insurance Premium Adjustment Plan ("the Retrospective Plan") effective April 16, 1992. The Retrospective Plan provides that premium payments may be adjusted, depending on losses paid during the applicable accounting period. If incurred losses exceed a certain limit, ERC is entitled to additional premium payments. If incurred losses fall below that limit, Chubb can recover a dividend payment from ERC. More specifically, if incurred losses exceed 70 per cent of Chubb's initial premium for the policy year, Chubb must pay the difference to ERC, up to a maximum adjustment payment of 30 per cent of the initial premium. On the other hand, if incurred losses are less than 70 percent of the initial premium, ERC must return the difference to Chubb, up to 30 per cent of the initial premium. The Retrospective Plan requires the adjustment payment to be paid 23 months after the end of each accounting period, which ends on April 16 of each particular policy year. Thus, any adjustment payment for the 1993-94 policy year was due March 16, 1996.
The Retrospective Plan defines "incurred losses" as follows:
Incurred losses shall mean losses plus claim expense paid by [ERC] plus [ERC's] share of losses outstanding, all as a result of claims first made during such accounting period.
Retrospective Plan, Exhibit D to Defendant's Motion. The Retrospective Plan does not define the term "losses," but the underlying policy provides as follows:
The word "loss" includes such amounts payable by [Chubb] in settlement of claims or in satisfaction of judgments up to the policy limits with all claims and individual claimants which arise out of a single act or incident being considered as a single claim for purposes of the limit of liability as stated in the Declarations.
Policy at 4, Exhibit C to Defendant's Motion.
In July 1993, investors of a failed limited partnership filed suit against Chubb and its agents. Abrams v. Chubb Sec. Corp., NASD Case No. 93-01590 ("Abrams claims"). Chubb gave notice of the claims to ERC and requested coverage under the policy. ERC denied coverage and in 1995, Chubb paid $787,500.00 to settle the Abrams case.
In August 1994, Chubb filed suit against ERC in the United States District Court for the Eastern District of Missouri to determine whether the policy covered the Abrams claims ("the recovery case"). ERC again denied coverage but in December 1995, it paid Chubb $720,000 to settle the case. As part of the settlement, Chubb executed a release which states that
[i]t is further understood and agreed that [ERC] maintains and reasserts its position that the exclusions relied upon by it are applicable to the underlying action [the Abrams case] and denies any liability therefore whatsoever, and intends merely to avoid litigation and buy its peace.
Release Of All Claims at 2, Exhibit E to Defendant's Motion.
ERC asserts that its settlement payment of $720,000 qualifies as an incurred loss under the Retrospective Plan and seeks to recover premium adjustments. For the policy year April 16, 1993 to April 16, 1994, Chubb's initial premium was $594,204.00.4 Under the Retrospective Plan, the maximum adjustment for this policy year is 30 per cent of $594,204.00, or $178,261.20. Excluding the $720,000 payment in regard to the recovery case, ERC paid Chubb policy losses totaling $255,701.43.5 If the $720,000 payment is included as an incurred loss for policy year 1993-94, incurred losses would exceed 70 per cent of the premium and Chubb would owe ERC $178,261.20, the maximum adjustment under the Retrospective Plan.
ERC has demanded that Chubb pay an adjustment payment for policy year 1993-94, but Chubb has refused to do so. In May 1999, ERC employed Dun & Bradstreet to collect from Chubb. On May 24, 1999, Dun & Bradstreet sent its first written demand. Beginning June 4, 1999, Dun & Bradstreet discussed the claim over the telephone with Chubb representatives in North Carolina on various occasions. Dun & Bradstreet closed its file and ceased collection activity in April 2000. On March 14, 2001, ERC sued Jefferson Pilot for breach of its obligation to pay an adjusted premium under the Retrospective Plan. See Complaint (Doc. # 1). Jefferson Pilot has filed counterclaims for injurious falsehood and recoupment. See Defendant's First Amended Counterclaim (Doc. # 21) filed September 12, 2001. Specifically, Jefferson Pilot contends that ERC published false statements to Dun & Bradstreet regarding unpaid insurance policy premiums, causing economic harm to Jefferson Pilot. Jefferson Pilot also alleges that under the Retrospective Plan, ERC owes $185,567.58 in downward premium adjustments for the 1992-93 and 1993-94 policy years.
Jefferson Pilot contends that it is entitled to summary judgment on ERC's claim because it is (1) barred by the statute of limitations and (2) a compulsory...
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