National R.R. Passenger Corp. v. Lexington Ins., 03-7075.

• Decision Date: 07 May 2004
• Docket Number: No. 03-7075.,03-7075.
• Parties: NATIONAL RAILROAD PASSENGER CORPORATION, Appellant, v. LEXINGTON INSURANCE COMPANY, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

365 F.3d 1104

NATIONAL RAILROAD PASSENGER CORPORATION, Appellant, v. LEXINGTON INSURANCE COMPANY, et al., Appellees.

No. 03-7075.

United States Court of Appeals, District of Columbia Circuit.

Argued January 9, 2004.

Decided May 7, 2004.

Appeal from the United States District Court for the District of Columbia (No. 01cv01815).

William G. Ballaine argued the cause and filed the briefs for appellant.

Frederick J. Wilmer argued the cause for appellees. With him on the brief was Michael H. McConihe.

Before: SENTELLE, TATEL and ROBERTS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

This is an insurance-coverage suit the National Railroad Passenger Corporation, commonly known as "Amtrak," brought against several of its "excess liability" insurers. The case is in federal court because Amtrak is a federal corporation and the federal government owns more than one-half of its stock. 28 U.S.C. § 1349. Amtrak was held liable for and paid a personal injury judgment of $25 million. Amtrak's suit seeks reimbursement for much of this sum from the insurers who insured Amtrak for personal-injury liability in excess of $10 million. The sole policy under which Amtrak is attempting to recover in this action was in effect from 1997-1998. The insurers moved for summary judgment, primarily on the ground that the plain terms of the policy allocate Amtrak's claim not to the 1997-98 policy, but rather to a different, less generous excess liability policy in effect from 1996-1997. The district court held that Amtrak could not recover under the 1997-98 policy and therefore granted the insurers summary judgment. We agree with the district court, hold that Amtrak may not recover under the 1997-98 policy, and affirm the district court's judgment. We express no view on whether Amtrak is entitled to reimbursement under the 1996-97 policy.

I.

Two sets of Amtrak's "excess liability" insurance policies lie at the core of this dispute. Both insured Amtrak against liability for personal-injury claims in excess of $10 million. The first set covered the policy period October 1, 1996, through September 30, 1997; the second covered the period October 1, 1997, through September 30, 1998. Presumably to spread the risk, multiple insurers provided coverage under these policies, and the parties agree that the language of the 1997-98 policy in effect between Amtrak and each individual insurer is identical in all respects relevant to this appeal (we thus refer to that common language as the "1997-98 policy").

The 1997-98 policy was titled a "claims-made liability policy." "Claims-made" is the term generally used to describe insurance policies under which the insurer agrees to indemnify the insured party against all claims made during the period of the policy, regardless whether the incident that gave rise to the claim occurred during the policy term. Black's Law Dictionary 809 (7th ed.1999). The 1997-98 policy, however, had, in all-capital letters at the top of the policy, the following qualification:

THIS IS AN EXCESS LIABILITY CLAIMS MADE POLICY WHICH IS NOT SUBJECT TO THE TERMS AND CONDITIONS OF ANY OTHER INSURANCE AND CONTAINS PROVISIONS WHICH MAY BE DIFFERENT FROM THOSE OF ANY OTHER INSURANCE.

IT SHOULD BE READ CAREFULLY BY THE INSURED.

The scope of the 1997-98 policy's basic coverage was defined nominally in claims-made terms. In particular, the policy provided that the insurers agreed subject to the Insuring Agreements, Exclusions, Conditions, Definitions and Declarations contained in this Policy, to indemnify [Amtrak] ... for damages in respect of a Claim which is first made in writing against [Amtrak] during the period of this Policy [October 1, 1997, though September 30, 1998] ... resulting from an Accident.

The term "Accident," however, was a term of art that the policy defined. Eleven pages later, in the definitions portion of the policy, the term "Accident" was defined as

an event which first commences at a specific time after the retroactive date [October 1, 1995] and prior to the expiry date [September 30, 1998] and of which [Amtrak's] Claim Agent first becomes aware during the Policy Period [October 1, 1997, through September 30, 1998] and up to 120 days thereafter.

The policy's definitions section also explicitly defined "Claim." That term was defined as "that part of any written demand received by [Amtrak] for damages covered by this Policy, including the service of suit, institution of arbitration proceedings or receipt of an attorney's lien."

The event that gave rise to this coverage dispute occurred on August 29, 1997, when Kimberly Alcorn was seriously injured in a railroad crossing automobile accident in Missouri. See Alcorn v. Union Pac. R.R. Co., 50 S.W.3d 226, 231 (Mo.2001). Union Pacific Railroad Company owned and operated the crossing, but Amtrak had contractually agreed to indemnify Union Pacific for any liability arising out of such accidents. Alcorn brought a personal-injury action against Amtrak and Union Pacific in Missouri state court; the indemnification agreement meant that Amtrak was fully responsible for Union Pacific's liability. The jury awarded Alcorn $40 million in compensatory damages and $120 million in punitive damages, but the trial court remitted the compensatory damage award to $25 million and the punitive award to $50 million. Id. On appeal, the Missouri Supreme Court struck down the punitive damage award entirely, but upheld the remitted compensatory award. Id. at 247-49.

The parties agree that Amtrak first learned of the event by a telephone call placed to one of its claim agents on September 2, 1997. Alcorn did not serve Amtrak with her suit, however, until January 20, 1998. Pursuant to its operating agreement with Union Pacific, Amtrak handled the defense of the litigation.

After Amtrak paid the $25 million judgment, it sought reimbursement from its insurers under the 1997-98 policy. The insurers refused to cover the accident under that policy. In response, Amtrak sued them in federal district court seeking coverage. The insurers moved for...