Onebeacon Am. Ins. Co. v. Commercial Union Assurance Co. of Canada

• Decision Date: 11 July 2012
• Docket Number: No. 11–2072.,11–2072.
• Citation: 684 F.3d 237
• Parties: ONEBEACON AMERICA INSURANCE COMPANY, Plaintiff, Appellant, v. COMMERCIAL UNION ASSURANCE COMPANY OF CANADA n/k/a Aviva Insurance Company of Canada, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

684 F.3d 237

ONEBEACON AMERICA INSURANCE COMPANY, Plaintiff, Appellant,

v.COMMERCIAL UNION ASSURANCE COMPANY OF CANADA n/k/a Aviva Insurance Company of Canada, Defendant, Appellee.

No. 11–2072.

United States Court of Appeals,First Circuit.

Heard April 2, 2012.

Decided July 11, 2012.

Kevin J. O'Connor, with whom Jennifer L. Noe and Hermes, Netburn, O'Connor & Spearing, P.C., was on brief for appellant.

Benjamin L. Hincks, with whom Wynter N. Lavier and Mintz Levin Cohn Ferris Glovsky and Popeo, P.C., were on brief for appellee.

Before TORRUELLA, BOUDIN, and THOMPSON, Circuit Judges.

TORRUELLA, Circuit Judge.

This case concerns a reinsurance dispute between an American insurance company and a Canadian insurance company. The American company, Plaintiff–Appellant OneBeacon America Insurance Company (“OneBeacon”), claims that the Canadian company, Defendant–Appellee Aviva Insurance Company of Canada (“Aviva”), is obligated to reinsure OneBeacon for policies OneBeacon issued to certain entities in the early 1980s. Both parties filed cross-motions for summary judgment, and the district court denied summary judgment to OneBeacon and granted summary judgment to Aviva. OneBeacon now appeals, challenging both summary judgment rulings. After careful review, we affirm the district court's denial of summary judgment to OneBeacon and award of summary judgment to Aviva.

I. Background

A. The 1980 OneBeacon Policy and the 1980 Aviva Policy

In the early 1980s, OneBeacon and Aviva were both affiliated members of the Commercial Union group of insurance companies (the two companies are no longer affiliated); OneBeacon was based in the U.S., while Aviva was based in Canada. ¹ On March 28, 1980, OneBeacon issued an insurance policy (the “1980 OneBeacon Policy”) to two U.S.-based subsidiaries of Harrisons & Crosfield (Canada) Ltd.: Harrisons & Crosfield (America), Inc. and Harrisons & Crosfield (Pacific) Inc. (collectively, “Harrisons US”). The 1980 OneBeacon Policy was effective from March 28, 1980 through April 1, 1981 and was identified as policy no. C8–9101–002. The Policy contained “Endorsement Number 4,” ² (the “1980 OneBeacon Endorsement Number 4”) which provides:

It is understood and agreed that this policy or any renewal thereof is 100% reinsured by [Aviva] policy number 6687287 effective 3/28/80 to 4/1/81.

It is further agreed that cancellations of this policy C8–9101–002 or any renewal thereof or policy 6687287 or any renewal thereof shall be reason for automatic cancellations of the other policy.

The premium listed on the 1980 OneBeacon Policy is “Canadian $45,530.” The “Producer” code for the 1980 OneBeacon Policy is “02–20211.”

Also on March 28, 1980, Aviva issued an insurance policy (the “1980 Aviva Policy”) to Harrisons & Crosfield (Canada) Ltd. (“Harrisons Canada”) with the policy no. 6687287. The 1980 Aviva Policy contains a “Differences in Conditions Endorsement” (the “1980 Aviva Endorsement”), which states:

In consideration of the premium charged, the Insurer agrees that this policy is placed in conjunction with and reinsures Policy No. CL C8–9191–002 issued by [OneBeacon], or any renewal thereof, in respect of:

Insured: Harrisons & Crosfield(America)Inc., Harrisons & Crosfield(Pacific)Inc.

...

Exceptions: This insurance differs from the policy which it follows in the following particulars:

(a) Premium: $45,530 (Canadian Funds–Deposit) The Limit of Liability under either or both policies shall not exceed $1,000,000.00 as set forth in Policies 6687 and CL C8–9101–002 or any renewal policies issued by this Insurer.

On November 26, 1980, Aviva issued to OneBeacon “reinsurance certificate No. 9009419” (the “Facultative Certificate”) ³ for the “reinsurance term” of March 28, 1980 to April 1, 1981. The Facultative Certificate states that Aviva reinsures policy no. C8–9101–002 (the 1980 OneBeacon Policy), and the reinsurance premium listed is $45,530.00 Canadian. The Facultative Certificate's policy period was never extended, nor does a separate facultative certificate exist for any subsequent policy period. The Facultative Certificate is the only direct written agreement between Aviva and OneBeacon on the record.

Aviva sent the Facultative Certificate to OneBeacon via a letter dated November 26, 1980, along with a check for $4,553 Canadian. The letter states: “Further to yours of July 1st, 1980. Attached is our Reinsurance Certificate along with our cheque in the amount of $4,553.00 Canadian being your override commission of 10% of the premium which was $45,530.00 Canadian.”

B. The 1981 Aviva Endorsement and the 1981 and 1982 OneBeacon Policies

In 1981, OneBeacon issued a policy to Harrisons US, effective April 1, 1981 to April 1, 1982, with the policy no. C8–9138–002 (the “1981 OneBeacon Policy”). Above the phrase “renewal of or previous no.” is the policy number C8–9101–002, which corresponds to the 1980 OneBeacon Policy. The named insureds on the 1981 OneBeacon Policy are Harrisons U.S. and Harcros Inc.,⁴ and the listed “Additional Insureds” are Harrisons & Crosfield Ltd. and Wilkinson Linatex. ⁵ The Producer code for the 1981 OneBeacon Policy is “02–20020.” The premium amount listed on the 1981 OneBeacon Policy is $24,000 U.S. The 1981 OneBeacon Policy does not contain the 1980 OneBeacon Endorsement Number 4 or any similar provision indicating that the 1981 OneBeacon Policy was reinsured by any Aviva policy.

Around the same time, Aviva issued an endorsement (the “1981 Aviva Endorsement”) to the 1980 Aviva Policy that extended the policy period from March 28, 1981 to March 28, 1982. Significantly, the 1981 Aviva Endorsement explicitly excluded Harrisons U.S. from coverage under the 1980 Aviva Policy. The 1981 Aviva Endorsement provided:

It is further understood and agreed that the following Corporations are specifically excluded from this policy which shall not inure to their benefit in any way:

...

Harrisons & Crosfield (America) Inc.

...

Harcros Inc.

...

Harrisons & Crosfield (Pacific) Inc.

In 1982, OneBeacon issued a policy to Harrisons U.S. with the policy no. C8–9138–007 (the “1982 OneBeacon Policy”). OneBeacon has not located a copy of the 1982 OneBeacon Policy, but the parties agree that the 1982 OneBeacon Policy was a renewal of the 1981 Policy. In addition, in 1982, Aviva again extended the term of its policy issued to Harrisons Canada by one year, to March 28, 1983.

C. Premium Evidence

The record contains a “ledger” from OneBeacon that includes entries pertaining to payments received in connection with the Harrisons U.S. policies. The ledger entry for policy no. 9101–002, the 1980 OneBeacon Policy, shows that OneBeacon received a premium of $4,252 U.S., even though the premium amount listed on the 1980 OneBeacon Policy was $45,530 Canadian. In addition, the “reinsurer” column in the entry for the 1980 OneBeacon Policy lists a reinsurer identified as “C44.” However, the “reinsurer” column of the entry for policy no. 9138–002, the 1981 OneBeacon Policy, is left blank, showing no reinsurer at all for the 1981 OneBeacon Policy. This entry also indicates that OneBeacon received a $24,000 premium, which corresponds exactly with the premium amount listed on the 1981 OneBeacon Policy. The “reinsurer” column for the entry corresponding to the 1982 OneBeacon policy is also blank. The ledger does not indicate that OneBeacon ever shared any of the premiums it received for the 1981 or 1982 OneBeacon Policies with Aviva.

D. Procedural History

In 1998, OneBeacon received notice of lawsuits against Harrisons U.S. for asbestos-related injuries. Based upon the coverage it issued to Harrisons U.S. under the 1980, 1981, and 1982 OneBeacon Policies, OneBeacon entered into a defense cost-sharing arrangement with Harrisons US's other insurers for claims arising from the covered period. In November 2007, OneBeacon requested that Aviva fully indemnify OneBeacon for costs incurred in connection with the Harrisons U.S. claims. Aviva responded that it would reimburse OneBeacon for only one-third of defense expenses and indemnity payments.

On February 2, 2010, OneBeacon filed suit against Aviva in the U.S. District Court for the District of Massachusetts. OneBeacon sought a declaration that Aviva had a contractual obligation to reinsure the 1980, 1981, and 1982 OneBeacon Policies issued to Harrisons US, and also sought damages for Aviva's alleged breach of contract. On June 24, 2011, OneBeacon and Aviva filed cross-motions for summary judgment. On August 18, 2011, the district court denied OneBeacon's motion and granted Aviva's. See OneBeacon Am. Ins. Co. v. Commercial Union Assur. Co., 804 F.Supp.2d 77 (D.Mass.2011). The court pointed out that the Facultative Certificate was the only contract on the record between the two parties. See id. at 87. The court then held that because the Facultative Certificate unambiguously stated that the term of reinsurance ended after April 1, 1981, Aviva did not reinsure the 1981 or 1982 OneBeacon Policies. Id. The court further concluded that the other evidence on the record also suggested that Aviva reinsured only the 1980 OneBeacon Policy. Id. at 86–88.

OneBeacon now appeals both the denial of its motion for summary judgment and the grant of summary judgment to Aviva.

II. Discussion

A. Standard of Review and Applicable Law

We review a grant or denial of summary judgment by the district court de novo. Sarsfield v. Great Am. Ins. Co. of N.Y., 335 Fed.Appx. 63, 65 (1st Cir.2009). “[W]e are not married to the trial court's reasoning but, rather, may affirm on any independently sufficient ground made manifest by the record.” Cahoon v. Shelton, 647 F.3d 18, 22 (1st Cir.2011). Where, as here, we are presented with cross-motions for summary judgment, we “must view each motion, separately,” in the light most favorable to the non-moving party, and draw all reasonable inferences in that party's favor. Estate of Hevia v. Portrio Corp., 602 F.3d 34, 40 (1st Cir.2010). “The presence of cross-motions...