Utica Mut. Ins. Co. v. Fireman's Fund Ins. Co.
| Decision Date | 24 February 2017 |
| Docket Number | 6:09–CV–853 (DNH/TWD) |
| Citation | 238 F.Supp.3d 314 |
| Parties | UTICA MUTUAL INSURANCE COMPANY, Plaintiff–Counter Defendant, v. FIREMAN'S FUND INSURANCE COMPANY, Defendant–Counter Claimant. |
| Court | U.S. District Court — Northern District of New York |
HUNTON & WILLIAMS LLP, OF COUNSEL: SYED S. AHMAD, ESQ., WALTER J. ANDREWS, ESQ., PATRICK M. MCDERMOTT, ESQ., 1751 Pinnacle Drive Suite 1700, McLean, VA 22102, Attorneys for Plaintiff–Counter Defendant.
SIDLEY AUSTIN LLP, OF COUNSEL: DANIEL R. THIES, ESQ., THOMAS D. CUNNINGHAM, ESQ., WILLIAM M. SNEED, ESQ., One South Dearborn Street, Chicago, IL 60603, Attorneys for Plaintiff–Counter Defendant.
WILLIAMS LOPATTO PLLC, OF COUNSEL: MARY A. LOPATTO, ESQ., JOHN B. WILLIAMS, ESQ., 1707 L Street NW, Suite 550, Washington, DC 20036, Attorneys for Defendant–Counter Claimant.
TABLE OF CONTENTS
Plaintiff Utica Mutual Insurance Company ("Utica" or "plaintiff") commenced this diversity action against defendant Fireman's Fund Insurance Company ("FFIC" or "defendant") on July 29, 2009 seeking to enforce the terms of its reinsurance contracts.
Plaintiff seeks damages in the amount of nearly $29 million for amounts billed through August 31, 2009, interest, attorneys' fees, costs, and declaratory relief based on defendant's alleged breach of the reinsurance contracts and breach of the duty of good faith and fair dealing. FFIC counterclaims for rescission based on plaintiff's alleged intentional and/or negligent rescission. The case was referred to mandatory mediation, but did not settle.
After completing limited discovery, plaintiff moved on June 6, 2014 and June 13, 2014 for partial summary judgment pursuant to Federal Rule of Civil Procedure ("Rule") 56 dismissing two of defendant's affirmative defenses. Oral argument was heard on July 25, 2014 and a Memorandum–Decision and Order was issued on February 9, 2015, denying both motions. Utica Mut. Ins. Co. v. Fireman's Fund Ins. Co. , No. 6:09-CV-853, 2015 WL 521024 (N.D.N.Y. Feb. 9, 2015). With respect to FFIC's late notice defense, it was held that the parties may litigate lost commutations at trial, and if FFIC can establish resulting prejudice, it would be entitled to complete relief from its duty to indemnify. As to FFIC's bad faith defense, disputed issues of material fact remain as to whether Utica was grossly negligent or reckless in failing to provide prompt notice to FFIC and thus whether its claim for indemnification is barred.
Thereafter, plaintiff moved for partial summary judgment pursuant to Rule 56 on the follow the fortunes doctrine, defendant's counterclaims for rescission, and when notice to defendant was required. Defendant simultaneously moved for judgment on the pleadings pursuant to Rule 12(c) to dismiss Counts II and III , and for partial summary judgment pursuant to Rule 56 on plaintiff's aggregate limits, bad faith, and follow the settlement contentions. Plaintiff opposed defendant's motions, and defendant opposed plaintiff's motions. Both parties submitted replies in further support.
All seven pending motions were fully briefed and oral argument was heard on February 13, 2015, in Utica, New York. Decision was reserved. While pending, defendant filed a motion in limine pursuant to Federal Rule of Evidence 702 to preclude expert testimony at trial by Dennis R. Connolly. Plaintiff opposed. That motion will be considered on the basis of the submissions without oral argument.
The parties' familiarity with the facts and history of this case is presumed, and only those facts necessary for the disposition of the pending matters will be recited. This case involves a dispute over $35 million which Utica claims FFIC owes it under its reinsurance contracts.2 FFIC argues it does not owe Utica any money because Utica breached provisions in the reinsurance contracts.
Utica issued primary liability insurance policies to Goulds from 1966 through 1972.3 These seven primary policies have not been located and one of the main issues in this case is whether those policies contained aggregate limits for bodily injury. Utica also issued umbrella policies to Goulds for these same years providing for $10 million in coverage each year. Utica reinsured the umbrella policies, reinsuring $5 million of each $10 million with FFIC4 pursuant to facultative reinsurance contracts. Each of the facultative reinsurance contracts contain the following provision: "All claims involving this reinsurance, when settled by the Company [Utica], shall be binding on the Reinsurer [FFIC]...." See LoPatto Decl., Ex. 2, ECF. No. 285 (the "Certificates"). This provision is known as a follow the settlements clause.5 SeeTravelers Cas. & Sur. Co. v. Gerling Global Reins. Corp. , 419 F.3d 181, 184 (2d Cir. 2005)"( Gerling ").
Goulds became the subject of thousands of asbestos bodily injury claims, with the first suits naming Goulds in 1997. Pursuant to the primary policies between Goulds and Utica, Utica defended and indemnified Goulds for these claims. In mid–2001, Utica provided notice of the Goulds losses to reinsurers of its umbrella policies, including reinsurers at the $5 million excess of the $5 million umbrella layer. Utica contends this was an initial and precautionary notice. FFIC disputes this and suggests the reinsurers actually received earlier notice, but Utica has no record of such. According to Utica, FFIC did not receive the precautionary notice at this time because Utica was unaware of the FFIC reinsurance and did not learn about it until 2008, when another reinsurer notified Utica about it. According to Utica, it had not retained all of its policy records from decades earlier, consistent with its document retention policies.
FFIC disputes this and contends that when Utica notified these reinsurers—those reinsuring umbrella policies post–1972—is irrelevant to when Utica determined or should have determined there was a reasonable possibility that the 1966–72 umbrella policies would be involved. FFIC maintains that Utica's sharing information on the Goulds claims in 1996 with Gen Re indicated that Utica recognized then that the claims could penetrate the 1996–72 umbrella policies. However, Utica contends that Gen Re only learned of the Goulds claims in the 1990s through its routine review of Utica's asbestos and environmental files. Utica asserts that it provided precautionary notice of the claims to the other reinsurers of its umbrella policies in June 2001, and that it would have included a notice to FFIC if Utica had known about FFIC's reinsurance at the time.
Declaratory judgment actions between Goulds and its insurers, including Utica, followed in 2003 to determine the rights of the insurers. Goulds and Utica engaged in mediation relating to the coverage. According to FFIC, Utica made it non-negotiable that Goulds agree that all Utica primary policies had aggregate limits of coverage, even those policies which were not at issue in the coverage litigation. According to FFIC, in exchange for Goulds' receipt of a $325 million settlement from Utica, Goulds agreed to stipulate that all of the Utica primary policies had aggregate limits for bodily injury of $300,000 and that all such limits had been exhausted. The agreement, signed in February 2007 by Utica and Goulds, also provided that the $325 million settlement would come from the umbrella policies (therefore triggering Utica's reinsurance policies). See LoPatto Decl., Ex. 6, ECF. No. 285 (the "Settlement Agreement").
According to Utica, by 2007, payments on Goulds claims had reached FFIC's layer on the umbrella policies at issue and after learning about FFIC's reinsurance in 2008, Utica notified FFIC in July 2008. FFIC asserts that Utica provided no rationale for reporting its reinsurance claim more than a year after its February 2007 settlement with Goulds. According to the Certificates, "[p]rompt notice shall by given to the Reinsurer ... of any occurrence or accident which appears likely to involve this reinsurance." Seegenerally Certificates. Utica submitted reinsurance claims in August, September, October, and November 2009, totaling $35 million. Under the Certificates, Utica was required to "make available for inspection and place at the disposal of [FFIC] at reasonable times any of its records relating to this reinsurance or claims in connection therewith." Id .
Following Utica's requests for payment, FFIC initiated a claims investigation. FFIC sought numerous pieces of information from Utica, inspected its files, and sent a team to Utica's offices for inspection. While its claims investigation was ongoing, Utica filed this suit contending that FFIC was taking too long to pay and was, inter alia, in breach of the Certificates.
The standard for granting a Rule 12(c) judgment on the pleadings is identical to that of a Rule 12(b)(6) motion to dismiss. Patel v. Contemporary Classics of Beverly Hills , 259 F.3d 123,...
To continue reading
Request your trial
-
Amerisure Mut. Ins. Co. v. Transatlantic Reinsurance Co.
...is based until it conducted its investigation, after [the reinsured] submitted its first claim." Utica Mut. Ins. Co. v. Fireman's Fund Ins. Co. , 238 F. Supp. 3d 314, 349–50 (N.D.N.Y. 2017). Here, Plaintiff pointed out that Defendant paid the invoice for loss and loss expense payments for t......
-
Sunrise One, LLC v. Harleysville Ins. Co. of N.Y.
...found that the plaintiff was unable to meet the high standard to prevail on such a claim." Utica Mut. Ins. Co. v. Fireman's Fund Ins. Co. , 238 F.Supp.3d 314, 329–30 (N.D.N.Y. 2017) (citing Ebrahimian v. Nationwide Mut. Fire Ins. Co. , 960 F.Supp.2d 405, 416 (E.D.N.Y. 2013) ).Here, the Cour......
-
Blackwell v. City of Bridgeport
... ... Utica Coll. of Syracuse Univ. , 453 F.3d 112, 116 (2d ... ...
-
Magnacoustics, Inc. v. Integrated Comput. Sols., Inc.
...also the predicate for a claim for breach of . . . an express provision of the underlying contract." Utica Mut. Ins. Co. v. Fireman's Fund Ins. Co., 238 F. Supp. 3d 314, 324 (N.D.N.Y. 2017) (quoting Haym Salomon Home for the Aged, LLC v. HSB Grp., Inc., No. 06-CV-3266 (JG) (JMA), 2010 WL 30......