WCHCC (Bermuda) Ltd. v. Granite State Insurance ( 2014 )

13-2438-cv(L)
WCHCC (Bermuda) Ltd v. Granite State Ins. Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED
WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York, on
the 5th day of May, two thousand fourteen.
PRESENT: JOHN M. WALKER, JR.,
DENNY CHIN,
CHRISTOPHER F. DRONEY,
Circuit Judges.
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WCHCC (BERMUDA) LIMITED,
Plaintiff-Appellee,
-v- 13-2438-CV
13-2866-CV
GRANITE STATE INSURANCE COMPANY,
Defendant-Appellant.
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FOR PLAINTIFF-APPELLEE: BARRY G. SARETSKY, Saretsky Katz
Dranoff & Glass, LLP, New York,
New York.
FOR DEFENDANT-APPELLANT: ROSS P. MASLER, McGaw, Alventosa &
Zajac, Jericho, New York, and Glen
A. Kaminska, Ahmuty, Demers &
McManus, Albertson, New York.
Appeal from the United States District Court for the
Southern District of New York (Briccetti, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Defendant-appellant Granite State Insurance Company
("Granite") appeals from the district court's judgment in favor
of plaintiff-appellee WCHCC (Bermuda) Limited ("WCHCC") awarding
WCHCC $1,211,342.47 plus interest. Judgment was entered after
the district court granted, by memorandum decision filed June
10, 2013, WCHCC's motion for summary judgment. We assume the
parties' familiarity with the facts, procedural history, and
issues on appeal.
In brief, Granite issued professional liability
insurance to a nurse working at the Westchester Medical Center
("WMC"). Granite argues that the coverage it supplied to the
nurse was junior to the general liability insurance WMC obtained
from WCHCC for itself and its staff. Granite thus argues that
when the nurse settled a medical malpractice suit filed in state
court, WCHCC should have paid first, with Granite owing only the
amount in excess of WCHCC's coverage. The district court
disagreed, holding that language in WCHCC's insurance policy
rendered it excess to the Granite policy.
Summary judgment is appropriate when "there is no
genuine dispute as to any material fact and the movant is
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entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a). We review de novo a district court's grant of summary
judgment after construing all evidence, and drawing all
reasonable inferences, in favor of the non-moving party. See,
e.g., McElwee v. Cnty. of Orange, 700 F.3d 635, 640 (2d Cir.
2012). "As with the construction of contracts generally,
unambiguous provisions of an insurance contract must be given
their plain and ordinary meaning, and the interpretation of such
provisions is a question of law for the court." Vigilant Ins.
Co. v Bear Stearns Cos., 884 N.E.2d 1044, 1047 (N.Y. 2008)
(internal quotation marks omitted). We therefore review de novo
the district court's interpretation of the insurance provisions
at issue.
Under New York law, when each of two insurance
policies "generally purports to be excess to the other, the
excess coverage clauses are held to cancel out each other and
each insurer contributes in proportion to its limit amount of
the insurance." Lumbermens Mut. Cas. Co. v. Allstate Ins. Co.,
417 N.E.2d 66, 68 (N.Y. 1980). This rule is inapplicable,
however, "when its use would distort the meaning of the terms of
the policies involved," which "turns on consideration of the
purpose each policy was intended to serve as evidenced by both
its stated coverage and the premium paid for it, as well as upon
the wording of its provision concerning excess insurance."
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State Farm Fire & Cas. Co. v. LiMauro, 482 N.E.2d 13, 17 (N.Y.
1985) (internal citation omitted).
Even insurance policies that claim to be excess can be
placed in a "pecking order" consistent with the nature of
protection each competing policy confers. See Argonaut Ins.
Co., v. U.S. Fire Ins. Co., 728 F. Supp. 298, 300 (S.D.N.Y.
1990). Such is the case here. We are presented with policies
that are only superficially similar: both have "other
insurance" clauses, but the plain language of each policy
provides for different coverage.
In Lumbermens, the Court of Appeals of New York noted
that there are three general types of excess insurance policies,
the first two of which are relevant here. The first Lumbermens
category encompasses policies generally stating that they are
excess to other sources of insurance. See 417 N.E.2d at 67
(noting that policy provided that "[i]f there is other
insurance[, this policy] . . . shall be excess insurance"
(internal quotation mark omitted)). The second Lumbermens
category encompasses policies stating that they are excess to
other policies, but specifically addressing their interplay with
other excess policies. See id.
Granite's "other insurance" clause mirrors the
language of the first Lumbermens category. The Granite policy
provides that "if there is other insurance, which applies to the
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loss covered under this Policy, the other insurance must pay
first." (App. 26-27). While the Granite policy would be
considered "excess" of primary insurance, it contains no
explicit statement about its position with respect to other
excess policies.
By contrast, the WCHCC policy falls within the second
Lumbermens category. It provides that it is "excess of any
valid and collectible insurance or self insurance coverage
afforded or provided to . . . a nurse . . . , whether such other
insurance or self insurance is stated to be primary, contingent,
[or] excess." (App. 42) (emphases added). The WCHCC policy
thus specifically provides that it is excess to any policy
provided to a nurse, whether excess or otherwise. Although the
WCHCC policy also contains a provision contemplating equal
contribution, this provision is triggered only when another
policy applies "on the same basis." (App. 43). That is not the
case here: by its explicit terms, the WCHCC policy does not
apply on the same basis as the Granite policy.
The plain language of these other insurance provisions
compels the conclusion that these policies should be tiered,
consistent with Lumbermens. Accordingly, we agree with the
district court that the WCHCC policy is excess and the Granite
policy must be exhausted first. See Lumbermens, 51 N.E.2d at 68
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(finding that policy was senior where it "clearly provided that"
another policy "should be exhausted first").
The disparity in premiums for each policy does not
vitiate this conclusion because the policies themselves are not
comparable. WCHCC's policy provides comprehensive professional
liability and commercial liability coverage for the WMC -- an
entire hospital -- and its employees, while Granite merely
covers professional liability for one nurse. The difference in
premiums is thus not instructive in determining tiers of
coverage. See Northbrook Excess & Surplus Ins. Co. v. Chubb
Grp. of Ins. Cos., 496 N.Y.S.2d 430, 433 (1st Dep't 1985) ("In
evaluating the significance of the amount of the premium, it is
clearly important to measure that premium against the
[comprehensiveness of the] coverage provided by that policy."),
aff'd mem., 494 N.E.2d 448 (N.Y. 1986).
Granite also argues that WCHCC did not have the
authority to enter into a settlement on behalf of the nurse. We
disagree. As the district court noted, Granite was informed of
the case against the nurse by January 2009, two years before
settlement was reached, but opted not to participate in pre-
trial negotiations. Indeed, in November 2010, the nurse, the
hospital, and WCHCC all sought to engage Granite's participation
in mediation and settlement talks. Instead of participating,
Granite, through its counsel, "demanded" that WCHCC continue to
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defend the nurse throughout mediation and settlement
negotiations. In light of Granite's failure to object to
WCHCC's involvement in settlement negotiations -- of which it
was fully aware and in which it could have participated -- it
has no basis upon which to challenge WCHCC's representation of
the nurse.
We have considered appellant's remaining arguments and
conclude they are without merit. For the foregoing reasons, we
AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk
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