Resnick v. Chubb Corp. , 74 F. App'x 216 ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
9-8-2003
Resnick v. Chubb Corp
Precedential or Non-Precedential: Non-Precedential
Docket No. 02-3843
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2003
Recommended Citation
"Resnick v. Chubb Corp" (2003). 2003 Decisions. Paper 284.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/284
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2003 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-3843
JOEL RESNICK,
Appellant
v.
CHUBB CORPORATION;
PACIFIC INDEM NITY INSURANCE, CO., INC.;
FEDERAL INSURANCE COMPANY
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
D.C. Civil Action No. 02-cv-04729
(Honorable Harvey Bartle, III)
Submitted Pursuant to Third Circuit LAR 34.1(a)
July 28, 2003
Before: SCIRICA, Chief Judge, RENDELL and AMBRO, Circuit Judges
(Filed September 8, 2003)
OPINION OF THE COURT
SCIRICA, Chief Judge.
The District Court granted defendant’s motion to dismiss the complaint in this
insurance litigation. Plaintiff appeals. We will affirm.
I.
On January 18, 2000, Joel Resnick was in Brazil on a business trip. While riding
as a passenger in a taxi cab, Resnick was involved in an accident when the driver
allegedly had an epileptic seizure causing him to drive off the road and strike a pole.
Resnick sustained injuries from the accident.
Resnick believed that the taxi driver was uninsured and sought uninsured motorists
benefits from his insurance providers. At the time of the accident, Resnick and his wife
had two insurance policies: a Masterpiece Auto Preference Policy issued by Federal
Insurance Co. and a Masterpiece Excess Liability Policy issued by Pacific Indemnity
Insurance Co., Inc. Chubb Corporation is the parent company of both Federal Insurance
and Pacific Indemnity.
In a letter from the Chubb Group of Insurance Companies, Federal Insurance and
Pacific Indemnity denied the claims. The letter quoted language in the Federal Insurance
auto policy that “coverage applie[d] to a loss occurring anywhere in the United States of
America, its territories or possessions, Puerto Rico or Canada,” thus providing no
coverage for the accident. The letter also stated that, while the Pacific Indemnity excess
policy provided liability coverage anywhere in the world, uninsured motorists protection
2
was limited to the geographical restrictions set forth in the Federal Insurance policy.
According to the letter, the Pacific Indemnity policy also provided no coverage for the
accident.
Resnick filed suit in federal court against Federal Insurance, Pacific Indemnity and
Chubb, alleging breach of contract and breach of fiduciary duty, and seeking declaratory
relief. In response to defendants’ motions to dismiss, Resnick acknowledged that he was
not entitled to benefits under the Federal Insurance policy because of its geographical
restrictions and that he could not maintain his fiduciary duty claim against any of the
defendants.
The District Court granted the motions to dismiss on all claims for all defendants.
On appeal, Resnick challenges the District Court’s judgment as to Pacific Indemnity, the
issuer of the excess policy. 1 He does not pursue claims against Federal Insurance or
Chubb.
1
We have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over the
District Court’s grant of defendant’s motion to dismiss. See Green v. Am. Online (AOL),
318 F.3d 465, 470 (3d Cir. 2003). “We accept all factual allegations in the complaint as
true, and we draw all reasonable inferences in the light most favorable to the plaintiff.
We will affirm only if no relief could be granted under any set of facts the plaintiff could
prove.” Id.3
II.
A.
Resnick contends the Pacific Indemnity policy provides coverage for his accident
based on provisions detailing the policy’s uninsured motorists protection. The policy
provides:
We cover damages for bodily injury a covered person is legally
entitled to receive from the owner or operator of an uninsured or
underinsured motorized land vehicle. We cover these damages in excess of
the underlying insurance or the Required Primary Underlying Insurance,
whichever is greater, if they are caused by an occurrence during the policy
period, unless otherwise stated.
...
This coverage will follow form.
The policy defines “follow form” to mean:
We cover damages to the extent they are both covered under the
Required Primary Underlying Insurance and, not excluded under this part of
your Masterpiece Policy. Also, the amount of coverage, defense coverages,
cancellation and “other insurance” provisions of this policy supersede and
replace the similar provisions contained in such other policies. When this
part of your policy is called upon to pay losses in excess of required primary
underlying policies exhausted by payment of claims, we do not provide
broader coverage than provided by such policies. When no primary
underlying coverage exists, the extent of coverage provided on a follow
form basis will be determined as if the required primary underlying
insurance had been purchased from us.
Resnick acknowledges that the first sentence of this provision supports Pacific
Indemnity’s argument that its policy only provides protection when there is coverage
under the required primary underlying insurance, and therefore because the underlying
Federal Insurance policy does not provide coverage due to geographical limitations, the
4
Pacific Indemnity policy would not provide coverage either. But Resnick focuses on the
last sentence in the follow form definition. Resnick argues the last sentence provides that
when there is no underlying coverage, such coverage will be deemed to exist. As such,
Resnick contends that here the Pacific Indemnity policy still provides coverage, given the
assumed underlying coverage, even though no actual underlying coverage is provided by
the Federal Insurance policy.
We believe that Resnick’s interpretation of the Pacific Indemnity policy is
incorrect. 2 The clear language is that the policy provides excess uninsured motorists
coverage when the underlying policy provides uninsured motorists coverage. The last
sentence in the follow form definition provides that, if the underlying policy was not
issued by a Chubb insurer and does not provide coverage, or if there is no underlying
insurance at all, the Pacific Indemnity policy will still provide excess coverage if
2
In diversity actions, the court must determine which state’s law applies. The District
Court held that, under both Pennsylvania and Kansas law, when an insurance policy is
clear and unambiguous, the policy must be enforced as made. See Med. Protective Co. v.
Watkins, 198 F.3d 100, 103 (3d Cir. 1999) (Under Pennsylvania law, “[w]hen the
language of an insurance contract is clear and unambiguous, a court is required to enforce
that language.”); Catholic Diocese v. Raymer, 840 P.2d 456, 459 (Kan. 1992) (Under
Kansas law, “[w]hen an insurance contract is not ambiguous, the court may not make
another contract for the parties. Its function is to enforce the contract as made.”). Thus,
there was no need for an extensive choice of law examination in analyzing Resnick’s first
argument. The parties do not challenge the District Court’s choice of law determination
and because there is no ambiguity in the Pacific Indemnity policy, we enforce the policy’s
language.
As we discuss, Resnick’s second argument focuses on a specific Kansas statute.
As such, we analyze this matter under Kansas law.
5
underlying coverage would have been provided by a Chubb insurer. 3 Because here the
underlying Federal Insurance policy does not provide coverage for the accident, the
Pacific Indemnity policy does not provide coverage. The last sentence in the follow form
definition plays no role here because the underlying insurance was issued by a Chubb
insurer. Thus, the District Court correctly concluded that coverage is not required under
the language of the Pacific Indemnity policy. 4
3
In like manner, the District Court read the last sentence in the follow form definition
to mean:
[I]f underlying insurance was purchased from a company other than a
Chubb subsidiary, and contained no coverage, the excess insurer would
look to the underlying coverage that the insured would have had under a
policy written by a Chubb subsidiary. If a Chubb subsidiary such as Federal
would have provided underlying coverage, then there would be excess
coverage by the Chubb excess carrier even though the non-Chubb
underlying policy did not provide coverage.
Resnick v. Chubb Corp., No. 02-4729, at 6 (E.D. Pa. Oct. 2, 2002). Resnick disagrees
arguing that the Pacific Indemnity policy makes no reference to a distinction between
underlying policies issued by Chubb insurers and underlying policies issued by non-
Chubb insurers. But this distinction is made by the last sentence in the follow form
definition, which contrasts other underlying policies with underlying policies “purchased
from us.” Resnick offers no viable explanation for the reference to underlying insurance
“purchased from us.”
4
To support his argument, Resnick also cites to another policy provision that states:
Failure [to maintain the required primary underlying insurance], or
failure of any of your primary underlying insurers due to insolvency or
bankruptcy, shall not invalidate this part of your policy. In the event of any
such failure, we shall only be liable in excess of the foregoing minimum
amounts and to no greater extent with respect to coverages, amounts and
defense costs than we would have been had this failure not occurred.
6
B.
Resnick also contends that, even if the Pacific Indemnity policy does not provide
coverage for the accident, coverage is required by law. For this argument, Resnick points
to Kansas Statutes Annotated § 40-284(a), which requires that certain insurance policies
provide uninsured motorists coverage limits equal to liability coverage limits.5 Resnick
argues that because the Pacific Indemnity policy provides worldwide liability coverage,
the statute requires that the policy also provide co-extensive uninsured motorists coverage
and cover the accident here.
But this provision provides no coverage here.
5
Kansas Statutes Annotated § 40-284(a) provides:
No automobile liability insurance policy covering liability arising out of the
ownership, maintenance, or use of any motor vehicle shall be delivered or
issued for delivery in this state with respect to any motor vehicle registered
or principally garaged in this state, unless the policy contains or has
endorsed thereon, a provision with coverage limits equal to the limits of
liability coverage for bodily injury or death in such automobile liability
insurance policy sold to the named insured for payment of part or all sums
which the insured or the insured’s legal representative shall be legally
entitled to recover as damages from the uninsured owner or operator of a
motor vehicle because of bodily injury, sickness or disease, including death,
resulting therefrom, sustained by the insured, caused by accident and arising
out of ownership, maintenance or use of such motor vehicle, or providing
for such payment irrespective of legal liability of the insured or any other
person or organization. No insurer shall be required to offer, provide or
make available coverage conforming to this section in connection with any
excess policy, umbrella policy or any other policy which does not provide
primary motor vehicle insurance for liabilities arising out of the ownership,
maintenance, operation or use of a specifically insured motor vehicle.
7
The flaw in Resnick’s argument is that Kansas Statutes Annotated § 40-284(a)
explicitly excludes excess and umbrella policies from its requirements. The statute
provides:
No insurer shall be required to offer, provide or make available coverage
conforming to this section in connection with any excess policy, umbrella
policy or any other policy which does not provide primary motor vehicle
insurance for liabilities arising out of the ownership, maintenance, operation
or use of a specifically insured motor vehicle.
Kan. Stat. Ann. § 40-284(a).
Nonetheless, Resnick contends the Pacific Indemnity policy does not fit into the
exclusion, arguing that the policy functions as both primary and excess insurance and thus
must adhere to the requirements of the statute. In support, Resnick cites to a provision in
the Pacific Indemnity policy explaining the extent of the liability coverage. The provision
states:
We cover damages a covered person is legally obligated to pay for
personal injury or property damage, caused by an occurrence:
• in excess of damages covered by the underlying insurance; or
• from the first dollar of damage where no underlying insurance is required
under this policy and no underlying insurance exists; or
• from the first dollar of damage where underlying insurance is required
under this policy but no coverage is provided by the underlying insurance
for a particular occurrence, unless stated otherwise or an exclusion applies.
Resnick argues that because the policy provides liability coverage “from the first dollar of
damage” when no underlying coverage is available, it serves as primary insurance, as well
as excess insurance.
8
But the fact that the policy provides liability coverage “from the first dollar” in
certain instances does not render the exclusion in Kansas Statutes Annotated § 40-284(a)
inapplicable. Applying Kansas law, the United States District Court for the District of
Kansas explained the proper categorization of this type of insurance, which provides both
coverage in excess of damages covered by the underlying insurance and, at times, first
dollar coverage. Such “hybrid” coverage constitutes umbrella insurance. Fid. & Deposit
Co. of Md. v. Hartford Cas. Ins. Co., 189 F. Supp. 2d 1212, 1223 (D. Kan. 2002).
[A]n umbrella policy generally provides two types of coverage: excess
coverage and, when broader than the underlying policy, primary coverage.
An umbrella policy provides standard excess insurance coverage that
applies after a predetermined amount of primary coverage is exhausted.
Additionally, an umbrella policy can provide broader coverage than the
underlying policy, meaning that the umbrella policy will “drop down” to
provide primary coverage.
Id. (citations omitted); see also Coleman Co., Inc. v. Cal. Union Ins. Co., 960 F.2d 1529,
1530 n.1 (10th Cir. 1992) (similarly defining umbrella insurance in suit under Kansas
law). Thus, the liability insurance provided by Pacific Indemnity might be better termed
“umbrella,” rather than “excess,” but, in any event, it is not primary insurance. Because
excess and umbrella policies are explicitly excluded from the requirements of Kansas
Statutes Annotated § 40-284(a), the statute does not require that the Pacific Indemnity
9
policy provide uninsured motorists coverage to the same extent it provides liability
coverage. For this reason, there is no coverage here.6
III.
The Pacific Indemnity policy does not provide coverage for this accident nor is
such coverage required by law. For these reasons, we will affirm the District Court’s
order granting Pacific Indemnity’s motion to dismiss.
6
Resnick argues that included in the requirement that uninsured motorists coverage
limits must equal liability coverage limits is the requirement that the coverages be
geographically co-extensive. We need not address this argument because we hold the
Pacific Indemnity policy is excluded from the requirements of Kansas Statutes Annotated
§ 40-284(a).
Also, there is no need to address Pacific Indemnity’s argument that, even if the
Kansas statute applied here, coverage would be denied because of a business pursuits
exclusion in the policy.
10
TO THE CLERK:
Please file the foregoing opinion.
/s/ Anthony J. Scirica
Chief Judge
DATED: September 8, 2003
11