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March 22, 1984


The opinion of the court was delivered by: CARTER

CARTER, District Judge: Old Republic Insurance Co. ("Old Republic"), has sued Concast, Inc. ("Concast"), Sumitomo Heavy Industries ("SHI"), and Federal Insurance Co. ("Federal"), for a declaratory judgment that its Umbrella Policy with Concast does not afford coverage to SHI. Old Republic provides excess liability insurance to Concast. Federal is Concast's primary insurer. The issue of SHI's coverage under Concast's insurance policy with Old Republic arises out of a subcontract between Concast and SHI. The question here is whether, under the terms of Old Republic's policy with Concast, Old Republic is obligated to provide coverage to SHI because of a provision in the subcontract which obligates Concast to provide products liability coverage to SHI.

The question is presented by two motions for summary judgment pursuant to F.R.Civ.P. 56, one filed by Concast against Old Republic, in which SHI joins, *fn1" the other, a cross-motion by Old Republic against Concast, SHI and Federal. Concast argues that if the language of Old Republic's insurance policy is construed literally, it is apparent that, under either one of two provisions, SHI is covered by that policy. Old Republic, relying on the same tack, maintains that the policy prohibits the addition of SHI as an assured. Under one provision, it claims, the addition is precluded entirely; under the other, the addition cannot be effected unless Old Republic receives notice of the addition, which it maintains Concast neglected to provide.

 Because Old Republic's reading of the policy's relevant provisions is not one the Court shares, summary judgment is granted to Concast and SHI. In addition, summary judgment is awarded to Federal due to the absence of any actual controversy between it and Old Republic.


 Concast is in the business of engineering and selling steel-making equipment, including continuous casting complexes made by other manufacturers. On March 2, 1979, it entered into a subcontract with SHI for the design, manufacture and shipment of certain elements of a continuous casting complex; Concast had contracted to deliver and install such a casting complex at National Steel Corporation's Granite City Steel Division ("Granite City"), in Illinois. SHI carried no products liability insurance and § 7.5 of the subcontract between SHI and Concast provided that SHI was to be included as "an additional named insured under Concast's own insurance policy." *fn2"

 In 1979 Concast had a $500,000 primary comprehensive liability insurance policy with Federal, which it renewed through its insurance broker, third-party defendant Fred. S. James & Co. of New York, Inc. ("James"). *fn3" On Concast's behalf, James also arranged through Baccala & Shoop Insurance Services ("Baccala"), a general agent for several insurance companies, for a $10,000,000 excess liability insurance policy with Puritan Insurance Company ("Puritan"), to begin April 30, 1979. Both policies were renewed with the same carriers for the year commencing April 30, 1980. On April 30, 1981, the Federal policy was again renewed, but James transferred the excess coverage from Puritan to Old Republic, which was also represented by Baccala. The coverage provided by Old Republic was identical to that which Puritan had offered.

 In compliance with the terms of the subcontract between SHI and Concast, Concast claims that it instructed James to secure coverage for SHI under all of the former's primary and excess liability policies for claims that could arise in connection with the continuous casting complex. In December, 1980, at Concast's request, James obtained a certificate of insurance from Federal, which Concast forwarded to SHI confirming that SHI had been added as an additional named insured on the primary policy. No such certificate was obtained from Old Republic.

 On July 7, 1981, three employees of Granite City were injured and they brought personal injury actions against Concast, SHI, and others. Their injuries, they claimed, resulted from defects in the continuous casting complex. Federal defended and indemnified SHI with regard to these actions. Old Republic refused to do so, denying that SHI was an insured under the terms and conditions of its excess policy with Concast. Shortly thereafter, Old Republic brought its declaratory judgment action. *fn4"


 The terms of the policy set out below over which the parties center their disagreement concern the definition of "assured".

 1. ASSURED --

 The unqualified word "Assured" wherever used in this policy includes:

 (c) any person, organization, trustee or estate to whom the Named Assured is obligated by virtue of a written contract or agreement to provide insurance such as is afforded by this policy, but only to the extent of such obligation and in respect of operations by or on behalf of the Named Assured or of facilities of the Named Assured or of faciilites used by the Named Assured.

 (d) any additional assured (not being the Named Assured under this policy) included in the Underlying Insurances, subject to the provisions in Condition B; but not for broader coverage than is available to such additional Assured under ...

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