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CONSOLIDATED EDISON CO. OF NEW YORK v. AETNA INS.

February 8, 1985

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Plaintiff, against AETNA INSURANCE COMPANY and MUTUAL FIRE, MARINE & INLAND INSURANCE COMPANY, Defendants


The opinion of the court was delivered by: NICKERSON

MEMORANDUM AND ORDER

NICKERSON, District Judge

Plaintiff Consolidated Edison Company of New York, Inc. (Consolidated Edison) brought this action against two insurance companies, Aetna Insurance Company (Aetna) and Mutual Fire, Marine & Inland Insurance Company (Mutual), seeking a declaration that the insurance companies afford coverage for any loss sustained as a result of any judgment in a case in this court entitled Cappellini v. McCabe Powers Body Company in which Consolidated Edison was joined a a third-party defendant. The parties move for summary judgment declaring their rights and obligations.

 I

 Thomas Cappellini was injured on May 11, 1973 while using a lift manufactured by McCabe Powers Body Company (McCabe) while he was working as an employee of Consolidated Edison. He and his wife brought the action against McCabe which impleaded Consolidated Edison. The jury rendered a verdict of $1,745,870.68 in favor of the Cappellinis and attributed 85% of the fault to Consolidated Edison and 15% to McCabe. The Court of Appeals upheld the amount of the award but ordered a new trial as to the apportionment of liability between Consolidated Edison and McCabe. 713 F.2d 1 (2d Cir. 1983). The matter is now pending in this court.

 II

 At the time of Cappellini's accident Consolidated Edison had four policies in effect, two issued by Mutual and two by Aetna. One Aetna policy (Aetna Workmen's Compensation policy) called "Workmen's Compensation and Employers' Liability" provides in pertinent part that Aetna will indemnify Consolidated Edison against loss sustained by it on account of (a) compensation and other benefits required of Consolidated Edison by the Workmen's Compensation Law, and (b) sums which Consolidated Edison becomes legally obligated to pay as damages because of bodily injury caused by accident sustained by a Consolidated Edison employee in the course of his employment, including damages for which Consolidated Edison is liable over by reason of suits by others "to recover damages" obtained from them "because of" the bodily injury to a Consolidated Edison employee. Under this policy Consolidated Edison's "retention" is $150,000 per accident and the "limit of indemnity" of Aetna is $1,250,000 per accident.

 This Aetna Workmen's Compensation policy also contains a provision the effect of which is the chief dispute among the parties. It is Condition 10 and reads as follows:

 
If the insured carries other valid and collectible insurance, reinsurance or indemnity with any other insurer or reinsurer covering a loss also covered by this contract (other than insurance or reinsurance that is purchased to apply in excess of the sum of the retained limit and the limit of liability hereunder), the insurance afforded by this contract shall apply in excess of and shall not contribute with such other insurance or reinsurance.

 One Mutual policy (Mutual Umbrella policy), characterized as "Umbrella Liability Insurance," provides indemnity for all sums which Consolidated Edison shall be obligated to pay by reason of liability imposed by law for damages, as defined by the term "ultimate net loss", on account of personal injuries. The term "ultimate net loss" is defined in pertinent part to mean "the total sum which the Insured [Consolidated Edison], or any company as his insurer, becomes obligated to pay by reason of personal injury . . . damage claims." Mutual's limit of liability is stated as only for the "ultimate net loss" in excess of $500,000 and then only up to $500,000 per occurrence.

 The second Aetna policy (Aetna Excess policy) and the second Mutual policy (Mutual Excess policy) are both in "excess" of the Mutual Umbrella policy and provide for limits of liability of $650,000 for Aetna and $350,000 for Mutual per occurrence part of $1,000,000 per occurrence in excess of the $1,000,000 referred to in the Mutual Umbrella policy.

 III

 Mutual contends that it has no liability under its Umbrella policy for any amounts payable in the Cappellini case by reason of Exclusion (c) of that policy, which provides that it shall not apply

 
except with respect to liability assumed under contract covered by this policy, to any obligation for which the Insured may be held liable ...

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