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ARGONAUT INS. CO., INC. v. U.S. FIRE INS.

January 16, 1990

ARGONAUT INSURANCE COMPANY, INC., PLAINTIFF,
v.
U.S. FIRE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

This coverage dispute between Argonaut Insurance Company, Inc. ("Argonaut") and U.S. Fire Insurance Company ("U.S. Fire") was argued before the court following the parties' submission in lieu of trial of an agreed statement of facts. Based on the findings and conclusions set forth below, judgment will be entered directing dismissal of Argonaut's complaint against U.S. Fire.

Prior Proceedings

This is one of three related proceedings initiated in 1986 to resolve several coverage disputes arising between Argonaut, U.S. Fire, and Hartford Indemnity Insurance Co. ("Hartford") with respect to insurance carried by Mount Sinai Hospitals ("Mount Sinai"). By order of the court dated July 15, 1986, Samuel Cantor, Esq. was appointed as Special Master to oversee discovery and to consider and make recommendations with respect to certain dispositive motions made by Argonaut and U.S. Fire in these proceedings.

On July 8, 1987, the Special Master issued a report recommending denial of these parties' motions. The court, by opinion of December 11, 1987, considered the objections to the report and determined that the motions should be denied. Following additional discovery and further motion practice, which did not result in the disposition of these actions, the proceedings were scheduled for a final pre-trial conference on April 4, 1989.

On that occasion, the two other actions (86 Civ. 0358 and 86 Civ. 1232) and the claims brought against Hartford in this action (86 Civ. 0357) were discontinued with prejudice by stipulation and order. The stipulation left only the claim of Argonaut against U.S. Fire in 86 Civ. 0357, which those two parties agreed to submit to resolution on an agreed statement of facts. After several extensions of time, a statement of agreed facts was submitted to the court on August 4, 1989. Following receipt of the parties' memoranda of law and upon oral argument thereon, the matter was taken under submission on August 18, 1989.

The Facts

The following findings of fact are not in dispute. In 1982 a medical malpractice case was brought against Mount Sinai (Bilbraut v. Mount Sinai Hospital, 82 Civ. 6234), which arose from events occurring on March 2, 1971. Bilbraut ended in a structured settlement reached at formal conference on April 17, 1985, calling for the payment of $918,916 to the Bilbraut plaintiff.

At the time of the occurrence, Hartford was the primary carrier for Mount Sinai, having issued a primary medical malpractice policy to the Federation of Jewish Philanthropies ("FOJP"), of which Mount Sinai is a member. Hartford paid $50,000 of the settlement sum.*fn1

Argonaut, an excess carrier for Mount Sinai, paid the remaining amount of $868,916, reserving its rights against Hartford and U.S. Fire. Its malpractice liability policy for the relevant period contained limits of liability of $1 million per occurrence, in excess of a $50,000 deductible. This policy, first reported in 1974, was a "drop back" policy covering claims made from 1974 forward that arose from events occurring between July 1, 1969 and July 1, 1971. The annual premium paid by the insured for this coverage, which extended not only to the Mount Sinai facility but other FOJP facility locations, was $213,500.

Both the U.S. Fire and Argonaut policies contained "other insurance" clauses. The clause in the U.S. Fire policy provides in pertinent part as follows:

  If other collectible insurance with any other
  insurer is available to the insured covering a
  loss also covered hereunder (except insurance
  purchased to apply in excess of the sum of the
  retained limit and the limit of liability
  hereunder) the insurance hereunder ...

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