unclear precisely what loss KSH claims. Id. Accordingly, we
deny both sides' motions as to the storage tank loss.
As to the excavated site loss, KSH has stated in the Joint
Stipulation ¶ 24 that the excavation — the only claimed loss —
was itself defective in part because of the mistaken choice of
the site. However, for the reasons stated in Part II.B.4 above
with regard to the defective slope grading, we lack sufficient
evidence to say whether the defective choice of the site in fact
"resulted" in the site loss*fn22.
For the reasons stated above, we deny NUFI's motion for summary
judgment for the excavated site loss and the storage tank loss.
We also deny KSH's cross-motion for partial summary judgment,
holding that it has failed to produce adequate evidence
implicating all the elements for coverage under the DIC Policy.
V. AIU's Motion for Summary Judgment Dismissing Count IV
In response to our finding in our July 11, 1990 Order that KSH
has stated a claim for estoppel against AIU, AIU argues that:
first, estoppel cannot be evoked to create primary insurance
liability; second, any promise would be outside the statute of
frauds; third, KSH has not identified the essential terms of the
alleged insurance relationship between it and AIU; fourth, KSH
has not offered factual support to show a clear and ambiguous
promise, a necessary element in promissory estoppel claims; and
fifth, because AIU was simply a manager of ICSP's foreign claims
and merely acted as an underwriter and claims processor, it
cannot be estopped from denying that it was an insurer.
In response to these arguments, KSH contends that AIU was in
fact an insurer because of its involvement in the negotiation and
payment of losses, and thus AIU should be held liable for the
losses claimed through the doctrine of estoppel.
In support of its motion, AIU contends that it merely acted as
a claims handler and underwriter for ICSP, and that NUFI did not
retain AIU in these positions. AIU Memorandum of Law in Support
of Summary Judgment Regarding Count IV at 2, 7. AIU cites the
testimonies of RS's Peter Deignan and THK's Baruch Netto. In his
deposition, Deignan stated that THK adjusted all but two claims,
and that these two were handled by other adjustment firms.
Deignan Depo. at 114-115. He stated that the representatives of
AIU never discussed that AIU would act as insurer of KSH's
claims. Id. at 234. He also said, "I don't look upon AIU as the
insurance company but rather as the manager of insurance
companies." Id. at 237-238.
In his affidavit, Baruch Netto of THK elaborates on the history
of KVC's claims report procedure. Netto's account does not refer
to AIU as a participant*fn23.
AIU further contends that KSH has admitted that AIU was merely
a manager and not an insurer because KSH has referred to AIU's
capacity "as foreign manager of ICSP" in the Joint Stipulation.
AIU Memo at 7.
KSH's sole argument in response to AIU's showing is that a
course of dealing existed that established that "from beginning
to end, AIU controlled all aspects of insurance with KSH." KSH
Opp. at 33. KSH contends that AIU was responsible for the
negotiation of the CAR and DIC Policies and that AIU paid KSH for
losses that AIU accepted.
KSH contends that AIU negotiated the CAR and DIC Policies. KSH
makes numerous citations to the affidavit of Deignan and the
deposition of Jonathan Pon, an
AIU executive. The citations to the Pon deposition show that Pon
was familiar with some of the various documents apparently
generated throughout the negotiation of the CAR Policy*fn24. It
is not clear that he was familiar with documents relating to the
KSH also contends that AIU reimbursed KSH for its losses. In
his deposition testimony, James Beecroft, an executive of AIU,
states that RS sent new claims directly to AIU, and that he
examined claims based on the information provided by THK.
Beecroft Depo. at 39-40. KSH contends that if a claim called for
payment, Beecroft authorized a check to be drawn on AIU's account
and transmitted the check to the insured through RS. KSH Memo at
34*fn25. KSH also notes that AIU wrote the letters denying the
two claims necessitating the lawsuit. AIU Memo at 34, citing
Joint Stipulation Exs. D and E.
As for the Joint Stipulation's reference to AIU's position of
"foreign manager," KSH acknowledges the reference but notes that
in Pon's deposition, Pon refers to AIU as a reinsurer and to KSH
as a broker. Pon Depo. at 145.
We find that the parties' showings raise the question of
whether AIU is a risk-bearing entity for the CAR Policy such that
it can be sued as an insurer. See Cloud v. Illinois Ins.
Exchange, 701 F. Supp. 197 (W.D.Okla. 1988); Squibb-Mathieson
International Corporation v. St. Paul Mercury Insurance Co.,
254 N.Y.S.2d 586 (1964). In Squibb-Mathieson, the Court had to
consider whether the American Foreign Insurance Association was
an insurer because the plaintiff had attempted to join the
association as a defendant in order to recover insurance
proceeds. The plaintiff contended that the association
"negotiates and effects the issuance of policies by its members
and, by agreement among its members, negotiates and pays claims
under these policies. . . ." Squibb-Mathieson at 587. The
Squibb-Mathieson Court's findings of fact do not clarify
whether the association actually paid the insured's
reimbursements. However, it was at least clear that the
association's members had agreed to act as reinsurers for one
another. Id. The Court held that the insurance association's
negotiation of the policy and adjustment of claims amounted at
most to brokerage. Id. at 588.
In Cloud, an insurance exchange regulated member syndicates
and prepared and dispensed the syndicates' insurance policies.
The syndicates' checks bore the legend of the exchange, but the
funds were drawn from the syndicates' accounts. Citing
Squibb-Mathieson, the Cloud court found that, without more,
the exchange was not a "risk-bearing entity." Cloud at 199.
In our own case, KSH has presented some evidence that AIU
actually paid losses for the CAR Policy from its own account.
Beecroft's letters to RS describe payment of claims to KSH,
apparently for the CAR Policy, and refer to "our check." These
letters are evidence that AIU has represented to RS, KSH's agent,
that AIU was KSH's insurer. If AIU indeed was the ultimate,
consistent reimburser of losses to KSH for the CAR Policy, and
this status was conveyed to KSH, then this activity would be a
factor weighing in favor of our designating AIU a "risk-bearing
entity" rather than a mere broker.
We find that KSH has raised a genuine issue of material fact as
to whether AIU was a risk bearing entity as to the CAR Policy.
KSH has not, however, rebutted AIU's showing as to the DIC
Policy. Even if the AIU negotiated the DIC Policy, the Beecroft
letters pertain only to the CAR Policy. This is shown by their
citations to numerically-coded claim references indicating the
CAR Policy, not the DIC Policy. Thus, KSH has not offered
evidence to show that AIU was a risk-bearing
entity as to the DIC Policy. We therefore deny AIU's motion for
summary judgment as to the CAR Policy but grant it as to the DIC
In sum, we deny defendants' motion to join as parties RS, SFI,
the Non-Party Reinsurers, and Progressive. With respect to Count
I: We deny ICSP's motion for summary judgment by reason of lack
of direct right of action; we deny ICSP's motion for summary
judgment for reimbursement of the excavated site loss; and we
deny ICSP's motion for summary judgment for reimbursement of the
storage tank loss.
With respect to Count II: We deny NUFI's motion for summary
judgment for the excavated site loss and the entire tank loss,
and we deny KSH's cross-motion for partial summary judgment.
With respect to Count IV, we grant AIU's motion for summary
judgment with respect to the DIC Policy and deny AIU's motion
with respect to the CAR Policy.
The pretrial order in this case will be filed on February 10,
1992. The trial will commence on March 10, 1992.