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GENERALI v. GENESIS INS. CO.

May 20, 1996

GENERALI - U.S. BRANCH, Plaintiff, against GENESIS INSURANCE CO. and GENESIS UNDERWRITING MANAGEMENT CO., Defendants.


The opinion of the court was delivered by: KOELTL

 JOHN G. KOELTL, District Judge:

 This is an action by Generali - U.S. Branch, ("Generali"), against Genesis Insurance Co. and Genesis Underwriting Management Co., (collectively "Genesis"), for contribution of $ 3.375 million representing one-half of Generali's settlement of an insurance claim arising from a fire loss on November 23, 1992 in Philadelphia, Pennsylvania. Generali is a corporation organized and existing under the laws of New York with its principal place of business in New York. Both Genesis defendants are Connecticut corporations with their principal places of business in Connecticut. Jurisdiction is based on diversity of citizenship. See 28 U.S.C. § 1332.

 Generali alleges that Genesis was a co-insurer of the property and is obligated to contribute equally to the settlement of the claim. Genesis denies any liability and asserts a variety of affirmative defenses as well as a counterclaim for reformation of the Genesis insurance policy to reflect that it was allegedly cancelled prior to the November 23, 1992 loss.

 Genesis' cross-motion for summary judgment is also based on three arguments. First, Genesis argues that its policy was in fact cancelled. Second, Genesis argues that it did not receive timely notice of the fire loss, either from its alleged co-insurer Generali, or the insured, Lasdon, or his agents. Third, relying on principles of res judicata, Genesis argues that Generali's failure to raise the "Other Insurance" provision in its policy as a defense in the initial lawsuit by Lasdon on the underlying claim bars Generali from asserting it now as the basis of an action for contribution against Genesis. Generali contests each of these arguments. With respect to the cancellation of the Genesis policy, Generali argues (i) that the cancellation was ineffective under Pennsylvania law because Lasdon had paid the premium; (ii) that Lasdon's agents were not capable of authorizing cancellation or substitution of Genesis' coverage; and (iii) that Lasdon never authorized or acquiesced to any such cancellation or substitution in any event. Generali also argues that Genesis as a co-insurer in an action for contribution cannot assert the lack of timely notice as a defense. Finally, Generali argues that even if Genesis were entitled to such a defense, it did receive notice once Generali learned of the Genesis coverage and Genesis suffered no prejudice from the delay.

 For the reasons that follow, both motions are denied.

 I.

 Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Id., 22 F.3d at 1224.

 The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts which are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962)); see also Gallo, 22 F.3d at 1223.

 II.

 The principal thrust of Generali's summary judgment motion is that Genesis could not have lawfully cancelled the policy covering the Philadelphia property based on non-payment of premiums because Lasdon did, in fact, pay. Generali maintains it is entitled to judgment as a matter of law on this point because of the alleged absence of evidence to controvert its contention that Lasdon's premium payment was made to Genesis. That contention is premised on two independent theories. First, Generali alleges an agency relationship existed between Genesis and the wholesale insurance broker, S. Kornreich & Sons ("Kornreich") and Associated Programs, Inc. ("API"), a separate corporate division within Kornreich responsible for the administration of a wholesale insurance brokerage program through which Lasdon purchased insurance (API and Kornreich are collectively referred to as "API/Kornreich"). Generali argues that Genesis has failed to offer any evidence to dispute the fact that Lasdon paid premiums to API/Kornreich, through the local broker, Laster, Samans & Levin ("LS&L"). Generali then argues that API/Kornreich was Genesis' agent for the purpose of collecting premium payments by virtue of the brokerage agreement between the two. Generali's second argument is based on Genesis allegedly returning the unearned Portion of Lasdon's premium payment to API/Kornreich. Generali argues that this action by Genesis eliminates any question that Genesis received the premium payment from Lasdon and, therefore, that cancellation for non-payment was improper.

 Under either of these two arguments, Generali concludes that the Genesis policy covering the Philadelphia property was in force on the date of the loss. Generali goes on to argue that it is entitled to contribution from Genesis by virtue of the "Other Insurance" provision of the Generali policy. Generali argues that this provision limits its liability to its pro rata share of coverage based on the relationship of the applicable limits of the policies. Because the two policies have applicable limits of $ 10 million, each insurer is liable for ...


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