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FOLKSAMERICA REINSURAMCE CO. v. REPUBLIC INSURANCE CO.

April 28, 2004.

FOLKSAMERICA REINSURANCE COMPANY, Successor-in-interest of MONY REINSURANCE CORPORATION, Plaintiff
v.
REPUBLIC INSURANCE COMPANY, Defendant REPUBLIC INSURANCE COMPANY, Third-Party Plaintiff -against- AON CORPORATION, AON RE WORLDWIDE, INC., AON SERVICES GROUP, INC. and AON SPECIALTY RE, INC. Third-Party Defendants



The opinion of the court was delivered by: HAROLD BAER, JR., District Judge

SUPPLEMENTAL OPINION & ORDER

Defendant Republic Insurance Co. ("Republic") moves (1) pursuant to Federal Rule of Civil Procedure ("Fed.R. Civ. P.") 56(c), for summary judgment against plaintiff Folksamerica Reinsurance Co. ("Folksamerica") on the issue of whether Republic violated the Definitive Statement of Loss ("DSOL") provisions of the J.T. Thorpe Co., Inc. ("Thorpe") Certificates; (2) to strike the Declaration of I. Davis Jessup, II ("Jessup Declaration") and certain portions of Folksamerica's 56.1 Opposition;*fn1 and (3) to voluntarily dismiss, without prejudice, its counterclaims for bad faith and unjust enrichment, pursuant to Fed. R. Civ. P. 41(a); and Folksamerica brings a separate motion for partial summary judgment against Republic, to dismiss Republic's bad faith counterclaim (with prejudice). Third party defendants Aon Re Worldwide, Inc. and Aon Specialty Re, Inc. (collectively "Aon") join in support of Republic's motion for summary judgment. For the following reasons, (1) Republic's motion for summary judgment, on the DSOL issue, is granted; (2) Republic's motion to strike is granted-in-part and denied-in-part; (3) Folksamerica's motion for summary judgment, dismissing Republic's bad faith counterclaim, is granted; and (4) Republic's motion to voluntarily dismiss, without prejudice, its counterclaims for bad faith and unjust enrichment, is denied.

I. DISCUSSION

 A. Background

  This declaratory judgment action involves a reinsurance coverage dispute between Folksamerica (the reinsurer), Republic (the insurer), and Aon (the reinsurance broker) — stemming from alleged late "notice" to Folksamerica of claims under several reinsurance Certificates involving two insureds — Clemtex, Ltd. ("Clemtex"), a supplier and/or manufacturer of sandblasting equipment, and Thorpe, a masonry and insulation contractor. Late last year, all three entities submitted extensive summary judgment motions, and after argument, this Court made the following determinations:

  Republic's violations of any notice provisions contained within the Certificates do not relieve Folksamerica of its obligation to indemnify Republic. Further . . . with regard to Clemtex, Republic did not violate the DSOL provision. However, summary judgment on the following issues of fact, with regard to the Thorpe Certificates, is inappropriate: (a) whether Republic violated the DSOL provision in the Thorpe Certificates, due to untimely submission, (b) whether the untimeliness, if any, of Republic's submission of the DSOL under Thorpe was unreasonable, and (c) whether, if such violations are deemed unreasonable, Republic's proffered excuse that Aon is the party at fault or that Folksamerica had constructive notice as a result of GLARC [a Treaty], or any other defense, will be credited. Folksamerica Reins. Co. v. Republic Ins. Co., 03 Civ. 0402, 2003 U.S. Dist. LEXIS 21584, at *53 (S.D.N.Y. Dec. 2, 2003).

  Because the parties had been unable to complete discovery, due to the illness of an important witness, the record did not contain the evidence necessary for the Court to resolve whether Republic had violated the DSOL under the Thorpe Certificates, and if so, whether such violation was reasonable. Subsequently, this needed discovery was completed, and, in order to streamline the proceedings, at Republic's request, the Court authorized a second round of summary judgment on this open issue, in order to provide the parties with an additional opportunity to obviate the need for a trial.*fn2

  Therefore, this Opinion begins where the prior left off. For a complete discussion of the factual and procedural background of this case, reference to the First Amended Opinion & Order, is advised. Folksamerica Reins. Co., 2003 U.S. Dist. LEXIS 21584, at *53.

  II. DISCUSSION

 A. Summary Judgment Standard of Review

  Pursuant to Fed.R.Civ.P. 56(c), a district court must grant summary judgment if the evidence demonstrates that "there is no genuine issue as to any material fact and [that] the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250 (1986). "Summary judgment is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to `secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986), quoting Fed.R.Civ.P. 1.

  In determining whether there is a genuine issue of material fact, a court must resolve all ambiguities and draw all inferences against the moving party. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). However, the mere existence of disputed factual issues is insufficient to defeat a motion for summary judgment. Knight v. United States Fire Ins. Co., 804 F.2d 9, 11-12 (2d Cir. 1986), cert. denied, 480 U.S. 932 (1987). The disputed issues of fact must be "material to the outcome of the litigation" (id. at 11), and must be backed by evidence that would allow "a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. With respect to materiality, "substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248. "Summary judgment is particularly appropriate in resolving insurance coverage disputes, because the interpretation of an insurance policy presents a question of law." Constitution Reins. Corp. v. Stonewall Ins. Co., 980 F. Supp. 124, 127 (S.D.N.Y. 1997), aff'd without opinion, 182 F.3d 899 (2d Cir. 1999) (citation omitted). See also Flair Broad. Corp. v. Powers, 733 F. Supp. 179, 184 (S.D.N.Y. 1990).

  "Ascertaining whether or not a writing is ambiguous is a question of law for the trial court." Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan et al., 7 F.3d 1091, 1094 (2d Cir. 1993) (citations omitted). Although it is true that "a motion for summary judgment may be granted only where the agreement's language is unambiguous and conveys a definite meaning" (id.) (internal quotations and citations omitted), "a court may not [] find ambiguity" in a reinsurance ...


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