Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

AMER. INT'L SPEC. LINES INS. v. NAT'L ASSOC./BUS. OWN.

June 29, 2004.

AMERICAN INTERNATIONAL SPECIALITY LINES INSURANCE COMPANY, Plaintiff,
v.
NATIONAL ASSOCIATION OF BUSINESS OWNERS AND PROFESSIONALS, THE UNITED STATES OF AMERICA, DAVID W. SILVERMAN, Versuslaw KING, ST. ANDREWS EPISCOPAL CHURCH, DONNA HICKMAN, DOUG GRAY, TERRELL GLENN, BRADY JOHNSON, DAVE JOHNSON, LYNN MITCHELL, CARYL RANDAZZO, GREG SHORE, ANDY TYRRELL, CANTEY WRIGHT, PEDERSEN & SCOTT, P.C., WILLIAM A. SCOTT, VINCENT & BOSTIC, LLP, CURTIS BOSTIC, THAD VINCENT, SANDY SCOTT, CAROL MURPHY, P. BRANDT SHELBOURNE, NUTLOCKER, INC. D/B/A WARM HARDWARE, DAR MACHINE & METALWORKS, INC., PALMETTO PEDIATRICS, INC., RICHARD B. MACDONALD D/B/A BEST GOLF CARS, FIDLER CORPORATION D/B/A MAIL BOXES ETC., TAMARA MICHELLE TRUEL, ROBERT TRUEL, MELISSA G. COLE, MICHAEL COLE, ROBIN DUNBAR, RAYMOND DUNBAR, STANLEY SCHARF, KENT D. MCPHAIL, BARRE C. DUMAS, SUSIE M. NELSON, CYNTHIA MULLINAX, W&W TRUCK & TRACTOR CO., INC., MARY B. GUNNELLS, WILLIAM A. GUNNELLS, TELE TECH CORPORATION, D'S JEWLERS, INC., HARVEY W. RUMPH, MICHELE HASTINGS, FRANCIS H. WALPOLE, PETER HASTINGS as guardian for ERIN HASTINGS (a minor child), FORM-A-TOOL, INC., JAMES E. MUSACCHIA, DAVE LOUDIN, CAROL HIGHTOWER, DON SIEVERT, THOMAS WOOTEN, DAVID C. FLEMING, JIMMY R. SULLIVAN, SR., ROGER L. BOWMAN, LEWIS L. HENSLEE, WILLIAM J. PRICE, TROY T. SWEET, DAVID L. WILLIAMS, BILLY L. CROWE, CURTIS WILBURN, CHARLES GINTHER, JAMES K. BRADBERRY, HAROLD STEWART, ROBERT G. COX, GARY EDENS, DOUGLAS AUSTIN, LAURIE LAMBERT, CHRISTINE A. AUGHTMAN, NEW RIVER HEALTH ASSOCIATION, INC., AND DONNA M. WILSON, and all other employers, and employees of such employers, similarly situated, Defendants. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. CHARLES L. BRADLEY, TERENCE E. RHUE, NOEL SHAW, JR., PAUL D. ASKEW, INTERNATIONAL WORKERS GUILD HEALTH AND WELFARE FUND, THE UNITED STATES OF AMERICA, DAVID W. SILVERMAN, MARY B. GUNNELLS, WILLIAM A. GUNNELLS, TELE TECH CORPORATION, CYNTHIA MULLINAX, and W&W TRUCK & TRACTOR CO., INC., and all other employers and employees of such employers, similarly situated, Defendants.



The opinion of the court was delivered by: ARTHUR SPATT, District Judge

MEMORANDUM OF DECISION AND ORDER

The plaintiffs American International Specialty Lines Insurance Company ("AISLIC") and National Union Fire Insurance Company of Pittsburgh, PA. ("National Union") (collectively, the "plaintiffs") brought separate interpleader actions to resolve multiple and conflicting claims regarding insurance policies that they issued to the defendant National Association of Business Owners & Professionals ("NABOP"). Presently before the Court are letter briefs by the plaintiffs and the South Carolina Defendants concerning the applicable limits of liability under the insurance policy issued by AISLIC to NABOP (the "AISLIC Policy" or the "Policy"). These letter briefs were submitted to the Court pursuant to the Court's Memorandum of Decision and Order dated March 28, 2003.

I. BACKGROUND

  This Court has previously considered this case, and the recitation of the facts set forth in Amer. International Specialty Line Ins. Co. v. Nat'l Assoc. of Business Owners and Professionals, et al., 253 F. Supp.2d 468 (E.D.N.Y. 2003), is incorporated by reference.

  The facts relevant to the instant application are as follows. In February 1998 NABOP applied for a "claims made" policy from AISLIC. On March 6, 1998, AISLIC issued the AISLIC Policy to NABOP in the amount of $1,000,000. NABOP paid AISLIC a premium of $6000 for the AISLIC Policy. This Policy was effective for the period from March 6, 1998 to March 6, 1999. Near the top of the first page of the AISLIC Policy, it is stated in bold print that "THIS IS A CLAIMS MADE POLICY, PLEASE READ CAREFULLY" (emphasis in original).

  Significant language in the original AISLIC Policy stated the following:
1. Errors and Omissions
To pay on behalf of the Insured [NABOP] all sums which [NABOP] shall become legally obligated to pay as Damages resulting from any claim or claims first made against [NABOP] during the Policy Period for any Wrongful Act of [NABOP] or of any other person for whose actions [NABOP] is legally responsible, but only if such Wrongful Act occurs during or prior to the Policy Period and arises solely out of the conduct of [NABOP's] business as an association.
Policy ¶ 1 (emphasis added). A "Wrongful Act is defined as
 
[A]ny actual or alleged: (a) negligent act, breach of duty, error, omission, misstatement or misleading statement, or; (b) infringement of copyright or trademark, or unauthorized use of title; (c) plagiarism, piracy or misappropriation of ideas, or; (d) the publication or utterance of libel, slander or other defamatory or disparaging material or remark, or; (e) invasion or infringement of the right of privacy.
  As stated above, the AISLIC Policy's limit of liability was $1,000,000 aggregate inclusive of defense costs, charges and expenses.
  Thereafter, on July 10, 1998, for an additional premium of $3,727, Endorsement #4, entitled "Increased Limits Endorsement" was added to the Policy. Endorsement #4 states:
Item 3. Limit[] of Liability: (Including Defense Costs, Charges, and Expenses):
$3,000,000 Each Wrongful Act or series of continuous, repeated or interrelated Wrongful Acts.
$3,000,000 Aggregate.
It is further understood and agreed that the above stated Limit[] of Liability apply to any claim for: a Wrongful Act which first occurs; or, a series of continuous, repeated or interrelated Wrongful Acts where the first Wrongful Act occurs; on or after July 10, 1998 and before the end of the policy period.
It is further understood and agreed that the Limit[] of Liability remain as $1,000,000 per Wrongful Act and $1,000,000 in the Aggregate for any claim for: a Wrongful Act which first occurs; or, a series of continuous repeated or interrelated Wrongful Acts where the first Wrongful Act occurred; before July 10, 1998 and before the end of the policy period.

  Prior to and during the term of the Policy, claims were asserted against NABOP by, among others, the South Carolina Defendants, alleging that NABOP failed to pay medical benefit claims that were submitted.

  As set forth in more detail in Amer. International Specialty Line Ins. Co. v. Nat'l Assoc. of Business Owners and Professionals, et al., 253 F. Supp.2d 468, on January 29, 2002, AISLIC, NABOP and Eugene Duncan, Yvonne Duncan, Carl Samuels and Dwayne Samuels (collectively, the "NABOP Individuals") and the appointed Independent Fiduciary and Receiver of NABOP David W. Silverman ("Silverman") filed stipulations of settlement in these actions for $500,000 each, for a combined amount of $1,000,000 (the "Settlement"). Also on January 29, 2002, United States District Judge Jacob Mishler preliminarily approved the Settlement, directed Silverman to serve notice of the Settlement on the named defendants and potential claimants and set a fairness hearing for June 24, 2002.

  On May 20, 2002, the South Carolina Defendants filed an objection to the Settlement. On May 28, 2002, the case was reassigned to this Court. On June 24, 2002, the Court heard argument at the fairness hearing. The South Carolina Defendants, among other things, argued that without discovery, the defendants and claimants have been deprived of a meaningful opportunity to challenge AISLIC's contentions concerning the validity of the AISLIC Policy and to determine its actual coverage limit of liability.

  On March 28, 2003, this Court issued a Memorandum of Decision and Order in which the Court, among other matters, concluded that it could not determine whether the proposed settlements were reasonable until it determined the actual limit of liability under the AISLIC Policy. As such, the Court authorized limited discovery and directed the South Carolina defendants and AISLIC to submit letter briefs concerning the applicable limit of liability under the AISLIC Policy. These letter briefs are the subject of the instant decision.

  II. DISCUSSION

  A. As to the Applicable Limits ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.