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November 8, 2005.

TIG INSURANCE COMPANY, successor by Merger to International Insurance Company, Plaintiff,

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge


TIG Insurance Company ("TIG") brings this action for breach of contract and declaratory judgment against Newmont Mining Company ("Newmont"). TIG alleges first, that Newmont unreasonably withheld a portion of a settlement recovery owed to TIG, and second that Newmont owes interest to TIG on certain late payments.*fn1 A bench trial was held from October 7, 2005 to October 14, 2005. The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332. Venue is proper in this district pursuant to 28 U.S.C. § 1391(a). The following constitutes the Court's findings of fact and conclusions of law.


  A. The Parties*fn2

  TIG is a California corporation with its principal place of business in Irving, Texas. TIG is the successor by merger to International Insurance Company ("International"). During the early 1980s, International issued certain Environmental Impairment Liability insurance policies to Newmont. Newmont is a Delaware corporation with its principal place of business in Denver, Colorado.

  B. The Idarado and Resurrection Mining Sites

  Significant mining began at the Idarado and Resurrection sites in Colorado after the Civil War.*fn3 Two Newmont subsidiaries, Idarado Mining Company and Resurrection Mining Company, conducted operations at these sites during the twentieth century.*fn4 In the 1980s, the State of Colorado brought actions against Newmont related to environmental contamination at Idarado and Resurrection.*fn5 Newmont claims that it incurred approximately seventy five to eighty million dollars in total costs related to these actions.*fn6 Subsequently, Newmont became involved in lawsuits with International and various of its comprehensive general liability insurers ("CGL Insurers") over coverage for these claims.*fn7

  C. The Agreement

  On February 1, 1995, International and Newmont executed a settlement agreement resolving their coverage dispute (the "Agreement").*fn8 The Agreement required International to pay $18,500,000 to Newmont by February 2, 1995.*fn9 This sum was paid.*fn10 In turn, Newmont was to remit to International twenty percent of any net recovery from the CGL Insurers "with respect to coverage for environmental claims involving the Idarado and/or Resurrection sites."*fn11

  The Agreement gives Newmont "the sole right, without interference" to settle its actions with the CGL insurers "in such manner as Newmont believes to be appropriate."*fn12 Newmont is charged with determining the "gross amount(s) received from any CGL Insurer with respect to environmental claims involving the Resurrection or Idarado Sites."*fn13 The Agreement does not provide any remedies for International in the event that it disputes Newmont's calculation of this amount.*fn14

  Before calculating International's twenty percent share of Newmont's recoveries from CGL Insurers, the Agreement allowed Newmont to deduct fees and expenses "incurred in connection with any litigation between Newmont and any CGL Insurer . . . involving the Idarado or Resurrection sites."*fn15 Newmont could deduct fees and expenses from an action even if no recovery had been obtained in that action.*fn16 Newmont was required to certify the amount of its deductible fees and expenses, and International was entitled to review Newmont's underlying bills for sixty days thereafter.*fn17 Additionally, for ninety days after Newmont's final payment under the Agreement, International had the right to seek review of Newmont's fees and expenses for "mathematical errors" by a "Referee."*fn18 If the Referee found that "any fees and expenses incurred for purposes other than litigation with a CGL Insurer with respect to the Idarado and Resurrection sites were deducted by Newmont," Newmont would be required to pay any amounts due to International, plus an additional ten percent.*fn19

  Payments became due to International when Newmont recovered settlement proceeds in excess of its fees and expenses on February 1, 1996, December 31, 1996, and each June 30 and December 31 thereafter.*fn20 The Agreement required Newmont to "periodically" deliver to International copies of documents filed in its actions against the CGL Insurers.*fn21 The Agreement is silent on the question of interest on any late payments from Newmont to International.*fn22 In the event of litigation, the Agreement allows costs and attorney's fees to the prevailing party.*fn23

  D. The Lloyds/North River Settlement

  Underwriters at Lloyds of London, certain London Market Insurance Companies, and North River Insurance Company (collectively, "Lloyds/North River") had issued excess and umbrella policies*fn24 to Newmont, covering occurrences from 1952 to 1968 and 1979 to 1984,*fn25 with limits totaling at least $250 million.*fn26 In 1993, Newmont brought suit in Colorado against Lloyds/North River and various other CGL Insurers for coverage related to the Idarado and Resurrection sites (the "Colorado CGL Action").*fn27

  Prior to trial in the Colorado CGL Action, Newmont had incurred approximately sixty million dollars in unreimbursed costs related to the Idarado and Resurrection sites.*fn28 During the summer of 1997, Newmont made a settlement offer to Lloyds/North River "in the tens of millions of dollars."*fn29 Newmont's offer was based on the "all sums theory" of allocation.*fn30 On this theory, when a loss occurs over more than one year and there are multiple insurers, the loss is allocated to a single year, insurers are jointly and severally liable, and insurers may be able to seek contribution from one another.*fn31 Lloyds/North River countered Newmont's demand with an offer of $900,000, and suggested that ...

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