Searching over 5,500,000 cases.

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.

National Union Fire Insurance Company of Pittsburgh, PA., v. Travelers Property Casualty Company

May 26, 2006


The opinion of the court was delivered by: Naomi Reice Buchwald United States District Judge


National Union Fire Insurance Company of Pittsburg, PA ("plaintiff" or "National Union"), individually and as subrogee of Bell Atlantic Corporation and Verizon Communication, Inc. ("Verizon"), formerly d/b/a/ Bell Atlantic Corporation (collectively, "Bell Atlantic"), brings this diversity action against Travelers Property Casualty Company of America ("defendant" or "Travelers") for reimbursement and/or contribution for payments made towards the defense and settlement of two underlying class action lawsuits ("Underlying Actions"). Both parties now move for summary judgment. For the reasons set forth herein, plaintiff's motion is denied and defendant's motion is granted.


The Underlying Actions

On October 23, 1997,*fn2 two Bell Atlantic Mobile Systems, Inc. ("BAMS") employees*fn3 initiated a class action lawsuit (the "McHenry Action") against Bell Atlantic before Judge Broderick in the United States District Court for the Eastern District of Pennsylvania. Defendant's Rule 56.1 Statement ("Def. 56.1 Stmt.") ¶ 18; Plaintiff's Rule 56.1 Statement ("Pl. 56.1 Stmt.")

¶ 23. Plaintiffs in the McHenry Action alleged that they had been Bell Atlantic employees who had been encouraged to accept employment with BAMS, which at the time was Bell Atlantic's new wireless subsidiary. Def. 56.1 Stmt. ¶ 20. However, this group of employees expressed concerns about losing benefits upon transferring to BAMS, as they were all already participants in a valuable pension plan through Bell Atlantic. Id. The McHenry plaintiffs claimed that in an effort to allay these concerns, Bell Atlantic, "acting in its own name and through the management of its wholly-owned subsidiary [BAMS]," represented to the potential transferees that their pension benefits would be "the same as or equivalent" to those they would receive if they remained at Bell Atlantic. Id. at ¶ 21. However, the McHenry complaint alleges that following the formation of a joint venture ("CellCo") between Bell Atlantic and NYNEX Corporation to jointly operate their cellular businesses, "the managements of [Bell Atlantic] and [BAMS] effected significant reductions in the pension plan benefits for plaintiffs and members of the Class."*fn4 Id. at ¶ 22. The McHenry plaintiffs alleged in part that Bell Atlantic and BAMS breached their fiduciary duties under Section 404(a) of ERISA.*fn5 Id. at ¶ 23. On May 18, 1999, Judge Broderick denied the McHenry defendants' motion for summary judgment, and the case was eventually settled and closed no later than November 2000. Id. at ¶¶ 24, 33.

On October 30, 1998,*fn6 another employee of BAMS*fn7 brought a separate, though virtually identical, action (the "Sollars Action") in the United States District Court for the Eastern District of Pennsylvania. Id. at ¶ 27; Pl. 56.1 Stmt. ¶ 24. The allegations in the Sollars Action were identical to those in McHenry.*fn8 Def. 56.1 Stmt. ¶ 29.

Bell Atlantic sought coverage in connection with the McHenry and Sollars Actions from its primary insurer, Travelers, but Travelers disclaimed coverage for both of the Underlying Actions.*fn9 Id. at ¶ 32. Subsequently, National Union, Bell Atlantic's excess insurer, agreed to participate in the actions.*fn10 Pl. 56.1 Stmt. ¶ 11.

The Current Action

National Union now brings this action in its capacity as subrogee to enforce Bell Atlantic's alleged rights under the insurance policies Travelers had issued to Bell Atlantic (the "Travelers/Bell Atlantic Policies" or "Policies"). It also asserts claims for contribution for payments allegedly made by National Union in connection with the Underlying Actions. National Union alleges that, in violation of the terms of the Travelers/Bell Atlantic Policies, Travelers denied both a defense and indemnity coverage for the Underlying Actions. Travelers/Bell Atlantic Policy

Travelers began issuing commercial general liability policies to Bell Atlantic in April 1995, renewing them on a yearly basis through April 2001. Def. 56.1 Stmt. ¶ 1. Of particular relevance to this case is the policy which Travelers issued to Bell Atlantic in April 1997 (the "1997 Travelers/Bell Atlantic Policy" or the "1997 Policy").

The 1997 Travelers/Bell Atlantic Policy had a coverage period of April 1, 1997 to April 1, 1998 and included a separate Employment Benefits Liability ("EBL") Coverage Form (the "EBL Form"), which insured against negligent acts, errors, or omissions "committed in the 'administration' of [a named insured's] 'employee benefit program.'"*fn11 Id. at ¶¶ 3, 4. Elsewhere, the 1997 Travelers/Bell Atlantic Policy defined "administration" as:

a. Counseling employees, including their dependents and beneficiaries, with respect to the "employee benefit program";

b. Handling records in connection with the "employee benefit program"; or

c. Effecting or terminating any employee's participation in a plan included in the "employee benefit program."

Id. at ¶ 7.

The 1997 Travelers/Bell Atlantic Policy also contained an exclusion (the "ERISA Exclusion") stating that the policy did not apply to "[l]oss for which the insured is liable because of liability imposed on a fiduciary by the Employee Retirement Security Act of 1974, as of now or hereafter amended." Id. at ¶ 8. In addition, Travelers asserts that the EBL Form referenced an endorsement (the "CG T8 02 Form") containing a $250,000 per-employee deductible, under which Travelers was obligated to reimburse the insured only if the total amount exceeded $250,000 per employee. Id. at ¶ 9. National Union disputes this, arguing instead that the deductible amount was to be applied to each occurrence reported under the EBL Form, regardless of the number of employees involved in any one occurrence. See Pl. Resp. ¶ 9; Pl. 56.1 Stmt. ¶ 5.

Through its broker, Marsh & McLennan, Bell Atlantic requested in 1995 that Travelers divest BAMS and any BAMS-related risk from the Travelers/Bell Atlantic coverage program and to lower the premium accordingly. Id. at ¶ 10. Travelers eventually did so, reducing the premium by $175,000.*fn12 Id. Despite this agreement, the 1995 policy and certain successive policies did not specifically reflect the BAMS "carve-out" ("the BAMS Carve Out Endorsement"). Id. at ΒΆ 11. However, in a letter dated February 16, 2001, Travelers re-confirmed these arrangements with Bell Atlantic and stated that it was preparing endorsements which would ...

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.