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National Union Fire Insurance Company of Pittsburgh, PA v. Liberty Mutual Fire Insurance Co.

June 22, 2006

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, PLAINTIFF,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION AND ORDER

This diversity action is a dispute between two insurance companies over their respective obligations to pay post-judgment interest on a $13.7 million dollar judgment against their mutual insured. National Union Fire Insurance Company of Pittsburgh, PA ("National Union") seeks a declaratory judgment that it does not owe reimbursement to Liberty Mutual Fire Insurance Company ("Liberty Mutual") for Liberty Mutual's payment of post-judgment interest on April 6, 2005. National Union and Liberty Mutual have filed cross-motions for summary judgment. Because the language of both insurance agreements is clear and mandates that Liberty Mutual pay the entire amount of post-judgment interest, National Union's motion is granted and Liberty Mutual's motion is denied.

Background

The factual record in this action is largely undisputed. National Union and Liberty Mutual both issued insurance policies to Richfield Hospitality Services, Inc., a Delaware corporation headquartered in Colorado. Liberty Mutual's policy was the primary policy and provided a limit of $3 million in coverage for each occurrence. The National Union policy was an excess policy which provided up to $25 million of coverage for each occurrence in excess of any underlying insurance.

Both policies contained language addressing post-judgment interest. Liberty Mutual's policy stated in relevant part that:

We will pay, with respect to any claim we investigate or settle, or any "suit" against an insured we defend: ....

All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of the insurance.

These payments will not reduce the limits of the insurance. (Emphasis Supplied). National Union's policy stated in relevant part that:

When we assume the defense of any claim or suit: ....

We will pay the following to the extent that they are not included in the underlying policies listed in the Schedule of Underlying Insurance or in any other insurance providing coverage to the Insured: .... all interest that accrues after entry of judgment and before we have paid, offered to pay or deposited in court the part of the judgment that is within our applicable Limit of Insurance. (Emphasis Supplied). National Union's Schedule of Underlying Insurance attached to its policy listed the Liberty Mutual policy.

On January 29, 1999, professional boxer Fernando Ibarra Maldonado ("Maldonado") collapsed in his dressing room after a boxing match held at a hotel operated by Richfield in St. Louis, Missouri. Maldonado sued several defendants for negligence, including Richfield, in Missouri state court. Liberty Mutual retained counsel to represent Richfield during the trial. On December 11, 2001, a jury rendered a verdict in favor of Maldonado for $13.7 million. See Maldonado v. Gateway Hotel Holdings, L.L.C., 154 S.W.3d 303, 306 (Mo. Ct. App. 2003).

Richfield appealed the trial court decision. Richfield was required to file a supersedeas bond of $16 million during the pendency of the appeal, $2.3 million of which represented security for post-judgment interest. Liberty Mutual filed a bond of $3 million, which was the limit of its insurance policy, and National Union filed a bond for the remaining $13 million. National Union retained appellate counsel to work with the trial counsel that had been retained by Liberty Mutual.

The parties in the Maldonado litigation engaged in unsuccessful settlement discussions during the pendency of the appeal. During those discussions Maldonado's counsel indicated that he would not take much less in settlement than the $13 million awarded in the lower court. On October 7, 2003, the trial court decision was affirmed by the Missouri Court of Appeals. See id. at 312. On December 31, 2003, Richfield applied to have the case transferred to the Missouri Supreme Court and on January 27, 2004, the case was transferred.

On June 4, 2004, the trial counsel retained by Liberty Mutual sent Maldonado's counsel a letter with a settlement offer in the form of a high/low agreement. Under the offer Liberty Mutual would pay $500,000.00 if the lower court decision was reversed or remanded by the Missouri Supreme Court but the plaintiff would accept $3 million if the verdict was upheld. The ...


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