Appeal from a judgment of the United States District Court for the Southern District of New York (Baer, J.), dated January 22, 2009, denying plaintiff-appellant's motion for partial summary judgment, granting defendants-appellees' motion for summary judgment, and dismissing the complaint with prejudice. We affirm.
Lumbermens Mutual Casualty Company v. RGIS Inventory Specialists, LLC
Argued: November 19, 2009
Before KEARSE, SACK, and KATZMANN, Circuit Judges.
Judge Kearse dissents in a separate opinion.
This appeal calls upon us to address the meaning and scope (under Michigan law) of a notice provision contained in an excess liability insurance policy issued by plaintiff-appellant Lumbermens Mutual Casualty Company ("Lumbermens"), to its insureds, defendants-appellees RGIS Inventory Specialists, LLC ("RGIS"), Robert M. Birardi ("Birardi"), and Camrac Inc. ("Camrac"). We hold that, under the specific circumstances of this case, defendants provided timely notice within the meaning of the excess liability insurance policy's notice provision, and therefore affirm the judgment of the district court.
The instant dispute arises out of an April 2003 accident in which non-party Robert Shore was struck and injured by a minivan owned by Camrac and driven by Birardi in the course of his employment with RGIS. Birardi was driving eastbound on an unilluminated two-lane highway in Middlebury, Connecticut in the early morning hours of April 8, 2003. According to a Middlebury Police Department Incident Report, "[i]t had snowed throughout the previous evening and . . . a light drizzle of freezing rain was occurring." J.A. 1072. "The travel portion of the roadway was restricted due to ongoing snow removal operations," J.A. 1067, and Birardi was driving at between 30 and 40 miles per hour, well below the posted 45 mile per hour speed limit. After cresting a hill, Birardi's vehicle suddenly encountered Shore, who was dressed in dark clothing and -- in violation of Connecticut law*fn1 -- was walking westbound in the narrow plowed portion of the eastbound travel lane of the highway. Birardi had no opportunity to brake or avoid a collision, and his vehicle immediately struck Shore and threw him to the side of the road.
Meanwhile, a patrol car operated by Middlebury Police Officer Anthony Quicquaro was approaching from the westbound side of the highway, and observed the accident as it occurred. Officer Quicquaro called for medical assistance, and brought his vehicle around to the accident scene. On May 11, 2003, Officer Quicquaro submitted an Incident Report after completing his investigation of the accident, concluding as follows:
Primary responsibility rested on Shore who should have been walking as far to the side of the roadway as possible. Because of the snow on the side of the roadway, the bare pavement section of the roadway was restricted to approximately 7 - 7.5 feet. With the width of the van at approximately 6 feet, there left very little room for safe passage. Shore chose to walk on the bare pavement. As a result the minivan struck Shore while the van was still operating within all legal parameters. This officer personally witnesses the collision and saw that the minivan did not have enough reaction time to perform any type of evasive maneuver.
All three defendants were covered by a $2 million primary liability policy issued by United States Fidelity & Guaranty Company ("USF&G"), a non-party, and a $25 million excess liability policy issued by Lumbermens ("the Excess Policy"). Birardi immediately reported the accident to his employer (defendant RGIS), RGIS immediately notified its third-party claims administrator, Gallagher Bassett Services, Inc. ("Gallagher Bassett"), and Gallagher Bassett, in turn, timely notified USF&G, the primary insurer. In the meantime, Shore's counsel sent Camrac a letter of representation. Gallagher Bassett and Discovery Managers, Ltd., the claims managing agent for USF&G, thereafter conducted an accident investigation, began negotiations with Shore's counsel, and retained an automobile-accident defense firm, Cella, Flanagan & Weber, P.C. ("the Cella firm") to assist them in evaluating the claim. Beginning almost immediately after the accident, Gallagher Bassett and the Cella firm issued a number of reports and assessments of the Shore claim. Throughout 2003 and early 2004, Gallagher Bassett attributed 0% fault to the defendants. On April 30, 2004, Gallagher Bassett noted that "[w]e have determined liability at 0% client," assessed liability as "doubtful," but nevertheless recommended that counsel be retained "[d]ue to the nature of this claim and voluminous records received by the claimant's attorney." J.A. 558-59. On July 28, 2004, Gallagher Bassett reiterated its belief that Shore bore responsibility for the accident, but recommended increasing reserves "due to the details of accident/inj[uries]." J.A. 561-62. On August 19, 2004, the Cella firm issued a "Liability Damages Opinion Letter," estimating the full value of Shore's claim (without regard to comparative fault)*fn2 as being between $1.25 million and $4 million, noting that "[i]f the claimant is found to be more than 50% at fault . . . , his comparative fault will act as a bar to recovery," and concluding that, based on the police officer's eyewitness report, "the chances of prevailing on liability issues is 90%." J.A. 566, 570. An October 29, 2004 report from Gallagher Bassett reiterated that it had "determined liability at 0% client," and noted that "[t]he likelihood of prevailing at trial is 90%." J.A. 572, 574.
On March 1, 2005, the Cella firm issued a litigation report, which (1) concluded that "[i]t is quite likely that a jury would assign in excess of 50% comparative fault to the plaintiff barring recovery on this action," (2) observed that "this matter poses significant risk given the massive injuries suffered by the claimant, his medical bills, and the future cost of care," (3) noted that "even a slight risk of plaintiff's verdict poses a substantial risk of a large award," (4) estimated the "full value" of the claim as being between $1.25 million and $4 million without regard to comparative fault; and (5) recommended filing reserves in the amount of $750,000. J.A. 580-83. A June 20, 2006 letter from the Cella firm (1) noted that the fact that the accident occurred halfway down a hill, rather than halfway up the hill as was initially thought, "negatively impacts the defense of this case," (2) estimated the "full jury value" of the case at approximately $4 million without regard to comparative fault, and (3) concluded that although it had become "apparent" that there was a less than 90% chance of prevailing on liability, there was still a "70% chance of securing a defendant's verdict," noting that Shore had "a difficult burden to overcome." J.A. 615-17. Based on the foregoing analyses, reserves for the Shore claim were never increased above $1.15 million ($1 million for liability and $150,000 for defense costs). On February 10, 2005, Shore's representative filed suit against the defendants, and in May 2005, Shore's damages expert valued the claim at $3.7 million. The parties participated in a mediation in June 2007. In its pre-mediation report, the Cella firm noted that it continued to "believe [it had] a strong chance of securing a defense verdict on the comparative fault special defense." J.A. 219 (noting that "this case presents the rare situation where the chance of a defense verdict outweighs the chance of a plaintiff verdict"). The report nevertheless noted, however, that the most likely scenario "should a jury return a plaintiff's verdict, presently consists of the 50% comparative fault threshold, which would ...