United States District Court, S.D. New York
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge.
Plaintiff Global Reinsurance Corporation of America brings this action against Defendant Century Indemnity Company seeking a declaration of its rights and obligations under nine certificates of reinsurance ("Certificates") issued by its predecessor-in-interest, Constitution Reinsurance Corporation, to Defendant's predecessor-in-interest, the Insurance Company of North America. Before the Court is Plaintiff's motion for partial summary judgment seeking a declaration that the dollar amount stated in the "Reinsurance Accepted" section of each of the nine Certificates caps the maximum amount that Global can be obligated to pay for combined loss and expenses. For the reasons discussed below, Plaintiff's motion is granted.
The facts are taken from the parties' summary judgment submissions and, as required, viewed in the light most favorable to the nonmoving party.
Plaintiff Global is an insurance company organized under the laws of New York, with its principal place of business in New York, New York. Defendant Century is an insurance company organized under the laws of Pennsylvania, with its principal place of business in Philadelphia, Pennsylvania.
From 1962 to 1981, Century issued various primary and excess liability policies to Caterpillar Tractor Company, some of which were reinsured by Global ("Policies"). Since 1988, thousands of lawsuits have been brought against Caterpillar by various plaintiffs alleging bodily injury resulting from exposure to asbestos ("Claims"). In January 2001, Caterpillar requested coverage and the defense of these Claims from Century.
In 2004, Caterpillar and Century commenced declaratory judgment actions against each other to resolve coverage issues concerning the Policies. As a result, Century became obligated to reimburse Caterpillar for defense expenses in addition to the indemnity limits of the Policies. Subsequently, Century has paid more than $60 million to Caterpillar, most of which was for expenses as opposed to loss. In 2013, Century settled the remainder of its past indemnity and expense costs owed to Caterpillar. Century continues to incur indemnity and expense costs for new asbestos-related suits brought against Caterpillar.
B. The Certificates
Each Certificate provides that Global reinsures Century "subject to" either the "amount of liability" or "limits of liability" set forth in the Certificate. The "Reinsurance Accepted" section of each of the Certificates provides a specific dollar amount ranging from $250, 000 to $2, 000, 000 ("Certificate Limits"). Global maintains that the Certificate Limits are the maximum amounts it must pay under each Certificate, while Century maintains that the Certificate Limits apply only to loss; therefore, Global must pay expenses above and beyond that amount.
Certificate E89-91, also named Certificate 60589 ("Certificate X"), contains a Certificate Limit of $250, 000. Century has already billed Global in excess of $250, 000 under Certificate X. Century has not yet billed Global under any of the other Certificates. Global expects further billings from Century under Certificate X as well as billings under other of the Certificates in excess of their respective Certificate Limits.
The first page of Certificate X states that the reinsurance is "in consideration of the payment of premium and subject to the terms, conditions and amount of liability set forth herein..." (the "Subject To Clause"). All of the Certificates contain this language or substantially similar language, stating that the reinsurance is "in consideration of the payment of premium and subject to the terms, conditions and limits of liability set forth herein
The first page of Certificate X also lists 5 "Items": Item 1 is "Type of Insurance" and is described as "Blanket General Liability, excluding Automobile Liability as original"; Item 2 is "Policy Limits and Application" and is described as "$1, 000, 000. each occurrence as original"; Item 3 is "[Century] Retention" and is described as "The first $500, 000. of liability as shown in Item #2 above"; Item 4 is "Reinsurance Accepted" and is described as "$250, 000. part of $500, 000. Each occurrence as original excess of [Century's] retention as shown in Item #3 above"; and Item 5 is "Basis" and is described as "Excess of Loss." Each of the Certificates contains Item 4, "Reinsurance Accepted, " with a listed dollar amount.
The second page of Certificate X provides that "the liability of the Reinsurer specified in Item 4 above shall follow that of [Century] and, except as specifically provided herein, shall be subject in all respects to all the terms and conditions of [Century's] ...