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Governmental Emples. Ins. Co. v. Ohio Cas. Group

United States District Court, S.D. New York

September 3, 2014

GOVERNMENTAL EMPLOYEES INSURANCE CO., Plaintiff, -
v.
- OHIO CASUALTY GROUP, OHIO CASUALTY INSURANCE COMPANY, and LIBERTY MUTUAL COMPANY, Defendants

For Governmental Employees Insurance Co., Plaintiff: Diane K. Kanca, LEAD ATTORNEY, McDonough, Marcus, Cohn, Heller & Kanca, New Rochelle, NY; Edward Griffin Warren Vout, Lohrfink, Magro & Collins, LLP White Plains, NY.

For Ohio Casualty Group, Ohio Casualty Insurance Company, Liberty Mutual Company, Defendants: Marshall Todd Potashner, Jaffe & Asher LLP, New York, NY; Michael Louis Ihrig, II, Rheingold, Valet, Rheingold, Shkolnik & McCartney, LLP, New York, NY.

Page 191

OPINION AND ORDER

Edgardo Radios, United States District Judge.

This action arises out of a dispute between two excess insurance providers.

Page 192

The underlying personal injury claim settled, and that settlement was paid in full. Multiple insurers contributed to the settlement. The question now before the Court is whether Plaintiff Governmental Employees Insurance Co. (" Plaintiff' or " GEICO" ), one of those insurers, is entitled to reimbursement fro a co-insurer that did not participate in the settlement. Defendants Ohio Casualty Group, Ohio Casualty Insurance Company and Liberty Mutual Insurance Company[1] (collectively, " Defendants" ) never disclaimed coverage in the underlying action; instead, they took the position that their insurance policy applies only to losses in excess of $10 million and that, because the underlying claim settled for less than that amount, Defendants' coverage obligations were never triggered.

GEICO disagrees, arguing that the two sides were required to contribute pro rata to the satisfaction of the underlying claim. GEICO thus brought suit against Defendants in New York State Supreme Court, New York County. See Aff. of Marshall T. Potashner Ex. 1 (" Compl." ).[2] Defendants subsequently removed the case to this Court. Doc. 1. They now move to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 5. In addition to arguing that the threshold for coverage under their policy was not reached, Defendants take the position that, because they never consented to the settlement of the underlying claim, they are not obligated to contribute to it.

The Court heard oral argument on Defendants' motion on July 18, 2014. For the reasons discussed below, that motion is hereby GRANTED.

I. Factual Background

The following facts are based on the allegations in the Complaint, which the Court accepts as true for purposes of the instant motion. Koch v. Christie's Int'l PLC, 699 F.3d 141, 145 (2d Cir. 2012).

The underlying personal injury suit involved an automobile accident that occurred in February 2008. Compl. ¶ 14. Defendants insured the owner of one of the vehicles, State Bancorp, Inc. (" Bancorp" ). Id. ¶ 15.[3] That insurance policy, issued October 1, 2007, was an excess policy with a $10 million policy limit. Id. ¶ 22. GEICO insured the driver, Brian Finneran (" Finneran" ), who was a Bancorp employee, pursuant to a personal umbrella policy with a $3 million policy limit. Id. ¶ ¶ 16, 23-25.

Bancorp's primary insurer, Utica National Insurance Company (" Utica National" ), defended the state court action. Id. ¶ 27. Bancorp also had a $10 million excess insurance policy through Utica Mutual Insurance Company (" Utica Mutual" ). Id. ¶ 29. Utica Mutual commenced a separate state court declaratory judgment action against GEICO, and the state court ruled that Utica Mutual's policy was excess to GEICO's. Id. ¶ 30-31. That decision was affirmed on appeal. Id. ¶ 34.

The underlying action settled for $6.75 million. Id. ¶ ¶ 18, 35. Utica National tendered its $1 ...


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