Defendant, Munich Re, moved for summary judgment relating to defense costs and allocation and Plaintiff, Utica, moved for summary judgment as to Munich Re's claim for reimbursement. The Court denied the motions with the exception of Utica's motion for summary judgment with respect to Munich Re's quasi contract claims.
Munich Re argued Utica's breach of contract claim should be dismissed because Utica allegedly never notified Munich Re it had added a defense endorsement to an umbrella policy issued to Goulds Pumps Inc. Utica asserted that the follow-the-fortunes doctrine prohibited Munich Re's argument, and that even if it didn't, notice would not have been required because issuance of the defense endorsement was an immaterial change that did not prejudice Munich Re. Finding no follow-the-fortunes clause in the reinsurance certificate, the Court looked at the parties' contract modification argument, finding there to be a question of fact as to whether Munich Re reinsured the defense endorsement.
Munich Re moved for summary judgment regarding defense costs, arguing it had no duty to indemnify Utica for defense costs Utica paid in addition to the umbrella's limits. Utica opposed the motion and moved for summary judgment on the allocation of defense expenses, arguing that Munich Re had "no valid defense to payment as a matter of law." The Court found that questions of material fact precluded summary judgment, ruling that the insurance certificates language concerning the payment of expenses and their connection to the umbrella policies was "sufficient to render the Certificate ambiguous."
Utica argued that, even assuming that reinsurance is unavailable unless the umbrellas themselves provide for defense costs in addition to the limits, Utica was still entitled to summary judgment on the defense costs because the umbrellas provide such coverage and follow-the-fortunes would require Munich Re to pay its share. Munich Re opposed, stating the certificates did not contain a follow-the-fortunes provision and even if they did, "Utica would not be entitled to defense under follow the fortunes because its payment of defense costs in addition to the limits was clearly beyond the scope of the Umbrellas and not in good faith." After much discussion on the law on follow the fortunes/follow the settlements, the Court declined to imply such a clause into the reinsurance certificates at issue and denied the requests for summary judgment.
Utica also moved for summary judgment dismissing Munich Re's quasi-contract claims. Munich Re argued there was a basis for finding that the reinsurance certificate did not encompass the events at issue because they did not have any provision providing for reimbursement. The Court disagreed, finding that the claims at issue, including Munich Re's obligation to pay defense expenses, are governed by the terms of the reinsurance certificate, dismissing Munich Re' quasi-contract claims.
Additional arguments on various issues raised in the summary judgment motions can be read in the Court's order.
Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 6:13-cv-00743 (NDNY Mar. 20, 2018)
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