Munich Reinsurance Am., Inc. v. Am. Nat'l Ins. Co.

936 F.Supp.2d 475

MUNICH REINSURANCE AMERICA, INC., Plaintiff,

v.AMERICAN NATIONAL INSURANCE COMPANY, Defendant.

Civil Action No. 09–6435 (FLW).

United States District Court, D. New Jersey.

March 28, 2013.

Amy S. Kline, Sean Tracy O'Neill, Saul Ewing LLP, Philadelphia, PA, for Plaintiff.

Joel Max Eads, Trenk Dipasquale Webster Della Fera & Sodono, P.C., Ardmore, PA, for Defendant.

OPINION

WOLFSON, District Judge.

In the instant motion for reconsideration, Defendant American National Insurance Company (“ANICO”) asks the Court to reconsider two aspects of the Court's September 28, 2012 ruling, 893 F.Supp.2d 686 (D.N.J.2012), which were both in favor of Plaintiff Munich Reinsurance America Inc. (“Munich”). ANICO contends: (a) that the Court failed to fully consider the applicability of Article XVI of the parties' 2000 and 2001 agreements in connection with ANICO's cross-motion for summary judgment on its untimely claim submission defense; and (b) with respect to Article X of the parties' agreements, that the Court erred in granting summary judgment on ANICO's prejudice defense to Munich's untimely claim submissions.

With respect to Article X, the Court grants ANICO's motion for reconsideration of the Court's ruling on the prejudice defense, yet affirms its prior grant of summary judgment to Munich on that defense. With respect to Article XVI, the Court grants ANICO's motion for reconsideration of Article XVI, and vacates its grant of summary judgment to Munich on the untimely claim submission defense regarding the 2000 and 2001 claims submitted after December 31, 2007 and December 31, 2008, respectively. With regard to the 2000 claims, the Court now grants summary judgment to ANICO. With regard to the 2001 claims, the Court denies summary judgment on both parties' motions, finding that there is a genuine issue of material fact that precludes summary judgment for either party.

I. BACKGROUND

My September 28, 2012 decision includes a detailed factual and procedural history, and hence I recount here only that background related to this ruling. The retrocessional agreements at issue are based upon Munich's reinsurance relationship with Everest National Insurance Company (“Everest”). Munich reinsures Everest's workers compensation insurance program under an excess of loss reinsurance treaty that covers claims dated January 1,1998 through December 31, 2001. Seeking to ameliorate some of its risk under the Munich–Everest agreement, Munich entered into retrocessional treaties with ANICO. The ANICO–Munich retrocessional agreements are for the periods of November 1, 1999 through December 31, 2000 (“the 2000 Agreement”), and January 1, 2001 through December 31, 2001 (“the 2001 Agreement”). For purposes of this motion, the parties agree that these two agreements are identical in substance.

Generally, these agreements provide that ANICO will indemnify Munich for losses Munich sustains under the Munich–Everest reinsurance agreement as long as Munich gives ANICO notice of those claims in the manner directed by the Munich–ANICO agreements. See LeBlanc Cert., Exh. 2 (“2001 Agreement”), Art. I(A). Article X of the agreements directs Munich to provide ANICO with notice of all workers' compensation claims Munich receives from Everest and, for which, Munich intends to seek retrocessional cover from ANICO:

A. The Company [Munich] agrees to advise the Reinsurer [ANICO] promptly of all claims coming under this Agreement on being advised by [Everest], and to furnish the Reinsurer with such particulars and estimates regarding same as are in the possession of the Company. An omission on the part of the Company to advise the Reinsurer of any loss shall not be held to prejudice the Company's rights hereunder.

B. In addition, the following categories of claims shall be reported to the Reinsurer immediately, regardless of any questions of liability of the Company or coverage under this Agreement:

1. Any accident reserved at 50% of the reinsured attachment point;

2. Any accident involving a brain injury;

3. Any accident resulting in burns over 25% or more of the body; or

4. Any spinal cord injury.

C. The Reinsurer agrees to pay the Company on demand, the Reinsurer's proportion of all losses and/or loss expenses paid by the Company arising from the Underlying Agreement, including any and all expenses incurred directly by the Company in the litigation, defense and settlement of claims made against the Company by the Original Ceding Company under the Underlying Agreement, excluding, however, all office expenses of the Company and the salaries and expenses of its employees.

2000 Agreement at Endorsement No. 1.

I explained, in my September 28, 2012 decision, how subsection A of Article X operates:

Subsection A directs Munich to advise ANICO “promptly of all claims coming under this Agreement [up]on being advised by the Original Ceding Company ...” By using the terms “any” and “all,” subsection A expressly covers each and every claim covered by the parties' agreement—including category B claims.

893 F.Supp.2d at 702 (emphasis added).

Thereafter, I explained the additional temporal requirement of immediacy applicable to claims falling within subsection B:

[S]ubsection B makes clear that its terms apply “in addition” to, not in lieu of, those of subsection A:

In addition, the following categories of claims shall be reported to the Reinsurer immediately, regardless of any questions of ... coverage under this Agreement ....

By incorporating this additional requirement for category B claims, ... the drafters supplemented subsection A's language with a special notice requirement (of immediate notice), just for category B claims.

Id. (internal citations omitted).

Finally, subsection C of Article X addresses ANICO's obligation to pay the claims for which Munich properly provided notice under subsections A or B, respectively. Per the plain text of subsection C, ANICO “agrees to pay the Company on demand, the Reinsurer's proportion of all losses and/or loss expenses paid by the Company arising from the Underlying Agreement....” 2000 Agreement at Endorsement No. 1.

Separate and apart from the Article X notice requirements, Article XVI directs Munich to advise ANICO of all claims within seven years following the expiration of each agreement. See id., Art. XVI. Article XVI states, in pertinent part,

ARTICLE XVI—COMMUTATION

A. Seven years after the expiry of this Agreement, the Company shall advise the Reinsurer of all claims for said annual period, [sic] not finally settled which are likely to result in a claim under this Agreement. No liability shall attach hereunder for any claim or claims not reported to the Reinsurer within this seven year period.

2001 Agreement at 5. As the plain text of this article makes clear, ANICO is not obligated to pay those claims not noticed within this seven-year period, which the parties refer to as the “sunset” period. Indeed, according to ANICO, several of Munich's claims were not noticed in this seven year period.¹

The text of the Article XVI notice requirement differs from Article X in two material respects. For one, Article XVI is not limited to those claims “coming under this Agreement,” as Article X provides. Rather, Article XVI applies to all claims “ likely to result in a claim under this Agreement.” In this way, Article XVI covers those claims that are not yet reportable under Article X. Second, Article X directs Munich to provide “particulars and estimates” in connection with the claims notices mandated therein, whereas Article XVI does not.

Munich initially brought the instant action against ANICO in December 2009, claiming that ANICO failed to pay all monies due under the retrocessional agreements. Munich's Complaint asserts two breach of contract claims—one relating to each retrocessional agreement—and a declaratory judgment claim regarding any future losses under the agreements. In its amended answer, ANICO asserted several counterclaims against Munich: fraudulent inducement, breach of the duty of good faith and fair dealing, breach of the duty of utmost good faith owed to a reinsurer, rescission of the retrocession agreements, and breach of contract.

As noted, Munich moved for partial summary judgment on its claims and ANICO cross-moved for summary judgment on certain of its defenses and counterclaims. I granted in part and denied in part Munich's motions and denied ANICO's cross-motion in its entirety. Pertinent here, I granted Munich's motion for summary judgment on ANICO's untimely claim submission affirmative defense based upon Article X of the agreements and, consequently, denied ANICO's cross-motion on that same defense. ANICO seeks reconsideration of this ruling, arguing that it presented sufficient evidence of prejudice to withstand summary judgment. Furthermore, ANICO argues that I did not fully consider the applicability of Article XVI of the parties' agreements to its untimely claim submission defense to certain of the claims. The parties have submitted briefing, including responding to specific inquiries from the Court, and have also presented oral argument.²

II. STANDARD OF REVIEW

Local Rule 7.1(i) allows parties to seek reconsideration by the Court of matters “which [it] believes the Court has overlooked” when it ruled on the initial motion. L. Civ. R. 7.1(i). The burden on the moving party, however, is quite high. The movant must demonstrate either: “(1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct [a] clear error of law or prevent manifest injustice.” Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir.2010). The Court will grant such a motion only if the matters overlooked might reasonably have resulted in a different conclusion. Bowers v. Nat'l Collegiate Athletic Assoc., 130 F.Supp.2d 610, 613 (D.N.J.2001)rev'd on other grounds by475 F.3d 524 (3d Cir.2007).

To be sure, the reconsideration vehicle may not be used by parties t...