Nat'l Union Fire Ins. Co. of Pittsburgh v. Fed. Ins. Co.

213 F.Supp.3d 1333

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Plaintiff,

v.FEDERAL INSURANCE COMPANY, Defendant.

Civil Action No. 13–cv–00079–PAB–KMT

United States District Court, D. Colorado.

Signed September 30, 2016

Christopher Del Blum, Ian Andrew Cooper, Jared Kent Clapper, Joseph Peter Lang, Matthew Jay Fink, Nicolaides Fink Thorpe Michaelides Sullivan LLP, John William Patton, Jr., Paul Donald Motz, Amy Marie Kunzer, Patton & Ryan LLC, Chicago, IL, Douglas Adam Stevens, Caplan & Earnest, LLC, Boulder, CO, for Plaintiff.

Aaron Lundstrom Hayden, Anne E. Zellner, Brett Marshall Godfrey, James Andrew Johnson, Godfrey Johnson, P.C., Englewood, CO, for Defendant.

ORDER

PHILIP A. BRIMMER, United States District Judge

This matter is before the Court on Motion for Summary Judgment [Docket No. 549] and Motion to Supplement the Summary Judgment Record [Docket No. 698] of plaintiff National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), and the Motion for Partial Summary Judgment Regarding National Union's Separate, Per Project, Completed Operations Coverage [Docket No. 556] of defendant Federal Insurance Company ("Federal"). This Court has jurisdiction pursuant to 28 U.S.C. § 1332.

I. BACKGROUND¹

This case arises out of an insurance coverage dispute. In early 1998, former defendant Intrawest ULC ("Intrawest"), a ski-resort developer, engaged former third-party defendant Willis,² an insurance broker, to negotiate and secure insurance coverage for its construction projects. Docket No. 549 at 5, Statement of Undisputed Material Fact ("SUMF") 1–3; Docket No. 556 at 5, SUMF 4, 6.³ Willis sought proposals from six insurance companies. Docket No. 549 at 8, SUMF 18. On April 27, 1998, Geoffrey Hall, a National Union representative, sent a proposal to Willis that included the following chart:

Limits of Liability
Per Location:
Bodily Injury & Property Damage	$2,000,000 Each Occurrence
Personal/Advertising Injury	$2,000,000 Each Occurrence
General Aggregate **	$5,000,000 *Per Project
Medical Expense	$5,000
Fire Damage Legal	$100,000
Products/Completed Operations Aggregate	$5,000,000
All Locations
General Aggregate	$15,000,000
Products Completed Operations	$5,000,000
Reinstatement of Aggregate Limits Annually except for the five (5) YearProducts/Completed Operations Extension Period which will have One Aggregatefor the Extended Reporting Period. *There is an option for a ten (10) yearProducts/Completed Operations Extension period in lieu of the five (5) year listedabove for an Additional Premium of $350,000.

Id. , SUMF 21, 23;⁴ Docket No. 549–16 at 2.

Intrawest purchased five consecutive general liability policies from National Union with effective dates of April 30, 1998 through June 30, 2002. Docket No. 549 at 5–6, SUMF 5; Docket No. 556 at 5, SUMF 5. The declarations pages of each policy list a $5 million general aggregate and a $5 million completed operations aggregate. Docket No. 549 at 6, SUMF 6. "Section III–Limits of Insurance" of the policies explains that "[t]he Limits of Insurance shown in the Declarations and rules below fix the most we will pay." Id. , SUMF 8. That section also provides that the "general aggregate limit" is the most National Union will pay for "Other Than Prod–Comp Operations" and that the "completed operations aggregate limit" is the most National Union will pay for completed operations damages. Id. ; Docket No. 549–7 at 2, 4. Intrawest selected the optional ten-year extension. Docket No. 556 at 11, SUMF 40.

On May 13, 1998, Craig Parrow, a Willis representative, wrote to Geoffrey Hall, a National Union representative, and asked whether the completed operations coverage "applies on a 'per project' basis similar to the 'primary' CGL." Id. at 9, SUMF 29. Mr. Parrow's reference to the "primary CGL" pertained to the ongoing operations limit, which had a $5 million per project limit rather than a per location limit. Id. at 10, SUMF 30. Mr. Hall responded that "there is only one aggregate for the entire Extension Period. The limit will apply per project but the total aggregate for all losses in the Extension will remain $5,000,000." Id. , SUMF 32.

On May 22, 1998, Mr. Hall issued a binder to Willis. Id. , SUMF 36. The binder issued to Willis contained the same limits as set forth in National Union's proposal. Id. at 11, SUMF 38. It took the parties more than a year to perfect the final terms of the 1998–1999 policy. Docket No. 556 at 7, SUMF 21.

On February 22, 1999, William Bridgman of Willis sent an email to Mr. Parrow and Joseph Riela of National Union confirming that Intrawest wanted a ten-year term, agreeing that the $5 million completed operations aggregate did not reinstate annually, and requesting confirmation that the aggregate applied on a "per project basis." Docket No. 556 at 8, SUMF 24. National Union thereafter provided a copy of the 1998–1999 policy to Willis with the following endorsement:

It is agreed that, Products Completed Operations coverage is extended for a period of five (5) years which will commence when that portion of the project is put to its intended use or a temporary or permanent certificate of occupancy is issued. The products/completed operations limit is $5,000,000 each occurrence and $5,000,000 Aggregate for the extended completed operations period.

All other terms, conditions and exclusions of this policy remain unchanged.

Docket No. 549 at 11–12, SUMF 43; Docket No. 549–28 at 2.

On March 2, 1999, Mr. Parrow identified mistakes in the endorsement to the policy and wrote to Mr. Riela. Docket No. 549 at 12, SUMF 44. Mr. Parrow wrote to Mr. Riela that the endorsement should say that the extended reporting period is ten years and that the completed operations aggregate applies "per project." Id. On March 12, 1999, Mr. Riela responded to Mr. Parrow, stating that "we are not in agreement that the $5 million aggregate [applies] separately per project. To clarify, the $5 million aggregate, as stated in the binder, applies to all projects and is not reinstated annually." Id. , SUMF 45. Later that day, Mr. Bridgman forwarded the May 13, 1998 email exchange between Mr. Hall and Mr. Parrow to Mr. Riela. Docket No. 549–31. Mr. Riela contacted Mr. Hall of National Union to confirm that the agreement was for a single $5 million total completed operations aggregate. Docket No. 549 at 12, SUMF 47. Mr. Hall clarified that the $5 million per location aggregate applied "per project," but confirmed to Mr. Riela that the total completed operations limit was $5 million. Id. , SUMF 48. Mr. Riela responded to Mr. Hall's email by stating, "based on your response, the Completed Operations Agg does apply on a per project basis. I will make this change on the endorsement." Id. , SUMF 49.

On May 3, 1999, National Union executed a number of endorsements that amended and became part of the policies. Docket No. 556 at 9, SUMF 27. One such endorsement was Endorsement 9, which included the following paragraph:

It is also agreed and understood that the Products and Completed Operations Aggregate is not reinstated annually, however, it does apply separately on a per project basis.

Docket No. 549 at 7, SUMF 12; id. at 13, SUMF 52.

On May 10, 2000, Intrawest executed the Indemnity Agreement. Id. at 15, SUMF 63. The Indemnity Agreement states:

National Union will issue the insurance policies listed in the Schedule(s). Such policies ... are governed by this Agreement.... This Agreement, together with the Schedule(s) and Policy(ies), constitutes the Program. The Program is a uniquely negotiated, single contract and no part of the Program would have been issued without the other parts being in force. Unless otherwise agreed, should the parties later adopt revised or different Schedule(s) or issue additional Policies, such Schedule(s) and Policy(ies) shall be subject to this Agreement and be part of the Program.

Id. , SUMF 62. The Paid Loss Addendum and Policy and Funding Schedule (the "Schedule") attached to the Indemnity Agreement contained a Policy Limits section, which provides:

General Liability:

Per Project

$2,000,000 per occurrence

$5,000,000 General Aggregate

$5,000,000 Completed Operations Aggregate

All Projects *(1)

$15,000,000 General Aggregate

$5,000,000 Completed Operations Aggregate

Docket No. 549–5at 2.

Endorsement 9 was included with the policy during its first two years, and the parties agree that it was mistakenly omitted from the Policy during years 3, 4, and 5. Docket No. 556 at 10, SUMF 32.

On January 14, 2013, National Union filed the complaint in the instant case seeking a declaratory judgment that the National Union policies' aggregate limit is $5 million and that, upon paying the aggregate limit, National Union's obligations under the National Union policies are satisfied. Docket No. 1 at 11–12. On October 2, 2013, Federal filed an answer and alleged three counterclaims against National Union: (1) equitable subrogation and (2) equitable indemnity for amounts Federal paid to settle claims against Intrawest after National Union took the position that the $5 million aggregate limit had been exhausted; and (3) a declaratory judgment that each project had an independent $5 million aggregate limit. Docket No. 86 at 11–14.

On October 30, 2015, National Union filed a motion for summary judgment on its declaratory judgment claim and Federal's three claims. Docket No. 549 at 50. On November 2, 2015, Federal filed a motion for summary judgment on its declaratory judgment claim. Docket No. 556 at 21.

On March 14, 2016, National Union filed a motion to supplement the summary judgment record. Docket No. 698. National Union requests to supplement the summary judgment record with evidence regarding Federal's reinsurance materials. Id. at 3.

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56, summary judgment is warranted when the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see ...