Utica Mut. Ins. Co. v. Abeille Gen. Ins. Co.

2022 NY Slip Op 03815

UTICA MUTUAL INSURANCE COMPANY, PLAINTIFF-RESPONDENT-APPELLANT, v. ABEILLE GENERAL INSURANCE CO., NOW KNOWN AS 21ST CENTURY NATIONAL INSURANCE CO., ET AL., DEFENDANTS-APPELLANTS-RESPONDENTS, ET AL., DEFENDANTS-RESPONDENTS.

No. 189 CA 21-00536

Supreme Court of New York, Fourth Department

June 10, 2022

NORTON ROSE FULBRIGHT U.S. LLP, NEW YORK CITY (JOHN F. FINNEGAN OF COUNSEL), FOR DEFENDANTS-APPELLANTS-RESPONDENTS.

HUNTON ANDREWS KURTH LLP, WASHINGTON, D.C. (SYED S. AHMAD, OF THE WASHINGTON, D.C. BAR, ADMITTED PRO HAC VICE, OF COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.

PRESENT: WHALEN, P.J., SMITH, NEMOYER, WINSLOW, AND BANNISTER, JJ.

Appeal and cross appeal from an order of the Supreme Court, Oneida County (Patrick F. MacRae, J.), entered January 22, 2021. The order, among other things, denied the motion of defendants-appellants and the cross motion of plaintiff for partial summary judgment.

It is hereby ORDERED that the order so appealed from is unanimously modified on the law by granting the motion and granting judgment in favor of defendants-appellants as follows:

It is ADJUDGED AND DECLARED that plaintiff is not entitled to recover from defendants-appellants reimbursement under the reinsurance contracts for defense costs paid by plaintiff to Burnham Corporation in the underlying actions under the umbrella policies of insurance, and as modified the order is affirmed without costs.

Memorandum Plaintiff, Utica Mutual Insurance Company, issued primary policies and umbrella policies of insurance to nonparty Burnham Corporation (Burnham) covering, as relevant to this appeal, a period from 1977 to 1983. Plaintiff obtained from defendants reinsurance coverage for the same period related to the umbrella policies. Burnham was sued by individuals who were allegedly injured by exposure to a boiler that was manufactured by Burnham and that contained asbestos (underlying actions). There is no dispute that, with respect to the underlying actions, plaintiff paid defense costs and losses to Burnham under the primary insurance policies. A dispute arose between plaintiff and Burnham regarding plaintiff's obligation to pay defense costs and losses under the umbrella policies once the coverage under the primary insurance policies was exhausted. Plaintiff and Burnham entered into a settlement whereby plaintiff agreed to pay defense costs and losses under the umbrella policies for those occurrences that had triggered coverage under the then-exhausted primary policies. Plaintiff, in turn, sought reimbursement from defendants for those costs under the reinsurance policies. Defendants refused to pay, contending that plaintiff was not obligated under the umbrella policies to pay and, thus, the reinsurance contracts were not triggered.

Plaintiff thereafter commenced this action, asserted causes of action for breach of contract and declaratory judgment, and sought inter alia, enforcement of the reinsurance policies. Defendants-appellants (hereafter, defendants) moved for partial summary judgment seeking a declaration that plaintiff may not recover from defendants any of the disputed defense costs plaintiff paid under the umbrella policies to defend Burnham in the underlying actions. Plaintiff cross-moved for partial summary judgment on the amended complaint insofar as the amended complaint sought a finding that defendants breached their obligations to pay certain amounts billed by plaintiff under the reinsurance contracts and a declaration that defendants are obligated to pay their respective shares of plaintiff's "future expense billings." Supreme Court agreed with defendants that the unambiguous terms of the umbrella policies established that the disputed defense costs were not covered under those polices and thus were likewise not covered under the reinsurance policies. Nevertheless, the court denied the motion and the cross motion, finding that issues of fact existed regarding the follow-the-settlements doctrine. Defendants appeal, and plaintiff cross-appeals.

Addressing first the cross appeal, we reject plaintiff's contention that the court erred in applying New York law and not Pennsylvania law to its analysis of the umbrella policies the latter being the location of Burnham's facility and the main location of the insured risk. "[B]ecause New York is the forum state, i.e., the action was commenced here 'New York's choice-of-law principles govern the outcome of this matter'" (Burnett v Columbus McKinnon Corp., 69 A.D.3d 58, 60 [4th Dept 2009]). "The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved" (Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 N.Y.2d 219, 223 [1993]). "If no conflict exists, then the court should apply the law of the forum state in which the action is being heard" (Excess Ins. Co. v Factory Mut. Ins. Co., 2 A.D.3d 150, 151 [1st Dept 2003], affd 3 N.Y.3d 577 [2004]). Here, plaintiff failed to establish the existence of "any conflict between New York and Pennsylvania law with respect to the issues raised in the [cross] motion, and therefore we need not engage in any choice of law analysis" (Farnham v MIC Wholesale Ltd., 176 A.D.3d 1605, 1606 [4th Dept 2019]).

Contrary to plaintiff's further contention on the cross appeal, we conclude that the court properly determined that defendants established that their interpretation of the umbrella policies, i.e., that those policies did not cover defense costs in the underlying actions inasmuch as those costs were covered by the primary insurance policies, is the only fair construction thereof (see Albert Frassetto Enters. v Hartford Fire Ins. Co., 144 A.D.3d 1556, 1557 [4th Dept 2016]; cf. Utica Mut. Ins. Co. v McAteer &amp FitzGerald, Inc., 78 A.D.3d 1612, 1612 [4th Dept 2010]; see generally Arrow Communication Labs. v Pico Prods., 206 A.D.2d 922, 923 [4th Dept 1994]). We consider first the language of the umbrella policies (see W.W.W. Assoc. v Giancontieri, 77 N.Y.2d 162, 162 [1990]), which...