Insurance Law

Dist. Ct. did not err in granting defendant-excess insurance company’s motion for summary judgment in plaintiffs-excess insurance companies’ action seeking declaration that insurance policy issued to insured required defendant to contribute additional $2.5 million to cover insured’s losses in two underlying personal injury settlements that plaintiffs had otherwise covered pursuant to their excess insurance policies with insured. Focus of dispute was whether aggregate corroder deductible (ACD) clause diminished amount that defendant owed on any of underlying claims, and whether insured’s payments towards ACD eroded defendant’s layer of required payments. Instant policy language was ambiguous, where policy failed to define whether ACD payments eroded policy limits. However, extrinsic evidence in form of negotiations between insured and both plaintiffs and defendant, as well as conduct of insured, indicated that combined liability of insured (which was self-insured with respect to first $3 million of each claim) and defendant was capped at $5 million per occurrence, such that plaintiffs would begin payments at $5 million level rather than $7 or $7.5 million level as asserted by plaintiffs.

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in plaintiff-insured’s action alleging that defendant breached terms of insurance policy by failing to fully pay on plaintiff’s claim for hail damage to 33 roofs of plaintiff’s buildings, as well as processed plaintiff’s claim in bad faith. After exchanging competing appraisals, umpire chosen by both parties issued proposed award of $154,391.77 that represented costs of some repairs for metal damage on 33 buildings, but was less that $1.5 million plaintiff sought to completely replace shingles on all 33 roofs. Instant appraisal provision in policy was unambiguous, and plaintiff failed to identify any unfairness, fraud, collusion or misfeasance committed by umpire that could set aside his proposed award that was ultimately signed by defendant, which made it binding on parties. Moreover, plaintiff’s appraiser found no hail damage to 20 of plaintiff’s buildings. Fact that ultimate award was more than defendant’s initial appraisal did not require finding that defendant acted in bad faith when processing plaintiff’s claim, where there was no evidence that defendant had deceived plaintiff, delayed payment to plaintiff or exercised unfair advantage to pressure plaintiff to settle claim.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in plaintiff’s claim seeking declaration that plaintiff’s excess insurance policy did not cover accident at issue in underlying lawsuit, where: (1) although defendant-insured notified its primary insurance company about said accident and tendered defense of underlying lawsuit to primary insurance company, defendant waited seven years until eve of trial in underlying lawsuit to notify plaintiff that its excess policy might be implicated in underlying lawsuit if jury’s verdict surpassed $1 million insurance provided by primary policy; and (2) jury awarded plaintiff in underlying lawsuit $2.3 million. Dist. Ct. could properly find that instant seven-year delay in notifying plaintiff about accident was too long, where plaintiff’s excess policy had clause making coverage contingent on proper and timely notice of accident. Ct. also rejected defendant’s argument that plaintiff was equitably stopped from asserting any lack of notice clause, even though plaintiff played passive role at trial in underlying action, where plaintiff did not inform defendant at any point that it was not going to stand on its rights for timely notice under excess policy.

Dist. Ct. did not err in granting plaintiff-insured’s motion for summary judgment in action alleging that defendant-insurance company was required to cover cost to replace aluminum siding on all sides of buildings owned in insured, even though hail and wind storm damage occurred only on buildings’ south and west sides. Record showed that replacement siding that would match existing siding was no longer available, and under language of relevant policy defendant was required to pay to return buildings to pre-storm status with matching siding on all sides. Ct. noted that result might be different if buildings had only incurred minimum damage to aluminum siding, such that defendant would only be required to replace damaged siding and pay plaintiff for any loss in value to buildings arising out of mismatched siding.