WCHCC (Bermuda) Ltd. v. Granite State Insurance

13-2438-cv(L)
WCHCC (Bermuda) Ltd v. Granite State Ins. Co.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED
WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York, on
the 5th day of May, two thousand fourteen.

PRESENT: JOHN M. WALKER, JR.,
DENNY CHIN,
CHRISTOPHER F. DRONEY,
Circuit Judges.

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WCHCC (BERMUDA) LIMITED,
Plaintiff-Appellee,

-v- 13-2438-CV
13-2866-CV
GRANITE STATE INSURANCE COMPANY,
Defendant-Appellant.

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FOR PLAINTIFF-APPELLEE: BARRY G. SARETSKY, Saretsky Katz
Dranoff & Glass, LLP, New York,
New York.

FOR DEFENDANT-APPELLANT: ROSS P. MASLER, McGaw, Alventosa &
Zajac, Jericho, New York, and Glen
A. Kaminska, Ahmuty, Demers &
McManus, Albertson, New York.
 Appeal from the United States District Court for the

Southern District of New York (Briccetti, J.).

UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

Defendant-appellant Granite State Insurance Company

("Granite") appeals from the district court's judgment in favor

of plaintiff-appellee WCHCC (Bermuda) Limited ("WCHCC") awarding

WCHCC $1,211,342.47 plus interest. Judgment was entered after

the district court granted, by memorandum decision filed June

10, 2013, WCHCC's motion for summary judgment. We assume the

parties' familiarity with the facts, procedural history, and

issues on appeal.

In brief, Granite issued professional liability

insurance to a nurse working at the Westchester Medical Center

("WMC"). Granite argues that the coverage it supplied to the

nurse was junior to the general liability insurance WMC obtained

from WCHCC for itself and its staff. Granite thus argues that

when the nurse settled a medical malpractice suit filed in state

court, WCHCC should have paid first, with Granite owing only the

amount in excess of WCHCC's coverage. The district court

disagreed, holding that language in WCHCC's insurance policy

rendered it excess to the Granite policy.

Summary judgment is appropriate when "there is no

genuine dispute as to any material fact and the movant is

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entitled to judgment as a matter of law." Fed. R. Civ. P.

56(a). We review de novo a district court's grant of summary

judgment after construing all evidence, and drawing all

reasonable inferences, in favor of the non-moving party. See,

e.g., McElwee v. Cnty. of Orange, 700 F.3d 635, 640 (2d Cir.

2012). "As with the construction of contracts generally,

unambiguous provisions of an insurance contract must be given

their plain and ordinary meaning, and the interpretation of such

provisions is a question of law for the court." Vigilant Ins.

Co. v Bear Stearns Cos., 884 N.E.2d 1044, 1047 (N.Y. 2008)

(internal quotation marks omitted). We therefore review de novo

the district court's interpretation of the insurance provisions

at issue.

Under New York law, when each of two insurance

policies "generally purports to be excess to the other, the

excess coverage clauses are held to cancel out each other and

each insurer contributes in proportion to its limit amount of

the insurance." Lumbermens Mut. Cas. Co. v. Allstate Ins. Co.,

417 N.E.2d 66, 68 (N.Y. 1980). This rule is inapplicable,

however, "when its use would distort the meaning of the terms of

the policies involved," which "turns on consideration of the

purpose each policy was intended to serve as evidenced by both

its stated coverage and the premium paid for it, as well as upon

the wording of its provision concerning excess insurance."

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State Farm Fire & Cas. Co. v. LiMauro, 482 N.E.2d 13, 17 (N.Y.

1985) (internal citation omitted).

Even insurance policies that claim to be excess can be

placed in a "pecking order" consistent with the nature of

protection each competing policy confers. See Argonaut Ins.

Co., v. U.S. Fire Ins. Co., 728 F. Supp. 298, 300 (S.D.N.Y.

1990). Such is the case here. We are presented with policies

that are only superficially similar: both have "other

insurance" clauses, but the plain language of each policy

provides for different coverage.

In Lumbermens, the Court of Appeals of New York noted

that there are three general types of excess insurance policies,

the first two of which are relevant here. The first Lumbermens

category encompasses policies generally stating that they are

excess to other sources of insurance. See 417 N.E.2d at 67

(noting that policy provided that "[i]f there is other

insurance[, this policy] . . . shall be excess insurance"

(internal quotation mark omitted)). The second Lumbermens

category encompasses policies stating that they are excess to

other policies, but specifically addressing their interplay with

other excess policies. See id.

Granite's "other insurance" clause mirrors the

language of the first Lumbermens category. The Granite policy

provides that "if there is other insurance, which applies to the

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loss covered under this Policy, the other insurance must pay

first." (App. 26-27). While the Granite policy would be

considered "excess" of primary insurance, it contains no

explicit statement about its position with respect to other

excess policies.

By contrast, the WCHCC policy falls within the second

Lumbermens category. It provides that it is "excess of any

valid and collectible insurance or self insurance coverage

afforded or provided to . . . a nurse . . . , whether such other

insurance or self insurance is stated to be primary, contingent,

[or] excess." (App. 42) (emphases added). The WCHCC policy

thus specifically provides that it is excess to any policy

provided to a nurse, whether excess or otherwise. Although the

WCHCC policy also contains a provision contemplating equal

contribution, this provision is triggered only when another

policy applies "on the same basis." (App. 43). That is not the

case here: by its explicit terms, the WCHCC policy does not

apply on the same basis as the Granite policy.

The plain language of these other insurance provisions

compels the conclusion that these policies should be tiered,

consistent with Lumbermens. Accordingly, we agree with the

district court that the WCHCC policy is excess and the Granite

policy must be exhausted first. See Lumbermens, 51 N.E.2d at 68

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(finding that policy was senior where it "clearly provided that"

another policy "should be exhausted first").

The disparity in premiums for each policy does not

vitiate this conclusion because the policies themselves are not

comparable. WCHCC's policy provides comprehensive professional

liability and commercial liability coverage for the WMC -- an

entire hospital -- and its employees, while Granite merely

covers professional liability for one nurse. The difference in

premiums is thus not instructive in determining tiers of

coverage. See Northbrook Excess & Surplus Ins. Co. v. Chubb

Grp. of Ins. Cos., 496 N.Y.S.2d 430, 433 (1st Dep't 1985) ("In

evaluating the significance of the amount of the premium, it is

clearly important to measure that premium against the

[comprehensiveness of the] coverage provided by that policy."),

aff'd mem., 494 N.E.2d 448 (N.Y. 1986).

Granite also argues that WCHCC did not have the

authority to enter into a settlement on behalf of the nurse. We

disagree. As the district court noted, Granite was informed of

the case against the nurse by January 2009, two years before

settlement was reached, but opted not to participate in pre-

trial negotiations. Indeed, in November 2010, the nurse, the

hospital, and WCHCC all sought to engage Granite's participation

in mediation and settlement talks. Instead of participating,

Granite, through its counsel, "demanded" that WCHCC continue to

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defend the nurse throughout mediation and settlement

negotiations. In light of Granite's failure to object to

WCHCC's involvement in settlement negotiations -- of which it

was fully aware and in which it could have participated -- it

has no basis upon which to challenge WCHCC's representation of

the nurse.

We have considered appellant's remaining arguments and

conclude they are without merit. For the foregoing reasons, we

AFFIRM the judgment of the district court.

FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk

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