Ali v. Federal Insurance, 719 F.3d 83

Directors of Commodore International Limited faced a collapsed insurance tower after Commodore’s bankruptcy, with Reliance and Home insolvent and liquidated.
Federal Insurance Company (FIC) pursued declaratory relief to determine whether it must drop down to cover losses that would have been covered by the insolvent carriers.
The District Court held that excess policies attach only after underlying losses are paid, i.e., after payment of losses, not merely by aggregation of unpaid losses.
Following the denial of the Directors’ partial summary judgment motion, the Directors dismissed all claims with prejudice to obtain immediate appellate review of the denial.
The Directors appealed the final dismissal, arguing for a broader trigger of excess coverage; the District Court’s order led to a final judgment that the excess policies attach only after payment of losses, which this court affirmed based on the contract language and policy structure.
The panel concluded that jurisdiction to review the voluntary dismissal was present under the unusual posture of the case and that the excess-coverage trigger is governed by the plain language requiring payment of losses to reach attachment points.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the appeal is reviewable despite a voluntary dismissal following denial of summary judgment.	Directors sought immediate appeal of the denial.	Ordinarily, dismissals are non-appealable; review is not allowed.	Yes; appellate jurisdiction exists under these circumstances to review the final judgment.
Whether excess policies attach only after payment of losses to reach attachment points.	Excess coverage attaches when the directors’ defense/indemnity obligations exceed underlying limits.	Exhaustion occurs only after actual payment of losses reaches the attachment point.	Plain language requires payment of losses, not mere accrual, to trigger attachment.

Empire Volkswagen, Inc. v. World-Wide Volkswagen Corp., 814 F.2d 90 (2d Cir. 1987) (final judgments and dismissal posture for expedited review)
Palmieri v. Defaria, 88 F.3d 136 (2d Cir. 1996) (conditions for effective dismissal to obtain appeal)
Chappelle v. Beacon Commc’ns Corp., 84 F.3d 652 (2d Cir. 1996) (limits on piecemeal appeals; final judgment rule)
DiStiso v. Cook, 691 F.3d 226 (2d Cir. 2012) (denials of motions for summary judgment; appellate reach)
Zeig v. Massachusetts Bonding & Insurance Co., 22 F.2d 665 (2d Cir. 1928) (exhaustion and construction of excess-policy terms; prior era)
Ortiz v. Jordan, 131 S. Ct. 884 (2011) (final-judgment review pathway after denial of summary judgment)
United States v. Procter & Gamble Co., 356 U.S. 677 (1958) (finality and expeditious review rationale)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal common law and choice of law considerations)