JP Morgan Chase & Co. v. Indian Harbor Insurance
947 N.Y.S.2d 17
N.Y. App. Div.2012Background
- Bank One purchased $175 million of claims-made bankers professional liability and securities action coverage in a Bank One tower above self-insured retention.
- Primary carrier was Indian Harbor; excess carriers included Houston Casualty, Arch, St. Paul, Twin City, Lumbermens, Swiss Re, and nonparties Federal, Executive Risk, and others.
- NPF litigation in 2002–2004 led to Bank One entities’ merger into JP Morgan entities between 2004 and 2008; six related actions settled for $718 million.
- Plaintiff settled with Federal for $17 million; settlement allocated no amount between Federal and Executive Risk; Swiss Re remained higher in the Bank One tower.
- Plaintiff subsequently settled with Zurich and Steadfast for $17 million; Zurich claim under Zurich’s Bank One tower and Steadfast related to separate litigation; Zurich later dropped as a defendant; summary judgment motions followed based on policy attachment language.
- The trial court granted summary judgment for several excess carriers; the appellate court affirmed, focusing on attachment/exhaustion conditions and privilege standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether excess policies attach only after underlying policies are exhausted and admitted liability | Twin City and others require underlying admission and full payment as a condition precedent | Exhaustion and admission are required before excess carriers’ liability | Yes, conditions precedent require underlying admission and payment; summary judgment affirmed |
| Whether settlements with underlying carriers exhaust underlying limits for excess coverage | Settlements should exhaust underlying limits, triggering excess coverage | Settlements without allocation do not exhaust underlying policies | No exhaustion due to lack of allocation; underlying settlements foreclose determination of exhaustion; summary judgment affirmed |
| Whether maintenance provisions affect coverage where underlying policies were not fully maintained | Maintenance clause should not invalidate policy due to settlements | Plain adherence to attachment conditions governs; maintenance irrelevant | Maintenance provision irrelevant; conditions precedent govern; summary judgment affirmed |
| Whether cooperation clauses create waivers of attorney-client/work-product privileges | Cooperation clauses waived privileges | Cooperation clauses do not waive privileges; discovery issues controlled by NY law | Cooperation clauses did not waive privileges; discovery issues upheld under NY law |
Key Cases Cited
- Zeig v. Massachusetts Bonding & Ins. Co., 23 F.2d 665 (2d Cir. 1928) (ambiguous exhaustion rule; explicit policy language controls)
- Qualcomm, Inc. v. Certain Underwriters at Lloyd's, London, 161 Cal. App. 4th 184 (Cal. Ct. App. 2008) (paid or have been held liable to pay requires exhaustion by actual payment)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (Ill. 1992) (policy interpretation; plain meaning governs)