Union Carbide Corp. v. Affiliated FM Insurance
16 N.Y.3d 419
| NY | 2011Background
- UCC obtained layered liability insurance for asbestos claims; Appalachian policy provided the bottom layer with an $5 million annual aggregate, renewed annually.
- Fifth-layer excess policy provided $30 million in aggregate over six insurers, including Continental and Argonaut, with a follow-the-form clause to the Appalachian policy.
- Declarations for the fifth layer state $30,000,000 in the aggregate, with $30,000,000 per occurrence and excess of $70,000,000.
- Continental extended its policy by two months (to February 1, 1977) for an additional premium, raising questions whether a new year of limits commenced.
- UCC sought summary judgment on annualization and extension issues; the trial court granted on both, the Appellate Division denied on both, and this Court granted appeal to resolve the issues.
- The Court held: annualization favored UCC; extension issue denied summary judgment, leaving open for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the fifth-layer aggregate is annualized. | UCC: follow-the-form requires annualization of the aggregate limit. | Continental/Argonaut: aggregate limit is fixed across the policy period. | Annualization favored UCC; limit renewed annually. |
| Whether the two-month Continental extension created a new policy year for limits. | UCC: extension effectively provides a new year of limits for the extended period. | Continental: extension does not create a new year; limits stay within original period. | Denied summary judgment on extension; issue remains open. |
Key Cases Cited
- Vintage, LLC v. Laws Constr. Corp., 13 N.Y.3d 847 (2009) (textual meaning controls; extrinsic evidence limited)
- Innophos, Inc. v. Rhodia, S.A., 10 N.Y.3d 25 (2008) (extrinsic evidence permitted when textual ambiguity exists)
- Greenfield v. Philles Records, 98 N.Y.2d 562 (2002) (textual interpretation and extrinsic evidence framework)
- Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208 (2002) (summary judgment standard on insurance coverage issues)
- Stonewall Ins. Co. v. Asbestos Claims Mgt. Corp., 73 F.3d 1178 (2d Cir. 1995) (divergent approaches to policy-year and limits extensions)