*1 & ABERCROMBIE FITCH
CO., Plaintiff-Appellee, COMPANY,
FEDERAL INSURANCE
Defendant-Appellant.
No. 09-3096. Appeals, States
United Court
Sixth Circuit.
March *2 Co., GUY, CLAY, separate of insurance anee issuer a Before: and KETHLEDGE, Abercrombie, Judges. to and a counterclaim Circuit In the counter- against Abercrombie. GUY, JR., Judge.
RALPH B. Circuit claim, Federal asserted Abercrombie’s diversity of contract This is a breach Policy, sought and breach of the Federal & plaintiff action in which declaratory judgment that it was not obli- Fitch claims defendant Federal Insur- Co. gated provide coverage to for the Ross Company improperly pay refused to ance In investigation. claims and SEC Febru- legal pro- defense costs under an executive ary Federal filed a motion for sum- summary policy. tection insurance On mary judgment, which was denied judgment, the district court ruled favor September district court in 2008.3 Abercrombie, the contract interpreting party facts se- Neither contests the and require coverage of its defense cоsts. quence of events set out in the district error in the district court’s Finding no denying Opinion court’s and Order Feder- interpretation, affirm. we summary judgment, al’s motion for re- peated below:
I. issued Executive Protection (Aber- Plaintiff Abercrombie & Fitch (the Policy Portfolio No. 8159-6218 crombie) contests defendant Federal In- Policy”) “Federal to Abercrombie for (Federal) Company’s surance refusal Policy September Period of pay defense of securities class ac- costs. September 2005. The Federal Pol- tions, suits, derivative shareholder and icy Liability includes an Executive and investigation against SEC initiated Aber- Entity Liability Coverage Securities beginning in crombie 2005.1 Abercrombie Section, provides up which million $10 in coverage had million for such claims $10 Abercrombie, its officers a Federal an effective under with directors, for ... “loss on account covering the the claims рeriod dates first ... [an Claim made against Abercrombie were filed. After or, during Policy if insured] Period pay Federal refused to exercised, during Report- the Extended claim, a five- surance Abercrombie filed Period, ing Wrongful for a Act commit- diversity count federal action in ted, attempted allegedly or committed seeking a declaration of Federal’s obli- attempted by before or [an insured] gation pay certain defense costs under during Policy Period.” As the end damages the Federal for its Policy ap- the Federal Period breach of contract.2 Federal’s answer to complaint third-party proached, purchased com- a new included plaint against National Fire Insur- claims-made from National Union Union pending, 3.While 1. securities class actions shareholder motion was Abercrom- suits, derivative filed in the Southern District partial summary judg- bie filed а motion for Ohio, ment, were consolidated in the district seeking the district court's determina- court as & No. Ross Abercrombie Fitch tion that it was entitled to advancement of 2:05-cv-819 In re: Abercrombie & Fitch certain or- defense costs. The district court's Litigation, Derivative No. 2:05- Co. cv-00819-EAS-TPK, Lead Case summary judg- der on Federal's motion for collectively and are re- ment indicated that it had taken Abercrom- ferred to as “the Ross claims.” bie's motion "under advisement” and would separate opinion rule on it in a and order. May In filed an amend- complaint, adding ed a count of bad faith for pay Federal’s refusal to defense costs. Fire Insurance of Pittsburgh No. 8159-6213 issued (“National Union”), (herein- effec- Federal Insurance Company September tive from 2005 to Septem- after Policy”), “Federal alleging any *3 ber 2006. Wrongful Act committed or allegedly 2, 2005, September On day one after 9/01/2005, committed prior then expiration of the Policy, Federal such insurance as provided by sued, along Abercrombie was with sev- policy shall apply only as excess over directors, eral of its officers and in a any paid Loss under such Federal complaint class action alleging violations Policy.
viding that the would cover tiated the National formally notified Federal of the Ross tion to $820,000 premium ed chasing the Ross claims were Period. Abercrombie exercised the op- 2005, within the 30-day ed Claims filed several derivative of the initial conduct that occurred crombie to commenced a formal Securities and November of federal There is no The Federal reporting period the Federal purchase letter dated October purchase ERP, claims Policy securities shareholders 2005. new Policy dispute Exchange the ERP filed, [4] Policy. Period, arising Union (the “ERP”) on during one-year permitted Aber- investigation laws. Certain window that after the suits, September after the end but subsequently Policy, Commission before the Policy would be involving paid and the renego- extend- provid- pur- pro- on written the National Union Policy to be bar to coverage. Specifically, Federal recover from National policies breach of the insurance contract and a tion al maintains crombie crombie excess, the National Union and Federal such conduct constitutes claims that Abercrombie breached Sec- recovery. tion or could the Insureds will do nothing that tion, The Company primary assistance and Insureds parties would both be prejudiced purchased its of the Policy, which states: coverage to that in the event of a Claim that, [Federal] with potential agree may reasonаbly require agree by shifting the burden the Company’s posi- the ERP and not Federal’s or actual cooperation primary. that, Union, Federal, provide all a material had Aber- and that informa- right Feder- which Aber- Abercrombie contends that the Feder- excess to primary coverage al expressly permitted Abercrom- agreement under the ERP. The be- bie to structure subsequent additional or tween National Union and Abercrombie coverage as excess to Federal’s primary was later memorialized in an Endorse- coverage. Specifically, the Federal Poli- ment to the Policy.[5] National Union states, cy in Section 18: Endorsement No. 17 reads as follows: In the event If any a Claim is made Loss this coverage under sec- an Insured under and also tion is insured under other valid ever, premium premium 4. This was twice the for the actual issuance of Endorsement No. original one-year policy. 17 to the National Union did not occur exchange electing until In November. for ERP, agreement negotiated rep- 5. The Abercrombie received benefits between resentatives for Abercrombie from National Union in the form of a and National reduced September prior Union in potential late to Aber- deductible and the for no increase in premium subsequent policy years. crombie's election of the Federal How- ERP. 12 of the with Section accordance this cover- then policy(ies), insurance of the Ross timely notice provide or to Loss, sub- cover such section shall age Section 15. Claims conditions, limitations, pro- ject to as a judgment now seeks terms, only to the and other visions a declaration that the matter of law and Loss is amount of such extent provide cover- Policy does not applicable retention in excess Claims, for the Ross age to Abercrombie deductible) liability (or limit of solely on Abercrombie’s conduct based insurance, whether other under such Policy to Union writing National stated to be other insurance such Federal, allegedly to that of be excess *4 excess, contin- contributory, primary, of right off contribu- cutting otherwise, such other unless or gent Section purported in breach of tion only specific as is written insurance Policy. of the Federal Limits over the insurance excess omitted). (Footnote coverage in this Liability provided interpretation to the Applying Ohio law Liability and Executive [the section Policy, the district court of the Federal Liability Coverage Entity Securities that the sections insur- determined section], reasonably in could dispute ance contract 85-2). (Federal # Policy, Doc. manner suсh a interpreted “in coverage for requires provide Federal to meaning over the parties differ The district court also the Ross claims.” maintains that provision. this Federal dismiss the bad faith found it could not only to applies the in Abercrombie’s amended claim contained excess; Abercrombie exclusively that is the Accordingly, district court complaint. it the gives section contends that this summary Federal’s motion for denied primary right purchase to judgment. only as to the Federal be excess would Federal’s motion Following ruling its on ERP. the district court summary judgment, for do not dis- parties Importantly, the parties memoranda from the requested key relating facts on several in connec- briefing any remaining issues there is no dis- example, coverage. For pending motion tion with Abercrombie’s fall within that the Ross Claims pute In partial summary judgment. Janu- for ERP, they by the coveragе provided Aber- ary granted court district dur- occurring conduct allege wrongful motion, entering its declaration crombie’s Also, Fed- Policy initial Period. ing the to advance- entitled was that Abercrombie of costs from categories ment of four Fed- allege eral does timely its notice eral.6 Federal filed option the ERP in failed to exercise Litiga- Derivative Abercrombie & Fitch Co. 6. The order stales: tion, No. Lead Case 2:05-cv-819 retention and Subject $1 to the million 3) (S.D.Ohio); costs in- and All reasonable in No. limit Federal $10 million investigate or by Abercrombie to curred 8159-62-13, hereby ORDERED in Abercrombie’s evaluate whether it is best following payment cate- advance for prosecute the claims raised interest has incurred gories costs that Plaintiff suits, up to the derivative shareholder 1) All future: reason- and will incur $250,000 (see Policy's limit by Abercrombie or its 4) costs incurred 12); able All reasonable costs pp. 1 and or directors current or former officers in connection with curred Abercrombie, 2:05-cv- Investigation No. Directing defend Ross Private the Order 2) (S.D.Ohio); Designating costs in- Take All reasonable Officers to Testimo- P-1305, ny, current or File after November by Abercrombie or its SEC No. curred Order, 30, 2005, to the In re date to defend former officers directors Cir.1994), from appeal January the district court’s the Eleventh Circuit considered order “all interlocutory leading orders whether an interlocutory partial summary thereto, including but not limited to the judgment directing order pay- insurance 30, 2008, Order dated September 2008 WL insureds, ments to pending resolution of 4425523, denying Federal’s motion for the insurer’s claim for rescission of the summary judgment.” 1292(a)(1). appealable In summary ruling that it jurisdic- had
II.
tion
appeal,
over the
the court relied on
A.
National
Jurisdiction
Union Fire Insurance Co. v.
Sahlen,
(11th Cir.1993).
A preliminary
issue raised
this
appeal
jurisdiction
is our
over it. After
Salden is a
plaintiff
case which the
filed
appeal,
insurer
complaint
filed a
for rescission of
dismiss,
moved
asserting
that the dis
an insurance contract based on the defen-
trict
January
court’s
2009 interlocutory or
alleged misrepresentations
dants’
in the
appealable
der was not an
injunction under
application
insurance,
which was ulti-
*5
1292(a)(1).7
28 U.S.C.
mately
in the
resolved
insurer’s favor on
summary
its motion for
judgment. Al-
A
panel
motions
first considered this
though it
judgment,
entered
the district
issue and in June 2009 denied the motion
jurisdiction
court reserved
over the insur-
prejudice,
without
noting decisions from
er’s claim for
payments
reimbursement of
the Ninth and Eleventh
allowing
Circuits
for defense
prior
costs
had made
the immediate appeals
interlocutory
or-
filing its
appeal,
ders
suit for recission. On
directing insurers to advance litiga-
cоncerned that
expenses.8
jurisdic-
tion
this reservation of
Abercrombie maintains in
2009,
its merits brief that the
tion over the
January
preclud-
non-
reimbursement issue
final order of the
appellate jurisdiction,
district court is neither
ed
the Eleventh Cir-
injunctive nor meets the requirements of
cuit
sponte
submitted a sua
question of
Brands, Inc.,
Carson v. American
450
jurisdiction
U.S.
to the litigants. Citing Gon v.
79,
993,
(1981)
101 S.Ct.
Autо. Mut. Ins. 49 Ohio St.2d section, the Company shall have the (1977). N.E.2d Federal con- right given and shall be the opportunity “abrogated” tends that Abercrombie to effectively associate with In- contribution, right by retroactively “col- sureds, and shall be consulted ad- luding” with National Union make Fed- Insureds, vance regarding responsible primary coverage eral investigation, defense and settlement of defense costs. Federal states that “Sec- Claim, including such but not limited to 16(d), short, tion takes a snapshot of selecting appropriate defense counsel rights day on the a Claim is negotiating any settlement. made; point Abercrombie is from that ob- (d) The agree provide Insureds ligated anything not to do un- could information, Company with all assis- rights.” dermine those tance cooperation which the Compa- argues that' Federal has ny may reasonably require selectively quoted frоm the taking that in the event of a Claim the Insureds the clause it relies on out of context. Pro- nothing will do could (d) vision is the parts fourth of five Company’s position potential or its Section labeled “Defense and Settle- actual of recovery. ment:” (e) Any advancement of Defense Defense and Settlement repaid Costs shall be to the Company by (a) duty It shall of the In- Insureds, severally according to duty sureds and not the interests, respective their if and to the *7 against to defend Claims made the In- extent it is that determined such De- sureds. fense Costs are not insured under this (b)The Insureds not to settle coverage section. Claim, or any any offer to settle incur § Federal 16. Abercrombie insists Defense or any Costs otherwise assume policy this section of the covers its obligation any contractual or admit lia- and rights obligations only Federal’s and bility respect any with Claim without in connection with the defense and settle- Company’s prior the -written consent. Abercrombie, ment against of claims made any shall not be liable for negotiations and not Abercrombie’s incurred, element of any Loss for obli- agreements regarding insurance contracts assumed, gation any or for admission and carriers.11 made, by any Insured without the Com- pany’s prior opinion, written In its the district court agreed consent. Provided comply the Insureds with Subsections with Abercrombie that 16 of the Federal 2005). highlights “deeming 11. Abercrombie also the Abercrombie asserts that because the Policy § 12 clause” of of the Federal Poli- National Union was not in dur- effect cy, falling ing period, which claims states that within the the 2004-05 time National Union during obligation extended are deemed made would have no to cover a claim (i.e. original period Policy during period, of the Federal deеmed made and Federal 1, during September 2004-September primary is sole insurer Ross claims. 570 did not violative of 18 Policy,” al while only to the defense and set-
Policy related claims, by violated actions which proscription and was not 16’s of breach tlement amending actions “potential or “prejudice” Abercrombie’s could Federal’s The district court policy. National Union disagree. rights recovery.” actual We no bar to similarly found law, “give Ohio we must Under that the sec- determining §in actions ordi plain in the their words the amend- language” allowed “plain tion’s Ins. Minor v. Allstate nary meaning.” Feder- out that 7 of the Pointing ment. Co., Inc., 16, 675 N.E.2d App.3d 111 Ohio (entitled governed “Subrogation”) Policy al (1996). as a read the We recovery “in the event rights of Federal’s whole, provisions, of its giving effect to all the district policy,” under this payment any section iso interpreting and not 16(d) can that “Seсtion court determined Inc. Enviresponse, lation. Foster Wheeler require the interpreted to reasonably be Facilities County v. Franklin Convention in connection of Abercrombie cooperation Auth., 78 Ohio St.3d Claim, of a and no the defense with (1997). Pol Section 16 of the Federal more.” (a) icy duty forth whose it is to de sets argues that the district court’s (b) Claims; cannot fend that Abercrombie Abercrombie, decision, in agreeing Federal’s offer to settle Claim without as give not effect to the did (c) consent; in involvement in whole, interpreted improperly but (d) Claims; vestigating settling isolation, argues limitation it without the in fully Abercrombie will assist with such Ohio by § 16. Federal cites to imposed doing “nothing that vestigation, including proposition standing law could or its position [Federal’s] the terms of a contract apply courts must recovery;” and potential or actual written, cannot “read into a con- (e) repay that Abercrombie will defense meaning given to the document tract” by Federal if it is deter costs advanced parties. See Motorists Mut. Ins. It is clear coverage. mined there was no Tomanski, 222, 271 27 Ohio St.2d Co. v. purpose 16 is to enumerate (1971). contends N.E.2d parties’ respective rights and obli existing policy of an that the amendment a claim made (the gations when policy), that was not National Union insured, is covered excess to the Feder- insured originally “specifically cited Storer v. Ocean that an insured who breaches a consent-to- 12. The district court *8 470, Corp., F.2d 472 automatically Accident & Guarantee from settle barred Cir.1935), (6th brought an action under Ohio unconvincing analogy coverage, making the contract, pur- for the law on an insurance 16(d) alleged § breach of Abercrombie's "(1) require poses cooperation To of a clause: it from for the Ross claims and bars preparing to aid in the case for the insured However, by investigation. related as shown defense; (2) making proper trial and in Abercrombie, the Ferrando v. Auto- case of and a prevent between the insured collusion 186, Co., St.3d Owners Mut. Ins. 98 Ohio friendly Lee R. Russ and claimant.” See also (2002) required ele- N.E.2d 927 added the Segalla, F. 14 Couch on Insurance Thomas prejudice ment of to an insurer's defense ed.) ("The (3d purpose § main of a 199:4 cooperation clause. Abercrom- based on prevent cooperation clause is to collusion found, argues, court Aber- bie district making possible for the insurer to while it did Federal's crombie’s actions investigation.”). proper make a "ability on the to defend the Ross Claims that Aber- merits.” Given our determination Champion Spark Plug v.Co. 13. Federal cites Co., Policy, we crombie did not breach the Federal App.3d Fidelity Casualty & Ohio (1996) holding not further address this issue. for the need 687 N.E.2d policy. It does not the parties’ giving address 30-day Abercrombie a window in obligations policy when a has which to elect the extended coverage fol- elapsed, a claim been brought against has lowing expiration of its 2004-2005 poli- insured, (formerly) and the insured is cy, language contained no limiting Aber- deciding whether to elect—and how best ability crombie’s to elect that coverage in to structure —extended insurance cover- the event that claims were made during age. period. window alsoWe note that the premium premium for the —double highlights As Abercrombie in its brief- year likely first took this risk into ac- 16(d) — § ing, position pro- Federal’s above, count. As noted Federal nowhere in amending scribes its actions the insur- contends that Abercrombie was not al- ance with National Union makes lowed to elect the ERP under thоse cir- little sense when in the viewed context of Moreover, cumstances. as argued by initial Abercrombie’s decision to elect the Abercrombie, a contract’s specific provi- coverage. ERP At the time the Ross sions, § such as 12 of the Federal Policy, filed, claims were had no control general provision over a more such whatsoever, responsibility as its had §as 16. See Monsler v. Cincinnati Cas. just expired. The by decision Abercrom- App.3d 74 Ohio 598 N.E.2d bie to elect the ERP after claims had been (1991). certainly made could be said to “prejudice” “position,” interpreta- Federal’s under the We note further that while Federal Federal, by tion advanced but Federal dates occurring Endorsement 17 as in No makes no such argument. The idea that 2005, entirely vember after 16(d) language should to Aber- apply purchase of the extended Federal cover Union, negotiation crombie’s with National age, negotiation it is clear that but not to Abercrombie’s election of the amendment a part occurred as of the deci ERP, argument undermines Federal’s sion to elect the ERP. Such a business 16(d) applies to the situation at all. negotiation prohibited by was not the Federal stated, icy.14 Pol theAs district court question
There is no that the interpreta- rejecting arguments about tion advanced only is not the interpreta unreasonable “[i]t “fairly placed one that can be on the lan- 16(d) tion of Section requires find Andersen, guage question.” Abercrombie to structure its insurance at 332. We find that the district court’s needs based not on its own needs and in its interpretation limiting provi- interests, own best but rather to minimize application sion’s to the defense and settle- claims, potential exposure.” its insurer’s In any ment of entirely reаsonable event, even if we were determine that supported by of the con- susceptible to more than tract. There is one nothing about 16 that prevents interpretation, strict construction of the making Abercrombie from fiscal- ly language against the driven business decisions about its in- insurer is mandated surance if Ohio law. See Lane v. coverage, Orange even such a decision is Mut. *9 Cos., 63, 488, unanticipated by existing past an insur- 45 Ohio St.3d 543 N.E.2d (1989). Certainly Policy, er. 12 of the Federal Moreover, persuaded by dealing. We
14. are also not Federal's fair Federal has waived argument, citing Progressive argument, bring v. Ins. as it did not the before Moskowitz 10, 174, Marys Foundry, 128 Ohio Misc.2d district court. St. See Inc. Wausau, 989, (2004), Employers that these business decisions con- 332 F.3d Ins. (6th Cir.2003). duty good stituted a breach of the faith and elected, § 12 of 2005, under im- Abercrombie Policy does not Because the Federal purchase in- ERP cov- terms of the Federal limitations on allowable pose That election was erage to between Abercrombie from Federal. agreed surance insurers, no error in find and it extended right; additional we interpretation September Policy period the district court’s Federal Policy. Federal the Ross thereby encompassing The election cost Abercrombie claims. AFFIRMED. district court is The $820,000 original cost of the —twice KETHLEDGE, Judge, merely to af- policy Circuit seemed Federal —and dissenting. coverage for duplicative ford Abercrombie poli- its new already claims covered under contract, the mat- construing a words In election seemed a cy with AIG. So the 16(d) § make clear The words ter. thing to do. strange To merely “cooperation a clause.” it is not way how read the however, scenes, Abercrom- Behind the —which nearly it—is to render Abercrombie reads to revise its negotiating was with AIG bie 16(d) meaningless. half words again by its terms was policy AIG —which reason- interpretation is neither Such an be ex- to the Ross claims—to primary as Ohio law. permissible nor under able covered the now- cess as to claim policy. The record terms, extended Instead, plain simple went to con- makes clear that Abercrombie sepa- a imposes on Abercrombie posi- lengths to hide from Federal duty not to siderable rate negotiations. Finally, a claim is filed. Abercrombie on No- tion after fact of those duty ought here. I think we months af- nearly breached that three vember 2005— Abercrom- to enforce the contract which policy took effect—Abercrom- ter AIG I therefore re- freely agreed. would bie and AIG executed Endorsements bie appeal. at issue in this verse the orders Endorsement policy. аnd 18 to the AIG policy the AIG ex- retroactively made A. single species of claim: name- cess as a chronology important. The in this case and also ly, policy claims made “under this In issued Abercrombie Fed- No. 8159-6213 issued claims, in cover- million policy insurance Those Company.” $10 eral Insurance policy course, claims; for claims asserted within age Ross and the were the expired September on period. period That retroactively to change effect of that not to renew 2005. Abercrombie chose the entire burden of cov- foist on Federal year, following for the but policy claims, million up for the to the erage $10 million from a purchased stead a change, $10 policy limit. Absent that insurer, cover- policy’s AIG. That different AIG have shared that burden would began September on age thereby The endorsement saved equally. apрar- very day by happenstance, next up AIG million. But $5 — claims filed ently Ross were in En- benefitted from the deal as well: —the district court. federal 18, AIG waived Aber- dorsements 17 and for the Ross crombie’s million retention $2 AIG undisputed It is not to increase Aber- promised claims and written, afforded Abercrombie originally premiums for renewal crombie’s Pre- coverage for those claims. primary year. appears It those following then, reported the dictably, repaid Abercrombie changes effectively next happened AIG. But what claims to *10 election, $820,000 likely ERP the cost of its September On predictable. was less million, The several times over. cost of all this which Abercrombie and AIG then course, fell largesse, party to not in spread amongst themselves. That seems namely, Federal. patent to me a violation of the terms of room— 16(d). B. disagrees with that conclu- sаys Federal partic- 16(d) view, § sion. In its merely is a ipation in this pejorative scheme—the “cooperation clause”; and, Abercrombie 16(d) earned here—violated of Federal’s says, “there legal is considerable authority policy. provides: That section demonstrating purposes of coop- [ie., The Insureds agree Abercrombie] eration clauses are to prevent collusion [ie., provide Company to Federal] between the insured and the claimant”—as information, with all assistance and co- opposed, apparently, to collusion between operation Company may which the rea- the insured and compa- another insurance sonably require agree ny permit to partici- insurer to —“and event of a Claim the Insureds will do pate in the defense and settlement of nothing prejudice that could the Comрa- claims.” Aber. Br. at 28. ny’s position potential or its or actual The short argument answer to this rights recovery. that we do not construe provi- contractual above, As shown the AIG policy took in gross. sions That one con- 1, 2005; September effect on the Ross tains “cooperation” the word does not 2; September claims were on filed mean that we treat it as identical every Abercrombie made its ERP election on other contractual provision that contains date, then, September 29. As of the latter therefore, that word. pointless, And it is obligated pay only Federal was 50% of “cooperation to talk about clauses” cate- claims, AIG, the costs of the Ross per gorically, discussing without the specific express terms of its on the hook language in each of them. Abercrombie Moreover, for other half. mention, discuss, does not much less a that, not dispute does had AIG thereafter single word of the “cooperation clauses” costs, not borne its share of those Federal 16(d) whose it meaning graft would onto could have asserted a contribution claim here. AIG for amounts that Federal But Abercrombie a more makes serious paid Buckeye above 50%. See Union Ins. omission as well. Abercrombie does not Co. v. State Auto. Mut. Ins. 49 Ohio explain anywhere in its brief —what (1977). St.2d — meaning, exactly, it attaches to the lan- 29; quo That was the status on September guage that upon relies point and at that was Abercrombie’s appeal. The undisputed obligation requires law Abercrombie to nothing “do contract,” could do so. “In position construing or its [Federal’s] we potential recovery.” or actual give “must meaning every paragraph, 16(d) added). (emphasis clause, word, phrase omitting nothing аs meaningless, surplusage[.]”
But Abercrombie then did Affiliat- something— ed FM Ins. Owens-Coming Fiberg- Co. v. in the form of Endorsement 17—that both (6th Cir.1994) Corp., las 16 F.3d obligated to pay 100% of the costs law). (applying Again, pro- Ohio of the Ross claims extinguished Fed- vides: potential right eral’s of recovery against [ie.,
AIG. The effect of that action prej- Insureds Abercrombie] [ie., position udice Federal’s to the extent of to provide Federal] $5 *11 det- injuriously or information, affect prejudice “[t]o and co- is assistance all with an act.” Id. judgment a or Company may rimentally rea- the operation which difference, the one fundamental agree that in at 1428. Thus sonably require and stated, of part the will do that the first simply a Insureds is Claim event of 16(d) Compa- help; the the prejudice obligation § that could an to nothing imposes actual potential its or ny’s position second, or hurt. The obligation not to an recovery. rights moreover, take is one to obligation, first of second, action; to obligation the an certain added.) (Emphasis the action. Neither refrain certain from does not is that Abercrombie reality The law, nor enforcement good grammar, nor the italicized meaning to give any sophisticated that these obligations 16(d) § Rather, only that says above. assume, to to allow us parties chosen have interpreted reasonably a whole “can as 16(d) § the imposes only conclude that of Abercrombie require cooperation the to “and no more.” obligation, first Claim, of a with the defense in connection (internal at Aber. Br. no 16(d) more[.]” and § on imposes that So I submit omitted). interpre- That marks quotation nothing” to “do obligation an however, reasonable, because is not tation that position, Federal’s prejudice to down Owеns- it violates the rule laid post-claim actions—whose Abercrombie’s alone, part first of Standing the Coming. to increase Federal’s very purpose was 16(d) provide to agree Insureds “[t]he— extinguish million and to liability by $5 information, assis- with all Company the claim for that amount —were contribution the cooperation which tance I see obligation. And in violation of re- reasonably require” already may 16(d) — to the remainder of nothing in cooperate “in con- quires Abercrombie common-sense conclusion. displace that Claim, and no the defense of a with nection § 16— heading cites the of 16(d) if it reads more.” proof that “Defense Settlement” —as there, period a after “reasoh- ended not prejudice at issue here was ably require.” But by the section. contemplated sort It go not there. nowhere in ease argument does end should a But “and, sаy expressly sought, goes [the Insureds] on to where Abercrombie obtained, of a the Insureds injunction requiring in the event Claim an nothing that could prejudice do costs—so pay will Abercrombie’s defense or actu- potential Moreover, or its Company’s position far, con- of them. million $8 language de- recovery.” That al trary suggestion, there Abercrombie’s cooper- 16(d) in addition to obligation, an spe- scribes nothing generally, ation, freely agreed. which Abercrombie creates a safe harbor cifically, that must mean says obligation law The taken “with another prejudicial actions what is to determine something. Our task a There is not word surance earner.” it is. no-preju- that so limits Abercrombie’s text contrary, text obligation. dice To examination, parts
Upon two “do that is Abercrombie shall there —that respects. in fundamental differ po- prejudicе Federal’s nothing that could cooperation provision; a The first is The hardly be broader. sition”—could term, is, for lack of better second obligation same is true cooperate To provision. anti-prejudice that could “do nothing” a com- together act work or toward “[t]o recovery.” rights of “potential or actual American purpose.” end or mon (3d Ed.). just to recov- obligation To That extends Heritage Dictionary
575 effect ery against parties, “poten- provisions certain but is to harmonize that at recovery” period. or actual rights conflict, tial first seem to having rather than — one of them cancel the other out. meaning” “Plain is an overused term. I believe, however, fairly applies that it here. we provisions When harmonize the two 16(d)’s no-prejudice obligation Section is here, 16(d) § remains a bar to conduct like broad, in simple, stated terms that are I completely agree Endorsement 17. parties common to the law. before us majority § that 12 specific is more sophisticated, they freely agreed are 16(d) § than as to whether Abercrombie to those terms. I submit that we should was free coverage to extend its within the enforce them. window, 30-day § ERP and that 12 there- fore controls that only issue. But that
C. means that Abercrombie’s ERP election presents Abercrombie also several argu- legal, was not that Endorsement 17 was. 16(d). § ments external The first § prescribes That 12 a highly specific right two other sections of the Federal 16(d) § to elect ERP coverage, to which Policy 12 and 18—demonstrate §§— 16(d)’s yield, must does not mean that could not bar the scheme at issue nothing” “do nothing itself means here. Section affords That, truth, at all. in is what Abercrombie 30-day Abercrombie a window to elect intimates here. But the law is otherwise: coverage. ERP disputing And there is no Subject only right to the to elect ERP that Abercrombie’s ERP election—which coverage, no-prejudice obli- filing came after of the Ross claims— enforceable, gation remains to the full ex- changed position Federal’s for the worse. terms, plain, tent of its broad except to the 16(d)’s Thus, says, § injunc- extent it conflicts with some other provi- nothing” tion to “do cannot mean what it sion that more specifically governs conduct (and says, which means turn here the like Endorsement 17. terms) argument even on fails its own permissible. Endorsement Section provision. There is no such Abercrom- part, grant rights for its does -apart bie cites but that section— all, Abercrombie at but instead diminishes being from one that grants rights to Fed- them, by limiting the instances which eral, not contemplates deci- Abercrombie — coverage But primary. layer siоns to how to as implicitly contemplate does that Aber- coverage only a claim is filed. before crombie might coverage have additional provides part: Section 18 relevant particular for a claim. So Abercrombie says that section too shows Endorse- If any Loss under this section game. ment 17 was fair is insured under other valid insur- policy(ies), ance then this sec- Abercrombie’s contention as to 12 is Loss, subject tion shall cover such to its scythed elementary down rule. The limitations, conditions, provisions and rule, applies existence of this and that it terms, only other to the extent that the here, points majority are on which the amount of such is in Loss excess of agree. specific provi- I contract’s “[A] (or deductible) applicable retention sions, § 12 such as of the Federal limit liability under such other insur- general provision control over more such ance, whether such other insurance is Maj. Op. (citing 16.” at 571 Monster primary, contributory, v. stated to be ex- App.3d Cincinnati Cas. Ohio (1991)). cess, otherwise])] contingent, The rule’s Mut. Fire Ins. confirms rather than re- Nationwide Co. Witte This section *13 16(d). § interpretation kind, of futes Federal’s 730 N.E.2d App.3d Ohio that, says company’s if (1999) (“a Section 18 another ambigu term is not provides coverage for a claim that is policy it includes a wide vari simply ous because the Fed- also covered defini ety objects concepts of its (rather pri- than coverage eral is excess tion”). complicated, And that a contract is mary) unless the other is its it does not mean is unclear. See Value exclusively provision This terms excess. Ins. Ohio City, Integrity Inc. v. stultification, be an exercise how- would (1986) App.3d ever, if amend the other the insured could (“[a] ambiguous merely contract is not be exclusively excess a claim after complex it is or difficult to read as a cause That, course, filed. of is what Aber- is whole”). parties’ I think the terms of the executing crombie did Endorsement agreement, closely, pro examined when implies only 18 thus that Aber- Section to the question pre vide a clear answer can structure other insurance crombie sented here. nothing is It has claim filed. before moreover, irony, It is with no small that § imply about afterwards. To read 18 as ambigui- the rule Abercrombie cites that if im- affirmatively, Abercrombie does—as against ties should be resolved the insurer. plicitly, authorizing conduct that makes rule, policies presumably, behind that beyond itself iron- unenforceable —is bargaining power the relative include interpret meaningless, ic. It is to 18 as sophistication of and insured. It is insurer effect, except as a without to the imagine hard a case in which those 16(d) meaningless extent 18 renders policies apposite they are less than are permit as well. The law does not that story, here. If there wolf in this it was a interpretation. not was Federal. Only arguments significance two re- mean was entitled to do what it did here. main. money First, to obtain ERP paid does a lot Although I write [*] alone, [*] I think it fair [*] say majority’s decision does not matter, argument initial re-
As an imprimatur lend to this scheme the of this disbelief, quires suspension a certain court. is is sometimes differ- legal What effectively repaid since Endorsement 17 right. Today ent from what is money Abercrombie its several times over. beneficiary reality: if distinction. disregards But even one bought, What respectfully I dissent. right right was a of adverse selection—the to obtain from Federal after a Abercrombie, against
claim is rather filed valuable, right
than before. That priced accordingly. Abercrom- What however, buy, right
bie did not was a
post-claim says collusion. Section right was not for sale.
Second, ambiguities the rule that are apply
resolved insurer does not 16(d)’s broad,
here. That terms are they ambiguous.
does not mean are See