Utica Mut. Ins. Co. v Am. Re-Ins. Co., 211 A.D.3d 1587 (N.Y. App. Div. 2022), amended on reargument, 214 A.D.3d 1418 (N.Y. App. Div. 2023)

Issue Discussed: Collateral Estoppel

Submitted by Elizabeth Kniffen, Megan Shutte

Date Promulgated: July 24, 2023

Utica Mutual Insurance Company (“Utica”) issued primary and umbrella insurance policies to Burnham Corporation (the “insured”). Utica obtained reinsurance coverage from American Re-insurance Company (n/k/a Munich Reinsurance America, Inc.) (“Am Re”) related to the umbrella policies. The
insured was sued by individuals who were allegedly injured due to asbestos exposure. Utica paid defense costs and claims under the primary policies and, when the primary policies were allegedly exhausted, Utica paid claims under the umbrella policies. Utica sought reimbursement from Am Re for defense costs under the umbrella policies.  Am Re refused to pay on the basis that Utica was not obligated to pay defense costs under the umbrella policies and that the reinsurance contracts were not triggered. The parties separately reached a settlement agreement for certain other amounts allegedly owed under the reinsurance agreements and carved out Utica’s claim for interest on those amounts.

Utica commenced a lawsuit against Am Re for breach of contract. The parties filed a series of summary judgment motions. The trial court granted Am Re’s motion on the ground of collateral estoppel, dismissing Utica’s claims. The trial court did not reach the parties’ cross motions related to Utica’s claims for defense costs or the parties’ cross motions on Utica’s claim for lost interest. Utica appealed.

The appellate court held that the trial court erred in granting Am Re’s motion based on collateral estoppel. Noting that the party seeking to invoke the doctrine of collateral estoppel bears the burden to show that the previously litigated issue was identical to that in the subsequent action and that it was decided after a full and fair opportunity to litigate, the appellate court held that Am Re failed to meet its burden because the language at issue in the case differed from the language in the documents that were the subject of the prior litigation that Am Re relied upon in its collateral estoppel argument.

Moving to the parties’ cross motions regarding defense costs, the appellate court concluded that Am Re established that the umbrella policies did not cover defense costs in the underlying actions. The umbrella policies provided that, “[w]ith respect to any occurrence not covered by the policies listed in the
schedule of underlying insurance or any other insurance collectible by the insured, but covered by the terms and conditions of this policy (including damages wholly or partly within the amount of the retained limit), the company shall: (a) defend any suit against the insured.” (Emphasis added). Because
the claims were covered by the primary policies, the appellate court concluded that the unambiguous terms of the umbrella policies established that defense costs were not covered under the umbrella policies. Therefore, Am Re was not required to reimburse Utica under the reinsurance contracts for
the defense costs. The appellate court modified the trial court order by granting Am Re’s motion for summary judgment dismissing the complaint with respect to defense costs and denying Utica’s corresponding cross motion.

On the issue of Utica’s claim for lost interest, the appellate court determined that the trial court erred in granting Am Re’s cross motion for summary judgment on that claim. The court found that Am Re failed to meet its initial burden on the cross motion relating to interest, and thus the burden never shifted to Utica. Under these circumstances, denial of the cross motion was “required regardless of the sufficiency
of the opposing papers.” The appellate court modified the trial court order by denying Am Re’s cross motion and reinstating the complaint insofar as it sought loss interest.

On rehearing, the appellate court further noted that the appellate court “considered the remaining contentions raised by plaintiff and conclude that they are without merit.” Utica Mut. Ins. Co. v Am. Re-Ins. Co., 214 A.D.3d 1418 (N.Y. App. Div. 2023).