New York Federal Court Orders Trial in Asbestos Coverage Dispute U.S. District Court, N.D. of New York, July 25, 2019

NEW YORK – Utica Mutual Insurance Company and Clearwater Insurance Company, which entered into reinsurance agreements regarding umbrella policies that Utica issued to Goulds Pumps, will go to trial over whether Utica can recover from Clearwater certain defense costs it paid to Goulds in underlying personal injury actions by asbestos claimants.

Utica will be able to recover the costs from Clearwater only if the umbrella policies obligated Utica to pay defense costs to Goulds. Clearwater argued that the umbrella policies provided no such obligation. Specifically, the parties contested the meaning of a provision in the umbrella policies requiring Utica to pay defense costs for “any occurrence not covered” by the umbrella policies but covered under the broader language of the  policies. Clearwater argued that “occurrence[s] not covered” were only those that fell outside the coverage language of the umbrella policies. Utica argued that the phrase included “occurrences” that are within the coverage language, but for which the policies did not provide coverage because their limits had been exhausted.

The court denied a summary judgment motion from Clearwater, holding that “any occurrence not covered” was ambiguous — each insurer’s reading of the phrase was reasonable.  The court distinguished several cases cited by Clearwater, refusing to rely on them because they involved materially different policy language or because they dealt with situations where the insurer had become insolvent. Additionally, the court noted that Clearwater did not provide any extrinsic evidence in support of its interpretation of the umbrella policies. Therefore, the court denied Clearwater’s motion for summary judgment, clearing the way for the matter to go to trial.

Read the case decision here.

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