TIG Ins. Co. v. Tyco Intn’l Ltd. (United States District Court, Middle District of Pennsylvania, November 12, 2010)
This coverage case involved the interpretation of an excess insurance policy issued by TIG and whether the policy covered Grinnell's payment in settlement of the underlying lawsuit arising out of a warehouse fire in May, 1997 due to a faulty sprinkler system. An endorsement to the policy extended coverage to "prior acts" that occurred before the policy's inception but the same endorsement also excluded "any claims of which the Named Insured had actual or constructive notice prior to the commencement of coverage under this policy." The fire took place during the "prior acts" period.
TIG contended that coverage was barred because Grinnell had notice of the fire before the commencement of the policy. Grinnell refutes the allegation and claims that the exclusion must be construed to apply only if the insured (Grinnell) had notice of a loss in excess of the policy's attachment point, i.e. $60 Million, prior to the commencement of the policy.
Grinnell sought TIG’s claims and underwriting manuals, information regarding reinsurance agreements and reserve information arguing that these documents would provide insight into the meaning of the policy's prior acts endorsement which bars from coverage "claims resulting from an occurrence of which the Named Insured had actual or constructive notice prior to the commencement of the policy.”
The court granted Grinnell’s requests for production of the claims and underwriting manuals, holding that whether an exclusion applies was relevant to Grinnell’s counterclaim, and these materials were relevant to determining whether an ambiguity existed, therefore aiding in its resolution.
However, the court denied the remaining requests for information regarding reinsurance agreements holding that this information is more remote than the underwriting manuals in its efficacy at resolving the policy language. Also, the court noted that TIG and its reinsurers may agree to a term that is not ipso facto probative of how the term is applied in the policy. Likewise the court denied the Grinnell’s request for reserve information as too speculative to provide good cause for discovery. The Court also denied TIG’s request for Grinnell’s litigation file because there was no common interest under the facts of this case and the underlying action.
For a copy of the decision click here
Paul Steck and Sharon Angelino