15-2358-cv

Nat’l Railroad Passenger Corp. v. Aspen Specialty Ins. Co. et al.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY

ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF

APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER

IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN

ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY

ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

 At a stated term of the United States Court of Appeals for the Second Circuit, held at

the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New

York, on the 31st day of August, two thousand sixteen.

PRESENT:

GERARD E. LYNCH,

SUSAN L. CARNEY,

Circuit Judges,

ALVIN K. HELLERSTEIN,

District Judge.*

_____________________________________

NATIONAL RAILROAD PASSENGER

CORP.,

Appellant,

v. No. 15-2358-cv

ASPEN SPECIALTY INSURANCE CO.,

COMMONWEALTH INSURANCE CO.,

LEXINGTON INSURANCE CO.,

MAIDEN SPECIALTY INSURANCE CO.,

PARTNER REINSURANCE EUROPE, PLC,

RSUI INDEMNITY CO., STEADFAST 

INSURANCE CO., TORUS SPECIALTY 

INSURANCE CO., WESTPORT INSURANCE 

CORP., CERTAIN UNDERWRITERS AT LLOYD’S 

*

 The Honorable Alvin K. Hellerstein of the United States District Court for the Southern

District of New York, sitting by designation.
OF LONDON, CERTAIN LONDON MARKET 

INSURANCE COMPANIES SUBSCRIBING 

TO POLICY NOS. 507/N11NA08242, 507/N11NA08244, 

507/N11NA08244, 507/N11NA08245, and

GEP 2944,

Defendants-Appellees,

ARCH SPECIALTY INSURANCE CO.,

FEDERAL INSURANCE CO., LIBERTY 

MUTUAL FIRE INSURANCE CO.,

MAXUM INDEMNITY CO., NAVIGATORS 

INSURANCE CO., CERTAIN UNDERWRITERS 

AT LLOYD’S OF LONDON SUBSCRIBING TO 

POLICY NOS. 507/N11NA08240 and 507/N11NA08241,

SCOR GLOBAL P&C,

Defendants.**

____________________________________

FOR APPELLANT: PAUL SMITH, Jenner & Block, LLP,

Washington, DC (Rhonda D. Orin,

Daniel J. Healy, Marshall Gilinsky,

Anderson Kill, LLP, Washington, DC;

Jessica Ring Amunson, Matthew L.

Jacobs, Joshua M. Parker, Jenner &

Block LLP, Washington, DC; Caroline

M. DeCell, Jenner & Block, LLP, New

York, NY, on the brief). 

FOR APPELLEES Partner Reinsurance DOUGLAS HALLWARDEurope, PLC, Torus Specialty Insurance DRIEMEIER, Ropes & Gray LLP,

Co., Westport Insurance Corp., and Certain Washington, DC (Matthew M. Burke,

Underwriters at Lloyd’s of London and Ropes & Gray LLP, Boston, MA, on the

Certain London Market Insurance brief).

Companies subscribing to Policy Nos.

507/N11NA08242, 507/N11NA08244, 

507/N11NA08244, and GEP 2944: 

**The Clerk of Court is directed to amend the official caption to conform to the caption

above.

2
FOR APPELLEES Aspen Specialty COSTANTINO SURIANO, Mound 

Insurance Co., Commonwealth Insurance Co., Cotton Wollan & Greengrass LLP, New

Certain Underwriters at Lloyd’s of London York, NY.

and Certain Market Companies subscribing 

to Policy No. 507/N11NA08245, Lexington 

Insurance Co., Maiden Specialty Insurance 

Co., RSUI Indemnity Co., and 

Steadfast Insurance Co.: 

Appeal from the United States District Court for the Southern District of New

York (Jed S. Rakoff, Judge).

UPON DUE CONSIDERATION IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district is AFFIRMED in part and

VACATED and REMANDED in part. 

The National Railroad Passenger Corporation (“Amtrak”) sought all $675 million

of available coverage from its insurers for damage that occurred following Superstorm

Sandy in October 2012. A major portion of the claim stemmed from the flooding of two

of Amtrak’s tunnels under the East and Hudson Rivers in New York City by seawater,

causing extensive damage. The district court granted summary judgment for Amtrak’s

insurers on three issues, holding that: (1) the damage caused by an inundation of water in

the tunnels was subject to the policies’ $125 million flood sublimit; (2) the corrosion of

Amtrak’s equipment after Amtrak pumped out the seawater was not an “ensuing loss”

and therefore was also subject to the flood sublimit; and (3) Amtrak had not shown it was

entitled to coverage under the Demolition and Increased Cost of Construction (“DICC”)

3
clause in its insurance policies. Amtrak appealed. We assume the parties’ familiarity with

the underlying facts and procedural history of this case, as well as the issues on appeal.1

I. The Policies’ Definitions of “Flood”

The district court held that the damage resulting from water inundation in

Amtrak’s tunnels was a “flood” within the three different definitions of the term that are

in Amtrak’s insurance policies, and that Amtrak’s claims based on that damage were thus

subject to the $125 million flood sublimit. The first definition of “flood,” which appears

in the majority of the relevant policies, is: “a rising and overflowing of a body of water

onto normally dry land.” J.A. 1647. The second definition, found in a minority of the

policies, provides that a flood is: 

[A] temporary condition of partial or complete inundation of

normally dry land from 

(1) the overflow of inland or tidal waters outside the normal

watercourse or natural boundaries 

(2) the overflow, release, rising, back-up, runoff or surge of

surface water; or

(3) [t]he unusual or rapid accumulation or runoff of surface

water from any sour[ce].

J.A. 406, 459. The third definition, which appears in only one policy is: “surface water,

flood waters, waves, tide or tidal waters, sea surge, tsunami, the release of water, the

rising, overflowing or breaking of defenses of natural or manmade bodies of water, or

wind driven water, regardless of any other cause or [e]vent contributing concurrently or in

1

 “We review a district court’s grant of summary judgment de novo, and will affirm only

when ‘there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.’” In re 650 Fifth Ave. & Related Properties, ---F.3d---, 2016

WL 3913403, at *10 (2d Cir. July 20, 2016), quoting Fed. R. Civ. P. 56(a).

4
any other sequence of loss.” J.A. 1127. Amtrak concedes that the Sandy damage falls

within the third definition of flood because the definition explicitly includes “sea surge”

and “wind driven water,” but argues that in the absence of those words, the wind-driven

tidal surge caused by Sandy does not fall within the other definitions. 

The inundation of sea water resulting from Sandy’s storm surge is a “flood” within

the meaning of all three of these definitions. “Language in an insurance contract will be

deemed ambiguous if reasonable minds could differ as to its meaning.” Fed. Ins. Co. v.

Am. Home Assur. Co., 639 F.3d 557, 567 (2d Cir. 2011) (internal quotation marks

omitted). “Flood” as that term is used in the policies is not ambiguous under this standard,

and thus we assign it “[its] plain and ordinary meaning . . . without the aid of extrinsic

evidence.” Id. (internal quotation marks omitted). The mere fact that there are three

different definitions of “flood” does not render the term ambiguous. See Ali v. Fed. Ins.

Co., 719 F.3d 83, 93 n.17 (2d Cir. 2013) (“[T]he fact that one contract is even clearer than

another does not make the other contract ambiguous.”); A. Gugliotta Dev., Inc. v. First

Am. Title Ins. Co. of New York, 976 N.Y.S.2d 172, 175 (2d Dep’t 2013) (noting that a

“lack of specificity does not render the policy provisions ambiguous” simply because “the

policy could have theoretically been more precise”). The first two definitions of “flood”

are sufficiently broad to include an inundation of seawater driven by storm surge or a

wind storm under their plain meaning, and the third definition explicitly includes “sea

surge” and “wind driven water” in its definition of flood. Thus, the damage in Amtrak’s

5
tunnels is subject to the $125 million flood sublimit, and we affirm the district court’s

grant of summary judgment for the insurers on this issue. 

II. The “Ensuing Loss” Clause

The ensuing loss clause of Amtrak’s policy provides that: “Even if the peril of

flood . . . is the predominant cause of loss or damage, any ensuing loss or damage not

otherwise excluded herein shall not be subject to any sublimits.” J.A. 260. “[W]here a

property insurance policy contains an exclusion with an exception for ensuing loss, courts

have sought to assure that the exception does not supersede the exclusion by disallowing

coverage for ensuing loss directly related to the original excluded [or sublimited] risk.”

Platek v. Town of Hamburg, 24 N.Y.3d 688, 694 (2015). Thus, “an ensuing loss provision

. . . provides coverage when, as a result of an excluded peril, a covered peril arises and

causes damage.” Id. at 695 (internal quotation marks omitted). The clause “does not

create a grant-back through which coverage may be had for the original excluded loss,”

and “does not resurrect coverage for an excluded peril.” Id. In general, therefore, courts

should not allow coverage “for [an] ensuing loss directly related to the original excluded

risk.” Narob Dev. Corp. v. Ins. Co. of N. Am., 631 N.Y.S.2d 155, 155-56 (1st Dep’t

1995). 

Corrosion of the metal components in Amtrak’s tunnels was a large source of its

damages after Sandy. Amtrak contends that the corrosion of its metal equipment was

caused by a “chloride attack” arising from the combination of seawater residue with

6
oxygen in the air, and thus is an “ensuing loss” that is not subject to the flood sublimit. In

support of this argument, Amtrak claims that the “chloride attack” is a covered peril

separate from the flood because the accelerated corrosion began only after Amtrak

pumped the seawater out of the tunnels, meaning that the corrosion is not

contemporaneous with the flood.2 Amtrak’s proposed interpretation of the ensuing loss

clause is so broad, however, that it “would contravene the [flood sublimit’s] purpose, as

expressed in unambiguous language.” Platek, 24 N.Y.3d at 697. The corrosion of

Amtrak’s metal equipment cannot meaningfully be separated from water damage that is

plainly subject to the flood sublimit, nor can it be attributed to a distinct “covered peril,”

id. at 695, arising from the original, sublimited peril (the flood). Thus, accepting

Amtrak’s version of the facts, the corrosion resulting from the “chloride attack” after the

flood is not an “ensuing loss.” Damage due to that corrosion is therefore also subject to

the $125 million flood sublimit, and the district court’s ruling is affirmed. 

III. The DICC Clause

The DICC clause in Amtrak’s insurance policy provides in relevant part:

In the event of loss or damage under this policy that causes

the enforcement of any law, ordinance, governmental

directive or standard regulating the construction, repair, use,

or occupancy of property, this Company shall be liable for:

(1) the cost of demolishing the undamaged property including

the cost of clearing the site;

(2) the proportion that the value of the undamaged part of the

property bore to the value of the entire property prior to loss;

2The insurers accept Amtrak’s view of these facts for purposes of summary judgment.

7
(3) increased cost of repair or reconstruction of the damaged

and undamaged property on the same or another site, limited

to the cost that would have been incurred in order to comply

with the minimum requirements of such law or ordinance

regulating the repair or reconstruction of the damaged

property on the same site . . . . 

J.A. 272.3

 The DICC clause has a $125 million sublimit. J.A. 260. Amtrak makes two

separate arguments with respect to the DICC clause: (1) that the district court erred in

granting summary judgment for the insurers because it found that Amtrak could not claim

DICC coverage for replacing undamaged portions of the tunnels; and (2) that the DICC

clause’s own $125 million sublimit may be “stacked” on top of the flood sublimit. 

The district court erred when it prematurely granted summary judgment for the

insurers on the DICC clause issue. The insurers moved for summary judgment and sought

a declaration that portal-to-portal replacement of the tunnels’ undamaged bench walls was

not covered under the DICC clause. In granting the insurers’ motion, the district court

held that the flood had not caused the enforcement of any law and that Amtrak had not

shown that such enforcement was likely in the future. Amtrak contends that, since it has

not yet submitted its repair plans to the Federal Railroad Administration (“FRA”), it does

not yet know what changes to undamaged portions of the bench walls the FRA may

require it to make. Moreover, Amtrak points to regulations accompanying the Americans

with Disabilities Act (“ADA”) that it argues will mandate certain repairs to undamaged

portions of the tunnels. See 49 C.F.R. § 37.43(a)(1). Assuming, as the district court did,

3Such clauses are relatively common in property insurance policies such as Amtrak’s. See

St. George Tower v. Ins. Co. of Greater New York, 30 N.Y.S.3d 60, 62-64 (1st Dep’t

2016). 

8
that the FRA has the power to regulate Amtrak, granting summary judgment in the

insurers’ favor was premature. The DICC clause does not have a time limit, and a

directive from the FRA or a requirement of the ADA may obligate Amtrak to make

changes to undamaged portions of the tunnels in the future. In the event that the FRA

does require Amtrak to replace undamaged portions of its tunnels – and a covered peril

caused the FRA to issue such a directive – Amtrak should be able to file a claim with its

insurers seeking DICC coverage. Thus, we vacate the district court’s ruling with respect

to the DICC clause.4

The excess insurers – the only insurers who are parties to this appeal – contend

that Amtrak’s stacking argument is waived because it was not properly raised at the

district court.5 See Lotes Co. v. Hon Hai Precision Indus. Co., 753 F.3d 395, 408 (2d Cir.

2014). Amtrak has not waived that argument, however, because it mentioned the DICC

clause’s separate $125 million sublimit in its summary judgment briefs at the district

court. The issue was not fully briefed at the district court or during this appeal, however,

4 In so holding, we express no view about whether Amtrak’s future claim for coverage

under the DICC clause will be successful. Amtrak has not yet shown that it is entitled to

coverage under the DICC clause, and does not contend that summary judgment should be

awarded in its favor at this time. As of this writing, no FRA directive or other law has

required it to demolish and replace undamaged property. Thus, the district court’s ruling

was correct that Amtrak is not entitled to coverage as of now. We vacate the DICC clause

ruling to the extent that it grants summary judgment with prejudice and prevents Amtrak

from seeking DICC coverage at a later date when the issue is ripe.

5

Whether the DICC’s $125 million sublimit may be stacked on top of the flood sublimit is

important to the excess insurers because they are responsible for paying only claims that

exceed $125 million, which is the extent of the primary layer and the amount of the flood

sublimit.

9
and the district court did not decide whether the DICC’s $125 million sublimit may be

stacked on top of the flood sublimit. We therefore decline to decide the stacking issue

because the district court should decide it in the first instance on remand. See United

Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Properties

Meriden Square, Inc., 30 F.3d 298, 307 (2d Cir. 1994).

We have considered all of Amtrak’s and the appellees’ remaining arguments and

find them to be without merit. Accordingly, we AFFIRM the judgment of the district

court in all respects, except that the district court’s ruling on the DICC clause is

VACATED and the case is REMANDED for further proceedings consistent with this

decision.

FOR THE COURT: 

Catherine O’Hagan Wolfe, Clerk

10