## F I LED United States C ourt of Appeals Tenth Circuit 

### A u gu s t27,2007 Elisab eth A. Shumaker C l erk of C ourt PU BL I SH UNI TED S TATES CO URT O F AP PEALS

T E N T H C IR C U IT
T H E Y A F F E C O M P A N IE S , IN C .,

P lain tiff - A p p e llan t, v. N o. 06- 7057 GREAT AM ERI CAN I NSURANCE C O M P A N Y , IN C .,

D efe ndant- A ppel l ee. AP P EA L F ROM THE UNI TE D S TA TE S DI S TR I CT COURT F O R T H E E A S T E R N D I S T R I C T O F O K L A H O MA

( D . C . N O . 05 - C V - 46 6- FH S) H arv eyD . E ll is, Jr. (K ev in D . G o rdo n an d Jess e C . W h it e, w ith h im o n the b ri ef), C ro w e & D u n lev y , O k lah o m a C ity , O k lah o m a , fo r P lain tiff - A p p e llan t. E dw ar d J . M ai n ( J ames K . Secr es t , I I , and R ogerN . B ut l er , J r . , w i t h hi m on t he br i ef) , Secr es t , H i l l & B ut l er , T ul s a, O kl ahoma, forD efe ndant- A ppel l ee. B efo re B RI S CO E , HA RTZ , and GORS UCH , C i rcui tJudg es. HA RTZ , C i r cui tJ udge. T hi s appea l ar i s es outof a c l ai m undera comm er ci al um br el l a i ns ur ance pol i cy . T he di s t r i ctcour tent er ed s um m aryj udgm enti n favorof G r eatA m er i can I ns ur ance C om pany , I nc. , deny i ng t he cl ai m of the Y affe C om pani es , I nc. on t he-2-

g ro u n d th a t th e p o lic yu n a m b ig u o u s ly p re c lu d e d c o v e ra g e . Yaf f e C os . , Inc. v. G r eatA m . Ins . C o. , No . CV - 0 5 - 4 6 6 - F HS , 2 0 0 6 WL 1 3 8 8 4 4 8 , a t* 3 , * 5 ( E . D. O kl a. M ay12, 2006) . W e hol d t hatt he pol i cyi s ambi guous and r ever s e and rem and for furt her proceedings. I . BA CKGROUND O n D ece m ber28, 2004, an expl os i on atY affe’ s s cr apy ar d i n M us kogee, O k lah o m a , ca u se d sig n if ica n t p ro p e rtyd a m a g e a n d b o d ilyh a rm . W h e n it file d its compl ai nt , Y affe had i ncurr ed $1, 785, 986. 89 i n l i abi l i t yon cl ai m s bynum er ous par t i es . T w o i ns ur ance pol i ci es coverY affe’ s l i abi l i t y . O ne i s a comm er ci al gener al - l i abi l i t ypol i cyi s s ued byA C E A m er i can I ns ur ance C om pany( A C E ) . T he pol i cypr ovi des cover age up t o $1, 000, 000 peroccurr ence , w i t h a gene r al aggr egat e l i m i tof $2, 000, 000 and a de duct i bl e of $10, 000 percl ai m . T he other pol i cyi s a comm er ci al um br el l a pol i cyw i t h G r eatA m er i can. A s a gene r al m at t er, um brel l a po l i ci es provi de tw o types of i nsurance co verage: ( 1) excess cover age forevent s al s o cover ed byot herunder l y i ng i ns ur ance pol i ci es t hat pr ovi de pr i m arypr ot ect i on and ( 2) pr i m arycover age forevent s notcover ed by o th e r p o lic ie s . See Com m er ci alUni on Ins . C o. v. Wal br ook Ins . C o. , 7 F. 3d 1047, 1053 ( 1s tC i r . 1993) . T he G r eatA m er i can pol i cyhas a cove r age l i m i tof $25, 000, 000. B uti t s exce s s cover age doe s notbegi n unt i l t he amountt hatY affe “bec om es l egal l yobl i gat ed t o pay , ” G r eatA m er i can pol i cy§ I , exce eds t he p o licy ’s “ R e tain e d L im it, ” w h ich is “ th e to tal a m o u n ts s tate d a s th e a p p lica b le-3-

l i m i t s of the under l y i ng pol i ci es [i n t he pol i cys chedul e] , ” i d. § I I . G . 1. ( C i t at i ons t o t he G r eatA m er i can pol i cy , A pl t . A pp. V ol . I at73–132, w i l l r efe rt o s ect i ons o f th e p o lic yra th e r t h a n p a g e s o f th e a p p e n d ix .) Th e s o u r c e o f

t h e d i ffi c u l t yi n t h i s c a s e i s t h e t yp e o f d e d u c t i b l e i n t h e ACE p o li cy . T h e d ed u cti b le i s $ 1 0 , 0 0 0 p er c la im . T h a t th e d e d u c tib le is p e r-c laim ra th e r t h a n p e r- o c c u rr e n c e is a p p a re n tly u n u s u a l. See 1 B arryR . O str ag er & T hom as R . N ew m an, H andbook on I ns ur ance C over age D i s put es § 9. 02, at557 (2 0 0 6 ) (in c o m m e rc ial g e n e ra l-liab ili typ o licie s “ th e re is typ ica llyo n e d e d u c tib le foreac h occurr ence ”) . T he natur e of the deduc t i bl e makes a s ubs t ant i al differ ence in t he A C E po l i cy ’s cov erage of the M usko gee ex plosi on . B ecause m o st cl aim s w ere u n d er $ 1 0 , 0 0 0 , the p o li cyco v ers o n ly$ 4 9 7 , 9 9 9 . 1 0 o f Y affe ’s t ot al l i abi l i t yof $1, 785, 986. 89. I f the $10, 000 deduct i bl e had be en per occurr ence , A C E w oul d have ha d t o pay$1, 000, 000, and ther e w oul d be no di s put e thatG r eatA m er i can mustcovert he t ot al l i abi l i t yi n exce s s of $1, 000, 000 (or p erh ap s $ 1 , 0 1 0 , 0 0 0 ). Y affe s oughtcover age f r om G r eatA m er i can i n t he amountof $785, 986. 89, t he di ffe r ence betw een the t ot al amount of the cl ai m s agai ns ti tar i s i ng fr om t he expl os i on and $1, 000, 000. ( Y affe al s o r ai s ed a s epar at e cl ai m , buti ti s not p u rsu e d o n a p p e a l.) G re a t A m e ric a n d e n ied th e c laim , n o tin g th a t A C E h a d p a id onl y$497, 999. 10 and as s er t i ng t hatt he G r eatA m er i can pol i cydoes notpr ovi de cover age unt i l t he $1, 000, 000 l i m i tof the A C E pol i cyhas been e xhaus t ed.-4-

O n O c to b e r 1 4 , 2 0 0 5 , Y a ffe filed a n a c tio n a g a in st G re a t A m e ric a n in O kl ahoma st at e court , cl ai m i ng t hatG r eatA m er i can ha d br eac hed i t s i ns ur ance contr actand s eeki ng a dec l ar at i on of cove r age. G r eatA m er i can t i m el yr emoved t h e c a s e t o t h e Un i t e d S t a t e s Di s t r i c tCo u r tfo rt h e Ea s t e r n Di s t r i c to f Ok l a h o ma o n No v e mb e r2 1 , 2 0 0 5 , c l a i mi n g d i v e r s i tyj u r i s d i c t i o n u n d e r2 8 U. S . C. § 1332( a) ( 1) beca us e Y affe i s an O kl ahoma corpor at i on w i t h i t s pr i nci pal pl ace of b u sin e ss in O k lah o m a a n d G re a t A m e ric a n is a n O h io c o rp o ra tio n w ith its pr i nci pal pl ace of bus i nes s i n O hi o. T he nextdayG r eatA m er i can f i l ed a c o u n ter c laim a g a in st Y a ffe , se e k in g a d e c lar a tio n th a t ith a s n o o b lig a tio n to pr ovi de cove r age on c l ai m s ar i s i ng fr om t he M us kogee e xpl os i on unt i l Y affe has e x h a u ste d th e A C E p o licy ’s $ 1 ,0 0 0 ,0 0 0 lim it. O n M ar ch 28, 2006, G r eatA m er i can moved fors um m aryj udgm ent . Y affe r es ponded and G r eatA m er i can r epl i ed. O n A pr i l 21, s hor t l yaft erG r eat A m er i can f

i l ed i t s r epl yi n s uppor tof s um m aryj udgm ent , Y affe moved t o compel d isc o v e ry , se e k in g in fo rm a tio n a n d d o c u m e n ts f ro m G re a t A m e ric a n re g a rd in g its c o n stru c tio n o f

its u m b re lla p o licie s w ith sim ilar la n g u a g e . Y a ffe th e n filed its ow n m ot i on fors um m aryj udgm enton M ay5. O n e w ee k lat er, be fo re G rea t A m erican h ad fil ed a re sp o n se to Y affe ’s s u m m a r y-j u d g m e n tm o t i o n , t h e d i s t r i c tc o u r tg r a n t e d G r e a tA m e r i c a n ’ s s u m m a r yj udgm entm ot i on w hi l e deny i ng Y affe’ s m ot i on. I trul ed thatt he G r eatA m er i can p o licyis u n a m b ig u o u s a n d th a t G re a t A m e ric a n is o b lig a ted to m a k e p a ym e n ts-5-

u n d e r its p o licyo n ly“ w h e n Y a ffe b e c o m e s le g a llyo b lig a ted to p a ysu m s in exce s s of or , s t at ed anotherw ay , aft erexhaus t i on of, t he $1, 000, 000 cover age pr ovi ded byt he A C E pol i cy . ” Ya ffe , 2 0 0 6 W L 1 3 8 8 4 4 8 , at *3 . T h e d istri ct co u rt al s o deni ed Y affe’ s m ot i on t o compel di s covery , r eas oni ng t hats uch i nfor m at i on, “w hi l e pot ent i al l yr el evantt o a t or tcl ai m forbad fa i t h, ” had no r el evanc e t o t he contr actcl ai m s beca us e i thad det er m i ned thatt he contr actw as t o be i nt erpr et ed bas ed on i t s l anguage al one. A pl t . A pp. V ol . 2 at519 ( O p. & O r der , M ay12, 2 0 0 6 ) . J u d g m e n tw a s e n t e r e d t h e s a m e d a y. Y affe appe al s t he gr antof s um m aryj udgm entt o G r eatA m er i can, t he deni al o f its o w n su m m a ry -ju d g m e n t m o tio n , an d , in th e a ltern a tiv e , the d e n ial o f its m o t i o n t o c o m p e l d i s c o v e r y. I I . DI S CU S S I ON A . St andard of R evi ew

“ [ A ]n o rd e r d e n y in g su m m a ryju d g m e n t is re v iew a b le w h e n . . . itis coupl ed w i t h a gr antof s um m aryj udgm entt o t he oppos i ng par t y . ” P adf i eld v. A IG Li f e Ins . C o. , 2 9 0 F .3 d 1 1 2 1 , 1 1 2 4 (9 th C ir. 2 0 0 2 ); s ee McInt os h v. Scot ts dal e Ins . C o. , 992 F. 2d 251, 253 ( 10t h C i r . 1993) ( “W her e w e r ever s e a s um m aryj udgm entor deri n favorof one pa r t y , . . . w e w i l l r evi ew t he deni al of t he otherpar t y ’ s cr os s - m ot i on fors um m aryj udgm entundert he s ame st andar ds appl i ed byt he di s t r i ctcour ts o l ong as i ti s cl eart hatt he part yoppos i ng t he c r o s s - mo t i o n h a d a n o p p o r tu n i t yt o d i s p u t e t h e ma t e r i a l fa c t s . ” ) ; J a me s W m.-6-

M oor e etal . , M oor e’ s Feder al Pr act i ce § 56. 41[1] , at56- 284. 1 ( 3d ed. 2006) ; 10A C har l es A l an W r i ghtetal . , Feder al Pr act i ce a nd Pr ocedur e § 2715, at268 ( 3d ed. 1995) . T hus , w e r evi ew bot h t he gr antof s um m aryj udgm entt o G r eatA m er i can and the deni al of s um m aryj udgm entt o Y affe. “W e r evi ew de novo a di s t r i ct cour t ’ s gr antordeni al of s um m aryj udgm ent , and w e appl yt he s ame l egal sta n d a rd to b e e m p lo y e d b yth e d istric t co u rt u n d e r F e d e ra l R u le o f C iv il Pr ocedur e 56( c) . ” Maldonado v. C i t y of A l t us , 4 3 3 F . 3 d 1 2 9 4 , 1 3 0 2 (10 th C ir . 2 0 0 6 ) ( b ra c k e ts a n d in te rn a l q u o ta tio n m a rk s o m itte d ), over r ul ed on other gr ounds as r ecogniz ed by Metz l erv. Fed. Hom e Loan B ank of Topeka , 464 F. 3d 1164, 1171 n. 2 ( 10t h C i r . 2006) . Sum m aryj udgm enti s appr opr i at e i f “ther e i s no genui ne i s s ue as t o anym at er i al fac tand . . . t he movi ng par t yi s ent i t l ed t o a jud g m en t as a m att er o f law . ” F ed . R . C iv. P. 56 (c). B. M ot i ons for Sum m ar y Judgment Y affe co n tend s tha t sum m aryjud g m en t fo r G rea t A m erican w as im p rop er, and s um m aryj udgm entfori tw as pr oper , beca us e ( 1) t he pol i cy ’ s unambi guous t erm s r equi r e G r eatA m er i can t o pr ovi de cove r age onc e Y affe’ s l i abi l i t yfort he expl os i on exce eded $1, 000, 000, and ( 2) even i f the pol i cyi s ambi guous , t hat am b igu itym u st be co n stru ed ag ains t th e d raf ter an d in fav o r of

Y affe ’s r eas onabl e expe ct at i ons of i ns ur ance cover age. G r eatA m er i can c ount er s t hat su m m a ryju d g m e n t w a s p ro p e r b e c a u se th e ter m s o f its p o licyu n a m b ig u o u sly ind icate tha t i t i s n o t ob li g ated to p rov ide c o v era g e u n ti l th e $ 1 , 0 0 0 , 0 0 0 p er--7-

occurr ence l i m i tof the A C E pol i cyhas been e xhaus t ed. I tm akes no al t ernat i ve argum ent i n the even tt hat w e ho l d the poli cyt o b e am biguou s. O k la h o m a s u b s ta n tiv e la w a p p lie s to th is d iv e rs ity a c tio n . See Ai rLi qui de A m . C or p. v. C ont ’ lC as . C o. , 217 F. 3d 1272, 1275 ( 10t h C i r . 2000) . I t s appr oach t o i nt erpr et i ng i ns ur ance pol i ci es i s unr emar kabl e: T h e fo re m o s t p ri n c ip le is th a t a n in s u ra n c e p o lic yis a c o n tr a c t. Par t i es ar e atl i ber t yt o contr actfori ns ur ance t o covers uch r i s ks as theysee fitan d theyare b o u n d b yterm s o f th e c o n tr ac t. It n e c e s s a r i l yfo l l o ws t h a tc o u r t s a r e n o ta tl i b e r t yt o r e wr i t e th e t e r ms o f a n in su ra n c e c o n tra c t. T h e in ter p re tatio n o f th e p o licy , w ith its excl us i ons , i s a l aw ques t i on, unl es s t he fa ct s nece s s aryt o appl yt he deci ded l aw ques t i on ar e i n di s put e. W hen addr es s i ng a di s put e conc erni ng t he l anguage of an i ns ur ance pol i cy , ourfi r s ts t ep i s t o det er m i ne as a mat t erof l aw w hethert he pol i cyl anguage ati s s ue i s ambi guous . I f i ti s not ambi guous , w e ac ceptt he l anguage i n i t s pl ai n, or di naryand popul ar se n se . W e m u st c o n stru e th e p o licyto g iv e a re a so n a b le e ffe c t to a ll of i t s pr ovi s i ons , cons t rui ng l i ber al l yw or ds of i ncl us i on i n favorof t he i ns ur ed and c ons t rui ng s t r i ct l yw or ds of exc l us i on agai ns tt he insu rer. D uens i ng v. St at e Farm F i r e & C as . C o. , 131 P. 3d 127, 134 ( O kl a. C i v. A pp. 2 0 0 5 ) ( c ita tio n s o m itte d ) ( s u m m a ri z in g O k la h o m a S u p re m e C o u rt c a s e la w ).

“ I n s u r a n c e c o n t r a c t s a r e a mb i g u o u s o n l yi f t h e ya r e s u s c e p t i b l e t o t wo cons t ruct i ons . ” Max Tr ue Pl as t er i ng C o. v. U. S. F i d. & G uar . C o. , 912 P. 2d 861, 8 6 9 (O k la. 1 9 9 6 ). W h en a c o n tr ac t i s am b igu o u s, ex tr insic ev iden ce is ne ce ssary to re s o lv e th e a m b ig u ity. See Campbel lv. Indep. Sch. D is t . No. 01 of O km ulgee C o u n ty , 77 P. 3d 1034, 1039 ( O kl a. 2003) . I n cons i der i ng ambi guous i ns ur ance-8-

contr act s , cour t s “exa m i ne the pol i cyl anguage obj ect i vel yt o det er m i ne w hether an insu red co u ld rea so n ab lyh av e e x p ec ted c o v era g e. . . . [A ]m b igu it ies are cons t rued mosts t r ongl yagai ns tt he i ns ur er . ” Max Tr ue , 912 P. 2d at865. T he part i es r el yon s ever al di ffe r entpr ovi s i ons of the G r eatA m er i can po l i cy . W e add res s them i n turn. S ect i on I s t at es: [G reatA m eri can] w i l l payon beh al f of [Y affe] tho se sum s i n ex cess of the “Ret ai ned Li m i t ” that[Y affe] becomes l egal l yobl i gat ed t o pay byr eas on of l i abi l i t yi m pos ed byl aw oras s um ed by[Y affe] underan “ in s u re d c o n tr a c t” b e c a u s e o f “ b o d ily inju ry,” “ p ro p e rt yd a m a g e ,” “per s onal i nj ur y , ” or“adve r t i s i ng i nj ur y ” thatt akes pl ace dur i ng t he P o lic yP e ri o d a n d is c a u s e d b ya n “ o c c u rr e n c e ” h a p p e n in g a n yw h e re . T h e a m o u n t w e w ill p a yfo r d a m a g e s is lim ited a s d e sc rib e d b e lo w in t h e I n s u r i n g Agr e e me n tSe c t i o n I I . LI M I TS OF I NSU RA NC E. G r eatA m er i can pol i cy§ I . ( N ei t herpar t ys ugges t s t hatt he i ns ur ed- contr act l ang uag e app l i es i n thi s case. ) Sub sect i on II . G defines R e ta in e dL im it . It state s: W e w i l l be l i abl e onl yfort hatpor t i on of damages , s ubj ectt o t he E ach O ccurr ence L i m i ts t at ed i n t he D ecl ar at i ons , i n exce s s of the “[R]e t ai ned [L] i m i t , ” w hi ch i s t he gr eat erof: 1. t he t ot al amount s s t at ed as t he appl i cabl e l i m i t s of the under l y i ng pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng I ns ur ance and the appl i cabl e l i m i t s of anyot heri ns ur ance pr ovi di ng cover age t o [Y affe] dur i ng t he Pol i cyPer i od; or 2. t he amounts t at ed i n t he D ecl ar at i ons as Sel f- I ns ur ed R et ent i on as a r es ul tof anyone “oc curr ence ” notcover ed byt he under l y i ng pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng In su ra n c e n o r b ya n yo th e r in su ra n c e p ro v id in g c o v e ra g e to [Y affe] dur i ng t he Pol i cyPer i od; a n d th e n u p to a n a m o u n t n o t ex c e e d in g th e E a c h O c c u rre n c e L im it as st at ed in t he D ecl arat i on s.-9-

O nce the Sel f- I ns ur ed R et ent i on has been e xhaus t ed byactual paym entof “c l ai m s ” i n ful l by[Y affe] , t he Sel f- I ns ur ed R et ent i on w i l l notbe r eappl i ed oragai n pay abl e by[Y affe] fors ai d Pol i cy Per i od. Id
. § II.G . (T h e p a rties a g re e th a t th e latte r o f th e tw o a ltern a tiv e s in § I I . G

— s el f- i ns ur ed r et ent i on— i s i r r el evantt o t hi s appea l . ) T he Schedul e of Un d e r l y i n g I n s u r a n c e l i s t s a p e r - o c c u r r e n c e l i mi to f $ 1 , 0 0 0 , 0 0 0 fo rt h e ACE p o l i c y. G re a t A m e ric a n c o n ten d s th a t th e se p ro v isio n s m e a n th a t it s “ o b lig a tio n to p a y i s l i m i t e d t o Y a ffe ’ s l i a b i l i t y i n exc es s of th e lim its o f

th e u n d e rl y in g p o lic y ,” A pl ee. B r . at17, and cons equent l y , “G r eatA m er i can ha s no obl i gat i on t o pay underi t s um br el l a pol i cyunt i l t he l i m i t s of the A C E Pr i m aryPol i cyhave be en exhaus t ed, ” i d. a t 2 0 . W e d is a g re e . T he n atural m eaning o f t he ab ov e provis i on s, r ead t ogether , i s t hatt he G r eatA m er i can pol i cypr ovi des cover age forl i abi l i t yof Y affe above t he R et ai ned Li m i tof $1, 000, 000. B eca us e Y affe has “bec om e[] l egal l yobl i gat ed t o pay ” $1, 785, 986. 89, G r eatA m er i can w oul d be r equi r ed t o pay t he amount i n exce s s of $1, 000, 000, or$785, 986. 89. T he pol i cydefi nes t he R e ta in e dL im it as t he t ot al of “a m ount s ” thatappea ri n t he Schedul e of U nder l y i ng I ns ur ance . T hi s s chedul e s et s for t h num ber s r epr es ent i ng pol i cy l i m i t s of the under l y i ng pol i ci es . I f anyot herfea tur es of the under l y i ng p o li cies— su ch as th e size o f th e d ed u cti b le or w h ethe r th e d ed u cti b le i s p ero c c u rre n c e o r p e r-c laim

— w e re re lev a n t to c o m p u tatio n o f th e R e tain e d L im it,-10-

c e rta in lyth o se fe a tu re s w o u ld b e d e sc rib e d in th e sc h e d u le. B u t th e sc h e d u le s e ts for t h onl yt hatt he A C E pol i cyhas a gene r al aggr egat e l i m i tof $2, 000, 000 and a p e r- o c c u rr e n c e lim it o f $ 1 ,0 0 0 ,0 0 0 . I ndeed, t he underw r i t i ng fi l e thatG r eat A m er i can c r eat ed i n pr epar i ng t he pol i cydoes noti ncl ude a de s cr i pt i on of the natur e of the deduc t i bl e; i ts t at es onl yt hatt he A C E pol i cyhad a $10, 000 deduct i bl e, w i t h no s peci fi cat i on of w hetheri tappl i ed percl ai m orper occurr ence . I n ourvi ew t he l anguage i n § I ( C over age) and § I I . G ( R et ai ned Li m i t ) of t he G r eatA m er i can pol i cyi m pl i es t hatcover age be gi ns once Y affe has i ncurr ed lia b iliti e s e x c e e d in g $ 1 ,0 0 0 ,0 0 0 . C f
. U. S. F i r e Ins . C o. v. C har t erF i n. G r oup, Inc. , 851 F. 2d 957, 959 & n. 6, 963 ( 7t h C i r . 1988) ( w hen exc es s pol i cydefi ned “r et ai ned l i m i t ” as , i n per t i nentpar t , “the t ot al of the appl i cabl e l i m i t s of the under l y i ng pol i ci es l i s t ed” a nd under l y i ng pol i cypr ovi ded cove r age of $100, 000, cour ti nt erpr et s exce s s pol i cyas pr ovi di ng cover age forpr oper t ydamage b e g in n in g a t $ 1 0 0 ,0 0 0 (in ter n a l q u o tatio n m a rk s o m itt e d )); Fri ed v. N
. R i ver Ins. C o. , 710 F. 2d 1022, 1024, 1026–27 & n. 6 ( 4t h C i r . 1983) ( w hen exc es s pol i cy defi ned “r et ai ned l i m i t ” as “‘ t he t ot al of the appl i cabl e l i m i t s of the under l y i ng pol i ci es l i s t ed i n Schedul e A her eof, and the appl i cabl e l i m i t s of anyot her under l y i ng i ns ur ance avai l abl e t o t he i ns ur ed, ’ ” courti nt erpr et s pol i cyas pr ovi di ng cover age “ above the thr es hol d l evel of the fa ce va l ue of the Schedul e A p o licie s” a n d n o tes th a t “[ t]o h o ld o th e rw ise su bjec ts th e in su re r to u n fo re se e a b le-11-

and var i abl e r i s ks dependi ng upon t he under l y i ng i ns ur ance actual l ym ai nt ai ned byanyone of the pot ent i al i ns ur eds ”) . A tor al ar gum entG r eatA m er i can s ugges t ed thatY affe’ s cons t ruct i on of thes e pr ovi s i ons w oul d fr ee Y affe fr om t he b arg ain it m ad e (a t l ea st i m p li cit ly ) w ith A C E

— n am ely , that in ex ch an g e fo r a re d u c e d p re m iu m o n th e A C E p o licy , Y a ffe a g re e d th a t th e d e d u c tib le w o u ld appl ypercl ai m r athert han peroccurr ence and ther ebyr i s ked havi ng a much l ar gerdeduct i bl e i n s om e i ns t ance s . B utY affe’ s bar gai n w i t h A C E s houl d be i r r el evantt o t he cons t ruct i on of the l anguage of the G r eatA m er i can pol i cy . A nd in a n ye v e n t, Y a ffe h a s c le a rl yp a id , th ro u g h th e n o s e , fo r t h e b a rg a in it m a d e . E ven underY affe’ s cons t ruct i on of the G r eatA m er i can pol i cy , a che aper i ns ur ance pol i cyw i t h A C E w i t h a p e r-c la im d e d u c tib le h a s c a u se d it t o h a v e to p a y m o r e t h a n $ 5 0 0 , 0 0 0 i n d e d u c t i b l e s b e fo r e G r e a tA m e r i c a n s t a r t s t o p a y. T he d i ssentargues t hat our r eading o f §§ I and II . G m ustbe w rong b ecause it ren d e rs irr e lev a n t th e a c tu a l co v e ra g e b yth e u n d e rly in g p o licie s. “ [ I]t w o u ld h a v e b e e n fa r sim p ler ,” s a y s th e d iss e n t, “to e sta b lish a se t d e d u c tib le a m o u n t, r athert han t o es t abl i s h t hatamount byr efe r ence t o t he appl i cabl e l i m i t s of the under l y i ng i ns ur ance pol i ci es . ” O p. ( B r i s coe, J . , di s s ent i ng) at7. W e ar e not per s uaded. T he pol i cydefi ni t i on of R e ta in e dL im it is th e su m o f th e lim its o f

a ll i ns ur ance pol i ci es pr ovi di ng cover age t o Y affe, notj us tt he pol i ci es l i s t ed i n t he S c h e d u le o f

U n d e rl y in g In s u ra n c e . See § I I . G . I f the pol i cys t at ed s i m pl y“a s et deduct i bl e amount , ” the R et ai ned Li m i tw oul d notbe aut om at i cal l yi ncr eas ed, as-12-

i ti s undert he pr es entl anguage , i f Y affe ac qui r ed addi t i onal under l y i ng in s u ra n c e . T h e d i s s e n ta l s o a s s e r t s t h a tt h e r e w o u l d b e n o n e e d fo r§ V I . I o f t h e p o l i c y, w h ich re q u ir es Y affe to m aintain its un d erly ing insu ran ce , if G rea t A m erican ’s cover age de pends onl yon amount s s etfor t h on t he Schedul e of U nder l y i ng I n s u r a n c e . We n o t e t h a tGr e a tAm e r i c a n i t s e l f h a s ma d e n o s u c h a r g u me n t . On t he contr ary , i t s br i ef t o t hi s cour tchas t i s es Y affe forr ai s i ng on appea l an arg u m en t bas ed o n § V I. I th at i t had n o t r aised b elow . Itco n ti n u es: “M o reo v er, th e a rg u m e n t is irre lev a n t as Y a ffe d id m a in tain u n d e rly in g in su ra n c e , an d A C E is p a y in g c laim s p u rsu a n t to its p rim a ryp o licy .” A p lee . B r. at 4 2 . In a n ye v e n t, § V I . I s erves a cl earpurpos e eve n underouri nt erpr et at i on of R e ta in e dL im it . For one thi ng, t he ac tual cover age pr ovi ded byt he A C E pol i cyand the exha us t i on of th e lim its o f

th a t p o lic ya ffe c t G re a t A m e ri c a n ’s d u ty (1 ) t o d e fe n d Y a ffe , s ee § II I. A , dis cussed b el ow , and (2) t o m ake p aym ents for app eal bo nd s, p reju d g m e n t in te re s t, a n d c o s ts , s ee § II I.B .3 (r e g a rd in g litig a tio n e x p e n s e s ). T hus , § V I . I i s nots uper fl uous . D es pi t e the di s s ent ’ s ar gum ent s , w e bel i eve that t he mostr eas onabl e r eadi ng of §§ I and I I . G i s t hatG r eatA m er i can i s obl i gat ed to p a yo n c e Y a ffe h a s in c u rr e d lia b iliti e s e x c e e d in g $ 1 ,0 0 0 ,0 0 0 . O t herpr ovi s i ons i n t he G r eatA m er i can pol i cy , how ever , ar e l es s cl eart han th e a b o v e a n d p ro v id e a t le a s t s o m e s u p p o rt fo r G re a t A m e ri c a n ’s c o n s tru c tio n . Subse ct i on V I . P of t he pol i cy , ent i t l ed “W hen Loss i s Pay abl e, ” s et s i ndepende nt-13-

c o n d iti o n s o n if (a s w e ll a s w h e n ) G re a t A m e ric a n m u st p a y . It sta tes , in p e rtin e n t p a rt: C o v e ra g e u n d e r th is p o licyw ill n o t ap p lyu n les s a n d u n til [ Ya ffe ] or [ Ya ff e’s ] un derl

yi ngi nsurer i s obl i gat ed t o payt he “[ R ] et ai ned [ L ]i m it.” G re a t A m e ri c a n p o lic y§ V I.P ( emphasi s added) . I ni t i al l yi tm ayappea rt hatt he pl ai n m eani ng of t he pr ovi s i on i s t hatcover age unde rt he pol i cybegi ns w hen ei ther Y affe or A C E i s obl i gat ed t o pay$1, 000, 000. W hen the C over age p ro v isio n o f

th e p o licysp e a k s o f

“ su m s . . . th a t [ Y a ffe ] b e c o m e s le g a lly obl i gat ed t o paybyr eas on of l i abi l i t yi m pos ed byl aw , ” i d. § I, itis u n d o u b ted ly inclu d ing su m s p aid b yu n d erly ing insu ran ce co v era g e. T h u s, w h en § V I. P refers t o w h a tY a ffe “ i s o b l i g a t e d t o p a y, ” i tm u s tb e r e fe r r i n g t o Y a ffe ’ s l e g a l l i a b i l i t y, re g a rd le s s o f

w h e th e r Y a ffe is p ro te c te d b yin s u ra n c e c o v e ra g e fo r t h a t lia b ility. B eca us e Y affe has been obl i gat ed t o paym or e than $1, 000, 000 as t he r es ul tof the M us kogee e xpl os i on, t her e w oul d s eem t o be cove r age unde rt he G r eatA m er i can po l i cy . B ut this con struct i on of the provis i on renders the w ords “or [Y affe’s] u n d erly ing insu rer” superfl uo us beca use Y affe’s und erl y i ng i nsurer , w ho se o b lig a tio n d e riv e s f

ro m Y a ffe ’s, w o u ld b e o b lig a ted to p a yo n lyw h e n Y a ffe itse lf w oul d be obl i gat ed. A pos s i bl e al t ernat i ve r eadi ng of § V I . P t hatavoi ds r ender i ng t he r efe r ence to Y a ffe ’s in su re r a s s u rp lu sa g e w o u ld b e b a se d o n th e re c o g n iti o n th a t u m b re lla cov erage prot ect s agai nsti den t i fi ed g aps i n u nd erl y i ng po l i ci es. “ U m b re lla-14-

pol i ci es di ffe rfr om s t andar d exce s s pol i ci es i n t hatt heyar e des i gned t o fi l l gaps i n cover age both ver t i cal l y( bypr ovi di ng exce s s cover age) and hor i zont al l y( by pr ovi di ng pr i m arycover age) . ” C om m er ci alUni on Ins . C o. , 7 F . 3 d at 10 5 3 . It m a yb e , th e re fo re , th a t § V I.P s houl d be r ead t o s ayt hatcover age unde rt he G r eat A m er i can pol i cyappl i es onl yw hen ei therY affe ( i n t he ca s e of a n eventnot co v ere d b yo ther insu ran ce ) orY affe’ s under l y i ng i ns ur er( i n t he ca s e of a n event cover ed byot heri ns ur ance ) i s obl i gat ed t o payt he R et ai ned Li m i t . B eca us e the M u sk o g e e e x p lo sio n is u n d o u b ted lyc o v e re d b yth e A C E p o licy , § V I.P w o u ld t hen mean t hat G r eatA m er i can’ s obl i gat i on i s t r i gger ed onl yaft erA C E has become obl i gat ed t o pay$1, 000, 000— t hati s , onl yaft ert he A C E cover age ha s been e xhaus t ed. A t hi r d r eadi ng, w hi ch arr i ves att he s ame concl us i on, i s pr offe r ed byG r eat A m eri can an d w as adop t ed b yt he d i stri ctcou rt . U nd er that r eading t he p urpose and effec tof the r efe r ence t o Y affe’ s obl i gat i on i n § V I . P i s m er el yt o pr ot ect Y affe i n t he eve ntof defaul tbyi t s pr i m aryi ns ur er , A C E . I f A C E , beca us e of in so lv e n c yo r u nju stified re f u sa l to p a y , d o e s n o t p a yits o b lig a tio n s a n d Y a ffe is for ced t o paycover ed l i abi l i t i es i t s el f, G r eatA m er i can w oul d counts uch p a ym e n ts u n d e r § V I.P . T h is th ird re a d in g a v o id s th e su rp lu sa g e p ro b lem w ith t he fi r s tr eadi ng, butnei t herG r eatA m er i can nort he di s t r i ctcour thas expl ai ned h o w i td e r i v e d t h i s m e a n i n g f r o m t h e l a n g u a g e o f

t h e p o l i c y.-15-

Subse ct i on V I . J , ent i t l ed “O t herI ns ur ance , ” s et s a furt hercondi t i on on p a ym e n t b yG re a t A m e ric a n . It, to o , is su bjec t to m o re th a n o n e re a so n a b le c o n s tru c tio n . Itst at es: I f o t h e ri n s u r a n c e a p p l i e s t o a l o s s t h a ti s a l s o c o v e r e d b y t h i s p o l i c y, th is p o licyw ill a p p lye x c e ss o f th e o th e r in su ra n c e . N o th in g h e re in w i l l be co nst rued t o m ake thi s poli cysubjectt o the t erm s, con dit i on s, a n d lim itatio n s o f

su c h o th e r in su ra n c e . H o w e v e r, th is p ro v isio n w ill notappl yi f the otheri ns ur ance i s s peci fi cal l yw r i t t en t o be exc es s of t h i s p o l i c y. G r eatA m er i can pol i cy§ V I . J . T he phr as e “e xces s of the otheri ns ur ance ” i s not defined in t he p oli cy . T here i s suppo rtfor G reatA m eri can’s vi ew t hat the p hrase m eans t hatt he pol i cyappl i es onl y“af t ert he pr i m arycover age l i m i t s have be en exhaus t ed. ” U. S. F i d. & G uar . C o. v. Feder at ed RuralE l ec. Ins . C or p. , 37 P. 3d 8 2 8 , 8 3 1 (O k la. 2 0 0 1 ) (“ P r i m ar y i ns ur ance pr ovi des i m m edi at e cove r age fort he i ns ur ed upon the occ ur r ence of a l os s ort he happe ni ng of an e ventw hi ch, under t he t erm s of the pol i cy , gi ves r i s e t o i m m edi at e l i abi l i t y . . . . A n exc es s i ns ur ance pol i cy i s one w hi ch byi t s t erm s pr ovi des cover age thati s s econda r yt o t he pr i m arycover age; t her e i s us ual l yno obl i gat i on t o t he i ns ur ed unt i l aft ert he p ri m aryco v era g e li m it s h av e b ee n ex h au sted . ”). B uta gene r al des cr i pt i on of i ns ur ance pol i ci es , s uch as t hati n U.S . F id e lit y & Gu a r a n t

y Co ., m u s t yie ld to th e s p e c ific la n g u a g e o f a p a rt ic u la r p o lic y . O kl ahoma l aw i m pos es cover age w hen “a n i ns ur ed coul d r eas onabl yhave e x p e c te d c o v e ra g e ” b a s e d o n th e p o lic yla n g u a g e , Max Tr ue , 9 1 2 P .2 d a t 8 6 5 ;-16-

and t o a r eas onabl e per s on l ooki ng onl yatt hi s l anguage , t he phr as e “e xces s of t he otheri ns ur ance ” coul d w el l m ean “ t o t he ext entt hatt he otheri ns ur ance i s not re q u ire d to p a y (e v e n if th e o th e r in su ra n c e a p p lies to th e lo ss ).” U n d e r th is re a d in g , § V I.J w o u ld c o m e in to p lay t o lim it G re a t A m e ric a n ’s d u tyto p a yo n ly wh e n b o t h t h e Gr e a tAme r i c a n p o l i c ya n d a n o t h e rp o l i c y( i n t h i s c a s e , t h e ACE p o licy ) re q u ire p a ym e n t. T h is c o u ld h a p p e n if, fo r e x a m p le, a n e w $ 5 0 ,0 0 0 c laim ar i s i ng outof the expl os i on w er e adde d t o t he cl ai m s agai ns tY affe. B eca us e of th e $ 1 0 ,0 0 0 p e r-c laim d e d u c tib le in th e A C E p o licy , A C E w o u ld b e o b lig a ted to pay$40, 000. B eca us e underY affe’ s cons t ruct i on of the pol i cyt he G r eat A m er i can de duct i bl e had be en exc eede d, G r eatA m er i can w oul d be obl i gat ed for t he ent i r e $50, 000. G r eatA m er i can w oul d be the onl yi ns ur erobl i gat ed t o pay th e first $ 1 0 ,0 0 0 , so it w o u ld o w e th a t su m . A s to th e re m a in in g $ 4 0 ,0 0 0 , b o th G r eatA m er i can a nd A C E w oul d be l i abl e, s o § V I . J w oul d pr es um abl yi m pos e the o b l i g a t i o n o n AC E. See L ee R. R us s , C ouch on I ns ur ance § 219: 1 ( 3d ed. 2007) ( “‘ O t heri ns ur ance ’ cl aus es govern t he r el at i ons hi p betw een i ns ur er s [; ] t heydo n o t affec t th e righ t of the in su red to rec o v er u n d er e ac h co n cu rren t po li cy . ”). Fi nal l y , bot h par t i es cl ai m t o fi nd s uppor tfort hei rpos i t i ons i n § I I I . A of the G rea t A m erican p o li cy , en ti tl ed “D efen se.” (Y affe h as n o t cl aim ed , h o w ev er, t hatG r eatA m er i can a ctual l yhad anyobl i gat i on t o defe nd i tagai ns tanyof the cl ai m s ar i si ng ou tof the exp l osi on ). Itprovides:-17-

[G r eatA m er i can] w i l l have the r i ghtand dutyt o i nves t i gat e any “ c l a i m” a n d d e fe n d a n y“ s u i t ” s e e k i n g d a ma g e s c o v e r e d b yt h e t e r ms and condi t i ons of thi s pol i cyw hen: 1. t he appl i cabl e Li m i t s of I ns ur ance of the under l y i ng pol i ci es listed in th e S c h e d u le o f U n d e rly in g In su ra n c e a n d th e L im its o f In su ra n c e o f

a n yo th e r in su ra n c e p ro v id in g c o v e ra g e to [Y affe] have be en exha us t ed byactual paym entof “c l ai m s ” for any“occ ur r ence ” t o w hi ch thi s pol i cyappl i es ; or 2. damages ar e s oughtforany“occ ur r ence ” w hi ch i s cover ed by th is p o licyb u t n o t co v e re d b ya n yu n d e rly in g p o licie s liste d in t he Schedul e of U nder l y i ng I ns ur ance oranyot heri ns ur ance p rov iding co v era g e to [ Y affe ]. G r eatA m er i can pol i cy§ I I I . A . B ot h par t i es s eem t o agr ee thatt hi s pr ovi s i on r equi r es ( and perm i t s ) G r eatA m er i can t o i nves t i gat e and de fend a cl ai m w hen the li m it s o f A C E ’s co v era g e h av e b ee n ex h au sted . Itw o u ld se em p ec u li ar, ho w ev er, fo r th e p o li cyto req u ir e p ay m en t byG rea t A m erican b efo re G rea t A m erican ’s r i ghtand dutyt o i nves t i gat e and de fend a r i s es . G r eatA m er i can s houl d notbe r equi r ed t o payon a cl ai m agai ns tY affe w i t houthavi ng t he oppor tuni t yt o pr ot ect i t s i nter est s byi nv est i gati ng and defe nd i ng the clai m . Y ett hat coul d b e t he case un der Y affe’s i nterpret at i on of the po l i cybecau se the d utyt o p aycou l d ari se b e fo re e x h a u stio n o f

A C E ’s c o v e ra g e , w h ich is w h a t trigg e rs th e rig h t an d d u tyto i nv est i gate and d efen d. O ne co uld thu s i nfer t hat the d utyt o p aym ustno tari se u n t i l t h e § I I I . A r i g h t s a n d d u t i e s a r i s e — n a me l y , u p o n e x h a u s t i o n o f t h e ACE cover age.-18-

B ut Y affe has a r eas onabl e contr ary ar gum ent . I t ar gues t hatt he l anguage o f § II I.A s how s t hatt he dr aft er s of the pol i cycoul d r equi r e “e xhaus t i on” of co v era g e w h en theyw an ted to . It cont ends t hatt hi s s ect i on “s how s pr eci s el yhow unambi guous l anguage can a nd s houl d pr ovi de fora r equi r ementt hatunder l y i ng in s u ra n c e b e ‘e x h a u s te d .’” A p lt. B r. a t 2 7 . T h e fa ilu re to u se su c h lan g u a g e in §§ I and I I . G , i tcont ends , t her efor e s how s t hatt he R et ai ned Li m i tcoul d be exce eded be for e exha us t i on of the under l y i ng cover age. I n ourvi ew § I I I . A does notunambi guous l yi ndi cat e w hetherG r eatA m er i can’ s obl i gat i on t o paybegi ns onl yw hen the A C E pol i cy ’ s l i m i t s have be en exha us t ed. In su m , w e b eli ev e tha t th e G rea t A m erican p o li cyis susc ep ti b le t o m o re th a n o n e re a s o n a b le c o n s tru c tio n ; it is n o t u n a m b ig u o u s . S u m m a ryju d g m e n t in favorof G r eatA m er i can on thi s gr ound w as t her efor e i m pr oper . Fur t herm or e, G rea t A m erican d o es n o t argu e o n ap p ea l th at i t w o u ld b e e n ti tl ed to su m m ary j udgm enteven i f the pol i cyw er e ambi guous , s o w e do notaddr es s s uch a pos s i bi l i t yand i ns t ead c oncl ude thatt he gr antof s um m aryj udgm entt o G r eat A m er i can mustbe r ever s ed. I n l i ghtof the above di s cus s i on, w e al s o m us tconcl ude thatt he di s t r i ct cour t ’ s gr ound fordeny i ng Y affe’ s m ot i on fors um m aryj udgm ent

— namel y , t hat t he G r eatA m er i can pol i cyunambi guous l yi ndi cat ed thatG r eatA m er i can ha d no o b lig a tio n to p a yu n til th e A C E p o lic yw a s e x h a u s te d

— w a s e rr o n e o u s . T hi s does notm ean, how ever , t hatY affe i s now ent i t l ed t o s um m aryj udgm ent . A l l w e have-19-

deci ded i s t hatt he G r eatA m er i can pol i cyi s ambi guous . Y affe w oul d have us t ake t he next s t ep. I t cont ends t hat i t i s ent i t l ed t o s um m aryj udgm entbeca us e ( 1) a n y a m b i g u i t y i n t h e p o l i c y m u s tb e c o n s t ru e d a g a i n s tt h e d r a f t e ro f t h e p o l i c y, G r eatA m er i can, and i n favorof cove r age; and ( 2) i thad a r eas onabl e expe ct at i on t h a tt h e p o l i c ywo u l d p r o v i d e c o v e r a g e . Bu ta tt h i s s t a g e o f t h e p r o c e e d i n g we m u st disag ree . G rea t A m erican h ad n o o p p o rtu n ityto resp o n d to Y affe ’s su m m a ry -ju d g m e n t m o tio n , an d e n tryo f su m m a ryju d g m e n t ag a in st it w o u ld there fo re b e im p rop er.

“ F e d e ra l R u le o f

C iv il P ro c e d u re 5 6 im p licitlyre q u ire s th e d istric t co u rt to a llo w th e n o n m o v in g p a rtya n o p p o rtu n ityto re sp o n d b e fo re su m m a ryju d g m e n t is ent er ed aga i ns ti t . ” See Beai r d v. Seagat e Tech. , Inc. , 1 4 5 F .3 d 1 1 5 9 , 1 1 6 3 (1 0 th C ir . 1 9 9 8 ). B u t th e d istri ct co u rtg ran ted G rea t A m erican ’s m o ti o n fo r sum m ary ju d g m e n t o n e w e e k a f ter Y a ffe filed its m o tio n fo r su m m a ryju d g m e n t, w e ll befor e G r eatA m er i can’ s r es pons e w as due. I n i t s r es pons e G r eatA m er i can may have poi nt ed t o extr i ns i c evi dence t hatr es ol ved anyambi gui t yi n t he pol i cyand w o u ld h a v e d e fe a ted Y a ffe ’s m o tio n . G iv e n th e d istric t co u rt’s g ro u n d s fo r its ru lin g o n th e m e ri ts , p ro c e e d in g to d e n yY a ffe ’s m o tio n w a s h a rd ly im p ro p e r. N ow t hatw e have r ever s ed thatrul i ng, how ever , G r eatA m er i can i s ent i t l ed t o an oppor tuni t yt o r es pond t o Y affe’ s m ot i on. A ccor di ngl y , w e mustr emand for f u rt h e r p ro c e e d in g s . C f
. D oebel e v. Spr i nt/ Uni t ed M gm t . C o. , 342 F. 3d 1117, 1 1 3 9 (10 th C ir . 2 0 0 3 ) (distri ct co u rtab u sed it s d iscreti o n in g ran ti n g su m m ary-20-

j udgm entw hen i tr el i ed on new m at er i al s i n r epl ybr i ef w i t houtgi vi ng t he nonm ovantan oppor tuni t yt o fi l e a s ur r epl y ; beca us e appe l l at e courtw as r ever s i ng s um m aryj udgm entforot herr eas ons , “[a ] nypr ej udi ce f l ow i ng fr om [a p p ell an t’ s] i n ab il ityto rep lyto this m aterial m ayb e c o rrected o n rem an d ”). C . M ot i on t o C om pel D i s cover y A s a n a ltern a tiv e to its a rg u m e n t th a t itb e g ra n ted su m m a ryju d g m e n t, Y affe ar gues forr ever s al of the di s t r i ctcour t ’ s deni al of i t s m ot i on t o compel di s covery . T he di s t r i ctcour tdeni ed the mot i on t o compel on t he gr ound t hatt he G r eatA m er i can pol i cyw as unambi guous . B eca us e w e have det er m i ned thatt he r el evantt erm s of the pol i cyar e ambi guous , w e r emand t hi s i s s ue t o t he di s t r i ct cour tforr econs i der at i on. I I I . CO NC L US I ON W e R E V E R SE t he di s t r i ctcour t ’ s gr antof s um m aryj udgm entt o G r eat A m eri can an d R E M A N D for further proceedings.N o. 06- 7057, T he Y affe C om pani es , I nc. v. G r eatA m er i can I ns ur ance C om pany

B R I S C O E , C i r cui tJ udge, di s s ent i ng: I r es pect ful l ydi s s ent . A l t hough t he maj or i t yconcl udes “thatt he di s t r i ct cour t ’ s gr ound fordeny i ng Y affe’ s m ot i on fors um m aryj udgm ent–namel y , t hat t he G r eatA m er i can pol i cyunambi guous l yi ndi cat ed thatG r eatA m er i can ha d no obl i gat i on t o payunt i l t he A C E pol i cyw as exhaus t ed–w as err oneous , ” M aj . O p. a t 1 8 , in m yv ie w it is th e m ajo ri ty’s o w n c o n c lu s io n th a t is e rr o n e o u s . I. B e fo re d e tailin g m yd iffe re n c e s w ith th e m ajo rity ’s d e c isio n , I b e liev e it i s us eful t o br i efl yr evi s i tt he r el evantfac t s of thi s cas e and, cons i s t entw i t h our obl i gat i on underO kl ahoma l aw t o cons t rue the pol i cyas a w hol e, t o r evi ew al l of t he rel evan tG reatA m eri can p oli cyprovis i on s t og et her. S ee B i tum i no us C as. C orp. v. C ow en C ons t r . , I nc. , 55 P. 3d 1030, 1033 ( O kl a. 2002) ( hol di ng t hatan i ns ur ance pol i cym us t“‘ be cons t rued ac cor di ng t o t he ent i r etyof i t s t er m s and condi t i ons s etfor t h i n t he pol i cyand as ampl i fi ed, ext ended, orm odi fi ed byany r i der , endor s ement , orappl i cat i on at t ache d t o and made a partof the pol i cy . ’ ”) (q u o tin g O k la . S ta t. tit. 3 6 , § 3 6 2 1 ). E ffe ct i ve O ct ober1, 2004, G r eatA m er i can i s s ued t o Y affe, i n excha nge for a pr emi um of $272, 310, a “Com m er ci al U m br el l a” pol i cyw i t h a pol i cyper i od of O ct ober1, 2004, t o O ct ober1, 2005. A pp. at74, 86. T he G r eatA m er i can pol i cy pr ovi ded t ot al cover age of $25, 000, 000 for“[e ] ach [ o] ccurr ence ” and i n t he-2-

aggr egat e. I d. at86. T he “I N SU R I N G A G R E E M E N T S” por t i on of the G r eat A m eri can p oli cyprovided, i n p ert i nen tpart , as fol l ow s: I . CO VE RA GE W e w i l l payon behal f of the “I ns ur ed” thos e s um s i n exce s s of the “R et ai ned Li m i t ” thatt he “I ns ur ed” be comes l egal l yobl i gat ed t o pay byr eas on of l i abi l i t yi m pos ed byl aw oras s um ed byt he “I ns ur ed” u n d e r a n “ in su re d c o n tra c t” b e c a u se o f “ b o d ilyinju ry ,” “ p ro p e rty damage, ” “pe r s onal i nj ur y , ” or“adve r t i s i ng i nj ur y ” thatt akes pl ace dur i ng t he Pol i cyPer i od and i s caus ed byan “oc curr ence ” happe ni ng anyw her e. T he amount w e w i l l payfordamages i s l i m i t ed as d e s c r i b e d b e l o w i n t h e I n s u r a n c e Ag r e e me n tS e c t i o n I I . L I M I T S OF I NSU RA NC E. I I . LI M I TS OF I NS URANC E * * * G . R e ta in e d L im it W e w i l l be l i abl e onl yfort hatpor t i on of damages . . . i n exce s s of t he “r et ai ned l i m i t , ” w hi ch i s t he gr eat erof: 1. t he t ot al amount s s t at ed as t he appl i cabl e l i m i t s of the under l y i ng pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng I ns ur ance and the appl i cabl e l i m i t s of anyot her i ns ur ance pr ovi di ng cover age t o t he “I ns ur ed” dur i ng t he Pol i cyPer i od; or 2. t he amount s t at ed i n t he D ecl ar at i ons as Sel f- I ns ur ed R et ent i on [w hi ch i n t hi s cas e w as “$ - 0- ”] as a r es ul tof any one “oc curr ence ” notcover ed byt he under l y i ng pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng I ns ur ance norbyanyot her i ns ur ance pr ovi di ng cover age t o t he “I ns ur ed” dur i ng t he Pol i cyPer i od; and then up t o an amountnotexce edi ng t he Each O c c u rr e n c e L im it a s s ta te d in th e D e c la ra tio n s [ i.e ., $ 2 5 , 0 0 0 , 0 0 0 ].-3-

A p p . a t 8 8 -8 9 (e m p h a s is a d d e d ). T h e G re a t A m e ric a n p o licy ’s “ S c h e d u le o f U n d e rly in g In su ra n c e ,” w h ich is r efe r ence d i n t he pol i cy ’ s defi ni t i on of “Ret ai ned Li m i t , ” l i s t ed thr ee di ffe r ent pol i ci es , i ncl udi ng “A C E A M E R I C A N PO L I C Y : D 35980490” ( A ce A m er i can p o licy ) w h ich p ro v id e d c o m m e rc ial g e n e ra l li a b ili tya n d e m p lo y e e b e n e fit l i abi l i t yt o Y affe fort he pol i cyper i od of O ct ober1, 2004, t o O ct ober1, 2005. I d. at76. T he Schedul e of U nder l y i ng I ns ur ance s t at ed thatt he A ce A m er i can pol i cy , t o t he ext enti tpr ovi ded comm er ci al gener al l i abi l i t ycover age, had a $2, 000, 000 gener al aggr egat e l i m i tand a $1, 000, 000 “ea ch occ ur r ence ” l i m i t . I d. Fi nal l y , t he G r eatA m er i can pol i cycont ai ned the fol l ow i ng t hr ee ( I , J and P ) releva n t “C O N D IT IO N S ” p rov isi o n s (w h ich a re fo u n d in § V I): I . M ai nt enance of

U nderl y i ng Ins urance D ur i ng t he per i od of thi s pol i cy , y ou agr ee: 1. t o keep the pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng In su ra n c e in f

u ll fo rc e a n d e ffe c t; 2 . tha t an yre n e w a ls o r re p lac e m e n ts o f th e p o licie s liste d in the S ch ed u le of

U n d erly ing Insu ran ce w il l no t be m o re r es t r i ct i ve i n cover age; 3. t hatt he Li m i t s of I ns ur ance of the pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng I ns ur ance w i l l be mai nt ai ned exc ept foranyr educt i on orexhaus t i on of aggr egat e l i m i t s bypaym ent of “c l ai m s ” or“s ui t s ” for“occ ur r ence s ” cove r ed by “under l y i ng i ns ur ance ”; and-4- 4. t hatt he t erm s , condi t i ons and endor s ement s of the pol i ci es l i s t ed i n t he Schedul e of U nder l y i ng I ns ur ance w i l l notchange dur i ng the per i od of thi s pol i cys uch as t o i ncr eas e the c o v e r a g e a ffo r d e d u n d e rt h e p o l i c y. If y o u fa il t o c o m p lyw ith th e se re q u ire m e n ts, w e w ill o n lyb e liab le t o t he s ame ext entt hatw e w oul d have be en had y ou ful l ycompl i ed w i t h these r equ i rem ents . J. O t her I nsurance I f o t h e ri n s u r a n c e a p p l i e s t o a l o s s t h a ti s a l s o c o v e r e d b y t h i s p o l i c y, th is p o licyw ill a p p lye x c e ss o f th e o th e r in su ra n c e . N o th in g h e re in w i l l be cons t rued t o m ake thi s pol i cys ubj ectt o t he t er m s , condi t i ons a n d lim itatio n s o f

su c h o th e r in su ra n c e . H o w e v e r, th is p ro v isio n w ill notappl yi f the otheri ns ur ance i s s peci fi cal l yw r i t t en t o be exc es s of t h i s p o l i c y. * * * P . W h e n L o ss Is P a y a b le C over age unde rt hi s pol i cyw i l l notappl yunl es s and unt i l any “I ns ur ed” oran “I ns ur ed’ s ” under l y i ng i ns ur eri s obl i gat ed t o payt he “ re ta in e d lim it.” W h e n th e a m o u n t o f

lo ss h a s fin a llyb e e n d e ter m in e d , w e w ill pr om pt l ypayon behal f of the “I ns ur ed” the amountof l os s fal l i ng w i t h i n t h e t e r m s o f

t h i s p o l i c y. I d. at99- 100. O n D e c e m b e r 2 8 , 2 0 0 4 , an e x p lo sio n o c c u rre d a t Y a ffe ’s s c ra p y a rd in M u sk o g e e , O k lah o m a . Id . at 4 7 . A c c o rd in g to Y a ffe , itin c u rre d a p p ro x im a tely $1, 785, 986. 89 i n t ot al l i abi l i t i es as a r es ul tof var i ous cl ai m s r es ul t i ng fr om t he e x p lo sio n . Id . B e c a u se , h o w e v e r, a m a jo rityo f th o se c laim s w e re fo r a m o u n ts l e s s t h a n t h e $ 1 0 , 0 0 0 p e r - c l a i m d e d u c t i b l e s e tfo r t h i n t h e A c e A m e r i c a n P o l i c y,-5-

A c e A m e ric a n p ro v id e d n o c o v e ra g e fo r th o se c laim s, le a v in g Y a ffe re sp o n sib le t o pay$1, 287, 987. 79 w or t h of cl ai m s . I d. at47- 48. I n ot herw or ds , A ce A m er i can, t o dat e, has pai d onl y$497, 999. 10 of the t ot al l i abi l i t i es i ncurr ed by Y affe as a r es ul tof the expl os i on, l eavi ng overhal f- a- m i l l i on dol l ar s r emai ni ng u n d e r t h e $ 1 ,0 0 0 ,0 0 0 “ p e r o c c u rr e n c e ” lim it s e t fo rt h in th e A c e A m e ri c a n P o lic y . I d. at48. Y affe fi l ed s ui tagai ns tG r eatA m er i can i n t he D i s t r i ctC our tof M us kogee C ount y , O kl ahoma. Y affe’ s compl ai ntal l eged thatG r eatA m er i can ha d br eac hed its c o n tra c t o f

in su ra n c e b yfa ili n g to re im b u rse Y a ffe fo r its d e d u c tib le obl i gat i ons , and al s o s oughta dec l ar at i on t hatG r eatA m er i can w oul d be obl i gat ed t o r ei m bur s e Y affe “foral l amount s notcover ed byY affe’ s under l y i ng pol i cy[the A ce A m er i can pol i cy ] , i ncl udi ng al l deduct i bl e paym ent s i ncurr ed byY affe. ” I d. at14- 17. A l t ernat i vel y , Y affe s oughta dec l ar at i on t hatG r eatA m er i can w as l i abl e foral l of Y affe’ s l i abi l i t i es r es ul t i ng fr om t he ac ci dentt hatexce eded $1, 000, 000, r egar dl es s of w ho pai d t he fi r s t$1, 000, 000 i n cl ai m s . G r eat A m er i can f

i l ed an a ns w er , t i m el yr emoved t he ac t i on t o fede r al di s t r i ctcour t , and th e n filed a c o u n ter c laim se e k in g a d e c lar a tio n th a t ith a d n o d u tyto p a yu n d e r its um br el l a pol i cyunt i l and unl es s t he l i m i t s of the A ce A m er i can pr i m arypol i cy h ad b ee n p aid. T h e p arti es su b seq u en tl yfil ed cro ss-m o ti o n s fo r sum m ary j udgm ent . T he di s t r i ctcour ti s s ued an opi ni on and or dergr ant i ng G r eat-6-

A m er i can’ s m ot i on fors um m aryj udgm entand deny i ng Y affe’ s cr os s - m ot i on for s u m m a ry ju d g m e n t. II. T u rn in g to th e m ajo rity ’s d e c isio n , itis first su g g e ste d th a t “th e lan g u a g e in § I ( C over age) and § I I . G ( R et ai ned Li m i t ) of the G r eatA m er i can pol i cyi m pl i es t hatcover age be gi ns once Y affe has i ncurr ed l i abi l i t i es exce edi ng $1, 000, 000. ” M aj . O p. at10. W i t h t hi s s t at ement , t he maj or i t yfocus es on t he phr as e “t ot al amount s , ” as empl oy ed i n § I I . G , and omi t s t he i nt r oduct or yr equi r ementt hat l i m i t s G r eatA m er i can’ s l i abi l i t yt o onl y“thatpor t i on of damages . . . i n exce s s of th e ‘re tain e d lim it. ’” T h e m ajo rityth e n in ter p re ts th e “ to tal a m o u n ts” p h ra se to s i m pl yr efe rt o a mat hemat i c t ot al equi val entt o t he appl i cabl e l i m i t s of any under l y i ng pol i ci es m ai nt ai ned byt he i ns ur ed, i n t hi s cas e $1, 000, 000, om i t t i ng a n yre q u ir e m e n t th a t th e s e lim its m u s t b e p a id b yth e u n d e rl y in g p o lic yin s u re r( s ). I n ot herw or ds , t he maj or i t yconcl udes t hatt he s ol e purpos e of § I I . G ’ s r efe r ence to th e “ th e a p p lica b le lim its o f th e u n d e rly in g p o licie s” is to e sta b lish a th re sh o ld dol l aramount , above w hi ch cove r age unde rt he umbre l l a pol i cyw i l l begi n, and r egar dl es s of w hetherY affe ort he under l y i ng i ns ur er ( s ) pai d orw er e l i abl e for th e a m o u n ts b e lo w th e th re s h o ld d o lla r a m o u n t. I n m yvi ew , t hi s i s a mi s r eadi ng of the pol i cy . T o begi n w i t h, i tom i t s t he k e yin tro d u c to rylan g u a g e o f § II.G th a t sta tes G re a t A m e ric a n “ w ill b e liab le onl yfort hatpor t i on . . . i n exce s s of the ‘ r et ai ned l i m i t , ’ w hi ch i s t he gr eat erof”-7-

( 1) “the t ot al amount s t at ed as t he appl i cabl e l i m i t s of the under l y i ng pol i ci es l i s t e d i n t h e S c h e d u l e o f U n d e r l yi n g I n s u r a n c e ” ( i . e . , t h e A c e A m e r i c a n p o l i c y, w hi ch had a peroccurr ence l i m i tof $1, 000, 000) “and the appl i cabl e l i m i t s of any ot heri ns ur ance pr ovi di ng cover age t o t he ‘ I ns ur ed’ dur i ng t he pol i cyper i od” ( t her e w er e no s uch otherpol i ci es i n pl ace i n t hi s cas e) , or( 2) “the amounts t at ed in th e D e c lar a tio n s a s S e lf-In su re d R e ten tio n ” (i.e., ze ro ). A lth o u g h § II.G c o u ld perhaps be more cl ear , i t s r efe r ence t o “the appl i cabl e l i m i t s of the under l y i ng pol i ci es ” w as obvi ous l yi nt ended, par t i cul ar l yw hen cons i der ed i n l i ghtof the ot herr el evantpol i cypr ovi s i ons , t o m ean thatt hos e l i m i t s have t o be exha us t ed befor e cove r age be gi ns undert he G r eatA m er i can pol i cy . T o concl ude otherw i s e, as the m aj ori t ydo es, effecti velyt ransform s the p oli cyfrom i t s i ntended pu rpose as a n ex ce ss p o li cyinto a p ri m aryinsu ran ce p o li cyw ith a larg e d ed u cti b le. If th a t is th e p ro p e r in ter p re tatio n , the n o n e m u st a sk w h yth e p o licyre p e a ted ly r efe r s t o t he under l y i ng pol i ci es and thei rappl i cabl e l i m i t s , and w hyt he pol i cy r equi r es t hatt hos e under l y i ng pol i ci es be kepti n ful l for ce a nd effect ? If t he m ajo rity ’s in ter p re tatio n w e re c o rre c t, th e re w o u ld b e n o n e e d to re fe r a t all to a n yu n d e rly in g p o licie s a n d th e ir a p p lica b le lim its. S tate d d iffe re n tly , itw o u ld have be en fa rs i m pl erfort he pol i cyt o es t abl i s h a s etdeduct i bl e amount , r ather t han t o es t abl i s h t hatamount byr efe r ence t o t he appl i cabl e l i m i t s of the u n d e rly in g in su ra n c e p o licie s m a in tain e d b yY a ffe . N o tab ly , the m ajo rity conce des t hatt he purpos e of § I I . G ’ s r efe r ence t o under l y i ng pol i ci es m ai nt ai ned-8-

b yth e in su re d is to e n su re th a t th e R e tain e d L im it w ill b e “ a u to m a tica lly i ncr eas ed” i n t he eve ntt hatt he i ns ur ed “a cqui r e[s ] addi t i onal under l y i ng i ns ur ance . ” M aj . O p. at11- 12. B utt hi s conce s s i on, w i t h w hi ch I agr ee, m akes s ens e onl yi f the G r eatA m er i can pol i cyi s i nt erpr et ed as pr ovi di ng exce s s , r ather t han pr i m ary , cover age. T he maj or i t yfur t hererr s i n cons t rui ng § V I . J ( “O t herI ns ur ance ”) of the pol i cy , w hi ch s t at es : “I f otheri ns ur ance appl i es t o a l os s t hati s al s o cover ed by t hi s pol i cy , t hi s pol i cyw i l l appl yexce s s of the otheri ns ur ance . ” A l t hough t he m aj or i t yacknow l edges , as i tm us t , t hatt hi s l anguage can r eas onabl ybe cons t rued t o “mean[] t hatt he pol i cyappl i es onl yaft ert he pr i m arycover age l i m i t s have b e e n e x h a u ste d ,” M aj. O p . at 1 5 (in ter n a l q u o tatio n m a rk s o m itt e d ), itsu g g e sts th a t “to a re a so n a b le p e rso n . . . the p h ra se ‘e x c e ss o f th e o th e r in su ra n c e ’ c o u ld w e ll m e a n ‘to th e e x ten t th a t th e o th e r in su ra n c e is n o t re q u ire d to p a y(e v e n if th e o th e r in su ra n c e a p p lies to th e lo ss ).’” Id . at 1 6 . In m yv iew , the p lain l anguage of § V I . J has onl yone r eas onabl e i nt erpr et at i on and thati nt erpr et at i on c le a rl yre f

u te s th e m ajo ri ty’s p ro p o s e d a lte rn a tiv e re a d in g . S p e c ific a lly, a r eas onabl e i ns ur ed i n t he pos i t i on of Y affe coul d onl yhave r ead § V I . J t o m ean t hatt he G r eatA m er i can pol i cyw oul d pr ovi de cove r age fora l os s onl yaft ert he l i m i t s of anyappl i cabl e under l y i ng pol i ci es w er e exha us t ed. T h e m ajo ri ty al s o re a d s to o m u c h in to § V I.P o f th e G re a t A m e ri c a n p o lic y . T hat s ect i on , enti t l ed “W hen L oss i s Pay able” and co ntai ned i n the “C on dit i on s”T h e m ajo rityc o m p lain s th a t “G re a t A m e ric a n itse lf” h a s n o t ex p re ss ly 1 re lied o n § V I.I to su p p o rts its p o sitio n . M aj. O p . at 1 2 . T h a t co m p lain t, h o w e v e r, ca rrie s n o w e ig h t in lig h t o f o u r o b lig a tio n u n d e r O k lah o m a law to cons t rue the pol i cy“ac cor di ng t o t he ent i r etyof i t s t er m s and condi t i ons . . . . ” B itu m in o u s C a s . C o rp ., 5 5 P .3 d a t 1 0 3 3 (i n te rn a l q u o ta tio n m a rk s o m itte d ). -9- se c tio n o f

th e p o licy , p ro v id e s, in p e rtin e n t p a rt, th a t “[ c ]o v e ra g e u n d e r th is pol i cyw i l l notappl yunl es s and unt i l any‘ I ns ur ed’ oran ‘ I ns ur ed’ s ’ under l y i ng i ns ur eri s obl i gat ed t o payt he ‘ r et ai ned l i m i t . ’ ” A pp. at100. A l t hough t he m aj or i t ys pecul at es on t he pos s i bl e meani ngs of thi s pr ovi s i on and i t s i m pacton cover age, t he fa cti s that§ V I . P does notpurpor tt o m odi fyorot herw i s e i m pact th e c o v e ra g e p ro v is io n s o f th e p o lic y . In d e e d , th e s e c o n d p a ra g ra p h o f § V I.P confi r m s t hatt he poi ntof the s ubs ect i on ( as i ndi cat ed byi t s t i t l e) i s t o s peci fy “w hen, ” not“how m uch, ” G r eatA m er i can i s obl i gat ed t o pay : “W hen the amount of l os s has fi nal l ybeen de t erm i ned, w e w i l l pr om pt l ypayon behal f of the ‘I n s u re d ’ t h e a m o u n t o f lo s s fa llin g w ith in th e te rm s o f th is p o lic y .” Fur t her , t he maj or i t yal l butover l ooks § V I . I of the G r eatA m er i can pol i cy . T hats ect i on, ent i t l ed “M ai nt enanc e of U nder l y i ng I ns ur ance , ” r equi r ed

1 Y a ffe to k e e p th e u n d e rly in g p o licie s liste d in th e sc h e d u le o f in su ra n c e “ in f

u ll fo r c e a n d e ffe c t ” a n d t o ma i n t a i n t h e s a me c o v e r a g e r e s t r i c t i o n s , l i mi t s , a n d t e r ms and condi t i ons dur i ng t he l i fe of t he umbre l l a pol i cy . I d. at99. I f, as t he m aj or i t yeffect i vel yconcl udes , t he pol i cy ’ s “r et ai ned l i m i t ” i s nothi ng m or e than a mat hemat i cal l i abi l i t yamount t hatm us tbe r eac hed befor e cove r age be gi ns , t hen w hyw oul d i thave be en nec es s aryforY affe t o m ai nt ai n anyunder l y i ng pol i ci es-10-

dur i ng t he l i fe of

t he G r eatA m er i can pol i cy ? T he onl yans w ert he maj or i t ycan m us t eri s t hat“the ac tual cover age pr ovi ded byt he A C E pol i cyand the exhaus t i on of the l i m i t s of thatpol i cyaffectG r eatA m er i can’ s dut y( 1) t o defe nd Y affe, ” “a nd ( 2) t o m ake pa ym ent s forappea l bonds , pr ej udgm enti nt er es t , and cos t s . . . . ” M aj . O p. at12. A gai n, how ever , t hi s i s a gr os s l ydi s t or t ed, and unnece s s ar i l yl i m i t ed, r eadi ng of the pol i cyl anguage . I n fac t , t he cl earand u n d e n iab le p u rp o se o f § V I.I’s m a in ten a n c e o f u n d e rly in g in su ra n c e re q u ire m e n t, cons i s t entw i t h t he G r eatA m er i can pol i cyas a w hol e, w as t o ens ur e thatt he pol i cyoper at ed as i nt ended, i . e. , as an exc es s l i abi l i t ypol i cyt hatpr ovi ded co v era g e o n lyaf

ter ex h au sti o n o f th e a p p li ca b le l im it s o f th e u n d erly ing p ri m ary pol i ci es m ai nt ai ned byY affe. Fi nal l y , t he maj or i t yeffect i vel yi gnor es t he fa ctt hatt he l i abi l i t yi ncurr ed byY affe i n t hi s cas e r es ul t ed fr om t he exi s t ence of m ul t i pl e cl ai m s , and thus t he appl i cat i on of m ul t i pl e corr es pondi ng deduct i bl es , undert he A ce A m er i can pol i cy . A l t hough t he maj or i t ys ugges t s t hatt he G r eatA m er i can pol i cycan be r eas onabl ycons t rued t o oper at e as an exc es s pol i cyt o fi l l gaps i n t he under l y i ng i ns ur ance , i ti s cl eart hatt he deduc t i bl e amount s t hatY affe w as r equi r ed t o pay undert he A ce A m er i can pol i cycannotr eas onabl ybe cons i der ed “ga ps ” i n t hat pol i cy . R ather , deduct i bl es , “w hi ch [a r e] fr equent l yr efe r r ed t o as s el finsu ran ce , ” f

u n cti o n “to a lt er the p o int at w h ich a n insu ran ce co m p an y ’s obl i gat i on t o payw i l l r i pen. ” I nt ’ l B anker s I ns . C o. v. A r none, 552 So. 2d 908,-11-

911 ( Fl a. 1989) ; s ee Beech A i r cr aftC orp. v. U ni t ed St at es , 797 F. 2d 920, 922 (10t h C i r. 19 86 ) ( “If one h aving an i nsurabl e ri sk ret ai ns t he ri sk of h i s ow n loss , t here i s no ri sk t ransfer , and t he arr ang em ent i s sel f-i nsurance. ”). In ot her w ords, Y affe, byagr eei ng t o t he unus ual deduct i bl e s cheme s etfor t h i n the A ce A m e r i c a n p o l i c y, c h o s e ( p r e s u m a b l y i n r e tu r n fo ra l o w e rp r e m i u m o n t h a tp o l i c y) to a c c e p t th e risk th a t itw o u ld b e re q u ire d to se lf-in su re in th e e v e n t o f m u lti p le c laim s a risin g o u t o f

a n o c c u rre n c e . A s th e d istric t co u rt c o rre c tlyn o ted , “it is gener al l yunder s t ood t hat‘ an exc es s i ns ur erdoes notr ei m bur s e the i ns ur ed for t he amountof the pr i m arypol i cydeduct i bl e, ’ ” A pp. at511 ( quot i ng C ouch on I ns ur ance , ( 3d E d. ) , § 220: 36) , and that“[t ] he r at i onal e fornoti ncl udi ng deduct i bl e paym ent s as par tof the l i m i t s of the under l y i ng pol i cy[w a] s gr ounded in th e in su re d ’s d e c isio n to , in e ss e n c e , b e c o m e se lf-in su re d fo r th e d e d u c tib le amount as a r es ul tof the bar gai n r eac hed w i t h t he pr i m aryi ns ur er. . . . ” I d. at 5 1 1 ; s e e a ls o D o u g la s R . R ic h m o n d , Is s u e s a n d P ro b le m s in “ O th e r I n s u ra n c e ,” M ul t i pl e I ns ur ance , and Sel f- I ns ur ance , 22 Pepp. L . R ev. 1373, 1399 ( 1995) ( “The purpos e of e xces s cover age oran umbre l l a pol i cyi s t o pr ot ectt he i ns ur ed in the ev en t of

ca tast rop h ic l o sses in w h ich liabili tyex ce ed s av ail ab le prim ary cover age. E xces s and umbre l l a pol i ci es ar e i nt ended t o expand the amount , but nott he s cope of

cover age. T her efor e, onl yaft ert he under l y i ng pr i m arypol i cy has been e xhaus t ed w i l l anyum br el l a pol i ci es ki ck i n. ”) ( i nt ernal quot at i on m arks o m itted).-12-

C ons i der i ng t he G r eatA m er i can pol i cyas a w hol e, I agr ee w i t h t he di s t r i ct cour tt hatt he pol i cycannotr eas onabl ybe cons t rued t o pr ovi de cove r age fort he ci r cumst ance s al l eged i n Y affe’ s compl ai nt . T her efor e, I agr ee w i t h t he di s t r i ct cour tt hatG r eatA m er i can w as ent i t l ed t o s um m aryj udgm enti n i t s favor , and I w o u ld a ffirm th e ju d g m e n t o f th e d istric t co u rt.