2003 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-17-2003

United Ins Co v. Unisys Corp

Precedential or Non-Precedential: Non-Precedential

Docket 02-2097

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2003

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2003 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"United Ins Co v. Unisys Corp" (2003). 2003 Decisions. Paper 646.

http://digitalcommons.law.villanova.edu/thirdcircuit_2003/646
 NOT PRECEDENTIAL 

 THE UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ___________ 

 No. 02-2097 

 ___________ 

 UNITED INSURANCE COMPANY, as assignee of 

 NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA 

 v. 

 UNISYS CORPORATION, 

 Defendant/Third-Party Plaintiff 

 v. 

 AMERICAN RISK MANAGEMENT, INC.; ARM INTERNATIONAL CORP.; 

 NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH, PA.; 

 AIG RISK MANAGEMENT, INC., 

 Third-Party Defendants 

 Unisys Corporation, 

 Appellant 

 ___________ 

 ON APPEAL FROM THE UNITED STATES DISTRICT COURT 

 FOR THE DISTRICT OF NEW JERSEY 

 (D.C. Civil No. 94-cv-00411) 

 District Judge: The Honorable Katharine S. Hayden 

 ___________ 

 ARGUED MARCH 11, 2003 

 BEFORE: SLOVITER, NYGAARD, and ALARCON, Circuit Judges. 

 (Filed April 16, 2003) 

John N. Ellison, Esq. (Argued) 

Anderson Kill & Olick 

1600 Market Street, 32nd Floor 

Philadelphia, PA 19103 

 Counsel for Appellant 

Gregg S. Sodini, Esq. 

Sodini & Spina 

120 Wood Avenue South, Suite 407 

Iselin, NJ 08830 
Joseph F. Lagrotteria, Esq. 

Vincent S. Ziccolella, Esq. (Argued) 

St. John & Wayne 

Two Penn Plaza East 

Newark, NH 07105 

 Counsel for Appellees 

 ___________ 

 OPINION OF THE COURT 

 ___________ 

NYGAARD, Circuit Judge. 

 This appeal requires that we analyze under New Jersey law a complex 

insurance agreement that was devised by sophisticated insurance experts and negotiated 

by skilled businessmen. Appellants argue that there is a "maximum premium," above 

which they are not obligated to pay. We agree with appellees that, despite the presence of 

the phrase "maximum premium" in the documents, appellants did not purchase the 

protection of a "maximum" that cannot be exceeded. 

 The insurance policy at issue, and all renewals thereof, contained an 

Endorsement entitled "Retrospective Premium Endorsement," which set forth the method 

which certain retrospective premiums payable by Sperry to National Union are to be 

calculated. It is this Endorsement about which United Insurance and Unisys disagree. 

 Unisys argues that the phrase "maximum premium" in the Endorsement 

fixes a cap on the calculation of the premiums on an aggregate basis. United Insurance 

contends that the Endorsement did not provide Unisys with such a protection, and asserts 

that under the terms of the Endorsement, "maximum premium" increases as losses are 

incurred and paid under the policy. Although the plain language of the insurance policy 

is confusing as to precisely what "maximum premium" means, we find that there is no 

cap on Unisys’ liability for retrospective premiums because Unisys did not pay for this 

cap protection. At oral argument, we pressed counsel for Unisys to show where the 

protection was acquired, but counsel could not cite any record evidence of such a 

purchase. We also considered a 1979 written analysis by Sperry’s insurance experts of 

the various insurance programs they were evaluating, which renders appellant’s argument 

meritless. This memorandum states: 

 Another possibility which must be considered is a period of 

 abnormally high loss frequency resulting in an accumulation 

 of losses under $500,000 each which in the aggregate 

 significantly exceed the estimated standard premium. Under 

 the current Liberty Mutual rating plan, retrospective earned 

 premium cannot exceed 150% of standard premium, 

 regardless of loss experience. Under the basic ARM 

 proposal, aggregate stop loss protection is not provided for 

 and an abnormal run of losses would have to be funded by 

 [Sperry] . . . . We can purchase aggregate stop loss protection 

 from [National Union] in the amount of $5,000,000 excess of 

 $13,500,000 (150% of standard premium) for an additional 

 premium of $285,000 but we recommend against this 

 inasmuch as loss payments are stretched out over a 10 year 

 period and, in any event, our past history does not indicate 

 that the purchase of this coverage is necessary. 

App. 415. Clearly, the Sperry insurance analysts were aware that, had Sperry wanted 

"stop loss" protection, they could have paid for it. The record shows that the protection 

that Unisys claims they have was in fact never purchased. 

 In sum, and for the foregoing reasons, we will affirm the District Court’s 

granting of summary judgment, which declared that the retrospective premium 
endorsements to the policy at issue do not cap Unisys’ liability for retrospective 

premiums. 

_________________________ 

 /s/ Richard L. Nygaard 

 Circuit Judge