it is OneBeacon's burden to prove that Aviva agreed to
reinsure the 1981 and 1982 OneBeacon Policies.
"The interpretation of an insurance contract and the
application of policy language to known facts present questions of
law for the judge to decide." Sarsfield, 335 F. App'x at 65
(internal quotation marks omitted); see also Merchs. Ins. Co. v.
U.S. Fid. and Guar. Co., 143 F.3d 5, 8 (1st Cir. 1998). The
interpretation of an insurance contract should be "according to the
fair and reasonable meaning of the words in which the agreement of
the parties is expressed." Allmerica Fin. Corp. v. Certain
Underwriters at Lloyd's, London, 871 N.E.2d 418, 425 (Mass. 2007)
(internal quotation marks omitted). Additionally, every word in an
insurance contract "must be presumed to have been employed with a
purpose and must be given meaning and effect whenever practicable."
Id.
B. OneBeacon's Motion for Summary Judgment
To prevail on summary judgment, OneBeacon must show that
there are no material facts in dispute and that as a matter of law
Aviva provided reinsurance coverage for both the 1981 OneBeacon
Policy and the 1982 OneBeacon Policy. As the district court noted,
the only direct agreement between OneBeacon and Aviva in the record
is the Facultative Certificate, which clearly indicates that the
term of Aviva's reinsurance obligation was from March 28, 1980 to
April 1, 1981. OneBeacon argues that the agreement between it and
Aviva was created by the 1980 OneBeacon and Aviva Policies rather
than by the Facultative Certificate. OneBeacon contends that the
1980 Aviva Policy reinsures the 1980 OneBeacon Policy and any
renewals, and that the Facultative Certificate, which was issued
several months after the 1980 Policies, was a mere confirmation of
the reinsurance relationship that already existed between the two
insurance companies.
However, even if we assume arguendo that the 1980 Aviva
and OneBeacon Policies formed the parties' agreement in 1980, this
does not help OneBeacon. For if the various 1980 policies
established the original agreement between the parties, the record
makes clear that the parties changed the terms of their agreement
in 1981.
The 1981 Aviva Endorsement explicitly changed the scope
of Aviva's obligations. The Differences in Condition Endorsement
in the original 1980 Aviva Policy stated that Aviva would reinsure
OneBeacon's coverage to Harrisons US. However, the 1981 Aviva
Endorsement stated that Harrisons US was "specifically excluded
from this policy which shall not inure to [its] benefit in any way"
(emphasis added). OneBeacon suggests that the 1981 Aviva
Endorsement only eliminated Aviva's direct insurance obligations to
Harrisons US while leaving undisturbed Aviva's agreement to
reinsure the 1980 OneBeacon policy and its renewals. But the 1981
Aviva Endorsement explicitly states that it "form[s] part of Policy
No. 6687287" (i.e., the 1980 Aviva Policy) and that it excludes
Harrison US from that policy entirely. Moreover, OneBeacon claims
in its reply brief that "the very heart of [OneBeacon's] case" is
that Policy No. 6687287 and the 1980 OneBeacon policy combine to
"provide the terms of the Reinsurance Agreement between OneBeacon