Opinion ID: 2683922
Heading Depth: 2
Heading Rank: 3

Heading: Self-Insured Retention

Text: We also affirm the district court’s declaration that a $3 million self-insured retention applies to the derivatives litigation because the litigation is sufficiently related to Baum’s business underwriting and selling municipal bonds. -15- Baum’s opening brief fails to cite a single authority supporting the idea that a $1 million retention applies to the derivatives litigation. The district court’s rejection of Baum’s argument was entirely correct: The best I can say for [Baum] is that, viewing this case independently from the IRS investigation, it would appear to essentially involve brokerage activity. The case does not directly result from activities as an underwriter or seller. However, the parties do not dispute that indirectly or in consequence of the underwriter or seller activity this controversy arose. The language of the policy plainly applies the $3 million retention to any claim which “in any manner relat[es] to [Baum’s] activities as an underwriter or seller of municipal bonds.” (Emphasis added); see, e.g., New Oxford American Dictionary, supra, at 1473 (defining “relate to” as “have reference to; concern”). As we explained in our coverage analysis, the only reason Twin City must cover the derivatives litigation at all is that the litigation arose out of the same underlying wrongful acts giving rise to IRS liability. The policy makes it clear that “all purposes” under the policy “includ[e], but [are] not limited to, the applicability of a single Aggregate Limit of Liability and Retention.” (Emphasis added). “If the plain language of the policy is determinative, [courts applying New York law] cannot rewrite the agreement by disregarding that language.” Fieldston Prop. Owners Ass’n, Inc. v. Hermitage Ins. Co., 945 N.E.2d 1013, 1017 (N.Y. 2011). The same $3 million retention which applied to the IRS liability must also apply to the related derivatives litigation.