Opinion ID: 779651
Heading Depth: 2
Heading Rank: 3

Heading: The IINA Policy

Text: 42 As noted above, CU appeals the grant of summary judgment to IINA on Multifoods' claim, and CU's cross-claim, under the IINA Policy. As an initial matter, IINA argues that CU lacks standing to appeal the grant of summary judgment to IINA. It contends that CU, while styling its appeal as an appeal of a cross-claim, is effectively appealing the dismissal of Multifoods' claim because CU's rights are asserted only as a potential subrogee of Multifoods, and that CU cannot do so because CU lacks privity with IINA and was not adversely affected by the judgment against IINA. 8 43 It is true that CU's claim is effectively derivative of Multifoods' claim under the IINA Policy. However, under New York law, an insurer has a right in equity to collect a ratable contribution from any other insurer who is also liable for the same loss. See United States Fire Ins. Co. v. Federal Ins. Co., 858 F.2d 882, 885 (2d Cir.1988), cert. denied, 490 U.S. 1020, 109 S.Ct. 1744, 104 L.Ed.2d 181 (1989) (The general rule under New York law is that there is a well-settled equitable right to contribution, where there is concurrent insurance....) (internal citations and punctuation omitted); Cosmopolitan Mut. Ins. Co. v. Lumbermen's Mut. Cas. Co., 20 N.Y.2d 145, 153, 281 N.Y.S.2d 993, 996-97, 228 N.E.2d 893, 895 (1967); Tops Markets, Inc. v. Maryland Casualty, 267 A.D.2d 999, 1000, 700 N.Y.S.2d 325, 326 (4th Dep't 1999) (An insurer has a right to seek contribution from an obligated coinsurer.); National Union Fire Ins. Co. of Pittsburgh, Pa. v. Hartford Ins. Co. of the Midwest, 248 A.D.2d 78, 85, 677 N.Y.S.2d 105, 110 (1st Dep't 1998) (Where two or more insurers bind themselves to the same risk and one pays the whole loss, the paying insurer has a right of action against his coinsurers for a ratable portion of the amount paid.). CU thus has a significant financial stake in whether IINA can be forced to cover any of Multifoods' loss, and CU thus has a right of action for potential contribution against IINA. 44 IINA argues that CU cannot assert this right until CU has indemnified Multifoods. The caselaw does make clear that the right of contribution ripens only upon indemnification of the underlying obligation. See, e.g., Gibbs v. Hawaiian Eugenia Corp., 966 F.2d 101, 106 (2d Cir. 1992) (The general rule is that an insurer's right to subrogation attaches, by operation of law, on paying an insured's loss.... At that time, the insurer is subrogated in a corresponding amount to the insured's right of action against any other person responsible for the loss, and the insurer succeeds to all the procedural rights and remedies possessed by the insured.) (emphasis added). Nonetheless, we do not believe that this concern bars CU's cross-claim here. It is understood that CU's right to collect on its cross-claim is contingent on it being found liable and indemnifying Multifoods; CU's potential liability to Multifoods is unaffected by the resolution of its claim against IINA. As a matter of efficiency and judicial economy, it made sense for CU to raise this issue within these proceedings. We thus reject IINA's challenge to CU's right to appeal the IINA Policy judgment.
45 However, we affirm the judgment in IINA's favor based on the language of the IINA Policy. As noted above, the IINA Policy contains an FC & S warranty that all parties agree by its terms clearly applies to the seizure in question: Notwithstanding anything herein contained to the contrary this insurance is warranted free from ... capture, seizure, arrest, restraint... and the consequences thereof... whether in time of peace or war and whether lawful or otherwise.  (emphasis added). CU argues that Section 13(a) of the IINA Policy effectively limits the force of the FC & S clause. Section 13(a) provides that 46 [a]ll goods and/or merchandise shipped, except as may be hereinafter especially provided, are insured ... [a]gainst all risks of physical loss or damage from any external cause (excepting risks excluded by the F.C. & S .... warrant[y] unless covered elsewhere herein), irrespective of percentage. 47 (emphasis added). CU contends that the fact that the reference to the FC & S clause is qualified by unless covered elsewhere herein means that the FC & S clause excludes only situations that are not specifically included by a different provision of the IINA Policy. It further argues that because Section 29 of the IINA Policy specifically covers takings at sea, arrests, restraints and detainments of all kings, princes or people of what nation, condition or quality soever, the language of Section 13(a) serves to override the FC & S clause's application to those situations. 48 Because the FC & S clause begins with the phrase [n]otwithstanding anything herein contained to the contrary, we hold that the District Court properly granted summary judgment to IINA. Such language means that the FC & S clause trumps any other provisions of the IINA Policy. This fact is important because the argument advanced by CU (and by Multifoods in the District Court below) is not without some force; it is virtually impossible to ascribe meaning to the unless covered elsewhere herein of Section 13(a) unless one views it as an attempt to limit the scope of the FC & S clause. CU's proposed explanation of the unless covered elsewhere herein is problematic because it effectively would eviscerate the FC & S clause entirely. Still, absent the [n]otwithstanding anything herein contained to the contrary language of the FC & S clause, the tension between the FC & S clause and the unless covered elsewhere herein language arguably would arise to the level of an ambiguity warranting denial of summary judgment. However, because the FC & S clause alone among the relevant provisions applies notwithstanding anything else in the contract, we need not resolve the ambiguities surrounding the purpose of the language of Section 13(a). The FC & S clause by its terms overrides any inconsistent language elsewhere in the IINA Policy. Because the FC & S clause by its terms plainly excludes coverage for the seizure of Multifoods' cargo, and because it trumps all other relevant provisions of the IINA Policy, we affirm the grant of summary judgment to IINA.
49 IINA requests sanctions against CU, arguing that CU is effectively not pressing the appeal because CU devotes (according to IINA) only 21 words of its brief to its appeal against IINA and cites no caselaw. We believe that IINA's request for sanctions is wholly unwarranted. First, IINA's reference to the 21-word argument distorts the attention CU's brief gives to the cross-claim against IINA. That the argument is contained in less than half a page reflects the fact that it is a straightforward argument relying upon the interplay of three different contractual provisions. Those provisions are carefully set forth on a page and a half of the brief, with the effort taken to italicize the language upon which CU relies. The fact that CU cites no cases relating to its appeal against IINA simply reflects the fact its argument here is entirely rooted in the language of the IINA Policy. 9 CU's argument, while ultimately not prevailing, is not frivolous. We therefore deny the motion for sanctions.