Opinion ID: 148187
Heading Depth: 3
Heading Rank: 3

Heading: The Final Settlement Agreement

Text: Although Travelers and Acme reached an agreement in principle during the July 7, 1998 meeting, the settlement was not finalized until September of that year. The primary issue in dispute was Travelers' proposed allocation of the agreed-upon sum among the different policies. According to Robert Miley, who, along with William Kingston, was primarily responsible for drafting the settlement agreement on behalf of Travelers, [18] it was not that Acme objected to Travelers' proposed allocation so much as that it wondered whether . . . it [ i.e., the allocation language] needed to be . . . in the settlement agreement. (Trial Tr. vol. 1, 216, Jan. 11, 2005.) In a draft dated July 27, Travelers included language indicating that, of the $20 million dedicated to the chemical products claims, $5 million would be allocated to the TIC policies, while the remaining $15 million would be allocated to the XN policies. That draft also included language providing that no amount could be allocated to the post-April 1982 AL policies. In a draft returned to Travelers on September 1, Acme crossed out most of the allocation language, put a question mark next to the line indicating that the post-April 1982 AL policies were not to be used, and added language stating that, with the exception of any allocations specifically set forth in the agreement, each party reserved the right to allocate the settlement as it pleased. In a draft returned on September 4, Acme continued to designate the allocation language IN DISPUTE, and specifically crossed out the section regarding allocation to the post-April 1982 AL policies. The settlement agreement became final in mid-September. It provided that Travelers' payments to Acme were net of any reinsurance obligations the Acme Insurance Subsidiaries have or may have to Travelers and net of any retrospective premium or other obligations Acme has or may have to Travelers. It also included the language indicating that the $20 million for the chemical products claims would be divided between the TIC policies ($5 million) and the XN policies ($15 million). In addition, the final version included a paragraph providing that [n]o payments. . . shall be allocated to any [AL] Primary Policies with a policy period commencing on or after April 1, 1982, or to any . . . XS Policies because the payments of the Settlement Amount are net payments and such Policies have been exhausted by virtue of the settlement. Lastly, the final version provided that [w]ith the exception of the agreements explicitly set forth in. . . this Agreement, Acme and Travelers each reserve to themselves the right to allocate any or all of the Settlement Amount to any Policy; Acme will not be deemed to concur in any such allocation by Travelers, and Travelers will not be deemed to concur in any such allocation by Acme. In the subsequent litigation with INA, Travelers conceded that the allocation language was included in the settlement agreement at its behest.