Opinion ID: 1192306
Heading Depth: 2
Heading Rank: 4

Heading: Mutual Marine as a Volunteer

Text: General Star argues, as it did before the district court, that it was entitled to summary judgment because Mutual Marine was acting as a volunteer when it agreed to indemnify and defend UFI, pursuant to the Second Agreement, and when it paid National Union the $700,000 at issue, pursuant to the Third Agreement. If the payment was indeed voluntary, then General Star has no obligation to reimburse Mutual Marine for it. See Merch. Mut. Ins. Group v. Travelers Ins. Co., 24 A.D.3d 1179, 1180, 806 N.Y.S.2d 813 (4th Dep't 2005) ([W]hen an insurer who is not acting under a mistake of material fact or law assumes the defense and indemnification of an insured when there is no obligation to do so, that insurer becomes `a volunteer with no right to recover the monies it paid on behalf of the insured.') (quoting Nat'l Union Fire Ins. Co. v. Ranger Ins. Co., 190 A.D.2d 395, 397, 599 N.Y.S.2d 347 (4th Dep't 1993)) (internal alterations omitted). However, when Mutual Marine agreed to indemnify UFI, it did not do so without compensation. It received in return whatever rights UFI had against General Star. General Star relies on the familiar proposition that an assignor `could only assign a right that it legally possessed' and an assignee's rights are no greater than those of the assignor. Appellant's Br. 40 (quoting Case v. Filmtrucks, 118 A.D.2d 749, 752, 500 N.Y.S.2d 141 (2d Dep't 1986); citing Int'l Ribbon Mills, Ltd. v. Arjan Ribbons, Inc., 36 N.Y.2d 121, 126, 365 N.Y.S.2d 808, 325 N.E.2d 137 (1975)). The district court found that UFI did have a claim against General Star to assign to Mutual Marine, and therefore Mutual Marine was not acting as a volunteer when it paid in excess of its policy limit. However, the district court had already determined that the Ernish adjudication was ultimately an adjudication against UFI for which General Star was obligated to pay, a determination with which we disagree. Although the Ernish adjudication in itself did not establish an ultimate net loss with respect to UFI such that UFI had a claim against General Star that it could assign to Mutual Marine, it may have done so if the legal liability of UFI was established under the First Agreement or otherwise. Because we leave it for the district court on remand to determine in the first instance whether the legal liability of UFI was established in any way other than by the Ernish judgment alone, the district court may also resolve on remand the related factual question of whether Mutual Marine was acting as a volunteer when it paid an amount in excess of its policy limit.