Opinion ID: 3014059
Heading Depth: 1
Heading Rank: 4

Heading: Sue and Labor Provisions

Text: to Y2K or other similar date or time recognition claims.” Letter from Brian J. GTE contends that it is entitled to Krais, Vice President and Operations reimbursement under the Sue and Labor Manager of Allendale Insurance, to Adam Provisions. GTE argues that these Kagan, J & H Marsh & McLennan (June provisions require the company to avert 15, 1998), J.A. at 4129. The proposed certain losses22 and then obligate the agreement provided that “Afilliated and Insurers to reimburse GTE for those GTE agree that Affilliated will not endorse onto the existing policy any restriction or clarification to the policy 21 At oral argument, GTE’s counsel language specifically relating to Y2K.” contended that there is a “disputed fact” as Id. The agreement went on to explain, to whether GTE or the Insurers sought however, that the parties would “agree that clarification on whether the policy covered a proper construction and interpretation of Y2K measures, indicating “we haven’t the policy is as follows: 1) the policy does had discovery on that issue yet.” Tr. of not pay for remediation, repair or Argument at 18:7-10. Even assuming that assessment of any Y2K or similar date or the Insurers sought the clarification, time recognition problem in any electronic GTE’s argument still fails. The fact that data processing equipment and media, Insurers may have sought clarification and whether preventative or remedial . . . .” after negotiations agreed not to add Id. at 4129-30. However, there is no additional Y2K exclusions does not indication in the record that the parties support GTE’s claim that the Insurers ever assented to the agreement. represented that Y2K measures were The fact that agreements clarifying covered. the scope of Y2K coverage were 22 discussed, and that GTE may have sought The language of the Preservation to have Insurers clarify that no “additional and Protection of Property Clause, in the exclusions” would be added in no way excess layer policies, does not appear to suggests that GTE believed, much less that explicitly obligate GTE to take action. Allendale represented, that the policies Rather, it merely provides that “the provided for Y2K coverage. In fact, expenses incurred by the Insured in taking GTE’s attempts to ensure that no reasonable and necessary actions for the “additional exclusions” pertaining to Y2K temporary protection and preservation of would be added suggest that GTE property . . . shall be added to the total anticipated that at least some Y2K physical loss or damage otherwise measures were not covered under the recoverable . . . .” Whether or not GTE was obligated to take such measures, however, is ultimately immaterial to our holding. 24 expenses. We decided in Part III that, of loss that is the subject of the policy; that because of the policies’ exclusions, GTE’s is, the clause is designed to allow actions were not aimed at averting a reimbursement for measures taken by the covered loss. Therefore, the only insured to mitigate damages in order to remaining question is whether the Sue and reduce the insurer’s obligation under the Labor Provisions provide an independent policy. See Swire I, 139 F. Supp. 2d at basis for recovery. They do not. 1383. While there is some dispute as to whether the covered loss has to occur to The Sue and Labor Provisions do invoke coverage, see Swire II, 284 F.3d at not save GTE’s claims from the policy 1232 (citing cases), it seems undisputed exclusions. Rather, as the District Court that the actions must at least be aimed at a explained, covered loss. An alternative view, [T]he purpose of the sue construing the Sue and Labor Provisions and labor clause is to as separate insuring agreements, would reimburse the insured for read the defective design and inherent vice costs incurred to satisfy the exclusions out of the policy. insured’s duty to the insurer. Thus, the Sue and Labor Provisions If the insured acts to prevent do not provide an independent basis for a loss that is not covered by GTE’s recovery. Such an interpretation of the policy, there is no duty the Sue and Labor Provisions is necessary or benefit to insurer; “[t]he to avoid rendering the exclusionary obligation only exists when provisions meaningless; an alternative the action taken is to interpretation would permit GTE to prevent a loss for which the recover for improvements and measures underwriter would be taken to address a host of uninsured risks. liable.”