Court Opinion

ID: 9490718
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:52:31.806166+00
Date Added: 2024-06-11T17:54:16.611788
License: Public Domain

WALD, Circuit Judge,
concurring:
I differ with the reasoning of the majority on only one aspect of this case, the issue of whether the Final Premium Clause should be read to permit Hartford to change the jurisdictional basis of closed policies without issuing an endorsement.
I find the evidence on which the majority relies on this issue — policy language, caselaw, and the purported lack of any reason for requiring endorsements to closed policies— unconvincing. The language of the Final Premium Clause seems to me to be ambiguous. It could be read to provide the insurer with only a substantive right to adjust the terms of a closed policy, or it could also furnish a specific procedure for doing so, and so excuse compliance with the General Section’s endorsement requirement. As for the cases cited by the majority, D.A.X., Inc. v. Employers Ins. of Wausau, 659 N.E.2d 1150 (Ind.Ct.App.1996) and Continental Ins. Co. v. Seppala & Aho Constr. Co., 121 N.H. 374, 430 A.2d 157 (1981), in neither of them does it appear that any party raised the question of whether an endorsement was required to effect a change in policy terms. (Indeed, the policies involved may not have even contained an endorsement requirement like the one here.) Nor do I agree with the majority’s conjecture that requiring endorsements to closed policies would be a “purely formal gesture.” Majority opinion at 1118. Formality can, at times, be very useful. The record now before us contains little evidence about the practices of the insurance industry or the usual behavior of regulators, and the parties did not argue this issue in any detail. We simply cannot be certain that insurers, insureds, and third parties would have no use for endorsements to closed policies.
Ultimately what I find dispositive in this case is that the parties’ course of performance under the policy indicates that they appeared to have implicitly agreed that the Final Premium Clause permitted changes in policy terms without an endorsement. “[Ejvidence of circumstances surrounding the contract formation and the parties’ conduct in performing it is relevant to ascertaining their intent.” Dano Resource Recovery, Inc. v. District of Columbia, 620 A.2d 1346, 1353 (D.C.1993) (emphasis added). In October 1989, after the 1988-89 policy had closed, Hartford audited that policy year and issued a “Statement of Premium Adjustment,” presumably under the Final Premium Clause, which set forth revised figures for PFI’s payroll and associated adjustments to the policy premium. No corresponding endorsement is appended to the copy of the 1988-89 policy that appeal’s in the record. I find this to be strong enough evidence that the parties read the Final Premium Clause as providing both a substantive right to change policy terms and a procedure for effecting such changes to concur with the result reached by the panel.1

. I agree with the panel majority that we need not decide whether the doctrine that ambiguities in a contract are construed against its drafter applies in this case. In discussing this issue in dicta, however, the majority observes that it is unclear how District of Columbia law would treat slate-mandated policy language. In fact, NCCI, the entity that drafted the policy language, appears to be dominated by the insurance industry. See William Hager, Data Value Depends on Accuracy, Not 'Independence', Natl Underwriter Prop. & Cas. Risk & Benefit Mgmt, Dec. 13, 1993 (stating that, of twenty-one seats on NCCI's board of directors, all but four are occupied by insurance industry representatives). The question, therefore, might be belter framed as how District of Columbia law would treat a policy whose use is mandated by law, but which was ultimately drafted by an entity with interests closely aligned with those of the insurer.