Court Opinion

ID: 3172267
Source: CourtListenerOpinion
Date Created: 2016-01-26 20:00:50.009792+00
Date Added: 2024-06-11T11:58:58.219661
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 14-1682

EMCOR GROUP, INC.; THE        POOLE     AND KENT CORPORATION;
FORTI/POOLE  AND  KENT        LLC;      MONUMENTAL INVESTMENT
CORPORATION,

                Plaintiffs - Appellants,

           v.

GREAT AMERICAN INSURANCE COMPANY,

                Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     J. Frederick Motz, Senior District
Judge. (1:12-cv-00142-JFM)

Argued:   December 9, 2015                 Decided:   January 26, 2016

Before WILKINSON, KEENAN, and HARRIS, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Bernard London, LONDON FISCHER LLP, New York, New York,
for Appellants.   Michael A. Graziano, ECKERT SEAMANS CHERIN &
MELLOTT LLC, Washington, D.C., for Appellee.    ON BRIEF: James
Walsh, James T.H. Deaver, LONDON FISCHER LLP, New York, New
York, for Appellants. F. Joseph Nealon, ECKERT SEAMANS CHERIN &
MELLOTT LLC, Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

      EMCOR       Group,        Inc.      and        three      of     its     subsidiaries

(collectively,        EMCOR)      brought        this       action   against        the   Great

American      Insurance         Company       (Great        American),    which      provided

EMCOR with three successive commercial crime insurance policies

between     December       1,    2002     and    December       1,     2005.        The   three

policies    each    provided        coverage          for    certain     losses      sustained

because of employees’ fraudulent acts.                         EMCOR contends that the

policy in effect from December 1, 2004 to December 1, 2005 (the

2004 policy), obligated Great American to provide coverage for

EMCOR employees’ fraudulent acts that occurred between December

1, 1999 and December 1, 2003.                   The district court concluded that

the   unambiguous      language         of     the    2004     policy    obligated        Great

American only to provide coverage for losses sustained after

December 1, 2003.               Because we agree that the language of the

2004 policy is unambiguous, we affirm.

                                                I.

      The   facts     at    issue       are     not    disputed.         At    all    relevant

times,    EMCOR    maintained          successive       commercial        crime      insurance

policies,     which    provided         coverage        for    losses     sustained       as    a

result of “employee dishonesty.”                       From December 1, 1999 until

December    1,    2002,     those       policies        were    provided       to    EMCOR     by

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Factory Mutual Insurance Company, which is not affiliated with

Great American.

       As noted above, from December 1, 2002 until December 1,

2005, Great American provided EMCOR with three successive crime

insurance     policies.            At    the   time       one      Great    American     policy

became effective, the immediately prior policy was terminated.

At issue in the present appeal is the scope of coverage afforded

under the 2004 policy.

       The    2004        policy     provided          that     the    applicable       “policy

period” began on December 1, 2004, and ended on December 1,

2005.     The policy also stated that, by accepting the terms of

the    2004   policy,        EMCOR      agreed     that       the     “prior   [p]olicy”       in

effect    from      December       1,   2003      to    December       1,   2004   (the    2003

policy),      was     cancelled.            The        2004     policy      obligated     Great

American to pay for the “loss of, and damage to,” any money,

securities,         and     property      resulting           directly      from     “employee

dishonesty.”         That coverage provision was limited by Condition

14, which stated that Great American would pay “only for loss

that     [EMCOR]      sustain[s]         through         acts       committed      or    events

occurring     during        the    Policy      Period”        of    December    1,      2004   to

December 1, 2005.

       Condition 14, however, was “subject to” Condition 10, which

extended coverage as follows:

       10.    Loss Sustained During Prior Insurance

                                               3
      a.   If you, or any predecessor in interest, sustained
      loss during the period of any prior insurance that you
      . . . could have recovered under that insurance except
      that the time within which to discover loss had
      expired, we will pay for it under this insurance,
      provided:

           (1)     this insurance became effective at the time
           of   cancellation  or   termination  of  the  prior
           insurance; and

           (2)     this loss would have been covered by this
           insurance had it been in effect when the acts or
           events causing the loss were committed or occurred.

(Emphasis added.)

      In 2005, EMCOR notified Great American of losses of more

than $10 million resulting from fraudulent acts committed by

EMCOR employees between December 1, 1999 and December 1, 2003. 1

EMCOR submitted a claim under the 2004 policy for its losses.

Great American refused to pay the claim on the ground that the

claimed losses occurred outside the scope of coverage provided

by   the   2004   policy.     EMCOR   filed   suit,   alleging    that   Great

American     breached   its   coverage    obligations     under    the    2004

policy.

      Both parties filed partial motions for summary judgment,

asking the district court to determine the extent of the 2004

      1 EMCOR originally sought coverage for fraudulent acts
committed up to December 1, 2005.   In a separate decision, the
district court determined that EMCOR lacked an evidentiary basis
for its claim that it suffered “loss” between December 1, 2003
and December 1, 2005, and granted partial summary judgment in
favor of Great American. EMCOR does not appeal that decision.

                                      4
policy coverage.            Great American maintained that it only was

required to cover losses arising from acts that occurred during

the 2004 policy period or the 2003 policy period, to include

only    fraudulent     acts    that    occurred      after    December     1,    2003.

EMCOR argued that Great American was obliged to cover losses

occurring as early as 1999, when Factory Mutual provided EMCOR

with commercial crime insurance.                 The parties’ arguments were

based   on    their    differing      interpretations        of    the   terms   “this

insurance” and “any prior insurance” set forth in Condition 10.

       In determining the meaning of those terms, the district

court relied on the language used throughout the entire 2004

policy.      In particular, although Condition 10 initially provided

that Great American would pay for loss sustained during “any

prior insurance,” that obligation immediately was limited by the

proviso      that   payment    would    be    made   only    if    “this   insurance

became effective at the time of cancellation or termination of

the prior insurance.”          (Emphasis added.)          Furthermore, under the

heading “Cancellation of Prior Insurance” in the declarations

page, the 2004 policy provided: “By acceptance of this Coverage

Part, you give us notice cancelling prior Policy or Bond Nos.

CRP    524-49-86-01     [the    2003    policy],      the    cancellation        to   be

effective at the time [the 2004 policy] becomes effective.”

       Reading      those    provisions       together,      the    district     court

concluded that the plain language of the 2004 policy identified

                                          5
the 2003 policy as the “prior insurance” referenced in Condition

10.   Accordingly, the district court held that the language in

Condition        10   requiring     Great         American        to   pay     for     losses

sustained     under     “any     prior   insurance”          unambiguously           referred

only to the losses EMCOR may have sustained during the 2003

policy period, from December 1, 2003 to December 1, 2004.                                  The

district    court      therefore    granted         partial       summary      judgment     in

favor of Great American.           This appeal followed.

                                          II.

      On    appeal,      EMCOR     argues         that     the     phrase      “any     prior

insurance” in Condition 10 unambiguously refers to all prior

commercial crime insurance policies that EMCOR retained, even

those provided by Factory Mutual.                    EMCOR submits that the only

limitation       on   Great    American’s         coverage       for   losses      sustained

because     of    “employee      dishonesty”         was     that      EMCOR      maintained

continuous       commercial      crime    insurance         coverage,        so    that    one

policy     period     began    immediately         upon     the    termination        of   the

previous     policy     period.          In       EMCOR’s    view,      Great        American

therefore is obligated to provide coverage for all of EMCOR’s

losses from acts that occurred as early as 1999, because EMCOR

retained continuous commercial crime insurance from 1999 through

the 2004 policy period.

                                              6
     EMCOR argues alternatively that the meaning of “any prior

insurance” is ambiguous and therefore this Court should review

extrinsic    evidence     and   resolve    the   ambiguity       against    Great

American    as   the   contract   drafter.       We   disagree    with     EMCOR’s

arguments.

     We review a district court’s grant of a motion for summary

judgment de novo.       Millenium Inorganic Chem. Ltd. v. Nat’l Fire

Ins. Co. of Pittsburgh, Pa., 744 F.3d 279, 285 (4th Cir. 2014).

In   interpreting       insurance     contracts,      we   apply     the     same

principles applicable to any other contract.               Mitchell v. AARP

Life Ins. Program, N.Y. Life Ins. Co., 779 A.2d 1061, 1069 (Md.

2001). 2    As with any other contract, we begin with the policy’s

plain language.        MAMSI Life & Health Ins. Co. v. Callaway, 825
A.2d 995, 1005 (Md. 2003).          Courts “analyze the plain language .

. . according to the words and phrases in their ordinary and

accepted meanings as defined by what a reasonably prudent lay

person would understand them to mean.”                Kendall v. Nationwide

Ins. Co., 702 A.2d 767, 771 (Md. 1997).

     2 EMCOR argues for the first time on appeal that Connecticut
law, rather than the Maryland law applied by the district court,
applies to our interpretation of the 2004 policy.     We will not
consider this newly introduced argument.      See Muth v. United
States, 1 F.3d 246, 250 (4th Cir. 1993) (“As this court has
repeatedly held, issues raised for the first time on appeal
generally will not be considered.”).      Moreover, our decision
would be the same under either Maryland or Connecticut law.

                                       7
       When the language of an insurance contract is unambiguous,

a court must enforce its terms.               Megonnell v. United Serv. Auto.

Ass’n,    796 A.2d 758,    772    (Md.     2002).      “A    contract       is   not

ambiguous merely because the parties do not agree as to its

meaning.”       Floyd v. Mayor & City Council of Balt., 946 A.2d 15,

48 (Md. Ct. Spec. App. 2008).             Rather, an insurance policy term

only is “ambiguous if, to a reasonably prudent person, the term

is susceptible to more than one meaning.”                     Cole v. State Farm

Mut. Ins. Co., 753 A.2d 533, 537 (Md. 2000).

       We agree with the district court that the language at issue

in the 2004 policy is unambiguous.               Condition 10 obligated Great

American to provide coverage for losses based on acts occurring

during “any prior insurance” period, but only if “this insurance

became effective at the time of cancellation or termination of

the     prior   insurance.”           Nothing    in    that      limiting    language

suggests that “prior insurance” means any and all commercial

crime    insurance      EMCOR   held     for     all     time,    regardless      which

insurer provided coverage or when such coverage was provided.

Nor can the limiting clause in Condition 10 be read to suggest

that    “this    insurance”     refers     collectively          to   all   of    Great

American’s insurance policies, as opposed solely to the 2004

policy.     The declarations page of the 2004 policy makes clear

that the 2003 policy was the only “prior insurance” cancelled at

the time that the 2004 insurance became effective.                     Accordingly,

                                          8
the   language    of    Condition     10     regarding      “prior   insurance”

unambiguously refers only to the 2003 policy, while the term

“this insurance” refers only to the 2004 policy.

      Our conclusion is not altered by the general dictionary

definitions advanced by EMCOR of the term “insurance” as the

“state of being insured,” such that the use of “this insurance”

in Condition 10 would include all commercial crime insurance

policies EMCOR has had.         Within the four corners of the 2004

policy, the phrase “this insurance” unambiguously refers only to

the 2004 policy.        We will not read into the contract EMCOR’s

tortured     interpretation      of        the    2004      policy     language.

Additionally, because we conclude that the language of the 2004

policy is unambiguous, we do not address EMCOR’s alternative

arguments regarding the proper approach for resolving contract

ambiguity.

                                      III.

      We hold    that   the   2004   policy      extended   coverage    only   to

losses sustained as a result of fraudulent conduct occurring

during the 2003 and 2004 policy periods.                 We therefore affirm

the judgment of the district court.

                                                                        AFFIRMED

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