Court Opinion

ID: 8604087
Source: CourtListenerOpinion
Date Created: 2022-11-24 01:39:15.28129+00
Date Added: 2024-06-11T16:55:14.173024
License: Public Domain

SUMMARY ORDER
Familiarity by the parties is assumed as to the facts, the procedural context, and the specification of appellate issues. This reinsurance collection dispute was brought by plaintiff Travelers Casualty Company (“Travelers”) against defendants ACE *41American Reinsurance Company (“ACE”) for breach of contract relating to ACE’s refusal to pay Travelers’ outstanding billings on three three-year facultative reinsurance certificates (“Certificates”). The Certificates provide reinsurance for excess insurance policies (“Policies”) issued by Travelers. The parties are in agreement that the underlying Policies provide coverage up to certain annual aggregate limits. They disagree, however, about whether the aggregate liability limits of the Certificates also apply on an annual basis, or whether the Certificates provide for a single aggregate limit for the three-year period of coverage. Obviously, an annual aggregate limit significantly enlarges ACE’s liability exposure.
The Certificates contain a “follow the form” clause that states that the terms and conditions of liability of the Certificates shall “follow” those of the Policies, “except as otherwise specifically provided.” Item 2 of the Certificate Declarations states the amount of liability and the application of the liability limits under the Policies; Item 4 states the amount of liability and the application of the liability limits under the Certificates. Both use the term “each occ.-agg.” to describe how the limits are applied. Neither “occurrence” nor “aggregate” is defined in the Certificates. The terms are defined, however, in the Policies. Under the Policies, the “aggregate” amount applies on an annual basis.
ACE argues that, because the Certificates do not contain the term “annual,” the district court erred in finding that the aggregate limits of the Certificates apply on an annual basis. ACE contends that the plain meaning of “aggregate” is a single aggregate limit. We disagree. Item 2 of the Certificates uses “agg” to describe the indisputably annualized aggregate limit of the Policies. The same term is used in Item 4 to describe the aggregate limit of the Certificates. The use of the term “agg,” therefore, does not “otherwise specifically provide” that the aggregate liability limits in the Certificates do not “follow the form” of the Policies.
The follow the form clause required the district court to presume that the liability limits of the Certificates applied in a manner concurrent with those of the Policies. That presumption is not a matter of law, but a matter of simple contract interpretation. Because the Certificates do not contain terms that specifically provide otherwise, the presumption of concurrence created by the follow form clause is not rebutted. The district court was therefore correct in holding that the aggregate limits of the Certificates, like those of the Policies, apply on an annualized basis.
Accordingly, for the reasons set forth above, the judgment of the District Court is hereby affirmed.