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Posts Tagged ‘Associate Judge Jenny Rivera’

One Per Occurrence Limit per Policy Period or One Per Occurrence Limit . . . Period? — New York Court of Appeals Reaffirms Noncumulation Clause Means what it Says  

December 2nd, 2014 Accumulation of Loss, Allocation, Allocation of Settlements, Anti-Stacking Provisions, Certificate or Treaty Limits, Claims Handling, Definition of Occurrence, Environmental Contamination Claims, Insurance Contracts, Insurance Coverage, Lead Paint Claims, New York Court of Appeals, New York State Courts, Noncumulation Clauses, Nuts & Bolts, Nuts & Bolts: Reinsurance, Reinsurance Allocation, Reinsurance Claims, Timing and Number of Occurrences, Trigger of Coverage Comments Off on One Per Occurrence Limit per Policy Period or One Per Occurrence Limit . . . Period? — New York Court of Appeals Reaffirms Noncumulation Clause Means what it Says  


Liability insurance policies written on a per occurrence basis generally provide coverage for losses that occur during the policy period and arise out of an “occurrence.” In general (and subject to policy definitions) “occurrence” means not only a temporally discrete accident or event, but also “continuous exposure” to the same harmful conditions. Such “continuous exposure” may occur during more than one consecutive policy period and cause what is, for all intents and purposes, indivisible, continuing injury or property damage. Examples of that type of continuous exposure resulting in continuing injury or damage include, among others, exposure of tenants to cracked or peeling lead paint in an apartment building for a period of years, exposure of persons to asbestos products, or exposure of groundwater to hazardous waste over a period of years, resulting in liability for clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (a/k/a “Superfund”).

Issues concerning the timing and number of occurrences, and per-policy allocation of loss, are particularly important in coverage cases where continuous exposure to conditions spans multiple policy periods and causes continuing, indivisible injury or property damage during those periods. The liability insurer’s indemnity obligation is limited to a specified limit per occurrence. In a continuous exposure case, the “occurrence” happens continuously over a period during which multiple consecutive policies are in effect.. There is one occurrence—sometimes referred to as a “continuing occurrence”—but it takes place during each of several consecutive policy periods. Does that mean that the insurer is obligated to pay a maximum of one per occurrence limit for all loss that occurs during its total coverage period, irrespective of how many policies it issued during that period, or must it pay up to one per occurrence limit per policy for whatever portion of the loss falls, or is deemed to fall, within that policy?

The answer to that question can have significant economic consequences for the liability insurer, and, of course, its reinsurers. If a liability insurer issues a landlord three, consecutive one-year-term policies with per occurrence limits of $X, and a tenant sustains injury attributable to continuous exposure to cracked or peeling lead paint, then, all else equal, the answer will determine whether the insurer’s maximum total indemnity obligation is $X or three-times that amount ($X multiplied by the number of policies involved).

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Arbitration and Mediation FAQs: Do Arbitrators Necessarily Exceed their Powers by Making an Award that Conflicts with the Unambiguous Terms of the Parties’ Agreement?

November 11th, 2014 Appellate Practice, Arbitration Agreements, Arbitration and Mediation FAQs, Arbitration as a Matter of Consent, Arbitration Practice and Procedure, Authority of Arbitrators, Awards, Confirmation of Awards, Contract Interpretation, Grounds for Vacatur, Judicial Review of Arbitration Awards, New York Court of Appeals, New York State Courts, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure, Small Business B-2-B Arbitration, United States Supreme Court Comments Off on Arbitration and Mediation FAQs: Do Arbitrators Necessarily Exceed their Powers by Making an Award that Conflicts with the Unambiguous Terms of the Parties’ Agreement?

We’ve addressed on many occasions the Enterprise WheelStolt-Nielsen/Oxford contract-based outcome review standard, which permits courts to vacate awards when they do not “draw their essence” from the parties’ agreement. Under that standard the “sole question is whether the arbitrators (even arguably) interpreted the parties’ contract, not whether [they] got its meaning right or wrong.” See Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 (2013) (parenthetical in original). (See, e.g.,  Loree Reins. & Arb. L. F. posts here, here, here, here, here & here.)

While exceedingly deferential, the standard is not toothless. Arbitration awards that disregard or contravene the clear and unmistakable terms of a contract are subject to vacatur under it. See Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 676 (panel had “no occasion to ascertain the parties’ intention in the present case because the parties were in complete agreement regarding their intent.”) (quotation omitted); United Paperworkers v. Misco, Inc., 484 U.S. 29, 38 (1987) (“The arbitrator may not ignore the plain language of the contract. . . .”). That’s because an arbitrator who makes an award that lacks “any contractual basis” has not even arguably interpreted the contract, and therefore has strayed from his or her task. See Oxford, 133 S. Ct. at 2069 (distinguishing Stolt-Nielsen); Stolt-Nielsen, 559 U.S. at 668-69, 672; Misco, 484 U.S. at 38.

An arbitrator whose award contradicts the unambiguous provisions of the parties’ contract may—but will not necessarily—exceed her powers. The answer depends on what the agreement says, what the award says and whether the award is at least arguably grounded in the agreement.

Whether or not a contract or contract term is “ambiguous” depends on whether it is reasonably susceptible to more than one meaning. See, e.g., White v. Continental Cas. Co., 9 N.Y.3d 264, 267 (2007); Greenfield v. Philles Records, 98 N.Y.2d 562, 570-71 (2002). When a contract is unambiguous, a court can interpret it as a matter of law; if it is ambiguous, its meaning is a question of fact for trial.

Can the Interpretation of the Arbitrators be “Unreasonable,” yet still Colorable or Plausible?

The legal standard for lack of ambiguity is that there be only one “reasonable” interpretation of the contract terms, not that there are no other at least barely plausible or barely colorable interpretations of what the contract might mean. In probably the majority of contract interpretation cases concerning alleged contract ambiguity, each litigant supports its position with good-faith, reasonable arguments for why the disputed contract terms are allegedly susceptible to one or more than one meaning. Whenever courts determine that a contract is unambiguous, that conclusion necessarily means that the losing party’s interpretation of the contract is unreasonable as a matter of law. Continue Reading »