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An American International Group Inc. unit was obligated to provide only a total of $5 million in products/completed-operations coverage under its policy with a ski resort builder, not per project, says a federal appeals court, in ruling in its favor in a coverage dispute with a Chubb Ltd. unit.
Denver-based ski resort developer Intrawest Resort Holdings Inc. had obtained a policy from National Union Fire Insurance Co. of Pittsburgh, Pa., a unit of New York-based American International Group Inc., in 1999 that included $5 million in products/completed-operations coverage, according to Thursday’s ruling by the 11th U.S. Circuit Court of Appeals in Denver in National Union Fire Insurance Co. of Pittsburgh, Pa. v. Federal Insurance Co.
It also obtained a $10 million umbrella policy from Warren, Connecticut-based Federal Insurance Co., a Chubb unit; a $25 million excess policy from Reliance National Insurance Co., a unit of the now-liquidated Reliance Insurance Co.; and another $40 million excess policy from Federal, for a total tower of $80 million, according to the ruling.
Several years later, Intrawest was sued for construction defects on two different projects. National refused to pay more than $5 million aggregate toward these two products/completed-operation suits, so Federal paid the remaining settlement of $6.7 million, according to the ruling.
In January 2013, National sued Intrawest and Federal in U.S. District Court in Denver, seeking a declaratory judgment that its products/completed-operations coverage was limited to $5 million for all projects.
Federal filed counterclaims, seeking reimbursement and a declaratory judgment that AIG was contractually obligated to provide each Intrawest project with a separate $5 million aggregate limit for product/completed-operations claims.
The District Court ruled in AIG’s favor, which was affirmed by a unanimous three-judge appeals court panel.
Federal argued that an endorsement to the coverage established a $5 million aggregate per project, “meaning that each project could separately use up to $5 million in products/completed operations coverage,” according to the ruling.
The ruling said however, “this court must consider the contract between National and Interest in its entirety ... We find it unlikely that the entirety of the contract between National and Intrawest is contained in the four corners” of the endorsement.
“If we read the contract as a whole in a way that harmonizes all the language concerning products/completed-operations coverage,” the policy’s terms are not amended or waived, said the ruling, in concluding “that the Program unambiguously sets a $5 million products/completed-operations coverage aggregate for all locations,” and affirming the lower court’s decision.
A Florida federal court ruled Thursday that a unit of American International Group Inc. does not have to cover a Jacksonville maritime company that reportedly spent over $2.5 million defending an executive from antitrust charges.