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A request for declaration relief is all that is needed



Plaintiff Pilkington North America, Inc. ("Pilkington"), a Delaware manufacturer, moved to dismiss counterclaims brought by defendant Mitsui Sumitomo Insurance Company of America ("MSI" or "MSI-US" ), a New York insurance company. In Pilkington North America, Inc. v. Mitsui Sumitomo Insurance Company Of America and AON Risk Services Central, Inc., No. 18 Civ. 8152 (JFK), USDC, District of New York (November 10, 2020) USDC to resolve competing claims for declaratory relief.

Background

Pilkington incurred a loss of between $ 60 million and $ 100 million when a tornado ("the Tornado") struck its glass factory in Ottawa, Illinois on or about February 28, 2017. Pilkington is seeking compensation for the loss according to a commercial real estate and business termination insurance policy issued by MSI to Pilkington's parent company and other subsidiaries, the “NSG Group”. also regarding damages against its insurance broker during the period in question, the defendant AON Risk Services Central, Inc. ("AON" or "AON-US") for allegedly providing incorrect advice during the mediation of the insurance policy, which enabled MSI's fraud [19659005] Pilkington claims that MSI incorrectly reported on the changes they proposed through a revision ("approval") of an active around MSI had issued to the NSG group for the policy period 2015-2016 ("US local policy". Or the "policy"). MSI proposed the amendments to AON, which did not notify Pilkington that, in addition to changing certain currency valuations in the policy, the approval also approved the wording of a sublimit applicable to certain types of wind gusts. AON failed to inform Pilkington that the approval would significantly reduce coverage for windstorms such as the Tornado. The grave in Pilkington's claim is about his accusations that MSI represented to AON that the approval would only change currency valuations when in fact it also reduced the types of losses that MSI was obliged to compensate; and about AON's negligence in carelessly helping to trick Pilkington into agreeing to the approval and incorporating the same fraudulently revised terms into next year's insurance, which applied when Tornado struck. the court to declare that the coverage for losses due to a storm in the United States is subject to a sublimit of $ 15 million and prevents Pilkington from trying to recover additional amounts covered by the agreed global program.

The global program was developed and marketed by AON-UK, and it consists of the coherent contracts designed to enable the NSG Group to save money by self-insuring many of NSG's businesses.

The global program was in effect when Tornado struck limited to $ 15 million. The NSG Group's total coverage for damage due to a storm in the United States. As is customary between the parties, AON-US acted as Pilkington's agent for the negotiation and placement of US local policies. During or around March 2016, AON-US prepared and transmitted a 2016-2017 U.S. Local Policy Policy to MSI-US. In accordance with the terms negotiated and agreed upon at the global level, AON-US filed a $ 15 million subdivision ("Windstorm Sublimit"). MSI-US cited the requested coverage, and AON-US then instructed MSI-US to issue the policy, noting that AON-US had "combined [MSI-US’s] quotation with our UK instructions". MSI-US issued the US local policy with Windstorm Sublimit of $ 15 million, which was in line with the Master Policy for windstorms in the US every year since 2009, when the MSI Group's companies first participated in the global program.

In early 2017, Tornado struck Pilkington's facility. MSI paid Pilkington $ 15 million in satisfaction of its US local policy coverage obligations, after which Pilkington sued to recover the remainder of its losses from the Tornado.

MSI claims that AON's 2016 market submission, which included $ 15 million in Windstorm Sublimit, and AON's accompanying statement that it had "combined" the offered policy terms with instructions from AON-UK, constitute false statements as Pilkington now claims that it did not knowingly agree to the $ 15 million Windstorm Sublimit. Furthermore, MSI claims that it is entitled to a fair exemption against Pilkington because MSI rightly relied on AON's representations when it issued an insurance policy according to which Pilkington is now trying to hold MSI liable for tens of millions of dollars.

MSI's counterclaim does not claim all the facts that give rise to a conclusion that AON's statements were false when they were made. Contrary to MSI's definitive claims, Pilkington's current claims do not falsify AON's previous statements in which Pilkington, as here, does not deny that AON's proposal included a $ 15 million Windstorm Sublimit, nor that it agreed to the US one. local politics 2016-2017 as written. In addition, MSI fails to assert unfair or unfair prejudices.

If Pilkington succeeds in its claims against MSI, there will be no injustice or unfair prejudice against MSI where Pilkington is the aggrieved party entitled to exemption due to MSI's wrongdoing.

USDC noted that insurance contracts involve unique promises, including some of the confidence of a policyholder to its insurer – here Pilkington's confidence that if it paid an agreed premium to MSI each year, MSI would compensate Pilkington for certain losses that may or may not arise. MSI offers no facts to support the conclusion that a sophisticated insurance company like itself, which repeatedly tried to substantially change the terms of the policyholder's insurance contract, in any way innocently misled the policyholder into agreeing to something MSI did not intend.

The almost identical statement made by MSI already allows the Court to declare all relevant rights and obligations of the parties with respect to the insurance in force at the time of the Tornado, including Windstorm Sublimit which is at the heart of this dispute.

In fact, MSI will have every opportunity to make any counter-arguments about the global program, when assessing whether Pilkington is entitled to the explanatory relief it seeks. Consequently, the right to change would be meaningless and the counterclaim would be rejected with prejudice.

Declarative relief is an important tool used by insurers and insured persons to resolve disputes over coverage. In this case, both parties sought tax relief for the $ 15 million lower limit for windstorms. The USDC, with a Solomon-like decision, found that it did not have to deal with two competing claims for tax relief when one was sufficient for the insurer and the insured to resolve the dispute. What seemed complicated turned out to be simple and straightforward: Did the insured agree on the $ 15 million sub-limit or was the insured or insurer cheated by the agent? The trial will be shorter and solve the problem.


© 2020 – Barry Zalma. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 52 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become insurance claims staff.

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