     12-0181-cv
     St. Paul Fire & Marine Ins. Co. v. Novus Int’l, Inc.

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 7th day of December, two thousand twelve.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                JOHN M. WALKER, JR.,
 9                              Circuit Judge,
10                SANDRA DAY O’CONNOR,
11                              Associate Justice (retired).*
12
13       - - - - - - - - - - - - - - - - - - - -X
14       ST. PAUL FIRE & MARINE INSURANCE CO.,
15                Plaintiff-Counter-Defendant-
16                Appellee,
17
18                    -v.-                                               12-0181-cv
19
20       NOVUS INTERNATIONAL, INC.,
21                Defendant-Counter-Claimant-
22                Appellant.
23       - - - - - - - - - - - - - - - - - - - -X


                *
                The Honorable Sandra Day O’Connor, Associate Justice
         (retired), of the United States Supreme Court, sitting by
         designation.
                                                  1
 1
 2   FOR APPELLANT:         MICHAEL G. BIGGERS, Bryan Cave LLP,
 3                          St. Louis, Missouri.
 4
 5   FOR APPELLEE:          JAMES W. CARBIN (P. Ryan McElduff,
 6                          on the brief), Duane Morris LLP,
 7                          Newark, New Jersey.
 8
 9        Appeal from a judgment of the United States District
10   Court for the Southern District of New York (Jones, J.).
11
12        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
13   AND DECREED that the judgment of the district court is
14   AFFIRMED.
15
16        Defendant-Counter-Claimant-Appellant Novus
17   International, Inc. (“Novus”) appeals from the judgment of
18   the district court granting summary judgment to Novus’s
19   insurer, St. Paul Fire & Marine Insurance Company (“St.
20   Paul”). Novus sought reimbursement from St. Paul for goods
21   damaged by flooding at a warehouse in Des Moines, Iowa, but
22   the district court held that the damage was not covered
23   under the “Accumulation Clause” of Novus’s policy. We
24   assume the parties’ familiarity with the underlying facts,
25   the procedural history, and the issues presented for review.
26
27        We review an order granting summary judgment de novo,
28   drawing all factual inferences in favor of the non-moving
29   party. Costello v. City of Burlington, 632 F.3d 41, 45 (2d
30   Cir. 2011). Likewise, we review de novo a district court’s
31   interpretation of the terms of a contract, including
32   insurance agreements. Fireman’s Fund Ins. Co. v. TD
33   Banknorth Ins. Agency Inc., 644 F.3d 166, 169 (2d Cir.
34   2011).
35
36        Novus’s insurance policy, an “ocean cargo” policy,
37   generally covered goods in transit. It contained, however,
38   a “Warehouse Endorsement,” which specifically insured, up to
39   a limit of $2 million, goods stored at the PDM Warehouse in
40   Des Moines, Iowa. The policy also contained an
41   “Accumulation Clause,” which provided that if goods insured
42   under the policy accumulated because of circumstances
43   “beyond the control of” Novus’s corporate “risk manager or
44   equivalent,” then St. Paul would be liable for the full
45   amount at risk, provided that Novus gave notice to St. Paul
46   of the accumulation as soon as practicable after the
47   accumulation became known to Novus’s corporate risk manager.

                                  2
 1   The district court was presented with two questions: (1) did
 2   the Accumulation Clause apply to coverage under the
 3   Warehouse Endorsement; and (2) did the Accumulation Clause
 4   apply to the specific damage at issue in this case? The
 5   district court determined that the Accumulation Clause did
 6   apply to coverage under the Warehouse Endorsement, but then
 7   held that the accumulation at the PDM Warehouse was not
 8   beyond the control of Novus’s corporate risk manager. For
 9   the reasons discussed below, we affirm the district court’s
10   determinations.
11
12   [1] In general, “New York insurance law provides that an
13   insurance contract is interpreted to give effect to the
14   intent of the parties as expressed in the clear language of
15   the contract.” Parks Real Estate Purchasing Grp. v. St.
16   Paul Fire & Marine Ins. Co., 472 F.3d 33, 42 (2d Cir. 2006)
17   (internal quotation marks omitted). “When the provisions
18   are unambiguous and understandable, courts are to enforce
19   them as written.” Id. “[I]t is settled that in construing
20   an endorsement to an insurance policy, the endorsement and
21   the policy must be read together, and the words of the
22   policy remain in full force and effect except as altered by
23   the words of the endorsement.” Cnty. of Columbia v. Cont'l
24   Ins. Co., 83 N.Y.2d 618, 628 (1994).
25
26        Here, the Warehouse Endorsement explicitly provides
27   that it forms part of the overall ocean cargo policy, and
28   operates as an extension of that coverage. The Warehouse
29   Endorsement must be read as part of the overall policy. In
30   addition, the Accumulation Clause explicitly provides for
31   coverage beyond the limits expressed elsewhere in the
32   policy. As the district court determined, the Accumulation
33   Clause operates to provide coverage beyond the $2 million
34   limit expressed in the Warehouse Endorsement if its
35   conditions are met.
36
37   [2] The question, then, is whether the district court
38   correctly determined that Novus did not satisfy the
39   requirements of the Accumulation Clause. The Accumulation
40   Clause protects only accumulation “by reason of any
41   interruption of transit or circumstance beyond the control
42   of [Novus]’s corporate risk manager or equivalent, or by
43   reason of any casualty . . . .” J.A. 94. Novus argues that
44   “the text [of the Accumulation Clause] did not require those
45   circumstances to be beyond the control of Novus,” but only
46   “beyond the control of the corporate risk manager, an
47   individual.” Appellant’s Br. 6. Novus argues further that

                                  3
 1   the circumstances were not “limited to ‘unforeseeable’ or
 2   even ‘unforeseen’ circumstances.” Id. at 5.
 3
 4        We agree with the district court that Novus’s
 5   interpretation “strains the Policy’s language beyond its
 6   reasonable and ordinary meaning.” Mem. & Order, at 19 (Dkt.
 7   No. 57) (Dec. 28, 2011) (internal quotation marks and
 8   alterations omitted). Novus essentially argues that,
 9   despite paying a premium for coverage up to $2 million,
10   Novus is entitled to receive up to $20 million due to its
11   corporate risk manager’s failure to devise effective risk
12   monitoring procedures. Implementing such procedures,
13   however, is the job of a risk manager and therefore hardly
14   beyond his control.
15
16        Accordingly, as the district court correctly noted,
17   “the Warehouse Endorsement is the only clause under the
18   Policy that covers Novus’[s] PDM Warehouse Claim. Since
19   coverage . . . is clearly and expressly limited to $2
20   million . . . and the parties agree that this sum has
21   already been paid by St. Paul to Novus, . . . St. Paul has
22   satisfied its obligations to Novus . . . .” Id. at 20.
23
24        Finding no merit in Novus’s remaining arguments, we
25   hereby AFFIRM the judgment of the district court.
26
27
28                              FOR THE COURT:
29                              CATHERINE O’HAGAN WOLFE, CLERK
30
31




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