     10-797-cv
     Fireman’s Fund Ins. Co. V. TD Banknorth Ins. Agency

                          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 Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 13th day of August, two thousand thirteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                GUIDO CALABRESI,
 9                ROBERT D. SACK,
10                              Circuit Judges.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       FIREMAN’S FUND INSURANCE COMPANY,
14                Plaintiff-Counter-Defendant-
15                Appellee,
16
17                    -v.-                                               10-797-cv
18
19       TD BANKNORTH INSURANCE AGENCY
20       INCORPORATED, f/k/a MORSE, PAYSON &
21       NOYES INSURANCE,
22                Defendant-Counter-Claimant-
23                Appellant.
24       - - - - - - - - - - - - - - - - - - - -X
25
26       FOR APPELLANT:                        FREDERICK M. KLEIN (Robert M.
27                                             Sullivan, on the brief), The
28                                             Sullivan Law Group LLP, New
29                                             York, New York.
30
 1   FOR APPELLEE:                CHRISTOPHER B. WELDON (Darren P.
 2                                Renner, Debra M. Krebs, on the
 3                                brief), Keidel, Weldon &
 4                                Cunningham, LLP, New York, New
 5                                York.
 6
 7        Appeal from a judgment of the United States District
 8   Court for the District of Connecticut (Droney, J.) .
 9
10        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
11   AND DECREED that the judgment of the district court be
12   AFFIRMED.
13
14        In 2008, Appellant TD Banknorth Insurance Agency (“TD
15   Banknorth”) and Appellee Fireman’s Fund Insurance Company
16   (“Fireman’s Fund”) brought competing claims for declaratory
17   judgment as to ownership of certain settlement funds being
18   held in escrow. The dispute arose after a client sued TD
19   Banknorth for alleged errors and omissions, and TD Banknorth
20   sought coverage from its professional liability insurer,
21   Fireman’s Fund. TD Banknorth paid its deductible
22   ($150,000); and Fireman’s Fund contributed an additional
23   $204,000, thus settling these claims for a combined
24   $354,000.1 The parties later obtained a $208,000 settlement
25   of their own from two third parties and placed the amount in
26   escrow. TD Banknorth now seeks to recover the cost of its
27   deductible from these settlement proceeds, and Fireman’s
28   Fund seeks to cover its contribution, plus defense costs.
29   The facts are recited in detail in our 2011 opinion in this
30   case. See Fireman’s Fund Ins. Co. v. TD Banknorth Ins.
31   Agency Inc., 644 F.3d 166, 168 (2d Cir. 2011).
32
33        TD Banknorth relies principally on the “make whole”
34   doctrine, which provides that “the insurer may enforce its
35   subrogation rights only after the insured has been fully
36   compensated for all of its loss.” United States v. Lara,
37   No. 3:08–cr–00169(VLB), 2009 WL 3754069, at *2 (D. Conn.
38   Nov. 6, 2009) (citing Wasko v. Manella, 269 Conn. 527, 849
39   A.2d 777, 784 (2004)). On cross motions for summary
40   judgment, the United States District Court for the District
41   of Connecticut (Droney, J.) ruled, inter alia, that the make


         1
             These figures are rounded to the nearest thousand.
                                    2
 1   whole doctrine does not apply to reimbursement of an
 2   insured’s deductible, and entered judgment for Fireman’s
 3   Fund.2 See Fireman’s Fund Ins. Co. v. TD Banknorth Ins.
 4   Agency Inc., 3:08-CV-364CFD, 2010 WL 420041, at *2 (D. Conn.
 5   Feb. 1, 2010).
 6
 7        On appeal, we certified the following question to the
 8   Connecticut Supreme Court: “Are insurance policy deductibles
 9   subject to Connecticut’s make whole doctrine?” Fireman’s
10   Fund Ins. Co., 644 F.3d at 172-73. On July 30, 2013, the
11   Supreme Court confirmed that the make whole doctrine is the
12   default rule in Connecticut, and answered the certified
13   question in the negative:
14
15            [W]e find persuasive the analogy that the
16            deductible is, in effect, akin to “a primary layer
17            of self-insurance underlying the [liability
18            insurance] policy, which policy is, as a practical
19            matter, the equivalent of an excess policy . . . .
20            [W]hen there is a recovery, the ‘excess’ level of
21            insurance is entitled to recover before a lower
22            level of insurance/deductible can recover. . . .
23
24                 Accordingly, we conclude that the equitable
25            considerations supporting the make whole doctrine
26            are inapplicable to deductibles. If we were to
27            decide otherwise, as TD Banknorth urges, we would
28            effectively disturb the contractual agreement into
29            which TD Banknorth and Fireman’s Fund entered,
30            thereby creating a windfall for TD Banknorth for a
31            loss that it did not see fit to insure against in
32            the first instance when it contracted for lower
33            premium payments in exchange for a deductible.
34
35   Fireman’s Fund Ins. Co. v. TD Banknorth Ins. Agency, Inc.,
36   309 Conn. 449, 468 (2013) (internal citations omitted).
37

         2
           In our 2011 opinion, we rejected the district court’s
     alternative basis for its ruling--that the subrogation
     clause in the parties’ insurance agreement abrogated
     Connecticut’s make whole doctrine. See Fireman’s Fund Ins.
     Co. v. TD Banknorth Ins. Agency Inc., 644 F.3d 166, 169-71
     (2d Cir. 2011).
                                  3
 1        TD Banknorth therefore may not claim reimbursement for
 2   the cost of its deductible until Fireman’s Fund has been
 3   repaid in full. Because the expenses incurred by Fireman’s
 4   Fund, including both damages and defense costs,3 exceed the
 5   $208,000 of settlement funds being held in escrow, Fireman’s
 6   Fund is entitled to the entire amount.
 7
 8        Accordingly, we hereby AFFIRM the judgment of the
 9   district court.
10
11
12
13                              FOR THE COURT:
14                              CATHERINE O’HAGAN WOLFE, CLERK
15
16
17




         3
           Pursuant to the parties’ contract, the deductible
     covers both damages and defense costs. A 67.
                                  4
