                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-18-2007

Reliance Ins Co v. Woodward-Clyde
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-1114




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"Reliance Ins Co v. Woodward-Clyde" (2007). 2007 Decisions. Paper 741.
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                                                                NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT


                                    No. 06-1114


                      RELIANCE INSURANCE COMPANY,
                               (in liquidation)

                                          v.

                    WOODWARD-CLYDE CONSULTANTS;
                   URS CORPORATION, as successor in interest
                        to Woodward-Clyde Consultants,

                                                   Appellants


                  On Appeal from the United States District Court
                            for the District of New Jersey
                                (D.C. No. 03-cv-03937)
                 District Court Judge: The Honorable Jose L. Linares


                                Argued June 28, 2007

              Before: BARRY, FUENTES, and GARTH, Circuit Judges.

                                (Filed: July 18, 2007)
                                       _______

Lauren Podesta
David J. McLean (ARGUED)
Latham & Watkins LLP
One Newark Center, 16th Floor
Newark, NJ 07101
Attorneys for Appellants
William G. Frey (ARGUED)
Virginia L. Hogben
Wolf, Block, Schorr & Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103
Attorneys for Appellee


                               OPINION OF THE COURT


FUENTES, Circuit Judge.

      Woodward-Clyde Consultants1 appeals the summary judgment ruling of the

District Court, which held that Woodward must pay Reliance Insurance Company

damages for unpaid retrospective insurance premiums. We affirm substantially for the

reasons expressed in the thorough and carefully reasoned oral opinion of the District

Court. We provide the following discussion only to underscore our agreement with that

decision.

      From 1992 to 1997, Reliance issued policies to Woodward for workers’

compensation and automobile insurance. These policies covered Woodward’s employees

in about forty states. Each year, Reliance and Woodward also signed separate Premium

Agreements, which set forth retrospective premium terms. Reliance acknowledges that it

did not file these Premium Agreements with state insurance regulators or otherwise gain

the approval of state insurance departments. In 1994, 1995, and 1997, Reliance sent



      1
     URS Corporation, also a defendant in this case, is the successor in interest to
Woodward.

                                            2
Woodward return premium checks totaling over $860,000, which Woodward accepted

and cashed. In 2003, Reliance issued Woodward an invoice for $634,861 for premiums

that Woodward had failed to pay under the Premium Agreements. Woodward refused to

pay and Reliance subsequently filed suit alleging breach of contract.

       Reliance moved for summary judgment in May 2004, and Woodward argued that

the Premium Agreements were unenforceable under state laws. The District Court ruled

in favor of Reliance, holding that (1) Woodward was estopped from arguing the legality

of the Premium Agreements, and (2) Woodward had failed to raise any legally valid

defenses. The District Court also awarded Reliance $879,653 in damages, the amount

owed by Woodward at the time Reliance moved for summary judgment.2

       According to New York law, which was applied by the District Court in this case,

“[e]quitable estoppel is grounded on notions of fair dealing and good conscience and is

designed to aid the law in the administration of justice where injustice would otherwise

result. . . . [O]nce a party accepts the proceeds and benefits of a contract, that party is

estopped from renouncing the burdens the contract places upon him.” E. Air Lines, Inc.

v. Ins. Co. of the State of Pa. (In re Ionosphere Clubs, Inc.), 85 F.3d 992, 999-1000 (2d

Cir. 1996). We agree with the District Court that Woodward accepted the benefits of the

Premium Agreements and cannot now refuse to pay the premiums it owes Reliance.



       2
        By order dated February 23, 2006, the District Court granted Reliance’s motion
to add prejudgment interest to the damages previously awarded. The total damages
therefore are $1,153,745.43.

                                               3
      Each year that the insurance policies were signed, Woodward’s insurance broker

insisted on the separate Premium Agreements. Woodward accepted the benefit of these

Agreements, most obviously by cashing more than $860,000 in return premium checks

sent by Reliance. We find unavailing Woodward’s argument on appeal that Reliance’s

payments could have resulted from annual audits provided for in the insurance policies.

In its brief to the District Court in opposition to summary judgment, Woodward conceded

that it had “accepted return premiums sent by Reliance,” JA 566, and it has cited to no

evidence suggesting these payments were the result of anything other than the terms of

the Premium Agreements.

      Woodward also appeals the District Court’s grant of summary judgment on

damages. It does not challenge Reliance’s calculation of damages, but argues that the

damages would have to be reduced if the Agreements were invalid in any states. Since,

as the District Court held, Woodward is estopped from arguing unenforceability, we will

affirm the District Court’s award of damages as well.3




      3
        Because we agree with the District Court on the issue of estoppel, we need not
discuss Woodward’s contentions that the Agreements violate the substantive laws of
some states. Likewise, we need not address Woodward’s arguments with regard to
choice of law, since it has conceded that applying Pennsylvania law would not affect our
analysis of estoppel. Finally, the District Court did not abuse its discretion in denying
Woodward further discovery; we do not believe any additional evidence would have
precluded summary judgment.

                                            4
