                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-8-2003

Resnick v. Chubb Corp
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-3843




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Recommended Citation
"Resnick v. Chubb Corp" (2003). 2003 Decisions. Paper 284.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/284


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                                                     NOT PRECEDENTIAL

             UNITED STATES COURT OF APPEALS
                  FOR THE THIRD CIRCUIT


                           No. 02-3843




                         JOEL RESNICK,
                                   Appellant

                                v.

                   CHUBB CORPORATION;
         PACIFIC INDEM NITY INSURANCE, CO., INC.;
             FEDERAL INSURANCE COMPANY




          On Appeal from the United States District Court
             for the Eastern District of Pennsylvania
               D.C. Civil Action No. 02-cv-04729
                  (Honorable Harvey Bartle, III)




          Submitted Pursuant to Third Circuit LAR 34.1(a)
                          July 28, 2003

Before: SCIRICA, Chief Judge, RENDELL and AMBRO, Circuit Judges

                     (Filed September 8, 2003)




                   OPINION OF THE COURT
SCIRICA, Chief Judge.

       The District Court granted defendant’s motion to dismiss the complaint in this

insurance litigation. Plaintiff appeals. We will affirm.

                                             I.

       On January 18, 2000, Joel Resnick was in Brazil on a business trip. While riding

as a passenger in a taxi cab, Resnick was involved in an accident when the driver

allegedly had an epileptic seizure causing him to drive off the road and strike a pole.

Resnick sustained injuries from the accident.

       Resnick believed that the taxi driver was uninsured and sought uninsured motorists

benefits from his insurance providers. At the time of the accident, Resnick and his wife

had two insurance policies: a Masterpiece Auto Preference Policy issued by Federal

Insurance Co. and a Masterpiece Excess Liability Policy issued by Pacific Indemnity

Insurance Co., Inc. Chubb Corporation is the parent company of both Federal Insurance

and Pacific Indemnity.

       In a letter from the Chubb Group of Insurance Companies, Federal Insurance and

Pacific Indemnity denied the claims. The letter quoted language in the Federal Insurance

auto policy that “coverage applie[d] to a loss occurring anywhere in the United States of

America, its territories or possessions, Puerto Rico or Canada,” thus providing no

coverage for the accident. The letter also stated that, while the Pacific Indemnity excess

policy provided liability coverage anywhere in the world, uninsured motorists protection



                                             2
was limited to the geographical restrictions set forth in the Federal Insurance policy.

According to the letter, the Pacific Indemnity policy also provided no coverage for the

accident.

       Resnick filed suit in federal court against Federal Insurance, Pacific Indemnity and

Chubb, alleging breach of contract and breach of fiduciary duty, and seeking declaratory

relief. In response to defendants’ motions to dismiss, Resnick acknowledged that he was

not entitled to benefits under the Federal Insurance policy because of its geographical

restrictions and that he could not maintain his fiduciary duty claim against any of the

defendants.

       The District Court granted the motions to dismiss on all claims for all defendants.

On appeal, Resnick challenges the District Court’s judgment as to Pacific Indemnity, the

issuer of the excess policy. 1 He does not pursue claims against Federal Insurance or

Chubb.




   1
    We have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over the
District Court’s grant of defendant’s motion to dismiss. See Green v. Am. Online (AOL),
318 F.3d 465, 470 (3d Cir. 2003). “We accept all factual allegations in the complaint as
true, and we draw all reasonable inferences in the light most favorable to the plaintiff.
We will affirm only if no relief could be granted under any set of facts the plaintiff could
prove.” Id.

                                              3
                                            II.

                                            A.

      Resnick contends the Pacific Indemnity policy provides coverage for his accident

based on provisions detailing the policy’s uninsured motorists protection. The policy

provides:

              We cover damages for bodily injury a covered person is legally
      entitled to receive from the owner or operator of an uninsured or
      underinsured motorized land vehicle. We cover these damages in excess of
      the underlying insurance or the Required Primary Underlying Insurance,
      whichever is greater, if they are caused by an occurrence during the policy
      period, unless otherwise stated.
              ...
              This coverage will follow form.

The policy defines “follow form” to mean:

              We cover damages to the extent they are both covered under the
      Required Primary Underlying Insurance and, not excluded under this part of
      your Masterpiece Policy. Also, the amount of coverage, defense coverages,
      cancellation and “other insurance” provisions of this policy supersede and
      replace the similar provisions contained in such other policies. When this
      part of your policy is called upon to pay losses in excess of required primary
      underlying policies exhausted by payment of claims, we do not provide
      broader coverage than provided by such policies. When no primary
      underlying coverage exists, the extent of coverage provided on a follow
      form basis will be determined as if the required primary underlying
      insurance had been purchased from us.

      Resnick acknowledges that the first sentence of this provision supports Pacific

Indemnity’s argument that its policy only provides protection when there is coverage

under the required primary underlying insurance, and therefore because the underlying

Federal Insurance policy does not provide coverage due to geographical limitations, the

                                            4
Pacific Indemnity policy would not provide coverage either. But Resnick focuses on the

last sentence in the follow form definition. Resnick argues the last sentence provides that

when there is no underlying coverage, such coverage will be deemed to exist. As such,

Resnick contends that here the Pacific Indemnity policy still provides coverage, given the

assumed underlying coverage, even though no actual underlying coverage is provided by

the Federal Insurance policy.

       We believe that Resnick’s interpretation of the Pacific Indemnity policy is

incorrect. 2 The clear language is that the policy provides excess uninsured motorists

coverage when the underlying policy provides uninsured motorists coverage. The last

sentence in the follow form definition provides that, if the underlying policy was not

issued by a Chubb insurer and does not provide coverage, or if there is no underlying

insurance at all, the Pacific Indemnity policy will still provide excess coverage if




   2
    In diversity actions, the court must determine which state’s law applies. The District
Court held that, under both Pennsylvania and Kansas law, when an insurance policy is
clear and unambiguous, the policy must be enforced as made. See Med. Protective Co. v.
Watkins, 198 F.3d 100, 103 (3d Cir. 1999) (Under Pennsylvania law, “[w]hen the
language of an insurance contract is clear and unambiguous, a court is required to enforce
that language.”); Catholic Diocese v. Raymer, 840 P.2d 456, 459 (Kan. 1992) (Under
Kansas law, “[w]hen an insurance contract is not ambiguous, the court may not make
another contract for the parties. Its function is to enforce the contract as made.”). Thus,
there was no need for an extensive choice of law examination in analyzing Resnick’s first
argument. The parties do not challenge the District Court’s choice of law determination
and because there is no ambiguity in the Pacific Indemnity policy, we enforce the policy’s
language.
        As we discuss, Resnick’s second argument focuses on a specific Kansas statute.
As such, we analyze this matter under Kansas law.

                                              5
underlying coverage would have been provided by a Chubb insurer. 3 Because here the

underlying Federal Insurance policy does not provide coverage for the accident, the

Pacific Indemnity policy does not provide coverage. The last sentence in the follow form

definition plays no role here because the underlying insurance was issued by a Chubb

insurer. Thus, the District Court correctly concluded that coverage is not required under

the language of the Pacific Indemnity policy. 4

   3
    In like manner, the District Court read the last sentence in the follow form definition
to mean:

          [I]f underlying insurance was purchased from a company other than a
          Chubb subsidiary, and contained no coverage, the excess insurer would
          look to the underlying coverage that the insured would have had under a
          policy written by a Chubb subsidiary. If a Chubb subsidiary such as Federal
          would have provided underlying coverage, then there would be excess
          coverage by the Chubb excess carrier even though the non-Chubb
          underlying policy did not provide coverage.

Resnick v. Chubb Corp., No. 02-4729, at 6 (E.D. Pa. Oct. 2, 2002). Resnick disagrees
arguing that the Pacific Indemnity policy makes no reference to a distinction between
underlying policies issued by Chubb insurers and underlying policies issued by non-
Chubb insurers. But this distinction is made by the last sentence in the follow form
definition, which contrasts other underlying policies with underlying policies “purchased
from us.” Resnick offers no viable explanation for the reference to underlying insurance
“purchased from us.”
   4
       To support his argument, Resnick also cites to another policy provision that states:

                  Failure [to maintain the required primary underlying insurance], or
          failure of any of your primary underlying insurers due to insolvency or
          bankruptcy, shall not invalidate this part of your policy. In the event of any
          such failure, we shall only be liable in excess of the foregoing minimum
          amounts and to no greater extent with respect to coverages, amounts and
          defense costs than we would have been had this failure not occurred.


                                                6
                                              B.

         Resnick also contends that, even if the Pacific Indemnity policy does not provide

coverage for the accident, coverage is required by law. For this argument, Resnick points

to Kansas Statutes Annotated § 40-284(a), which requires that certain insurance policies

provide uninsured motorists coverage limits equal to liability coverage limits.5 Resnick

argues that because the Pacific Indemnity policy provides worldwide liability coverage,

the statute requires that the policy also provide co-extensive uninsured motorists coverage

and cover the accident here.




         But this provision provides no coverage here.
   5
       Kansas Statutes Annotated § 40-284(a) provides:

         No automobile liability insurance policy covering liability arising out of the
         ownership, maintenance, or use of any motor vehicle shall be delivered or
         issued for delivery in this state with respect to any motor vehicle registered
         or principally garaged in this state, unless the policy contains or has
         endorsed thereon, a provision with coverage limits equal to the limits of
         liability coverage for bodily injury or death in such automobile liability
         insurance policy sold to the named insured for payment of part or all sums
         which the insured or the insured’s legal representative shall be legally
         entitled to recover as damages from the uninsured owner or operator of a
         motor vehicle because of bodily injury, sickness or disease, including death,
         resulting therefrom, sustained by the insured, caused by accident and arising
         out of ownership, maintenance or use of such motor vehicle, or providing
         for such payment irrespective of legal liability of the insured or any other
         person or organization. No insurer shall be required to offer, provide or
         make available coverage conforming to this section in connection with any
         excess policy, umbrella policy or any other policy which does not provide
         primary motor vehicle insurance for liabilities arising out of the ownership,
         maintenance, operation or use of a specifically insured motor vehicle.

                                               7
          The flaw in Resnick’s argument is that Kansas Statutes Annotated § 40-284(a)

explicitly excludes excess and umbrella policies from its requirements. The statute

provides:

          No insurer shall be required to offer, provide or make available coverage
          conforming to this section in connection with any excess policy, umbrella
          policy or any other policy which does not provide primary motor vehicle
          insurance for liabilities arising out of the ownership, maintenance, operation
          or use of a specifically insured motor vehicle.

Kan. Stat. Ann. § 40-284(a).

          Nonetheless, Resnick contends the Pacific Indemnity policy does not fit into the

exclusion, arguing that the policy functions as both primary and excess insurance and thus

must adhere to the requirements of the statute. In support, Resnick cites to a provision in

the Pacific Indemnity policy explaining the extent of the liability coverage. The provision

states:

                 We cover damages a covered person is legally obligated to pay for
          personal injury or property damage, caused by an occurrence:
          • in excess of damages covered by the underlying insurance; or
          • from the first dollar of damage where no underlying insurance is required
          under this policy and no underlying insurance exists; or
          • from the first dollar of damage where underlying insurance is required
          under this policy but no coverage is provided by the underlying insurance
          for a particular occurrence, unless stated otherwise or an exclusion applies.

Resnick argues that because the policy provides liability coverage “from the first dollar of

damage” when no underlying coverage is available, it serves as primary insurance, as well

as excess insurance.




                                                8
       But the fact that the policy provides liability coverage “from the first dollar” in

certain instances does not render the exclusion in Kansas Statutes Annotated § 40-284(a)

inapplicable. Applying Kansas law, the United States District Court for the District of

Kansas explained the proper categorization of this type of insurance, which provides both

coverage in excess of damages covered by the underlying insurance and, at times, first

dollar coverage. Such “hybrid” coverage constitutes umbrella insurance. Fid. & Deposit

Co. of Md. v. Hartford Cas. Ins. Co., 189 F. Supp. 2d 1212, 1223 (D. Kan. 2002).

       [A]n umbrella policy generally provides two types of coverage: excess
       coverage and, when broader than the underlying policy, primary coverage.
       An umbrella policy provides standard excess insurance coverage that
       applies after a predetermined amount of primary coverage is exhausted.
       Additionally, an umbrella policy can provide broader coverage than the
       underlying policy, meaning that the umbrella policy will “drop down” to
       provide primary coverage.

Id. (citations omitted); see also Coleman Co., Inc. v. Cal. Union Ins. Co., 960 F.2d 1529,

1530 n.1 (10th Cir. 1992) (similarly defining umbrella insurance in suit under Kansas

law). Thus, the liability insurance provided by Pacific Indemnity might be better termed

“umbrella,” rather than “excess,” but, in any event, it is not primary insurance. Because

excess and umbrella policies are explicitly excluded from the requirements of Kansas

Statutes Annotated § 40-284(a), the statute does not require that the Pacific Indemnity




                                              9
policy provide uninsured motorists coverage to the same extent it provides liability

coverage. For this reason, there is no coverage here.6

                                            III.

       The Pacific Indemnity policy does not provide coverage for this accident nor is

such coverage required by law. For these reasons, we will affirm the District Court’s

order granting Pacific Indemnity’s motion to dismiss.




   6
    Resnick argues that included in the requirement that uninsured motorists coverage
limits must equal liability coverage limits is the requirement that the coverages be
geographically co-extensive. We need not address this argument because we hold the
Pacific Indemnity policy is excluded from the requirements of Kansas Statutes Annotated
§ 40-284(a).
       Also, there is no need to address Pacific Indemnity’s argument that, even if the
Kansas statute applied here, coverage would be denied because of a business pursuits
exclusion in the policy.

                                            10
TO THE CLERK:

           Please file the foregoing opinion.




                                                /s/ Anthony J. Scirica
                                                        Chief Judge

DATED: September 8, 2003




                                         11
