pacific employers ins co v. global reinsurance corp of america appeals complaint

8/4/2019 PACIFIC EMPLOYERS INS CO v. GLOBAL REINSURANCE CORP OF AMERICA Appeals Complaint

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UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF PENNSYLVANIA

PACIFIC EMPLOYERS INSURANCECOMPANY,

Plaintiff,IVIL ACTION NO.

V .

GLOBAL REINSURANCE CORPORATION OFAMERICA (FORMERLY KNOWN ASOMPLAINTCONSTITUTION REINSURANC ECORPORATION),

Defendant.

Plaintiff, Pacific Employers Insurance Company ("PEIC") by and through its attorneys,

White and Williams, LLP, and by way of Complaint against D efendant G lobal Reinsurance

Corporation of America (formerly known as Constitution Reinsurance Corporation) ("Global")

avers as follows:

PARTIES

1. PEIC is a Pen nsylvania corporation with its principal place of business located a t

436 Walnut Street, Philadelphia, Pennsylvania 19106.

2. Global is a New Y ork corporation with its principal place of business located a t

Times Square Towe r, 7 Times Square, 37 t h Floor, New York, NY 10036.

JURISDICTION AND VENU E

3. This Court has subject ma tter jurisdiction pursuant to 28 U.S.C . § 1332(a)(1)

because the amount in controversy exceed s $75,000 exclusive of interest and costs and because

there is complete d iversity of citizenship in that Global is a New Y ork corporation with its

Case 2:09-cv-06055-RK Document 1 Filed 12/18/09 of 12



principal place of business in Ne w Y ork, New York, and PE IC is a Pe nnsylvania corporation

with its principal place of business in Philade lphia, Pennsylvania.

4. This Court has personal jurisdiction over G lobal because, upon information and

belief, Global regularly conducts business and ha s continuous and system atic contacts with the

Com monw ealth of Pennsylvan ia, including but not limited to contacts relating to the claims that

are the subject of this action.

5. Venu e is proper in this Court because PEIC 's principal place of business is

located in this district and a substantial part of the eve nts giving rise to this action occurred in

this district. 28 U .S.C. § 1391(a)(2).

NATURE OF THE ACTION

6. This action arises out of and se eks dam ages and other relief in connection with

Global's breach of a reinsurance contract.

BACKGROUND

7. In a re insurance contract, a reinsurer agrees to indemnify the re insured against all

or part of the loss that the re insured m ay sustain unde r an insurance policy or policies the

company has issued, in exchange for a portion of the premium paid to the reinsured for the

insurance policies.

8. A "facultative" reinsurance contract reinsures a spec ific insurance policy or risk,

as opposed to "treaty" reinsurance, which reinsures multiple insurance policies or an entire book

of business written by the reinsured .

9. Where reinsurance is written on an "excess of loss" basis, the reinsured's loss

must excee d a ce rtain retention before the reinsurer's obligation begins.

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THE CER TIFICATE OF FACUL TATIVE REINSURANCE

10. For the period June 1, 1980 to June 1, 1981, PEIC en tered into a facultative

reinsurance contract with Global (then Constitution Reinsurance Corporation), Certificate

Numbe r 68224, pursuant to which Global, as the re insurer, agreed to reinsure, on an e xcess of

loss basis, an umbre lla comme rcial liability policy, numbe r XM O-00364 9, that PEIC issued to

the Buffalo Forge Com pany of Buffalo, New Y ork (the "Facultative Certificate"). A true and

correct copy of the Facultative Ce rtificate is attached he reto as Exhibit A.

11. Buffalo Forge had obtained a numbe r of insurance policies from several

insurance compa nies. Policy number XM O-0036 issued to Buffalo Forge by P EIC attached

above one of those other insurance policies.

12. Under the Facultative Certificate, Global agreed to reimburse up to $1 million

part of $4 million (or 25% o f $4 million) of any PEIC loss on the Buffalo Forge policy that

exceeds $1 million, for any single occurrence or in the aggregate. See Exh. A at 1.

13. The Facultative Certificate also obligated Global to reimburse PEIC for Global's

proportion of certain expenses incurred in connection with loss under PEIC's policy with Buffalo

Forge , including investigation costs, legal costs, and inte rest, in the same ratio that Global's loss

payment bears to PEIC's gross loss payment. See Exh. A at 2, para. E.

14. As with many reinsurance contracts, the Facultative Certificate provided that

Global's liability "shall follow that of [PEIC ] and shall be sub ject in all respects to all the term s

and conditions of [PEIC's] policy ...." Exh. A. at 2, para. A.

15. The Facultative Certificate also contains "follow the settlements" language which

provides that all of PEIC's loss settlements under the Buffalo Forge policy "shall be binding"

upon Global. Exh. A at 2, para. E.




THE UNDERL YING ASBESTOS CLAIMS AND PEIC'S LOSS PAYME NTS

16. After the Facultative Certificate w as executed , Buffalo Forge and its corporate

successors were name d as d efendants in many asbestos products personal injury claims and

lawsuits. These claims and lawsuits were tende red to B uffalo Forge's insurers for defe nse and

indemnity.

17. Eventually, the insurance policy below PEIC's policy exhausted , and P EIC be gan

to participate in defense and indemnity of Buffalo Forge and its corporate successors, pursuant to

the terms of Policy number XMO-003649.

18. PEIC participated in the d efense and inde mnity of Buffalo Forge according to the

terms of a "De fense and Inde mnity Agreem ent" betwee n Buffalo Forge's corporate successors

and their remaining insurers with unexhausted insurance policies.

19. PEIC's obligations under the D efense and Ind emnity Agreem ent were und ertaken

after a good faith, reasonable and business-like assessme nt of PEIC's duties unde r the um brella

liability policy and possible coverage defenses. The allocation of responsibility for defense and

indemnity dollars among Buffalo Forge's insurers within the agree me nt was the product of good

faith, reasonable and business-like negotiations among the parties, and gave due consideration to

the terms of the insurance policy PEIC issued to Buffalo Forge.

PEIC'S REINSURANCE BILLING TO G LOBAL

20. By Septem ber of 2009, PEIC's indem nity payme nts on behalf of Buffalo Forge

excee ded the $1 m illion retention on the Facultative Certificate.

21. Subseque nt to earlier reporting, PEIC issued a billing to Global pursuant to the

Facultative Certificate on or around Se ptember 2, 2009.

I n




22.long with the billing, PEIC subm itted supporting information and p ortions of its

investigative claim file.

23. Following receipt of the billing, Global requested additional documentation. In

response, Century provided add itional docume ntation from its claim file on seve ral occasions.

24. Global also reque sted to re view for itself Century's claim file, and w as provided

the opportunity to d o so. Following that review, copies of ad ditional docume nts as requested by

Global were provided.

25. The Facultative Certificate provides that, "[u]pon receipt of a definitive statement

of loss, the Reinsure r shall promptly pay its proportion of such loss as se t forth in the

[Facultative Ce rtificate]."

26. Global has not pa id PEIC 's billing.

27. Currently, Global owes PEIC $559,072 under the Facultative Certificate for its

share of de fense and indemnity payments in connection with the unde rlying asbestos claims

against Buffalo Forge.

COUNT ONE

Breach of Contract

28. PEIC repe ats and incorporates herein by reference the allegations contained in the

foregoing paragraph s above a s if fully set out at length.

29. PEIC and Global entered into the Facultative Certificate.

30. PEIC has fully performed its obligations under the Facultative Certificate and has

properly billed Global for amounts due thereunder.

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31 .n breach o f the Facultative Ce rtificate an d in violation of its duty of utmost good

faith to PEIC, Global has refused to pay PEIC 's billings.

WH EREFO RE, PEIC de mands that judgment be entered in its favor and against Global

as follows:

(a ) Awarding PE IC mone y dam ages plus interest with respect to outstanding

billings;

(b ) For attorneys' fees, interest and costs of suit; and

(c ) Such other relief the Court dee ms appropriate.

COUNT TWO

Declaratory Relief

32. Plaintiff repeats and incorporates herein by reference the allegations contained in

the foregoing para graphs above as if fully set out at length.

33. An actual controve rsy exists with respect to the parties' rights under the

Facultative Ce rtificate, including but not limited to, the obligations of G lobal to pay past, current

and future billings in a timely manne r.

34 .EIC is entitled to a dec laration of its rights unde r the Facultative Certificate.

0




WH EREFO RE, PEIC de mands that judgment be entered in its favor and against Global

as follows:

(a ) D eclaring that Global is obligated to pay past, current and future billings

from PEIC in a timely mann er;

(b ) Awarding PEIC attorneys' fees, interest and costs of suit; and

(c ) Award ing PEIC such other relief the Court dee ms appropriate.

Respectfully submitted,

WHITE AND W ILLIAMS LLP

BY:

hristine G. Russell (Pa. Id(No. 76915)Brendan D . McQuiggan (Pa. Id. No. 206567)1650 Market StreetOne L iberty Place, Suite 1800Philadelphia, PA 19103-7395Phone: 215.864.6301/7173

Dated: December 18, 2009ttorneys for Plaintiff Pacflc Employers

Insurance Com pany

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EXHIBIT A




C O N S T I T U T IO N R E I N S U R A N C E C O R P O R A T I O N B Y

CONSTITUTION REINS' °FIANCE CORPORATION1 1 0 W I L LI A M S T R E E T . N E W Y O R K , N . Y . 1 00 3 88 2 2 4C E D I N G C O M P A N Y A N D A D D R E S S

E R T I F IC A T E N U M B E R

PACIFIC EMPLOYERS INSURANCE COMPANY

N A M E O F I N S U R E D C O M P A N Y P O L I C Y N U M B E R

BUFFALO FORGE COMPANY XMO 00 36 49C I T Y S T A T E Z IP

BUFFALO NEW YORK 1 4 2 0 4

R E I N S U R A N C E P O L I C Y P E R I O D C O M P A N Y P O L I C Y P E R I O D R E N E W A L C E R T I F I C A T E N O .

06/01/806/01/81 06 /01/80 TO 06 /01/81

REPLACES CERTIFICATE J.O.C

I T E M 1 - T YP E O F I N S U R A N C E

UMBRELLA LIABILITY

I T E M 2 - P O L IC Y L I M I T S & A P P L I C A T I O N

$9,00 0,00 0 ANY ONE OCCURRENCE AND IN THE AGGREGATE WHERE APPLICABLE

EXCESS OF UNDERLYING INSURANCE

I T E M 3 - C O M P A N Y R E T E N T I O N

THE FIRST $1,000,000 SUBJECT TO FACULTATIVE REINSURANCE

I T E M 4 - R E IN S U R A N C E A C C E P T E D

$1,000,0 00 ANY ONE OCCURRENCE AND IN THE AGGREGATE WHERE APPLICABLE

PART OF $4,000,000 WHICH IS EXCESS OF $1,000,000 WHICH IN TURN IS EXCESS

OF UNDERLYING INSURANCE

ITEM 5 - B A S IS O F A C C E P T A N C E

E X C E S S O F L O S SO N T R I B U T I N G E X C E S SO N - C O N C U R R E N T

I T E M 6 - P R E M I U M

$2,812.50 NET

I T E M 7 - C A N C E L L A T I O N N O T I C E

4 5 D A Y S

F M 1 0 . 0 .9 3 1 1 . 7 7 )




CERTIFICATE OF REiNSURANC .. . . .

C O N S T I T U T IO N R E I N S U R A N C E C O R P O R A T I O N110 WILLIAM STREET

N E W Y O R K , N E W Y O R K 1 0 0 38 he re i n c e l l ed t he R e i ns u re r

R E I N S U R I N G A G R E E M E N T S A N D C O N D IT IO N S

I n c ons ide r a t i on o f t he pay m en t o f t he p r em ium , and s ub j ec t t o t he t e r m s , . c ond i t ions an d l im i t s o f l iab i l it y s e t f o r t h he r e i n and i n t he De c la r a ti ons m ad e a pa r thereof , the Re insure r does hereby re insure the ced ing company named In the Dec lara t ions (here in ca l led the Company) in respec t o f the Company 's po l icy l ies )as fo l lows :

A . T he C om pan y war r an t s t o r e t a i n f o r it s own ac c oun t , s ub j ec t to t r ea t yr e in su ra n ce i f a p p l i ca b le , t h e a m o u n t o f l i a b i l it y sp e c i f i e d i n I t e m 3 o f t h eDeclarations, unless otherwise declared to the Reinsurer, The liability of the.R e ins u r e r , as s pec i f i ed i n I t em 4 o f t he De c la r a t ions , s ha l l f o l low t ha t o f t heCom pany and sha l l be sub jec t in a l l respec ts to a l l the te rms an d cond i t ions o ft he C om pany ' s po l i c y exc ep t when o t he r w i s e s pec i f ic a l l y p rov ided he r e i n o rdes ignated as non-con cur ren t re insurance in the Dec lara t ions . The Re insure r 'sC er t i f ic a t e pe r i od s ha l l be as s pec i f i ed i n t he De c la r a t ions a t 1 2 : 0 1 AM as t oboth da tes a t the p lace spec i f ied in the Compan y 's po l icy . The Com pany sha l lf u r n i s h t he R e ins u r e s ' w i t h a c opy o f i ts po l i c y and a l l endo r s em en t s t he r e t oa n d a s a c o n d i t i o n p r e c e d e n t a g r e e s to n o t i fy t h e R e i n s u r e r p r o m p t l y o f 1 3 11c h a n g e s w h i c h i n a n y m a n n e r a f f e c t th i s C e r t i f ic a t e o f R e i n s u r a n c e . T h eCompany sha l l make ava i lab le fo r inspec t ion , and p lace a t the d isposa l o f theReinsurer at all reasonable times, all records of the Company relating to thisCer t i f i ca te o f Re insu rance or c la ims in connec t ion herew i th .

B . L i a b il it y o f t h e R e i n s u r e r f o r a n y d a m a ge s a s s e s s e d a ga i n s t Th e C o m -

pany arising out of its conduct in the . investigation, negotiation, defense orh a n d l i n g o f a n y c la ims o r su i t s o r i n a n y d e a l i n gs w i t h i t s p o l icyh o ld e rs i ss pec i f i c a l ly exc luded u nde r t h i s C e r t i f ic a t e un les s t he R e ins u r e r s ha l l haveb e e n m a d e a w a r e o f a n d s h a l l h a v e c o n c u r r ed i n t he ac t i ons g i v i ng r i s e t os u c h d a m a g e s .

C . I n no even t s ha l l any one o t he r t han t he C om pany o r , i n the eve n t o fthe Co mpany 's inso lvency , I ts rece ive r , l iqu ida tor o r s ta tu tory successor , haveany r igh ts under th is Cer t i f i ca te o f Re insu rance ,

D . A s a c o n d i t io n p r e c e d e n t , th e C o m p a n y s h a l l p r o m p t ly p r o v i d e t h eR e i n s u r e r w i th a d e f i n i ti v e s t a te m e n t o f io n s o n a n y c l a i m o r o c c u r r e n c er epo r t ed t o t he C om pany and b r oug h t unde r t h i s C e r t i l i da t e wh i c h i nvo l ves 'a death , se r ious in ju ry or lawsu i t , The Com pany sha l l a lso no t i fy the R e insure rpr om pt l y o f any c la im o r oc c u r r enc e whe r e t he C om pan y has c r ea t ed a l os sr e se rv e e qu a l t o f i ft y ( 5 0) p e rce n t o f t h e Co mp a n y ' s ; e t e n t io r ' sp e c i f i e d i ni t em 3 o f t he Dec la r a t i ons . W h i le t he R e ins u r e r does no t unde r t ak e : o i nveF i :

g iven t he opp or t un i ty , w i t h t he f u l l c oope r a t ion o f t he C om pan y , tc as s oc ia t ecounsel at its own expense and to join with the Company and its represents.t i ves in the de fens e and co n tro l o f any c la im, , su i t o r p roceed ing invo lv ing th isCer t i f ica te o f Re insurance .

E. All loss settlements made by the Company, provided they are withinthe terms and conditions of the original'policy(iesl and within the terms andcond i t ions o f th is Cer t i fi ca te o f Re insurance , sha l l he b ind ing on the R e insure r .U p o n r e c e i p t o f a d e f in i t iv e staterr,ent of loss, the Reinsurer shall promptlypay its proportion 6f such loss as set forth in the Declarations. In additionthereto, the Reinsurer shall pay its proportion of expanses tether than officeexpenses and payments to any salaried employee) incurred by the Companyin the investigation and its proportion of court costs and interest on anyjudgment or award, in the ratio that the Reinsurer's loss payment bears to theCompany's gross loss payment. if there is no loss payment, the Reinsurershall pay its proportion of such expenses only in respect of business acceptedon a contributing excess basis and then only in the percentage stated in Item 4of the Declarations in the first layer of participation.

F. DefinitionsAs used in this Certificate the following terms shall have the meaning seto p p o s i t e e a c h ,

EXCESS OF LOSS The limits) of liability of the Reinsurer, as stated inItem 4 of the Declarations (Reinsurance Accepted) applieslyl only to thatportion of loss settlement(s) in excess of the applicable retention of the

Company as stated in Item 3 of the Declarations.

CONTRIBUTING EXCESS Th e Company's policy applies in excess of othervalid insurance, reinsurance or a self insured retention and the limit of liabilityof the Reinsurer applies proportionally to all loss settlements in the percent-age(s) set forth in Item 4 of the Declarations.

NON-CONCURRENT . The reinsurance provided does not apply to anyhazards or risks of loss or damage covcred under the Company's policy other

than those specifically set forth in the Declarations. The retention of theCompany and liability of the Reinsurer shall be determined as though theCompany's policy applied only to the hazards or risks of loss or damagespecifically described in the Declarations.

DEFINITIVE STATEMENT OF LOSS Shall consist of those parts orportions of the Company's investigative claim file which in the Judgem ent ofthe Reinsurer-are wholly 'sufficient foe the Reiristirer to-establish adequateloss reserves and determine the propensities, of any loss reported hereunder.

G . The Reinsurer will be paid or credited by the Company with i ts pro-portion of salvage, that is, reimbursement obtained or recovery made by theCompany, less all expenses paid by the Company in making such recovery Itthe reinsurance afforded by this Certificate is on the excess of loss basis,s a l v a g e s h a l l b e a p p l i e d i n t h e i n v e r s e O r d e r i n w h i c h l ia b i li ty a t t a c h e s .

H. The Company will be liable for all taxes on premiums ceded to theReinsurer under this Certificate of Reinsurance.

I. In the event of the incolvenr:y cf the Crrpany, the rein.̂ .,::en• s ,'ovided by this Certificate shall be payable by the Reinsurer on the hat:i°o fl iabi l i t y o f t he C om pany un de r t he po l i r. y fi es l r v r ns u r vd , w i thou t beeacse of Such ! its i, !vet t C', (t rill :t l \' '.a the Cars trry '. '1s rsc,tl.'h;r,

o r s t a tu t o r y S u C C C , s r .he Re: • r'.;rt.•:I ire file..,. .vrf Ste' tic'pendant',endant',n' each ; a.;n. nga .:n th. : ... ! ::.; . , t ' h r : r :o l 'C : ... hereunder within • r, r ysonahl;!.fta.' ...,... ..proceedings. The Reinsurer shaf theve'i< , • !r•. ...•I cand interpose, at itt: own ex p ense, in the proceedingv:r.. re such claim it to beadjudicated, any defenses which it may .teem avnilahf' to then^m^:i..receiver, liquidator. or statutory success : o r . 'ht: _xpf:wz thus f ••r,,.+,

Reinsurer shall he chargeable, subject to cou r t approval against rho n"Oiv nrCompany as part of the expense of liquidation to the extent of a p r o p e rtionatu snare of thr. banafit which may .:cc us W ti,a Companyresult of the deferise undertaken by the Reinsurer.

J. The Reinw:.rer 'nay -offset any halanceisi, whether onug'. ',tprerniur r, . : , co'nntlS :C i cnns, C 'rlm5, IUS;x3t'Ijustnlertt ex p ense. s:i'/t tr` or '.other utnou-tfs! dui: from one party to thin other under this Cer ; f f r :n ts . o fReinsurance or unrfer any other agreement heretofore or hereafter or*.tiredinto bervveen the Cornoany and the Reinsurer, whether acing ns .'wrlrnir.,r e in s u r e r o r a s c e d i n g C o m p a n y .

K. Shu,.ld the Company's policy at cancelled this Certificate shalltern,inate.eutornatically at the satire tfmc and date. This Certificate may also

be cancelled by the Company or by the Reinsure( upon not less than the

number of day.. shown in Item 7 except ten 110) days for non-payment of

premium with prior written notice, one to the other, stating when thereafterthe reineurcrice afforded hereby shall terminate, Proof of mailing shall bedeemed proof of notice and calculation of the earned premium shall followthe Company's calculation in the use of short rate or pro rata tables.

L . The terms of this Certificate of Reinsurance shall not be waived orchanged except by endorsement issued to form a part hereof, executed by a

duly authorized representative of the Reinsurer,

1 3 1 n#itt ri reclf r CONSTITUTION REINSU RANCE C ORPORA TION has caused this Certificate of Reinsurance to be signed by its President,and Secretary at New Y ork, New York but the same shall not be binding upon the Reinsurer unless countersigned by an authorized representative of the Reinsurer,

//v Secretary' ̂President




NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE

(1) This reinsurance does not cover any loss or liability accruing to the Company as a member of, or

subscriber to, any association of insurers or reinsurers formed for the purpose o f covering nuclear ene rgy risksor as a direct or indirect reinsurer of any such mem ber, subscriber or association.

(2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreedthat for all purposes of this reinsurance all the original 'j olicies of the Company (new, renewal and replacement)of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this para.

graph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision):

Limited Exclusion Provision.•

I. It is agreed that the policy does not, apply under any liability coverage,t o f injury, sickness, disease, death or destruction

with respect to which an insured under the policy is alsot bodily injury or property damage

an insured unde r a nuclear en ergy liability policy issued by Nuclear Energy Liability Insurance Associ-ation, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, orwould be an insured unde r any such policy but for its termination upon exhaustion of its limit of liability.

II.. Family Automobile Policies (liability only), Special Automobile Policies (private passenge r automobiles,liability only), Farmers Comprehensive Personal Liability Policies (liability only), Com prehensivePersonal Liability Policies (liability only) or policies of a similar nature; and the liability portion of

combination forms related to the four classes of policies stated above, such as the C omprehensiveDwelling Policy and the applicable types of Homeowners Policies.

LU. The inception dates and,thereafter of all original policies as described in 11 above, whe ther new, re-newal or replacem ent, being policies which either

(a ) become e ffective on or after 1st May, 1960, or(b ) become effective be fore that date and contain the Limited Exclusion Provision set out above:

provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special AutomobilePolicies, or policies or combination policies of a similar nature, issued by the Re assured on Ne w Yorkrisks, until 90 days following approval of the Limited Exclusion Provision by the Governm ental Author-ity having jurisdiction thereof.

(3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restrict-ing the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this

reinsurance the original liability policies of the Company (new, renewal and replacement) affording the followingcoverages:

Owners, Landlords. and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Con-tractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product

Liability, Professional and Ma lpractice Liability, Storekeepers liability, Garage Liability, AutomobileLiability (including Massachuse tts Motor Vehicle or G arage Liability) .

shall be deeme d to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3),the following provision (specified as the Broad Exclusion Provision):

Broad Exclusion Provision.̀It is agreed that the policy does not apply:

1. Under any Liability Coverage, toinjury, sickness, d isease, de ath or destructionbodily injury or property damage

(a ) with respect to which an insured under the policy is also an insured under a nuclear energyliability policy issued by Nuclear Energy Liability Insurance Association, Mutual AtomicEnergy Liability Underwriters or Nuclear Insurance Association of Canada, or would be aninsured unde r any such policy but for its termination upon exhaustion of its limit of liability;or

(b ) resulting from the hazardous properties of nuclear material and with respect to which (1) anyperson or organization is required to maintain financial protection pursuant to the AtomicEnergy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy

not been issued would be, entitled to inde mnity from the United States of Ame rica, or anyagency thereof, under any agreem ent entered into by the United States of America, or anyagency thereof, with any person or organization.

11. Under any Me dical Payments Coverage , or under any Supplementary Payme nts Provision relating

t o Simmediate medical or surgical relief,first aido expenses incurred with respect

,

bodily injury, sick ness, disease or deathto bodily injuryesulting from the hazardous properties of nuclear material

and arising out of the operation of a nuclear facility by any person or organization.

•1-




III. Under any liability Coverage, to IHw y' sickness, d isease, death or destruction

resulting from thebodily injury or property damage

hazardous properties of nuclear material, if(a ) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of,

an insured or (2) has been discharged or dispersed therefrom;(b ) the nuclear mate rial is contained in spent fuel or waste at any time possessed, handled , used,

processed , stored, transported or disposed of by or on behalf of an insured; or

(c ) thetnjury, sick ness, disease, death or destruction

arises out of the furnishing by an insured ofbodily injury or property damage

services, materials, parts or equipment in con nection with the planning, construction, mainte-nance, operation or use of any nuclear facility, but if such facility is located within the U nitedStates of Am erica, its territories or possessions or C anada, this exclusion (c) applies only.

touyury to or destruction of property at such nuclear facility.

property damage to such nuclear facility and any property there at.IV. As used in this endorsement:

"hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" meanssource material, special nuclear material or byproduct mate rial; "source material", "special nuclear

material", and "byproduct materrar' have the meanings given them in the Atomic Energy Act of 1954or. in any law amendatory thereof; "spent fuel" means any fuel elem ent or fuel component, solid or

liquid, which has been used or exp osed to radiation in a nuclear reactor; "waste" means any wastematerial (1) containing byproduct material and (2) resulting from the operation by any person ororganization of any nuclear facility included w ithin the definition of nuclear facility under paragraph (a)or (b) thereof; "nuclear facility" means

(a ) any nuclear reactor,

(b ) any equipment or de vice designed or used for (1) separating the isotopes of uranium or plu-tonium, (2).processing.or utilizing spent fuel, or (3) handling, processing or packaging w aste,

(c ) any equipment or device used for the processing, fabricating or alloying of special nuclearmaterial if at any time the total amount of such material in the custody of the insured at thepremises whe re such equipme nt or device is located consists of or contains more than 25 gramsof plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium2 3 5 ,

(d ) any structure. basin, excavation, premises or place prepared or used for the storage or disposal

of waste,

and includes the site on which any of the foregoing islocated, all operations conducted on such site

and all premises used for such operations: "nuclear reactor" means any apparatus designed or used tosustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionablematerial;

{ With respect to injury to or destruction of property, the word "injury' or "destruction"

. 'property damage" includes all forms of radioactive contamination of property.includes all forms of radioactive contam ination of property.

V. The inception dates a nd thereafte r of all original policies affording coverages specified in this paragraph(3), whether new, renewal or replacement, being policies which become effective on or after 1st May,1960, provided this paragraph (3) shall not be applicable to

(I) Garage and Automobile Policies issued by the C ompany on Ne w York risks, or(ii) statutory liability insurance required under C hapter 90, Gene ral Laws of M assachusetts,

until 90 days following approval of the Broad Exclusion Provision by the Governmental Authorityhaving jurisdiction thereof.

(4) Without in any way re stricting the ope ration of paragraph (1) of this Clause, it is understood and agree dthat paragraphs (2) and (3) above are not applicable to original liability policies of the C ompany in C anada an dthat with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Pro-

visions adopted by the Canadian Und erwriters' Association or the Inde pendent Insurance Conference of Canada.

•NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provisionshall apply only in relation to original liability policies which include a Limited Exclusion Provision or a BroadExclusion Provision containing those words.

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pacific employers ins co v. global reinsurance corp of america appeals complaint

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