the settlement represented a compromise of a compensatory damage claim rather than the punitive damage judgment.
It is manifest that Reliance cannot recover for its losses unless the losses are covered by the terms of the Excess Umbrella Policy and reinsurance certificate. We have already determined that the $ 912,044.34 paid by Reliance in the settlement agreement, which forms the basis of Reliance's claim, represented a compromise of the punitive damage award. Thus, Reliance can prevail in this suit only if that loss, suffered as a result of the settlement of the punitive damage judgment, falls within the coverage of the insurance policy and reinsurance certificate. We have concluded that Reliance's loss is not so covered.
Reliance offered testimony in support of its contention that the Excess Umbrella Policy afforded coverage broad enough to include liability arising out of the business activities of claim adjusters and claim representatives, whether or not such persons were employees of Reliance. According to Reliance, the Excess Umbrella Policy afforded coverage in excess of the underlying liability policy, which had limits of $ 500,000.00 per each occurrence and in excess of $ 500,000.00 for uninsured perils. We reject Reliance's interpretation of the Excess Umbrella Policy.
Coverage for punitive damages is not specifically mentioned in either the Excess Umbrella Policy or the underlying general liability policy. Moreover, the Excess Umbrella Policy contains no provision specifically extending coverage for bodily injury and property damage to the negligent act, error, or omission arising from the business activities of claim adjusters and claim representatives. The underlying general liability policy does contain such a provision, Endorsement # 25. However, the Excess Umbrella Policy does not have that provision, and it is the umbrella policy, not the general policy, which is reinsured by the General certificate. Even Endorsement # 25, or a similar provision, if included in the Excess Umbrella Policy coverage, would be of no avail to Reliance, for it provides coverage only for the negligent acts, errors or omissions of claim adjusters or representatives, not for willful or intentional acts. Cady's conduct in taking the jeep parts and Dwinnell's conduct in securing the statement from Blackwood can hardly be considered negligent acts. Rather, each of these actions clearly were intentional and willful.
The settlement represented a compromise of Blackwood's claims against Reliance and the resulting judgment, consisting primarily of a $ 2,000,000.00 punitive damage award. The claims, the judgment, and the settlement arose out of the intentional acts of Cady and Dwinnell, agents of Reliance, in removing the jeep turn signal and securing the statement from Blackwood. Thus Reliance cannot recover under the Excess Umbrella Policy and reinsurance certificate as coverage was for bodily injury and/or property damage liability, but not for intentional acts or punitive damages.
Even if we had concluded that the general policy, the umbrella policy and the reinsurance certificate provided coverage, we would still find that Reliance could not recover from General because we find that there were two "occurrences." One "occurrence" was the taking of the jeep turn signal by Cady. A second "occurrence" was the obtaining of the statement from Blackwood by Dwinnell.
Clearly, each of these incidents were separate and distinct, as they occurred at different times and places, and involved different agents of Reliance. These "occurrences" were related to each other only because they both arose out of the same case and were precipitated by Reliance agents. We therefore reject Reliance's argument that there was a single "occurrence" in its failure to monitor its claims process. Furthermore, as the jury in the California trial made clear, it was the actions of Cady and Dwinnell that caused them to conclude that an award of punitive damages was proper and they awarded $ 1,000,000.00 for each of their acts.
For each "occurrence" there is a $ 500,000.00 deductible under the terms of the umbrella policy and the reinsurance certificate. Thus for the two "occurrences" there is $ 1,000,000.00 deductible ($ 500,000.00 X 2). Since Reliance's obligation under the settlement agreement totaled $ 912,044.34, a deduction of $ 1,000,000.00 from that amount leaves nothing to be paid by General.
We therefore enter judgment in favor of the defendant General Reinsurance Corporation and against the plaintiff Reliance Insurance Company.
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