The opinion of the court was delivered by: HANNUM
This is an action by Transamerica Insurance Company seeking declaratory relief pursuant to 28 U.S.C. § 2201. As related in this Court's Memorandum and Order of May 21, 1980, "The essence of the action requires a determination concerning which of two insurance companies, Transamerica and/or the defendant Bellefonte Insurance Company . . . provided insurance coverage to the defendant Roussel Corporation with respect to 'suits brought by or on behalf of persons after the expiration of Transamerica's policy period.'"
The factual background of this case is adequately set forth in the Memorandum and Order of May 21, 1980. See 490 F. Supp. at 935-36. Subsequent to that ruling, which denied summary judgment motions by all parties, counsel stipulated that:
1. That there exists before your Honorable Court for determination the issue of whether the Bellefonte Insurance Company is liable in the sum of $200,000.00 in each of the three cases (Kushnir, Demko and Provenzano) wherein children were born before the endorsement dated April 23, 1976, which was sent by Herman Rich, Vice President of American Coverage Company, Roussel Corporation's broker to John Bauer, Roussel Corporation's insurance manager, who signed or initialed acceptance and acknowledgement of said endorsement.
2. In the alternative, in view of said endorsement is Bellefonte Insurance Company liable in the aggregate sum of $200,000.00 and if so, as of what date, i.e. the inception of the policy 8/19/75, the date of the endorsement April 23, 1976 or the date on which the endorsement was signed and returned to Mr. Rich by Mr. Bauer [?]
Although not denominated as such, the Court will treat the submission of issues as though cross motions for summary judgment or partial summary judgment were filed.
The issue presently before the Court centers around an endorsement to a bodily injury and property damage liability policy issued by Bellefonte to Roussel. Bellefonte had issued the policy to Roussel for a period of time covering August 19, 1975 to August 19, 1976 and the limit of liability contained in this policy was $200,000.00 per occurrence. Roussel paid a $10,000.00 premium for the policy. Ten months later, Bellefonte issued an endorsement to Roussel which sought to change the limit of liability from $200,000.00 per occurrence to $200,000.00 annual aggregate. The endorsement [hereinafter "Endorsement No. 2"] was forwarded to John D. Bauer, Insurance Manager for Roussel and conveyed via Roussel's insurance broker, American Coverage Corporation. Three dates are specified on the cover sheet of Endorsement No. 2: In the upper left hand corner, there is a designation "Effective: August 19, 1975." At the bottom of the sheet the phrase occurs: "Dated April 23, 1976 sm" and the upper right hand corner of the page is marked "Received June 25, 1976."
Bellefonte contends that the liability -- limiting Endorsement No. 2 forwarded to Roussel in June, 1976 was retroactive to the inception date of the policy, that is, August 19, 1975. Plaintiff Transamerica and defendant Roussel Corporation both take the position that the endorsement took effect June 5, 1976 and operated prospectively only. The Court agrees with Transamerica and Roussel and holds that the Endorsement No. 2 was effective, if at all, prospectively from June 25, 1976, the date on which Roussel's Insurance manager signed or initialed acceptance of the endorsement.
In reaching this result, the Court is persuaded by the arguments of Transamerica and Roussel to the effect that the Endorsement No. 2 is ambiguous as to the effective date.
It is an established principle of insurance law that an ambiguity in a policy must be construed against the insurer, particularly when the ambiguity is found in a clause excluding or limiting coverage in some way. Breed v. Insurance Company of North America, 46 N.Y.2d 351, 413 N.Y.S.2d 352, 385 N.E.2d 1280 (1978).
See also Hionis v. Northern Mutual Insurance Co., 230 Pa.Super. 511, 327 A.2d 363 (1974); Couch on Insurance 2d § 15.73 (1959 & 1981 Supp.). In this regard, the Court is persuaded that under the circumstances of its issuance, Endorsement No. 2 is indeed capable of more than one reasonable interpretation. Bellefonte contends that the limiting endorsement was retroactive to the policy inception date relying wholly on the following language in the caption of the endorsement:
"Assured: Roussel Corporation"
"Effective: August 19, 1975"
On the other hand, the actual endorsement received by Roussel contains two other dates, as related above. Clearly, it is a reasonable interpretation that such a drastic modification of policy terms as contemplated by the endorsement would operate only prospectively as of the date it was initialed and returned by the Roussel Insurance Manager.
The ambiguity of the limiting endorsement is further illustrated by the much clearer language in other portions of the policy, such as the language used by Bellefonte in describing the effective date of the deductible liability insurance ...