The opinion of the court was delivered by: Padova, J.
This dispute concerns an umbrella insurance policy that Plaintiff Axis Specialty Insurance Company ("Axis") issued to Defendant Brickman Group LTD, LLC ("Brickman"). Axis has asserted claims against Brickman, seeking to recover $250,000 that it contributed to the settlement of a state court action against Brickman, arguing that Brickman had a $250,000 self-insured retention that had to be exhausted before Axis's insurance coverage applied. Meanwhile, Brickman has asserted a claim against Axis, seeking to recover amounts it expended to defend itself in the state court action. The parties have filed cross-motions for summary judgment pursuant Federal Rules of Civil Procedure 56.
For the following reasons, we grant each motion in part and deny each motion in part. Specifically, we grant Axis's motion insofar as it seeks judgment in its favor on Brickman's claim for defense costs, and grant Brickman's motion insofar as it seeks judgment in its favor on Axis's claims for reimbursement in the amount of $250,000. In all other respects, we deny both motions.
The undisputed facts of record are that, in 2006, a woman named Deborah Peisel commenced an action in the New Jersey state courts against Home Depot and Brickman (the "Peisel Action"), alleging that she had sustained injuries in a fall in the Home Depot parking lot, due in part to inadequate snow removal by Brickman. During the relevant time period, Brickman was self-insured for the first $250,000 of its liability, and it maintained two excess insurance policies. The first was an ACE American Insurance Company ("ACE") policy, which provided $750,000 in excess coverage for losses in excess of the "retained limit," which was Brickman's $250,000 self-insured retention ("SIR"). (R. 51;*fn1 R. 42, R. 55.) Brickman's second excess policy was an umbrella liability policy with Axis. The Axis policy provided $5 million of coverage in excess of the "retained limit," which it defined as the underlying ACE insurance policy providing $1 million in coverage. (R. 47; R. 30; R. 3.)
In January 2008, the insurance broker warned Axis that Brickman's defense counsel estimated a reasonable settlement value of the Pesisel Action to be in the range of $2.2 to $2.4 million, which would therefore implicate Axis's coverage. (R. 208.) Approximately six months later, on June 19, 2008, ACE "tender[ed] [the] matter" to Axis, and invited Axis to participate in the case. (R. 232.) In doing so, ACE reiterated that its policy provided $750,000 of coverage, "excess over a $250,000 self insured retention," which "ha[d] not been satisfied." (Id.) ACE further advised Axis that Brickman "has offered the remaining balance of their SIR." (Id.) In an email that same day, Axis's outside counsel, Lou Piechta, echoed back to ACE that "you are giving authority . . . to negotiate settlement for Brickman to the extent of the remaining SRI [sic] of Brickman (a figure less than 250K) plus the limits of the 750K of Ace." (R. 234.)
In late August 2008, Piechta negotiated a settlement in principle with Peisel to resolve Peisel's claims against Brickman, but not Home Depot, for $1.15 million. (See R. 240.) In an August 28, 2008 email to Mary Grace Maley, counsel for Brickman, Piechta stated that he had advised Peisel's counsel that "the 750K policy limits of ACE and 400K from Axis would fund the accepted settlement of the claims against Brickman." (R. 237.) Piechta then asked Maley to let him know whom he could contact "to verify the exhaustion of the retained limit." (Id.)
Around the same time, Piechta had a conference call with Brickman's Assistant General Counsel and others. (R. 260.) In that call, the parties discussed Brickman's SIR. (R. 261.) Piechta suggested that Brickman and Axis present a united front and "argue later about the retained limit," but counsel for Brickman did not agree to resolve the issue later. (R. 135; R. 260-61.) According to Brickman's counsel, the SIR was not the main focus of the call. Rather, the main focus of the call was Brickman's opposition to a settlement that did not involve Home Depot.*fn2 (R. 261.) Piechta made clear in the phone call, however, that he would settle the claim without Home Depot, in spite of Brickman's objections, because the settlement was in Axis's best interest. (Id.)
Significantly, Axis admits that, at the time of the settlement, it had not yet "formulated a position" on whether Brickman could exhaust its SIR only with indemnity payments or whether its payment of defense costs could also exhaust the SIR. (R. 187.) As the Axis claims adjuster explained, there were a number of issues that the case raised, including that little had been done to prepare for the upcoming trial and the Home Depot issues, so that Axis's "focus was not on whether or not there was a self-insured retention that [was] reduced by defense expenses, it was how we were going to get to the end result on behalf of Brickman and deal with all of these [other] issues." (R. 194.)
The parties put the settlement on the record with the New Jersey Superior Court during a hearing on September 2, 2008. (R. 92-124.) Peichta attended the hearing on behalf of Axis, and Maley attended on behalf of Brickman. (R. 95.) During the hearing, the Court stated that its "understanding of the situation here is that Brickman has a -- has a deductible policy with ACE of $250,000, ACE has $750,000 insurance, and then after that we have an excess carrier -- in the matter." (R. 103.) Piechta subsequently described the $1.15 million settlement to the Court as follows:
[M]y understanding is that the $750,000 policy limits of Ace are available for the settlement, that a $400,000 offer on top of that $750,000 is made upon behalf of Brickman by [Axis] pursuant to its policy of insurance, that there will not be a concern addressed at this time and in this matter regarding the self-insured retention of -- of Brickman, which is represented to be $250,000, that we will work within our -- our own group here, not as part of this case, and the plaintiff has not to be concerned about it, that the money will be given as set forth, 750,000 from Ace, 400,000 from [Axis] on behalf of Brickman.
(R. 110-11.) At the time of the settlement, no one had asked Brickman to contribute financially. (R. 138.)
A couple of months after the settlement, Piechta "turned [his] attention" to the question of the SIR. (R. 140.) On March 5, 2009, Piechta sent a letter to Brickman, "seek[ing] . . . payment from Brickman of the $250,000 'retained limit' which is applicable to the Peisel claim." (R. 249.) Piechta acknowledged in the letter that Brickman was taking the position that his payment of over $250,000 in defense costs had satisfied its retained limit obligation, but Piechta expressly disagreed.*fn3
(R. 250.) When Brickman refused to remit the requested funds, Axis, on July 31, 2009, commenced the instant action, essentially asserting that Brickman should have contributed its $250,000 in self- insurance to the settlement, thereby reducing Axis's required contribution by that amount.
The Amended Complaint contains four counts, three of which survived a prior Motion to Dismiss.*fn4 The first of the three remaining counts asserts a claim for Declaratory Relief and seeks a declaration that (1) the ACE policy did not include within its underlying limit or retained limit any amounts expended by Brickman for its defense; (2) Axis had no duty to defend or pay any defense costs incurred by or on behalf of Brickman; and (3) Brickman was required to fund the first $250,000 of the Peisel settlement. The second remaining count alleges that Brickman breached its contract with Axis by failing to fund the first $250,000 of the Peisel settlement. The third remaining count asserts that Brickman was unjustly enriched by Axis's contribution of $400,000 to the settlement, when Axis's only obligation was $150,000, because Brickman should have paid $250,000.
Brickman filed an Answer to Axis's Complaint, denying all liability and asserting a Counterclaim for breach of contract. The Counterclaim demands judgment in Brickman's favor in the amount of $391,740.66, claiming that Axis is responsible for payment of ...