U.S. District CourtSouthern District of New YorkJudge BaerDefendant Republic Insurance Co. (“Republic”) moves (1) pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.”) 56(c), for summary judgment against plaintiff Folksamerica Reinsurance Co. (“Folksamerica”) on the issue of whether Republic violated the Definitive Statement of Loss (“DSOL”) provisions of the J.T. Thorpe Co., Inc. (“Thorpe”) Certificates; (2) to strike the Declaration of I. Davis Jessup, II (“Jessup Declaration”) and certain portions of Folksamerica’s 56.1 Opposition;[1] and (3) to voluntarily dismiss, without prejudice, its counterclaims for bad faith and unjust enrichment, pursuant to Fed. R. Civ. P. 41(a); and Folksamerica brings a separate motion for partial summary judgment against Republic, to dismiss Republic’s bad faith counterclaim (with prejudice). Third party defendants Aon Re Worldwide, Inc. and Aon Specialty Re, Inc. (collectively “Aon”) join in support of Republic’s motion for summary judgment. For the following reasons, (1) Republic’s motion for summary judgment, on the DSOL issue, is granted; (2) Republic’s motion to strike is granted-in-part and denied-in-part; (3) Folksamerica’s motion for summary judgment, dismissing Republic’s bad faith counterclaim, is granted; and (4) Republic’s motion to voluntarily dismiss, without prejudice, its counterclaims for bad faith and unjust enrichment, is denied.I. DiscussionA. BackgroundThis declaratory judgment action involves a reinsurance coverage dispute between Folksamerica (the reinsurer), Republic (the insurer), and Aon (the reinsurance broker) – stemming from alleged late “notice” to Folksamerica of claims under several reinsurance Certificates involving two insureds – Clemtex, Ltd. (“Clemtex”), a supplier and/or manufacturer of sandblasting equipment, and Thorpe, a masonry and insulation contractor. Late last year, all three entities submitted extensive summary judgment motions, and after argument, this Court made the following determinations:Republic’s violations of any notice provisions contained within the Certificates do not relieve Folksamerica of its obligation to indemnify Republic. Further . . . with regard to Clemtex, Republic did not violate the DSOL provision. However, summary judgment on the following issues of fact, with regard to the Thorpe Certificates, is inappropriate: (a) whether Republic violated the DSOL provision in the Thorpe Certificates, due to untimely submission, (b) whether the untimeliness, if any, of Republic’s submission of the DSOL under Thorpe was unreasonable, and (c) whether, if such violations are deemed unreasonable, Republic’s proffered excuse that Aon is the party at fault or that Folksamerica had constructive notice as a result of GLARC [a Treaty], or any other defense, will be credited.Folksamerica Reins. Co. v. Republic Ins. Co., 03 Civ. 0402, 2003 U.S. Dist. LEXIS 21584, at 53 (S.D.N.Y. Dec. 2, 2003).Because the parties had been unable to complete discovery, due to the illness of an important witness, the record did not contain the evidence necessary for the Court to resolve whether Republic had violated the DSOL under the Thorpe Certificates, and if so, whether such violation was reasonable. Subsequently, this needed discovery was completed, and, in order to streamline the proceedings, at Republic’s request, the Court authorized a second round of summary judgment on this open issue, in order to provide the parties with an additional opportunity to obviate the need for a trial.[2] Therefore, this Opinion begins where the prior left off. For a complete discussion of the factual and procedural background of this case, reference to the First Amended Opinion & Order, is advised. Folksamerica Reins. Co., 2003 U.S. Dist. LEXIS 21584, at 53.II. DiscussionA. Summary Judgment Standard of ReviewPursuant to Fed. R. Civ. P. 56(c), a district court must grant summary judgment if the evidence demonstrates that “there is no genuine issue as to any material fact and [that] the moving party is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250 (1986). “Summary judgment is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to ‘secure the just, speedy and inexpensive determination of every action.’ ” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986), quoting Fed. R. Civ. P. 1.In determining whether there is a genuine issue of material fact, a court must resolve all ambiguities and draw all inferences against the moving party. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm’rs, 834 F.2d 54, 57 (2d Cir. 1987). However, the mere existence of disputed factual issues is insufficient to defeat a motion for summary judgment. Knight v. United States Fire Ins. Co., 804 F.2d 9, 11-12 (2d Cir. 1986), cert. denied, 480 U.S. 932 (1987). The disputed issues of fact must be “material to the outcome of the litigation” (id. at 11), and must be backed by evidence that would allow “a rational trier of fact to find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The non-movant “must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. With respect to materiality, “substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson, 477 U.S. at 248. “Summary judgment is particularly appropriate in resolving insurance coverage disputes, because the interpretation of an insurance policy presents a question of law.” Constitution Reins. Corp. v. Stonewall Ins. Co., 980 F. Supp. 124, 127 (S.D.N.Y. 1997), aff’d without opinion, 182 F.3d 899 (2d Cir. 1999) (citation omitted). See also Flair Broad. Corp. v. Powers, 733 F. Supp. 179, 184 (S.D.N.Y. 1990).“Ascertaining whether or not a writing is ambiguous is a question of law for the trial court.” Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan et al., 7 F.3d 1091, 1094 (2d Cir. 1993) (citations omitted). Although it is true that “a motion for summary judgment may be granted only where the agreement’s language is unambiguous and conveys a definite meaning” (id.) (internal quotations and citations omitted), “a court may not [ ] find ambiguity” in a reinsurance contract “where none exists.” United Capital Corp. v. Travelers Indem. Co. of Il., 237 F. Supp. 2d 270, 274-75 (E.D.N.Y. 2002).B. Definitive Statement of Loss on Thorpe CertificatesRepublic asserts, as a matter of law, that it fully complied with the DSOL provision contained within the Thorpe Certificates, by supplying Folksamerica, no later than May 29, 2002, with all information necessary for it to post proper reserves and determine the propensities of any loss reported. Folksamerica, on the other hand, enumerates specific topics, and one in particular, about which it allegedly requested, but did not receive, documentation until November 2002, when it audited Republic’s records. By way of background, the DSOL provision contained within the Certificates provides that:C. As a condition precedent,[3] the Company shall promptly provide the Reinsurer with a definitive statement of loss on any claim or occurrence reported to the Company and brought under the Certificate which involves a death, serious injury or lawsuit.Van Tol Decl. Exh. A. By definition, the DSOL “consist[s] of those parts or portions of the Company’s investigative claim file which in the Judgment of the Reinsurer are wholly sufficient for the Reinsurer to establish adequate loss reserves and determine the propensities of any loss reported hereunder.” Id. (emphasis added).[4] Further, the Certificates require that “[t]he Company shall make available for inspection, and place at the disposal of the Reinsurer at all reasonable times, all records of the Company relating to the Certificate of Reinsurance or claims in connection therewith.” Id. By definition, “upon receipt of a definitive statement of loss, the Reinsurer shall promptly pay its proportion of such loss as set forth in the Declarations.” The Certificates also contain the following provision, relating to loss settlements:All loss settlements made by the Company, provided they are within the terms and conditions of the original policy(ies) and within the terms and conditions of this Certificate of Reinsurance, shall be binding on the Reinsurer.Id.It is undisputed that Folksamerica received invoices on April 30, 2002, or soon thereafter, seeking reimbursement under the Thorpe Certificates, in the amount of $450,000. Rep. 56.1 ¶5; Folk. 56.1 ¶2. Further, due to the problems experienced with transmitting reports to its reinsurers, through Aon, its intermediary, on May 3, 2002, Republic forwarded a complete set of all narrative reports that it had previously instructed Aon to forward to all reinsurers (which included Folksamerica).[5] Rep. 56.1 ¶10. Republic sent additional invoices, proofs of loss, and a narrative report, to Folksamerica on May 8, 2002, raising the total amount of reimbursement sought to $800,000. Id. ¶11. Soon thereafter, on May 23, 2002, Larry Lande (“Lande”), Folksamerica’s Assistant Secretary, requested authority to post reserves for the Thorpe claims, in the amount of $4,057,505, and received such approval on May 29, 2002. Id. ¶13.Republic asserts that the fact that (1) Folksamerica posted reserves in May 2002, (2) at $4,057,505,[6] an amount far in excess of the loss submitted to date, which was only $800,000, (3) sent notices to its retrocessionaires on or about May 31, 2002, advising them of its posting, (4) informed its retrocessionaires, in such notices, that it had “received backup documentation from Republic, indicating an exposure to Republic in excess of $2 million” on each of the two Thorpe Certificates[7] (Van Tol Decl. Exh. M) (emphasis added), and (5) none of Folksamerica’s retrocessionaires complained that the information provided by Folksamerica was insufficient to enable them to post adequate reserves themselves, collectively establishes that Folksamerica had fulfilled both of the requirements of the DSOL – to enable Folksamerica to set adequate loss reserves and to determine the propensities of the loss. Rep. 56.1 ¶¶13-14. Further, Republic asserts that, in response to Folksamerica’s continued questions, and dissatisfaction with its timely answers, in September 2002, it invited Folksamerica to come to the offices of its counsel, and view all the records, arranged for the audit to take place in October 2002, and the audit was conducted on November 4, 2002. It is undisputed that the audit confirmed Republic’s prior assurances. Therefore, Republic argues that by May 29, 2002, when it received authority to post its reserves at $4,057,505, it had fully complied with the DSOL provision. Rep. Mem. at 4.Folksamerica argues that, after receiving the relevant invoices from Republic, it specifically inquired about: (1) “acceleration of the exposure by Republic under its policies”; (2) “the treatment of multiple occurrences”; (3) “payment of claims under products liability coverage and non-products coverage”; and (4) “allocation of losses among policies.” Folk. Mem. Opp. at 3. As to the products versus non-products coverage, Folksamerica allegedly requested documentation because “[i]f the claims were allocated to non-products theories of recovery, and thus, non-products coverage, the limit per occurrence could be hit again and again, without ever reaching an aggregate cap.” Id. at 4. While Folksamerica appears to have received sufficient documentation to assuage its other concerns, Folksamerica continued to seek documentation relating to products versus non-products losses.Additional communications between the parties, concerning products versus non-products losses, began on May 31, 2002, when Lande wrote to Montgomery, seeking clarification as to, inter alia, (a) whether Republic planned to cede the $1.35 million settlement of non-product claims to its reinsurers, (b) how the Republic policies were exposed for non-products losses, and (c) what percentage of Thorpe’s overall exposure stemmed from non-products losses. In this letter, Lande wrote that “Folksamerica is holding payment in abeyance pending receipt and review of the requested information.” Van Tol Decl. Exh. Q. In response, Jennifer Morrison (“Morrison”), Republic’s Managing Coverage Attorney, promptly wrote that “Republic’s settlement with J.T. Thorpe, for $1,350,000 represents the parties’ resolution of their dispute concerning the existence of coverage other than Products-Completed Operations coverage. That settlement has not been billed to your layer.” Id. Exh. R. On May 31, 2002, Lande requested that Republic “please provide the information requested in items three and four ["b" and "c" above] of my May 31, 2002 letter.” Id. Exh. S. In a June 4th response, Morrison explained that:To better assess the exposure, Republic requested specific information on the number of product claims and the number of non-product claims received by Thorpe. In response, Thorpe advised ‘[a]lthough Thorpe believes that a number of the claims settled or pending against it may have arisen out of its operations, and not its products, Thorpe is unable at this time to provide the specific information you have requested regarding the number of such non-product claims.While Republic’s position was that these claims were still products claims arising from the same occurrence, Republic was seeking a resolution of the matter that would ensure that Republic and its reinsurers would not be subject to any attempt to expand coverage or reclassify claims in the future . . . we are extremely confident that this settlement was beneficial to Republic and its reinsurers.Given Thorpe’s initial unwillingness to seriously negotiate on the premises/operations coverage, it is Republic’s position that the resulting settlement agreement is exceedingly beneficial to Republic and its reinsurers. Moreover, the premises/operations coverage remains the subject of current coverage litigation pending between J.T. Thorpe and all of its carriers (except Republic) in Austin, Texas.Id. Exh. T. But, this response did not satisfy Folksamerica. Instead, Lande continued to question Republic’s actions, largely repetitiously, resulting in a several month long letter-writing frenzy between Folksamerica and Republic, during which Republic attempted to justify its actions.[8] In response to Lande’s July 31 letter, one of Folksamerica’s latter inquiries, Republic and Folksamerica participated in a conference call, which occurred on August 20, 2002. During the call, as represented by an internal Folksamerica memoranda, Folksamerica “reiterated our position that we require proof of the non-products exposure to our layers . . . Republic maintains that they have not paid any non-products claims to date. We were unable to resolve our differences, and Republic is to forward additional information in support of their position.” Id. Exh. CC. Shortly thereafter, in a September 6, 2002 letter, after having what appears to be an epiphany, instead of forwarding any documentation, Morrison informed Lande that “[t]o the extent you desire to review information and documentation included within the Thorpe claim files, the claim files can be made available for your review in the office of defense counsel located in Center, Texas. I would be happy to coordinate such a review with defense counsel at your earliest convenience.” Id. Exh. FF. On September 27, 2002, Morrison reiterated the audit invitation[9] to Richard Watson (“Watson”), Folksamerica’s Vice President, and again explained “that Republic has paid in accordance with your [Folksamerica's] definition of a product claim.” Id. Exh. GG.Watson performed the audit on November 4, 2002, and concluded, after reviewing “56 pre-trial reports involving over 400 plaintiffs,” that “Thorpe’s attorneys have properly allocated the paid claims and that the payments, according to the plaintiffs’ depositions and product identification do not include non-products claims.” Van Tol Decl. Exh. HH. While Watson remarked that “[i]t certainly would have been helpful” if these documents “ had been made available prior to our Dallas trip” (id.) (emphasis added), Watson never intimated that Republic had been dishonest or even negligent in its representations that a breakdown of products and non-products claims did not exist. Instead, it appears that only after Watson spent a considerable amount of time, with pages and pages of documents, did he gain the level of satisfaction that Folksamerica demanded. Whether this degree of compliance was or is the practice in this industry, I leave for another day.Certainly, Folksamerica was entitled to pursue its inquiry.[10] Id. Exh. A. On the other hand, Republic must not be punished for failing to intuit, until September 2002, that Folksamerica would not be satisfied until it saw for itself that Republic had not billed for non-products losses. There was not a peep from Folksamerica, that even suggested that an audit was necessary, or that it would have been helpful. Instead, Folksamerica continuously requested that Republic locate and forward documentation for its position – but such documentation was simply non-existent. Republic’s responses to Folksamerica’s inquiries were always prompt, and were never indicative of evasion. For the most part, Folksamerica inquired and Republic explained. When Folksamerica reiterated its demand for documentation, a conference call was held, and Republic then initiated the audit invitation. To conclude that Republic violated the DSOL provisions in the Thorpe Certificates, would invalidate months of responsiveness, and create a precedent, which would invite abuse. Put another way, to so hold would violate both law and public policy.C. Republic’s Bad Faith ClaimAlthough the Court intended only one additional round of summary judgment motions on the single issue of whether Republic violated the DSOL provision of the Thorpe Certificates, in an effort to resolve all issues, the Court agreed to adjudicate Folksamerica’s additional summary judgment motion, pertaining to Republic’s counterclaims premised on the theories of Folksamerica’s “breach of the implied covenant of good faith and fair dealing” and the “duty of utmost good faith.” [11] Folksamerica asserts, and this Court agrees, that “New York has consistently and repeatedly held that there is no right of action for ‘bad faith’ claims handling practices between the parties to an insurance contract . . . ” Folk. Mem. at 1. See New York Univ. v. Continental Ins. Co., et al., 87 N.Y.2d 308, 316 (1995) (“ defendant may be liable in tort when it has breached a duty of reasonable care distinct from its contractual obligations, or when it has engaged in tortuous conduct separate and apart from its failure to fulfill its contractual obligations.”); Rocanova v. Equitable Life Assurance Soc. Of the U.S. v. American Int’l Underwriters Ins. Co., et al., 83 N.Y.2d 603, 614 (1994) (the “law of this State does not currently recognize a private cause of action under Insurance Law §2601,” which “prohibits insurers from engaging in ‘unfair claim settlement practices’ ” such as “ not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonably clear.”); Marvex Processing & Finishing Corp., et al. v. Allendale Mutual Ins. Co., et al., 398 N.Y.S.2d 464, 466 (Sup. Ct. 1977) (“It has been generally recognized in this State that an insurer’s liability under a policy is limited to the amount of coverage, plus appropriate interest.”).Republic argues that these cases, which stem from the primary insurance field, not the reinsurance context, are not controlling, and that these cases left open the possibility that New York law does recognize such an alternative cause of action in the context of reinsurance. Although this Court has been well educated, primarily by the parties here, as to how New York law on reinsurance differs from primary insurance, in certain contexts, e.g., whether late notice automatically absolves the reinsurer of its duty to remit payment (Unigard Sec. Ins. Co., Inc. v. North River Ins. Co., 4 F.3d 1049, 1063 (2d Cir. 1993); Unigard Ins. Co. v. North River Ins. Co., 79 N.Y.2d 576, 582 (1992)), Republic has failed to establish that the policies underlying reinsurance, as distinct from those involving primary insurance, counsel in favor of an additional cause of action for bad faith failure to reinsure promptly.[12] Therefore, despite the fact that, as recognized and expounded in this Court’s prior summary judgment opinion, the reinsurance field enjoys the “tradition of utmost good faith, particularly in the sharing of information” (Folksamerica Reins. Co., 2003 U.S. Dist. LEXIS 21584, at 5, citing Unigard Sec. Ins. Co., Inc., 4 F.3d at 1053-54), there is no caselaw to support a private right of action for the breach of this “traditional” manner of dealing. Republic’s Count III counterclaim is therefore dismissed.III. ConclusionFor the foregoing reasons, and to ensure that there remain no open motions, I conclude as follows: (1) Republic’s motion for summary judgment, contending that it did not violate the DSOL provision of the Thorpe Certificates (Folksamerica’s last struggle to resist payment), is granted; (2) Folksamerica’s motion for summary judgment, dismissing Republic’s Count III counterclaim, based on a violation of the duty of good faith and fair dealing, is granted; (3) Republic’s motion to dismiss, without prejudice, its counterclaims for bad faith and unjust enrichment, is denied; and (4) Republic’s motion to strike the Jessup Declaration and portions of Folksamerica’s 56.1 Opposition is granted-in-part and denied-in-part. As all outstanding issues have now been resolved, there need be no trial on May 17, 2004. The Clerk is instructed to close all pending motions and remove this case from my docket. Settle Judgment on notice.It Is So Ordered.FootNotes:[1] This Court expressly limited this second round of summary judgment motions to ten pages of legal memoranda, excluding exhibits, and clearly stated that “I don’t want any affidavits” (Tr. at 17:6-11). Republic and Aon complied with this request, but Folksamerica, in submitting the Jessup Declaration, violated the Court’s express limitation. As it would be unfair to allow Folksamerica to submit a Declaration, when neither of its opposing parties submitted Affidavits or Declarations, Republic’s motion to strike the Jessup Declaration is granted. Republic also moves to strike a portion of Folksamerica’s 56.1 Opposition. This motion is denied. However, the Court implores Folksamerica to confirm, through peering at its e-mail archives, whether or not it received the attachments which were supposed to have accompanied a particular e-mail, rather than relying on its answer in ¶3 of its 56.1 Opposition, that Betsy Montgomery (“Montgomery”), the Supervisor of Ceded Reinsurance Accounting at Republic, “could not confirm” whether the attachments were received.[2] As the Court authorized a second round of summary judgment motions under the guise that such motions could resolve all outstanding issues, the Court authorized Folksamerica’s submission of an additional summary judgment motion, to address Republic’s bad faith counterclaim, which was not discussed in Republic’s motion.[3] Aon asserts that Republic had a duty to submit the DSOL as a condition precedent to payment, not to coverage. Therefore, Aon argues that even if Republic failed to submit the DSOL promptly, the penalty would not be a release of Folksamerica’s duty to remit payment, ever, but rather, a release of Folksamerica’s duty to remit payment until Republic fully complied with the DSOL provision. Because such a reading would ignore the word “promptly” (Republic had a duty to “promptly provide [Folksamerica] with a definitive statement of loss”), the Court declines to adopt such an interpretation. See Two Guys From Harrison-N.Y., Inc. v. S.F.R. Realty Assoc., 482 N.Y.S.2d 465, 468 (1984) (“one of a court’s goals is to avoid an interpretation that would leave contractual clauses meaningless.”).[4] In the first Opinion, the Court did not undertake an analysis of whether Republic violated the DSOL provision in the Thorpe Certificates, but rather, explained how the DSOL requirement differed from the notice requirement, and was therefore able to rely on a general description of a DSOL as “a detailed billing, [to be submitted] promptly after submission of a summary invoice, as a condition precedent to Folksamerica’s duty to remit its reinsurance payment.” Folksamerica Reins. Co., 2003 U.S. Dist. LEXIS 21584, at *47. Now, the Court must analyze the contours of the DSOL more strictly, with a keen eye toward the exact language of the DSOL requirement, not the general description which sufficed at the earlier stage.[5] The detailed reports which accompanied the billings, the “Facultative Proof of Loss,” included “Republic’s outstanding loss reserves and expense reserves, the total paid loss, Republic’s retention and other facultative reinsurance, and a calculation of expenses and the paid loss subject to the certificate supporting the amount claimed in the summary billing.” Aon Mem. at 4, citing Van Tol Decl. Exh. F. Republic also provided Folksamerica with narrative claims reports, which provided additional details and factual information regarding the claims under the Thorpe Certificates. Aon Mem. at 4.[6] Notably, the information received by Folksamerica enabled it to post reserves at almost the exact amount at which Republic had eventually billed Folksamerica by October 2003 – $4,043,866.53. Rep. 56.1 ¶15. And, the fact that Folksamerica structured these reserves as “claim reserves” rather than “precautionary reserves” (Folk. Int. Resp. ¶3) lends credence to Republic’s argument that Folksamerica had the information necessary to fulfill the requirements of the DSOL.[7] However, in these same letters to its retrocessionaires, Folksamerica expressly noted that “[w]e have requested an explanation for the late notice and raised issues with respect to coverage for the non-products portion of the loss . . . We will report further as developments warrant.” Van Tol. Decl. Exh. M (emphasis added). This caveat supports Folksamerica’s claim that its provision of notice to retrocessionaires may not be viewed as a concession, at that time, that it had all information necessary to determine the propensities of the loss. Folk. Opp. at 5, n.4.[8] Again on May 31, 2002, Lande sought “any . . . information you can provide” concerning whether “aggregate limits of Republic’s policies are now being eroded by claims that might otherwise not have impacted Republic, or its reinsurers, on a per occurrence basis,” in particular, those arising from “settlement of [Republic's] potential exposure for alleged non-products claims.” Id. Exh. U. In a June 16th response, Morrison explained that: . . . within the Settlement Agreement entered into between Republic and Thorpe, Republic drafted the definition of an asbestos claim broadly. Policyholders may argue that the definition of a product claim is narrower in the insurance policy than it is in the law. Therefore, to avoid the potential of coverage under both the products and non-products portions of the policy, Republic entered into the referenced Agreement. Republic believes that this Agreement, including the broad definition of an asbestos claim, is in the best interest of Republic and its reinsurers. I would again advise that this very issue remains the subject of highly contested coverage litigation pending in Austin, Texas between Thorpe and its carriers, excluding Republic.Id. Exh. V. In this same letter, Morrison explicitly stated that “I trust that this information is responsive to your requests.” Id. But, Lande again wrote on July 19, 2002, explaining that:We have previously requested that you provide us with a percentage breakdown of the exposure for the products and non-products claims. Your response indicated that Thorpe is unable to provide a breakdown. We are somewhat surprised by this, and it is not clear how Thorpe can allege a non-products exposure without having some idea of what that exposure is. Without such a breakdown, Folksamerica cannot determine whether the products aggregate exposure has actually exceeded the $6 million retention under each of our certificates.* * * *We are prepared to further discuss these issues with Republic, and are open to any proposal regarding compromise or commutation of this loss. Please review and advise.Id. Exh. Z. In a July 23rd response, Morrison explained, in a detailed fashion, that:It is our understanding that Texas law is unsettled on this point [whether each claimant or each location in a non-products claim would constitute a separate occurrence] and a range of outcomes were possible on non-products at the time of our settlement . . . [One such outcome] could have exposed Republic and, in turn, FolksAmerica [sic] to significantly more exposure. The settlement prevents such an adverse result and should be supported by FolksAmerica [sic].* * * * . . . we are unaware of any case law on point with respect to how one should categorize claims that may involve both a products and non-products exposure. Thus, it should not be ‘surprising’ that Thorpe is alleging a non-products exposure without knowing the scope of the issue. It appears to be merely asserting the obvious at this point – it had employees installing asbestos-containing products at certain locations and during this installation period they had not relinquished control of the product. It also appears to be its position that any injury that occurred during this period would be a non-products claim.* * * * . . . we are unaware of any claims on which we have paid which arise solely from injury caused prior to Thorpe’s relinquishment of control of any product. As such it is our position that we have only paid products claims.Id. Exh. AA. But, on July 31, 2002, seemingly unsatisfied, Lande again wrote concerning this issue:Under the facultative certificates, Republic is required to provide a Definitive Statement of Loss. This is defined as: ‘ . . . those parts or portions of the Company’s investigative claim file which in the Judgment of the Reinsurer are wholly sufficient for the Reinsurer to establish adequate loss reserves and determine the propensities of any loss reported hereunder.’ For the reasons stated in our July 19, 2002 letter, we have requested that Republic quantify both products and non-products exposure to their policy. To date, Republic has failed to supply this information, other than to state that you are ‘unaware’ of any non-products claims which have been paid. We again request that you provide backup documentation to support your statement. We stand by our position that without such a delineation, we are unable to confirm the claimed exposure to our certificates. We would also like to point out that even if we were to concede a per location / per occurrence finding, Republic has not provided any documentation to support an exposure to their policies or our certificates on that basis.Id. Exh. BB (emphasis added).[9] Folksamerica asserts that during the period September 6 through October 24, 2002, Republic refused to allow Folksamerica to audit its records until it made a payment of $1,000,000. Folk. Opp. at 2, citing O’Farrell Dep. at 143:3-146:6 (delay audit until good faith payment is made to preclude fishing expedition for issues). In light of the short period of this request for payment, and the fact that Republic eventually retracted its position, and allowed Folksamerica to conduct the audit, without any advance payment, the Court finds this issue to be immaterial.[10] Since Folksamerica is only obligated to remit payment, to reinsure for loss settlements that are “within the terms and conditions of the original policy(ies) and within the terms and conditions of this Certificate of Reinsurance” (Id. Exh. A), Folksamerica was not obligated to accept, without sufficient documentation, Republic’s assurances that coverage was proper. Further, pursuant to well-founded tenets of contract interpretation, expressly recognized to apply with equal force in the reinsurance field, the ” ‘follow the fortunes’ doctrine cannot ‘alter the terms or override the language of reinsurance policies.’ ” Travelers Casualty & Surety Co. v. Certain Underwriters at Lloyd’s, 96 N.Y.2d 583, 596 (2001); see also Bellefonte Reins. Co. v. Aetna Casualty & Surety Co., 903 F.2d 910, 913 (2d Cir. 1990).[11] Republic moved, pursuant to Fed. R. Civ. P. 41, to dismiss without prejudice, inter alia, its claim against Folksamerica for breach of the implied covenant of good faith and fair dealing and the duty of utmost good faith (Count III), which claim is the subject of Folksamerica’s motion for summary judgment. As Folksamerica’s motion for summary judgment on Count III was already fully-briefed and submitted when Republic moved to dismiss its claim without prejudice, Folksamerica refused to stipulate to the dismissal. Republic’s Count III counterclaim is now dismissed with prejudice. Republic’s motion pursuant to Fed. R. Civ. P. 41(a), to dismiss its unjust enrichment counterclaim, without prejudice, is denied as moot.[12] The only Second Circuit case that Republic relies on for the direct proposition that courts “have held that a claim for violation of the utmost good faith is an independent cause of action for which a cedent may recover extra-contractual damages” (Rep. Opp. at 6), Mentor Ins. Co. v. Brannkasse, 996 F.2d 506, 521 (2d Cir. 1993), is inapposite. In Mentor Ins. Co., the Court remanded for further factual findings necessary for a determination that the plaintiff was entitled to attorney’s fees, paid by the reinsurer, as an equitable sanction. Attorney’s fees are not at issue in the instant motions. Brannkasse lends no support to Republic’s argument that the Second Circuit has recognized a separate tort cause of action, in addition to customary contractual damages, for breach of good faith in the reinsurance context. Further, the Court need not consider the cases cited by Republic, from other Circuits, arguably establishing a separate cause of action for breach of utmost good faith, based on non-New York law, as such cases shed no light on whether New York recognizes such a claim. As counsel are well-aware, as evidenced by their fervent choice of law arguments on the prior summary judgment motions, culminating in this Court’s holding that New York law applies, the law on reinsurance differs notably among states. Folksamerica Reins. Co., 2003 U.S. Dist. LEXIS 21584, at *15-21.
