New York County Clerk's Index No. 600920/08
Docket No. APL-2015-00048
C!tnurt nf Appeals
STATE OF NEW YORK
MILLENNIUM HOLDINGS LLC,
-and-
THE NORTHERN ASSURANCE COMPANYY OF AMERICA,
- and-
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON and
CERTAIN LONDON MARKET INSURANCE COMPANIES,
Plaintiff,
Appellant,
Intervenor-Appellants,
- against-
THE GLIDDEN COMPANY, n/k/a AKZO NOBEL PAINTS LLC
and AKZO NOBEL PAINTS LLC,
BRIEF OF AMICUS CURIAE COMPLEX INSURANCE
CLAIMS LITIGATION ASSOCIATION
LAURA A. FOGGAN
EDWARD R. BROWN
WILEY REIN LLP
1 776 K Street, NW
Washington, DC 20006
(202) 719-7000
(202) 719-7049 Facsimile
of Counsel
s. DWIGHT STEPHENS
MELITO & ADOLFSEN PC
233 Broadway
New York, New York 10279
(212) 238-8900
(212) 238-8999 Facsimile
Attorneys for Amicus Curiae
Complex Insurance Claims
Litigation Association
Press of Fremont Payne, Inc. · 55 Broad Street, Third Floor, New York, NY 10004 · (212) 966-6570
Respondents.
TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT ........................................................ l
INTEREST OF AMICUS CURIAE .......................................................................... 2
QUESTION PRESENTED ...................................................................................... 2
SUMMARY OF ARGUMENT ................................................................................ 3
STATEMENT OF THE CASE ................................................................................ 4
ARGUMENT ............................................................................................................ 5
I. Consistent with its Purpose, the Anti-Subrogation Rule Has
Narrow Application, and It Does Not Apply to Non-Insureds ............ 5
A. Subrogation Performs an Important Role in the Fields of
Insurance and Tort Law ............................................................. 5
B. A Narrow Limitation on the Right of Subrogation Serves
Two Distinct Purposes, Neither of Which Are Applicable
Here ............................................................................................ 8
C. There Is No Basis To Deny Subrogation Here ........................ 10
IL If Third Party Wrongdoers Benefit from An Extension of the
Anti-Subrogation Doctrine, The Costs Will Be Borne by
Innocent Policyholders ....................................................................... 11
CONCLUSION ...................................................................................................... 14
-1-
TABLE OF AUTHORITIES
Page
Federal Cases
Memphis & L.R.R. Co. v. Dow,
120 U.S. 287 (1887) ................................................................................................................... 5
State v Amro Realty Corp.,
936 F.2d 1420 (2d Cir 1991) ...................................................................................................... 2
State Cases
County of Columbia v. Continental Co.,
83 N.Y.2d 618, 634 N.E.2d 946 (1994) ..................................................................................... 2
Consolidated Edison Co. v. Allstate Insurance Co.,
98 N.Y.2d 208, 774 N.E.2d 687 (2002) ..................................................................................... 2
Continental Casualty Co. v Rapid-American Corp.,
80 N.Y.2d 640, 609 N.E.2d 506 (1993) ..................................................................................... 2
ELRAC, Inc. v. Ward,
96 N.Y.2d 58, 748 N.E.2d 1 (2001) ........................................................................................... 9
Fitch v. Turner Construction Co.,
241A.D.2d166 (1st Dep't 1998) ............................................................................................ 10
Flowers v. KG Land New York Corp.,
219 A.D.2d 579 (2d Dep't 1995) ............................................................................................. 10
Glidden Co. v. Lumbermens Mutual Casualty Co.,
112 Ohio St. 3d 470, 861N.E.2d109 (2006) ........................................................................... .4
Inc. Village of Cedarhurst v Hanover Insurance Co.,
89 N.Y.2d 293, 675 N.E.2d 822 (1996) ..................................................................................... 2
K2 Investment Group, LLC v. American Guarantee & Liability Insurance Co.,
22 N.Y.3d 578, 6 N.E.3d 1117 (2014) ....................................................................................... 2
KeySpan Gas East Corp. v. Munich Reinsurance America, Inc.,
23 N.Y.3d 583, 15 N.E.3d 1194 (2014) ..................................................................................... 2
Northern Star Reinsurance Corp. v. Continental Insurance Co.,
82 N.Y.2d 281, 624 N.E.2d 647 (1993) ........................................................................... passim
Northville Industries Corp. v. National Union Fire Insurance Co.,
89 N.Y.2d 621, 679 N.E.2d 1044 (1997) ................................................................................... 2
-11-
TABLE OF AUTHORITIES
(continued)
Technicon Electronics Corp. v. American Home Assururance Co.,
Page
74 N.Y.2d 66, 542 N.E.2d 1048 (1989) ..................................................................................... 2
Town of Harrison v. National Union Fire Insurance Co.,
89 N.Y.2d 308, 675 N.E.2d 829 (1996) .................................................................................... .2
Other Authorities
F. Joseph Du Bray, A Response to the Anti-Subrogation Argument: What Really Emerged from
Pandora's Box, 41 S.D. L. Rev. 264 (1996). Second ................................................................ 7
Lee R. Russ & Thomas F. Segalla, 16 Couch on Insurance§ 222:2 (3d ed. 2005) ........................ 5
Lee R. Russ & Thomas F. Segalla, 16 Couch on Insurance§ 222:8 (3d ed. 2005) .................... 5, 7
Lee R. Russ & Thomas F. Segalla, 16 Couch on Insurance§ 224:3 (3d ed. 2005) ........................ 9
Lee R. Russ & Thomas F. Segalla, 16 Couch on Insurance § 224: 12 (3d ed. 2005) ................... .! 0
Mason v. Sainsbury, 99 Eng. Rep. 538 (1782) ................................................................................ 5
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CORPORATE DISCLOSURE STATEMENT
Pursuant to the Rules of the Court of Appeals (22 NYCRR) § 500.l(f), the
Complex Insurance Claims Litigation Association ("CICLA") states that it is a
trade association incorporated under the laws of Delaware. It has no parents,
subsidiaries or affiliates. 1
1 CICLA makes the following additional disclosures regarding the CICLA member companies
participating in this submission: CICLA submits this brief on behalf of the following member
companies: Century Indemnity Company, Chubb & Son- a Division of Federal Insurance
Company, Liberty Mutual Insurance Company, The Travelers Indemnity Company and
Travelers Casualty and Surety Company, and TIG Insurance Company.
Century Indemnity Company is a wholly-owned subsidiary of Brandywine Holdings
Corporation, which in turn is a wholly-owned subsidiary of INA Financial Corporation, which in
turn is a wholly-owned subsidiary of INA Corporation, which in tum is a wholly-owned
subsidiary of ACE INA Holdings Inc., 80% of which is owned by ACE Group Holdings, Inc.
and 20% of which is owned by ACE Limited. ACE Group Holdings, Inc. is a wholly-owned
subsidiary of ACE Limited, the ultimate parent company. ACE Limited is a publicly held
company. Chubb and Son, is a division of Federal Insurance Company. Federal Insurance
Company is a wholly owned subsidiary of The Chubb Corporation, a publicly held company.
Liberty Mutual Holding Company Inc. owns 100% of the stock ofLMHC Massachusetts
Holdings Inc. LMHC Massachusetts Holdings Inc. owns 100% of the stock of Liberty Mutual
Group Inc. Liberty Mutual Group Inc. owns 100% of the stock of Liberty Mutual Insurance
Company. The Travelers Indemnity Company and Travelers Casualty and Surety Company,
formerly known as The Aetna Casualty and Surety Company, are wholly owned subsidiaries of
Travelers Insurance Group Holdings Inc., which is a wholly owned subsidiary of Travelers
Property Casualty Corp., which is in tum wholly owned by The Travelers Companies, Inc., a
publicly held company. TIG Insurance Company is a wholly owned subsidiary of TIG Insurance
Group, Inc., which in turn is a wholly owned subsidiary ofTIG Holdings, Inc. TIG Holdings,
Inc. is wholly owned subsidiary of Fairfax, Inc., which in turn is a wholly owned subsidiary of
FFHL Group Ltd., which in tum is a wholly owned subsidiary of Fairfax Financial Holdings
Limited, a public company.
1
INTEREST OF AMICUS CURIAE
The Complex Insurance Claims Litigation Association ("CICLA") is a
leading trade association of major property and casualty insurance companies.
Together the members of CICLA write a substantial amount of insurance both in
New York and nationwide. CICLA also seeks to assist courts in understanding and
resolving important insurance coverage issues, and it has participated in numerous
cases throughout the country, including cases before this Court. 2
CICLA has both a national perspective and in-depth knowledge of the
important insurance and subrogation issues presented in this appeal. Therefore,
CICLA respectfully submits that its unique perspective will assist the Court in
deciding this appeal and the important principles at stake.
QUESTION PRESENTED
Whether the anti-subrogation rule should be applied where it would advance
neither of the rule's two recognized purposes, would undermine the rule's basic
2 CICLA, or its predecessor the Insurance Environmental Litigation Association ("IELA"), has
appeared as an amicus curiae in the following New York cases: KeySpan Gas E. Corp. v.
Munich Reinsurance Am., Inc., 23 N.Y.3d 583, 15 N.E.3d 1194 (2014); K2 Inv. Grp., LLC v. Am.
Guar. & Liab. Ins. Co., 22 N.Y.3d 578, 6 N.E.3d 1117 (2014); Consol. Edison Co. v Allstate Ins.
Co., 98 N.Y.2d 208, 774 N.E.2d 687 (2002); Northville Indus. Corp. v Nat'l Union Fire Ins. Co.,
89 N.Y.2d 621, 679 N.E.2d 1044 (1997); Town of Harrison v Nat'l Union Fire Ins. Co., 89
N.Y.2d 308, 675 N.E.2d 829 (1996); Inc. Vil!. of Cedarhurst v Hanover Ins. Co., 89 N.Y.2d 293,
675 N.E.2d 822 (1996); Cnty. of Columbia v Cont'/ Ins. Co., 83 N.Y.2d 618, 634 N.E.2d 946
(1994); Cont'/ Cas. Co. v Rapid-Am. Corp., 80 N.Y.2d 640, 609 N.E.2d 506 (1993); State v
Amro Realty Corp., 936 F.2d 1420 (2d Cir 1991); and Technicon Elecs. Corp. v Am. Home
Assur. Co., 74 N.Y.2d 66, 542 N.E.2d 1048 (1989).
2
aim of protecting policyholders, and would have the opposite effect of its purpose
by actually harming policyholders. 3
SUMMARY OF ARGUMENT
Subrogation serves important roles in both insurance and tort law. As this
Court has observed, "[ s ]ubrogation allocates responsibility for the loss to the
person who in equity and good conscience ought to pay it, in the interest of
avoiding absolution of a wrongdoer from liability simply because the insured had
the foresight to procure insurance coverage." See NStar Reinsurance Corp. v.
Cont'! Ins. Co., 82 N.Y.2d 281, 294, 624 N.E.2d 647, 654 (1993). Besides the
general benefits inherent in the doctrine, subrogation benefits policyholders
because it decreases their costs of insurance in myriad ways.
While the benefits of subrogation are significant, it is inherently a creature of
equity, and it is not appropriate in all circumstances. One situation has arisen with
such frequency that courts have created a "rule" - the "anti-subrogation rule" -
providing that an insurer cannot assert a subrogation claim against its own insured
for the very same risk for which the insured was covered by the insurer's policy.
The anti-subrogation rule is supported by two important purposes. The first
purpose is to prevent the insurer from passing the incidence of loss to its own
3 CICLA does not take a position on the application of the voluntary payment doctrine to the
facts in this case.
3
insured. The second purpose is to guard against the potential conflict of interest
that may affect the insurer's incentive to provide a defense for its insured.
In this case, application of the anti-subrogation rule is improper. First, the
party who seeks to invoke it, Akzo Nobel Paints ("ANP"), is not an insured in any
way, shape or form. Second, application of the anti-subrogation rule would not
serve its intended purposes. Finally, the anti-subrogation rule is intended to benefit
policyholders, but applying it in cases such as this one - where the party seeking to
invoke it is a stranger to the insurance contract - would have the opposite effect,
forcing policyholders to pay for the wrongdoing of third parties (here, ANP).
Because the anti-subrogation rule derives from principles of equity, this Court
should look to the inequitable results that would flow from its expansion and refuse
to apply it to advantage non-insureds at the expense of the insurance system.
STATEMENT OF THE CASE
CICLA adopts the Statement of the Case found in the Brief of Appellant and
Intervenor Appellants (collectively the "insurers"). The most critical fact - and the
one CICLA views as dispositive - is that ANP was never an insured under any of
the relevant policies. See Glidden Co. v. Lumbermens Mut. Cas. Co., 861 N.E.2d
109, 112 (Ohio 2006). Further, the insurers here incurred millions of dollars in
fulfilling their contractual defense obligations to the policyholder, Millennium
Holdings LLC ("Millennium"), while ANP had a contractual obligation to
4
indemnify Millennium for those same costs, but breached its contract by
wrongfully refusing to do so.
ARGUMENT
I. Consistent with its Purpose, the Anti-Subrogation Rule Has Narrow
Application, and It Does Not Apply to Non-Insureds
A. Subrogation Performs an Important Role in the Fields of
Insurance and Tort Law
In the insurance context, subrogation refers to the ability of an insurer to
recover from a third party on the grounds that the policyholder had a right to
recover from the third party for the same loss as was compensated by the payment
of the policy proceeds. See Lee R. Russ & Thomas F. Segalla, 16 Couch on
Insurance§ 222:2 (3d ed. 2005). Common law courts have long recognized the
function of subrogation. See Mason v. Sainsbury, 99 Eng. Rep. 538, 540 (1782)
(insurers are entitled to bring subrogation action in name of policyholder when
they have paid out a loss under an insurance contract); see also Memphis & L.R.R.
Co. v. Dow, 120 U.S. 287, 301-02 (1887) ("The right of subrogation ... is a
creature of equity; is enforced solely for the purpose of accomplishing the ends of
substantial justice[.]"). This Court also has recognized the doctrine, along with its
benefits. See, e.g., NStar, 82 N.Y.2d at 294, 624 N.E.2d at 654. The rationale
behind the subrogation doctrine is simple: a loss ordinarily should be paid "by the
person who in equity and good conscience ought to pay it." Russ & Segalla, supra
§ 222:8.
5
Insurance policies are contracts. A policyholder performs its part of the
contract, at least initially, by paying policy premiums. An insurer performs its part
of the contract later, after coverage is triggered, often by defending the
policyholder or by paying covered loss. Without commercial insurance, a
company would have to set aside capital in the event of a future loss. But with
insurance, the bargained-for premium-for-risk exchange allows the policyholder to
invest in growth or return money to shareholders.
Insurers set premiums based on anticipated net losses. Net losses take into
consideration loss payments and recoveries. To illustrate, suppose a policyholder
is in an automobile accident through the negligence of another driver. Here, the
policyholder's automobile insurer may pay to repair or replace her car, provide her
with a rental vehicle, etc. - which would be loss - but the "net loss" would reflect
the amount of the insurer's outlay after any recoveries the insurer obtained through
a subrogation claim against the negligent driver. Of course, the negligent driver
may have purchased automobile insurance for himself, which may (or may not)
provide the ultimate source of recovery for the losses caused to the innocent driver.
This system makes sense, both for its basic logic and as a matter of policy.
The innocent driver is made whole by payment from her own insurance company.
That insurer, in tum, is entitled to the policyholder's rights as against third parties.
The benefits of allowing these subrogation claims are clear. First, by permitting
6
the insurer to recover from a responsible third party, its policyholders, including
the innocent driver, do not shoulder the burden of increased premiums resulting
from the loss. See generally F. Joseph Du Bray, A Response to the Anti-
Subrogation Argument: What Really Emerged from Pandora's Box, 41 S.D. L.
Rev. 264 (1996). Second, the loss is passed to the culpable party- here, the
negligent driver- ensuring the normal operation and function of basic tort law,
where wrongdoers are held liable for the damages proximately caused by their
negligence. Stated differently,
[ w ]hen the insurer has made payment for the loss ... , it is only
equitable and just that the insurer should be reimbursed for its
payment to the insured, because otherwise either the insured would be
unjustly enriched by virtue of a recovery from both the insurer and the
third party, or in the absence of such double recovery by the insured,
the third party would go free notwithstanding the fact that he or she
has a legal obligation in connection with the damage.
Russ & Segalla, supra§ 222:8.
In the automobile insurance context, safe drivers may pay lower premiums
because the risk to insure them is lower than the risk to insure riskier drivers. In
much the same way, premiums for commercial risks are set based on a number of
factors, such as the policyholder's loss history, the jurisdictions in which the
policyholder's risks are located, and the nature of the policyholder's operations. In
addition, insurers often look to certain practices of the business in assessing risk.
For example, when issuing a commercial general liability policy to a general
7
contractor, an insurer may evaluate whether that contractor requires its
subcontractors indemnify it and/or name it as an "additional insured" under their
own policies. These contractual risk-shifting mechanisms are vital for insurers to
adequately price the risk and set the premiums. Policyholders benefit from careful
underwriting, as well, in the form of lower insurance premiums. The existence of
the subrogation doctrine is vital to ensure the continued vitality of this system.
B. A Narrow Limitation on the Right of Subrogation Serves Two
Distinct Purposes, Neither of Which Are Applicable Here
Given the major benefits of subrogation, courts apply the doctrine liberally
to permits subrogation claims in a wide range of circumstances. Courts have also
recognized a narrow limitation to the right of subrogation, commonly referred to as
the "anti-subrogation rule." The anti-subrogation rule provides that "[a]n insurer
... has no right of subrogation against its own insured for a claim arising from the
very risk for which the insured was covered." See N. Star, 82 N.Y.2d at 294, 624
N.E.2d at 654 (internal citation omitted).
There are two recognized purposes behind this limitation on insurers' right
to subrogation. As one leading treatise has explained:
The antisubrogation rule is supported by two public policy
considerations. First, the insurer should not be able to pass its
loss to its own insured, thus avoiding coverage which its
insured has purchased and paid in the form of premiums.
Accordingly, the antisubrogation rule is a limitation on the
insurer's right of subrogation when the subrogor and third party
are both insureds of the same carrier on the same claim,
8
whereby the insurer which provides coverage to both sides of a
third-party action is prevented from recouping from one insured
- the third-party defendant - a payment it makes on behalf of
another insured - the third-party plaintiff.
The second public policy concern is that the insurer should not
be placed in a situation where there exists a potential conflict of
interest, thereby possibly affecting the insurer's incentive to
provide a vigorous defense for one of its insureds.
Allowing a liability insurer to unilaterally settle uncovered
claims and then step into shoes of the claimant and sue its own
insured runs counter to the special relationship between the
insurer and the insured and to the public policy interests in
fostering trust and eliminating conflicts of interest.
Russ & Segalla, supra§ 224:3. This Court and many others have recognized these
specific purposes of the limitation. See N Star, 82 N.Y.2d at 294-95, 624 N.E.2d
at 654 ("Public policy requires this exception to the general rule both to prevent the
insurer from passing the incidence of loss to its own insured and to guard against
the potential for conflict of interest that may affect the insurer's incentive to
provide a vigorous defense for its insured.") (internal citation omitted).
The anti-subrogation rule is narrow. First, it can only apply when the party
seeking to invoke it qualifies as an insured under the insurer's policy. See ELRAC,
Inc. v. Ward, 96 N.Y.2d 58, 76, 748 N.E.2d 1, 8 (2001). Further, the anti-
subrogation rule does not prohibit subrogation where the loss in question was not
covered by the insurer's policy. See NStar, 82 N.Y.2d at 296, 624 N.E.2d at 654
(anti-subrogation rule did not apply where policy excluded loss at issue). These
9
limitations flow logically from the two aims of the anti-subrogation rule. As the
venerable Latin maxim goes, cessante ratione legis, cessat et ipsa lex - "where the
reason stops, there stops the rule."
C. There Is No Basis To Deny Subrogation Here
ANP is not, and never has been, insured under the policies; instead, it is a
third party stranger to the insurance contracts.4 Therefore, there is no risk that any
insurer will "pass its loss to its own insured," which is the key concern of the anti-
subrogation rule. By contrast, as described in Section II, infra, ANP would have
this Court adopt a rule under which, in many instances, a loss that should be paid
by a third party wrongdoer would instead be paid by the policyholder itself. This
runs counter to the policies behind the anti-subrogation rule.
Moreover, the risk of an insurer "unilaterally settl[ing] uncovered claims and
then ... su[ing] its own insured" - is not at play in this case. Here, the insurers
defended their policyholder, Millennium, and then stood shoulder-to-shoulder with
it in seeking to recover from ANP, a non-insured who ultimately was found to be
4 Given the equities, it is no surprise that courts and commentators agree that non-insureds, such
as ANP here, cannot benefit from the anti-subrogation doctrine. See, e.g., Russ & Segalla, supra
§ 224: 12 ("[W]here persons or entities are not covered under a policy as additional insureds, the
antisubrogation rule does not apply."); see also Flowers v. KG Land NY. Corp., 219 A.D.2d 579,
581 (2d Dep't 1995) ("Here, it is undisputed that [the party against whom the subrogation claim
was made] is not covered under the ... policy .... Accordingly, [the insurer] is not seeking a right
of subrogation against its own insured, and the antisubrogation rule does not apply."); Fitch v.
Turner Constr. Co., 241 A.D.2d 166, 171 (1st Dep't 1998) (anti-subrogation rule did not bar
liability insurer from seeking recovery from subcontractor where insurer "never undertook to and
d[id] not insure" the subcontractor).
10
obligated to pay for Millennium's losses. On the facts presented, Millennium
bargained for important indemnification rights. The insurers worked with
Millennium to enforce those rights against ANP. ANP was not an insured under
any of the policies, and there is no conflict of interest in the insurers pursuing valid
claims against ANP.
On the facts of this case, the fundamental right to subrogation is and should
remain applicable. Here, the insurers fulfilled their obligations to Millennium by
defending it in the underlying litigation. By contrast, ANP breached its contract
with Millennium by wrongfully refusing to indemnify it. Equity does not support
absolving ANP from liability. To so hold would sanction ANP's breach of
contract while penalizing the insurers, who fulfilled their obligations. The
subrogation doctrine serves to avoid inequitable results, and in this case its
application would serve that exact purpose.
II. If Third Party Wrongdoers Benefit from An Extension of the Anti-
Subrogation Doctrine, The Costs Will Be Borne by Innocent
Policyholders
The narrow limitations on insurers' rights to subrogation protect
policyholders and the insurance system. If this Court were to broaden the anti-
subrogation rule to cover non-insureds, policyholders could be harmed in a number
of ways. These harms demonstrate additional reasons why expanding the rule is
unwarranted and unwise.
11
The insurance market is premised on the risk-for-premium exchange.
Insurers charge premiums commensurate with the risks underwritten, and through
the aggregation of premiums from a large number of policyholders - many of
whom will never have claims requiring payment under the policies - they are able
to cover the significant losses of the policyholders who do.
Dollars not paid by third party wrongdoers to offset losses will need to be
paid by someone. Because insurers do not price their products below cost, that
"someone" will end up being the very class of persons the anti-subrogation rule is
intended to protect: policyholders. See Du Bray, supra. While it would be bad
enough to spread that risk across all of an insurer's policyholders, in reality the risk
would largely fall on the specific policyholder that had a cause of action against
some third party because that policyholder's loss history (made worse by the
absence of a subrogation recovery) would almost surely lead it to incur higher
premium expenses on a going-forward basis. Id. at 273-74.
Extending the anti-subrogation rule to protect non-insureds would also harm
policyholders in loss sensitive insurance programs. For commercial risks,
policyholders and insurers often enter into retrospective premium arrangements,
under which a policyholder's loss history has a direct bearing on its ultimate
payment obligation and may provide greater value (i.e., more coverage and/or
12
lower premiums).5 In these programs, the policyholder ultimately has a lower cost
of insurance if it has a lower loss history (measured in net claims paid). Thus, if
subrogation rights are denied to its insurer, a policyholder under this type of
program would effectively be required to subsidize the wrongdoing of third party
non-insureds -who under ANP's rule would be immune from suit- in the form of
higher retrospective premiums or other payments.6
Finally, unnecessarily limiting insurer subrogation rights may harm
policyholders and underlying claimants through the accelerated exhaustion of
policy limits. Insurance contracts contain limits of liability. When losses are paid,
those limits become eroded. If any amounts are recovered, such as through
subrogation, policy limits are replenished. Thus, in any policy where the limits of
coverage are not infinite (which is virtually every policy), policyholders benefit
from subrogation claims against non-insureds because recoveries operate, in effect,
to reinstate or "increase" the limits available.
5 At least from a payment perspective, the way these programs work is rather simple. First, the
policyholder pays a base premium at the outset, before policy inception. Then, after the policy
term has been completed and the claims are closed, the policyholder may be entitled to a refund
- or it may be required to pay additional amounts - based on its actual loss history.
6 A policyholder may not be able to obtain meaningful recovery for its own uncovered expenses,
as well, such as for amounts paid by the policyholder within its deductible. Cf N Star, 82
N.Y.2d at 294, 624 N.E.2d at 294 (1993) ("Subrogation allocates responsibility for the loss to the
person who in equity and good conscience out to pay it, in the interest of avoiding absolution of
a wrongdoer from liability simply because the insured had the foresight to procure insurance
coverage.").
13
CONCLUSION
Insurers' rights to subrogation serve important functions in the tort and
insurance systems. The narrow limitations recognized with respect to insurers'
subrogation rights are not applicable here, and denying subrogation would harm,
not protect, policyholder interests. For all of these reasons, CICLA respectfully
requests that this Court reverse the Appellate Division's erroneous ruling that the
anti-subrogation doctrine immunizes ANP, a non-insured, from suit.
December 28, 2015
Laura A. Foggan
Edward R. Brown
WILEY REIN LLP
177 6 K Street, NW
Washington, DC 20006
(202) 719-7000
(202) 719-7049 (fax)
Of Counsel
115167
Respectfully Submitted,
S. Dwight Stephens, Esq.
MELITO & ADOLFSEN PC
233 Broadway
New York, NY 10279
(212) 238-8900
(212) 238-8999 (fax)
Attorneys for Amicus Curiae Complex
Insurance Claims Litigation Association
14
