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GenCorp, Inc. v. American Int'l Underwriters

Citation: 29 ELR 20478
No. 97-3869, 178 F.3d 804/(6th Cir., 02/05/1999, 06/02/1999)

The court holds that, under Ohio law, excess insurance policies that "follow form" to-or provide coverage on the same terms as—underlying unbrella insurance policies incorporate a pollution exclusion endorsement included in the underlying policies. The pollution exclusion endorsement was added to the underlying policies after the policy period had ended and was made retroactive to the inception date of the underlying polices. The court first holds that the insured received consideration for and consented to the inclusion of the pollution exclusion clause in the excess policies. When the insured entered into the contracts with each excess insurer, it agreed that the excess policies would incorporate the terms of the underlying policies and that any of these policies could be modified by endorsement. In exchange for its consent to the terms of each express excess policy, the insured received consideration in the form of insurance coverage. Thus, when the insured agreed to add a retroactive pollution exclusion clause to the underlying policies, the insured had already consented to incorporate that exclusion in the excess policies and had already received consideration for its inclusion. The court next holds that because the incorporation of the pollution exclusion clause in the excess policies was not a modification, the incorporation of the pollution exclusion clause did not improperly modify the excess policies subsequent to a loss. The court then holds that the insured forfeited an argument premised on notice provisions in the excess policies because it failed to raise the argument in the court below.

The court also holds that the pollution exclusion clause in the underlying policies contains no latent ambiguities that would make the district court's grant of summary judgment to the excess insurers improper. Similarly, the court holds that the excess policies do not contain ambiguities that would render the district court's grant of summary judgment for each policy erroneous. The court then holds that the effective dateof the underlying policies does not create a defective ambiguity as to whether the pollution exclusion was included in the excess policies. The insured agreed that the endorsements would be effective from inception. Thus, from the excess insurers' standpoint, the endorsements were in place on the effective dates of the underlying policies, and were therefore properly incorporated into the applicable policies.

Last, the court holds that the district court did not abuse its discretion in denying the insured's motion to amend judgment on the basis of newly discovered evidence. To constitute newly discovered evidence, the evidence must have been previously unavailable. Although the second settlement agreement between the insured and the underlying insurers, which eliminated the pollution exclusion clause from the underlying policies, did not technically exist prior to the district court's order, it was within the insured's power and control to revise the settlement agreement before the lower court's ruling.

Counsel for Plaintiff
Thomas W. Ladd
McCarter & English
Four Gateway Center
100 Mulberry St., Newark NJ 07101
(973) 622-4444

Counsel for Defendants
Michael P. Comiskey
Lord, Bissell & Brook
Harris Bank Bldg.
115 S. La Salle St., Ste. 2600, Chicago IL 60603
(312) 443-0700

Before Daughtrey and Gilman, JJ.