Opinion
Index No. 603405/2001
02-02-2022
CENTURY INDEMNITY COMPANY, Plaintiff, v. BROOKLYN UNION GAS COMPANY et al., Defendants.
O'Melveny & Myers LLP, New York, NY (Jonathan Rosenberg and Leah Godesky of counsel), and Los Angeles, CA (Daniel Petrocelli and Craig P. Bloom of counsel), for plaintiff. Covington & Burling LLP, Washington, D.C. (Jay T. Smith, Eric Bosset and Michael Lechliter of counsel), and San Francisco, CA (Gretchen Hoff Varner of counsel), for defendant Brooklyn Union Gas Company.
O'Melveny & Myers LLP, New York, NY (Jonathan Rosenberg and Leah Godesky of counsel), and Los Angeles, CA (Daniel Petrocelli and Craig P. Bloom of counsel), for plaintiff.
Covington & Burling LLP, Washington, D.C. (Jay T. Smith, Eric Bosset and Michael Lechliter of counsel), and San Francisco, CA (Gretchen Hoff Varner of counsel), for defendant Brooklyn Union Gas Company.
Gerald Lebovits, J. This decision addresses one of 14 motions in limine filed in two-decades-old litigation between Brooklyn Union Gas Company and Century Indemnity Company. The underlying dispute in the litigation concerns whether and to what extent Century, as Brooklyn Union's excess insurer, must cover the vast costs that Brooklyn Union is incurring through its contributions to the environmental remediation of the Gowanus Canal in Brooklyn and the sites of other former manufactured-gas plants (MGPs) in New York City.
The first trial in the litigation, limited to a subset of Brooklyn Union's MGP sites, is scheduled to begin in late-March 2022. In preparing for trial, the parties have filed numerous motions seeking to preclude at trial various potential topics of testimony and argument. This decision addresses motion sequence 034 in this action: Brooklyn Union's motion to preclude Century from introducing evidence at trial or arguing to the jury that the terms of the Century policies required Brooklyn Union to provide notice to Century as soon as it was reasonably likely that Brooklyn Union would be required to incur environmental-remediation costs exceeding the $100,000 attachment point of the Century policies. The motion is granted.
The parties have agreed that one or more trials relating to other Brooklyn Union MGP sites will be held at a later date yet to be determined. (See NYSCEF Nos. 217-221 [note of issue with exhibits].)
The litigation between the parties comprises two separate actions before this court: the current action and Brooklyn Union Cas Co. v. Century Indemnity Co. , Index No. 403087/2002. (In the latter action, Brooklyn Union sued not only Century, but also Munich Reinsurance America, Inc.) The motions in limine filed in the two actions largely, but not completely, overlap. This court understands there to be 14 distinct motions in limine in total that it must decide.
This motion is motion sequence 026 in the Brooklyn Union docket.
BACKGROUND
One of the many issues that will likely be contested at the upcoming trial is whether Brooklyn Union timely notified Century of the happening of occurrences for which Century would have to provide coverage. Timely notice is generally a condition precedent to coverage. (See Morris Park Contr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 33 A.D.3d 763, 764, 822 N.Y.S.2d 616 [2d Dept. 2006].)
The inquiry into timeliness of notice is driven by the relevant language of the insurance policy or policies at issue. Here, that language requires Brooklyn Union to provide written notice "as soon as practicable" following "the happening of an occurrence or accident that appears reasonably likely to involve liability on the part of [the insurer]." (NYSCEF No. 615 at 13 [bates-number CEN000405].) Coverage exists only when the accident or occurrence happens during the policy period. (Notice of the occurrence, however, may be provided later). (See id. at 10 [CEN000402].) The threshold for liability (often referred to as the "attachment point") is $100,000 per accident or occurrence. (See id. ) And whether an occurrence is "reasonably likely to involve liability" is an objective inquiry, considered from the standpoint of a reasonable insured in Brooklyn Union's position. (See Christiania General Ins. Corp. of N.Y. v. Great Am. Ins. Co. , 979 F.2d 268, 276 [2d Cir. 1992].)
The litigation between Century and Brooklyn Union involves several excess policies issued by Century's corporate predecessors. This court understands the quoted language, taken from an excess policy issued in 1951, to be representative.
For a single discrete incident happening within the policy period, Brooklyn Union must provide notice to Century once it is reasonably likely that Brooklyn Union will suffer a covered loss exceeding $100,000. This case, however, does not involve a single identifiable incident, but rather "dispersion of ... pollutants" through a "gradual, continuous process." ( Consolidated Edison Co. of NY v. Allstate Ins. Co. , 98 N.Y.2d 208, 746 N.Y.S.2d 622, 774 N.E.2d 687 [2002].) That dispersion "creat[es] an inference that there was an accident or occurrence during each and every policy period, though there is no evidence of an accident during any particular policy period." ( Id. [emphasis added].) In this scenario, given the policy language limiting Century's coverage liability to occurrences within the policy period, the loss for which Brooklyn Union is seeking coverage must be allocated pro rata across the various policies in effect during the overall (lengthy) period of environmental contamination. (See id. at 222-224, 746 N.Y.S.2d 622, 774 N.E.2d 687 [discussing pro rata allocation]; Century Indem. Co. v. Brooklyn Union Gas Co. , 170 A.D.3d 632, 633, 97 N.Y.S.3d 72 [1st Dept. 2019] [holding that pro rata allocation is required for the loss at issue in this action].) As a result, the dollar figure required before Brooklyn Union's covered losses will reach the Century excess policies is far higher than $100,000. This is because Brooklyn Union must have suffered a covered loss—one potential example being costs of mandated environmental cleanup—large enough that after the loss has been spread across applicable policies it still remains above the Century policies’ $100,000 attachment point.
There are different permissible "ways to prorate liability among successive policies." (Con. Ed. , 98 N.Y.2d at 224, 746 N.Y.S.2d 622, 774 N.E.2d 687.) One common allocation formula is the so-called "time on the risk" method. This formula multiplies "the total risk by a fraction that has as its denominator the entire number of years of the claimant's injury and as its numerator the number of years within which the policy was in effect"—assuming, in environmental-contamination cases, "that the amount of pollution occurring in any particular year is always the same as in every other year." (Keyspan Gas E. Corp. v. Munich Reins. Am., Inc. , 143 A.D.3d 86, 92, 37 N.Y.S.3d 85 [1st Dept. 2018], affd 31 N.Y.3d 51, 73 N.Y.S.3d 113, 96 N.E.3d 209 [2018].) Brooklyn Union suggests that in a July 2018 decision in this action, this court approved the use of the time-on-the-risk formula. (See NYSCEF No. 618 at 4 [quoting NYSCEF No. 550 at 12].) In context, though, this court was merely describing the Court of Appeals's approach in Con. Ed. , not adopting that approach for this action. The choice among allocation formulas was not before this court when it rendered its July 2018 decision. Nor is it at issue on this motion.
In light of this effect of pro rata allocation on Century's coverage liability, the question arises whether allocation should affect Brooklyn Union's notice obligation, as well: I.e. , should the question for notice purposes be the point at which $100,000 in covered losses was reasonably likely, or instead some (much) higher figure. This is important, because the higher the amount in likely covered losses needed to trigger Brooklyn Union's notice obligation, the later in time the notice obligation would be triggered—thereby making it more likely that Brooklyn Union's notice to Century was timely.
Brooklyn Union argues that under the language of the policy and prior decisions in this action, pro rata allocation must be taken into account in considering both when liability exists and when notice is due. Brooklyn Union relies for this proposition on Century Indemnity Co. v. Keyspan Corp., 2007 N.Y. Slip Op. 508957(U), 2007 WL 1341264 (Sup. Ct., N.Y. County May 7, 2007) (Stallman, J.), affd sub nom. Century Indem. Co. v. Brooklyn Union Gas Co. , 58 A.D.3d 573, 574-575, 872 N.Y.S.2d 444 (1st Dept. 2009). (See NYSCEF No. 618 at 3-4.) Brooklyn Union has therefore moved in limine to prevent Century submitting evidence, or arguing to the jury, that Brooklyn Union's notice obligation was triggered by a reasonable likelihood of only $100,001 in covered losses. In essence, Brooklyn Union is arguing that Century's interpretation of this aspect of the insurance policies is untenable as a matter of law, rendering any testimony in support of that interpretation irrelevant and inadmissible.
Century does not dispute that this court may resolve as a matter of law the parties’ disagreement on this issue.
In opposing the motion, Century argues that Brooklyn Union's position misconstrues the caselaw on notice and allocation. That caselaw, Century contends, dictates a conclusion that allocation is not relevant to the timing of the notice obligation—only to an insured's potential justifications for having provided untimely notice. Century relies on Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 24 A.D.3d 172, 173, 805 N.Y.S.2d 74 (1st Dept. 2005) ( LILCO ). (See NYSCEF No. 619 at 2.)
This court finds Brooklyn Union's interpretation of the governing caselaw more persuasive. Brooklyn Union's motion in limine is granted.
DISCUSSION
As discussed above, the parties on this motion ground their respective positions in existing caselaw about pro rata allocation, notice, and whether one affects the other. This court's analysis therefore begins with close consideration of that prior precedent.
A. The Prior Rulings in this Action on Allocation and Notice on which Brooklyn Union Relies
The 2007 decision rendered by Judge Stallman in this action on which Brooklyn Union relies addressed motions for partial summary judgment filed by Century. The motions sought declarations that Brooklyn Union's 1993 notice of occurrence with respect to four MGP sites (including the one at issue in the upcoming trial) was untimely, contending that Brooklyn Union's notice obligation assertedly arose as a matter of law in 1991. (See 2007 N.Y. Slip Op. 50957[U], at *1.) Judge Stallman rejected this contention and denied Century's motion.
Judge Stallman explained that in the environmental-contamination context, "liability for cleanup is based in large measure on the involvement of a regulatory agency." ( 2007 N.Y. Slip Op. 50957[U], at *7.) Determining whe ther a reasonable likelihood existed at a given time that an excess policy would be implicated requires weighing the likelihood of (i) property damage due to environmental contamination; (ii) a regulatory agency requiring the insured to remediate that contamination; and (iii) resulting remediation costs incurred in amounts sufficient to reach the policy. (See id. at *8.) A further "layer of complexity in this inquiry" is added by the Court of Appeals's endorsement in Con. Ed. of pro rata allocation of coverage liability. ( Id. at *9.) A prior decision in this action had held that the record was not sufficiently developed to decide definitively whether to apply pro rata allocation for liability purposes (see id. at *5-*6, *12 ). Given that prior ruling, and Con. Ed. itself, the possibility of pro rata allocation also must "be factored into the analysis of whether Brooklyn Union had a duty to notify Century" ( id. at *9 ).
Century says this statement held merely that "allocation can be relevant as potential evidence that Brooklyn Union held a reasonable, good-faith belief that the allocation method would preclude the Century policies from being reached." (NYSCEF No. 619 at 12.) That reading, however, ignores the statement's surrounding context, which concerns the point at which an insured's notice obligation arises at all—not when and how an insured may have late notice excused. (See 2007 N.Y. Slip Op. 50957[U], at *9.)
Century also argues, in the alternative, that this court should disregard Judge Stallman's analysis on the relationship between allocation and notice as having relied "on the incorrect premise that the proper allocation method turned on questions of fact." (NYSCEF No. 619 at 11, citing Century Indemnity , 170 A.D.3d at 633, 97 N.Y.S.3d 72.) But Judge Stallman found the prior ruling deeming allocation a fact question to be relevant to his analysis precisely because it left open the possibility that pro rata allocation would still prove material in determining Century's liability, and thereby entailed taking allocation into account at summary judgment with respect to notice, too. (See 2007 N.Y. Slip Op. 50957[U], at *12.) That the First Department has since held that pro rata allocation will affect Century's liability strengthens, not weakens Judge Stallman's conclusion on this point.
Judge Stallman held that this need to adjust for pro rata allocation precluded granting summary judgment to Century—even as to an MGP site at Coney Island for which it was clear by June 1991 that Brooklyn Union faced estimated remediation costs of up to $8 million. (See 2007 N.Y. Slip Op. 50957[U], at *12.) He explained if the court were ultimately to employ pro rata allocation, and "if remediation costs are prorated, then there may not have been a reasonable possibility in June 1991 that [Century's] excess policies would be reached" due to cleanup at the site. ( Id. at *12.) Absent clarity in June 1991 on whether a reasonable possibility existed of reaching Century's excess policies due to this MGP site, there was no basis to hold as a matter of law that notice of occurrence was then due to Century.
With respect to the other three MGP sites at issue on the motion, the judge concluded that the record did not establish as a matter of law that regulatory agencies "were imposing or about to impose cleanup liability upon Brooklyn Union" for those sites as of June 1991. (Id. at *11.) Those sites’ remediation costs (if any) then remained unclear, such that it was not yet "within the realm of reasonable possibility" to conclude that covered remediation costs would reach the Century excess policies. (Id. )
The key point for present purposes is that Judge Stallman's bottom-line ruling on notice as to that MGP site depended on his conclusion that allocation is relevant to when notice is triggered in the first place, not merely to when an insured may point to allocation to justify late notice.
On appeal, Century challenged this conclusion (as well as other aspects of the ruling). Century argued that for notice purposes "allocation is properly considered only as a possible explanation for [the insured's] delay" in providing notice to the insurer. ( Br. for Plaintiff-Appellant, Century Indemnity , 2008 WL 5948971, at *43.) Judge Stallman's having required Century to account at summary judgment for the effect of "pro rata allocation ... on whether [its] policies were reasonably likely to be impacted" improperly shifted the burden from insured to insurer. ( Id. at *42 ; see generally id. at *42-*44.)
The First Department affirmed. (See 58 A.D.3d 573, 872 N.Y.S.2d 444.) The Court rejected Century's allocation-related challenge to the ruling below, holding that Judge Stallman did not "improperly shift the burden of showing pro rata allocation to the insurer since the issue is notice with respect to undetermined costs, not reimbursement for known costs." ( Id. at 574, 872 N.Y.S.2d 444, citing Con. Ed. , 98 N.Y.2d 208, 746 N.Y.S.2d 622, 774 N.E.2d 687.) In short, a prior decision in this action squarely held that allocation must be considered with respect both to the insurer's ultimate coverage liability and the timing of the onset of the insured's notice obligation. That holding was directly challenged on appeal, and affirmed by the First Department. It would thus appear to be binding on this court now—both as law of the case and as controlling appellate precedent.
Century claims here that the First Department intended by this sentence to convey that notice and allocation are separate and independent issues (with allocation being relevant only to liability). (See NYSCEF No. 619 at 13.) That reading ignores that the First Department was rejecting Century's argument that Judge Stallman had improperly linked allocation and notice. (See 58 A.D.3d at 574-575, 872 N.Y.S.2d 444.)
Century contends, however, that this court cannot take these trial and appellate rulings on notice at face value, because that interpretation is (assertedly) foreclosed by an earlier pair of trial and appellate rulings relating to notice. (See NYSCEF No. 619 at 8-13, citing LILCO , 24 A.D.3d at 173, 805 N.Y.S.2d 74.) Therefore, Century argues, it may properly introduce evidence at trial and argue to the jury that Brooklyn Union's notice obligation was triggered upon a reasonable likelihood of $100,000 in covered losses. As discussed further below, this contention is unpersuasive.
B. The Rulings in LILCO on which Century Relies
LILCO was an insurance-coverage dispute over costs of remediating environmental damage at a landfill in the Town of Oyster Bay on Long Island. LILCO had used this landfill, which was open from the 1930s to the 1970s, to dispose of hazardous substances. (See Decision & Order, NYSCEF No. 621 at 2-3 [Gammerman, J.].) In September 1993, Oyster Bay wrote to LILCO, indicating an intent to sue LILCO to recover part or all of the costs of remediating environmental harm at the landfill—costs the EPA had estimated at $26.2 million (see id. at 5)—unless LILCO promptly entered settlement negotiations (see id. at 6). Five months later, in February 1994, Oyster Bay sued LILCO in federal court. Five weeks after that, LILCO sent notice of an occurrence to its excess insurers. (See id. )
Judge Gammerman's trial-court decision in LILCO is not available on NYSCEF or Westlaw. Century's opposition papers on this motion include a copy of the decision at NYSCEF No. 621.
In later coverage litigation brought by LILCO in Supreme Court, New York County, LILCO's insurers argued that LILCO's months-long delay after it received Oyster Bay's September 1993 letter rendered LILCO's notice untimely under the terms of the policies. (See id. at 12.) Separately, some of the insurers also moved to dismiss LILCO's clams against them, arguing that LILCO's covered losses necessarily could not reach their policies’ attachment point given pro rata allocation. (See id. at 2 n 1 and 15-16; see also Br. for Plaintiff-Appellant, LILCO , 2004 WL 5369009, at *19-*20.) Judge Gammerman granted that motion to dismiss. (See NYSCEF No. 621 at 2 n 1.)
The notice provisions of the policies are similar to those at issue in this action. (See NYSCEF No. 621 at 8-10.)
On the notice motion, Judge Gammerman held the September 1993 letter from Oyster Bay, "threatening litigation and making a claim to hold LILCO responsible for the entire remediation, removes all ambiguity from the situation." (NYSCEF No. 621 at 14.) He held that it therefore was unreasonable for LILCO to have waited another several months until after Oyster Bay had actually commenced its action in early 1994. (Id. ) Judge Gammerman rejected an argument by LILCO that "calculations on allocation may render the policies unreachable so that no notice should have been required," pointing out that he had only "considered policies that were not involved" in the allocation-based motion to dismiss. (Id. at 15 [emphasis added].)
Judge Gammerman then went on to say that in his view this LILCO argument "misses the point," because the "issue of notice is completely separate and unrelated to allocation." (Id. ) That is, once LILCO knew that Oyster Bay was prepared to bring a remediation-related claim against it for as much as $26.2 million, LILCO was required to provide notice of this occurrence to its excess insurers, whether or not "allocation has subsequently determined" in the course of the coverage action "that a number of [excess] policies will not be reached." (Id. at 16.)
On appeal, the First Department affirmed Judge Gammerman's notice ruling. (See LILCO , 24 A.D.3d 172, 805 N.Y.S.2d 74.) The Court held that an occurrence reasonably likely to involve the excess policies at issue happened when Oyster Bay sent its September 1993 letter threatening litigation—not several months later when Oyster Bay actually filed suit. ( Id. at 173, 805 N.Y.S.2d 74.) The Court rejected LILCO's argument "that there was a reasonable possibility that the subject policies ... would not be reached" by the town's threatened claim: "[P]laintiff offers no evidence that the timing of its notice was the result of a deliberate determination to that effect," as opposed to plaintiff's "belief that it was not responsible for the [landfill] cleanup costs." ( Id. )
C. Reasons to Conclude the Disposition of this Motion is Controlled by the Prior Notice-Related Rulings in this Action, Rather Than by LILCO
Century claims the First Department's holding in LILCO necessarily means that allocation is irrelevant to the notice inquiry. (See NYSCEF No. 619 at 8-9.) But there are several reasons to read that decision more narrowly—i.e. , as holding only that an insured proffering allocation as an excuse for late notice must establish that the insured's delay was based on a good-faith, reasonable belief that allocation rendered the excess policy unlikely to be reached. (See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Connecticut Indem. Co. , 52 A.D.3d 274, 276, 860 N.Y.S.2d 35 [1st Dept. 2008] [describing the requirements for an insured to justify late notice to excess insurer]; Morris Park , 33 A.D.3d at 766-767, 822 N.Y.S.2d 616 [same].)
First , in deciding the motion about notice, Judge Gammerman expressly refrained from considering excess policies for which insurers had argued that no liability existed under pro rata allocation. (See NYSCEF No. 621 at 15.) That limitation in turn suggests that pro rata allocation would not have affected the timing of LILCO's notice obligation under policies that were at issue on the motion. This inference is strengthened by LILCO's strategy on appeal: Although attacking Judge Gammerman's statement that allocation and notice are independent inquiries, LILCO did not argue on appeal that applying pro rata allocation would, in fact, affect when LILCO became obligated to provide notice to its insurers. (See Br. for Plaintiff-Appellant, LILCO , 2004 WL 5369009 at *29-*30.) The First Department thus likely had no need in LILCO even to reach the question that Century now argues the Court definitively decided.
Indeed, there is good reason to think the effect of allocation would not have delayed the onset of LILCO's notice obligation. Of the two sets of excess policies at issue on appeal in LILCO , one covered 16 years; the highest attachment point of those policies was $100,000. The other set of policies covered 12 years; the highest attachment point of those policies was $3.1 million. (See Br. for Plaintiff-Appellant, LILCO , 2004 WL 5369009, at *6-7, 8-9 ; see also Br. for Defendants-Respondants, LILCO, 2004 WL 5369010, at *4-7.) The landfill was in operation for approximately 42 years. (See NYSCEF No. 621 at 2.) And the potential liability from Oyster Bay's lawsuit was as much as $26.2 million (the EPA's cost estimate for remediation)—more than 8 times the attachment point of one set of excess policies, and 262 times the attachment point of the other set of policies. (See NYSCEF No. 621 at 5.) A ballpark time-on-the-risk estimate using these figures would at least suggest a reasonable likelihood of the policies being reached as a result of Oyster Bay's threatened lawsuit, even applying pro rata allocation.
Second , in affirming Judge Gammerman's ruling, the First Department neither said it was addressing the relationship between notice and allocation nor relied on allocation-related precedent (such as the Court of Appeals decision in Con. Ed. ). Instead, the Court cited only cases related whether an insured's late notice is excusable absent prejudice to the insurer. This absence points at least to some extent toward understanding the Court's holding as limited to the settled principle that an insured may only justify late notice based on factors the insured reasonably considered—not the relatively new and unsettled issue of allocation's effect on an insured's notice obligation. (See Morris Park , 33 A.D.3d at 764-765, 822 N.Y.S.2d 616 [collecting late-notice cases].)
On that point, the Court rejected LILCO's argument that its insurers had to show prejudice due to any late notice of occurrence. (See 24 A.D.3d at 173, 805 N.Y.S.2d 74, citing Great Canal Realty v. Seneca Ins. Co. , 5 N.Y.3d 742, 800 N.Y.S.2d 521, 833 N.E.2d 1196 [2005] ; Argo Corp. v. Greater N.Y. Mut. Ins. Co. , 4 N.Y.3d 332, 339, 794 N.Y.S.2d 704, 827 N.E.2d 762 [2005] ; Security Mut. Ins. Co. of NY v. Acker-Fitzsimons Corp. , 31 N.Y.2d 436, 440, 340 N.Y.S.2d 902, 293 N.E.2d 76 [1972] ; Matter of Brandon [Nationwide Mut. Ins. Co.] , 97 N.Y.2d 491, 496 n. 3, 743 N.Y.S.2d 53, 769 N.E.2d 810 [2002].)
Third , Judge Stallman, although citing and discussing LILCO in some parts of his decision (see 2007 N.Y. Slip Op. 50957[U], at *10), did not even me ntion it in analyzing the relationship between notice and allocation (see id. at *12 ). That omission is curious if, as Century would have it, LILCO definitively settled that notice and allocation are unrelated. The omission is still more remarkable given Judge Stallman's conclusion that assessing the likelihood of a covered loss reaching an excess policy requires "account[ing] for pro rata allocation," and his resulting denial of Century's summary-judgment motion. ( Id. at 12.)
Fourth , if Century is correct now, Judge Stallman was wrong then, both in his analysis and his bottom-line conclusion. Yet the First Department unanimously affirmed Judge Stallman's ruling in full. In doing so, the Court directly rejected Century's principal argument about the limited role of allocation in the notice inquiry into the bargain—the same argument Century makes here. (See 58 A.D.3d at 574, 872 N.Y.S.2d 444.) And the First Department did not mention LILCO , either.
Century also cites four postLILCO decisions applying New York law to support its reading of the First Department's ruling in that case. (See NYSCEF No. 619 at 9 & n 6.) Two of those four did not address the issue of allocation. (See Hammersmith v. TIG Ins. Co. , 480 F.3d 220, 237-238 [3d Cir. 2007] ; Illinois Natl. Ins. Co. v. Banc One Acceptance Corp. , 2008 WL 5423262, at * 15 [N.D. N.Y. Dec. 29, 2008].) A third decision held only that the insured had failed to raise a factual dispute about whether pro rata allocation had delayed the onset of its notice obligation. (See New York State Elec. & Gas Corp. v. Century Indem. Co. , 767 F. Appx. 188, 190-191 [2d Cir. 2019] [NYSEG ].) That decision also rested on the questionable assumption that before Con. Ed. , a reasonable insurer operating under New York law would not have adjusted for pro rata allocation in assessing the likelihood that losses would reach the insured's excess policies. (Compare id. at 190, with e.g. Uniroyal, Inc. v. Home Ins. Co. , 707 F. Supp. 1368, 1391-1393 [E.D. N.Y. 1988] [applying a version of pro rata allocation in coverage litigation related to Agent Orange exposure]; Stonewall Ins. Co. v. National Gypsum Co. , 1992 WL 163180 at *1 [S.D. N.Y. June 24, 1992] [applying pro rata allocation in coverage litigation related to asbestos exposure], modified on other grounds sub nom. Stonewall Ins. Co. v. Asbestos Cls. Mgt. Corp. , 73 F.3d 1178, 1201-1204 [2d Cir. 1995].)
Only one of the four cited decisions appears to adopt Century's reading of LILCO . (See Travelers Indem. Co. v. Northrop Grumman Corp. , 2020 WL 1469550, at *5 n. 5 [S.D. N.Y. Mar. 26, 2020].) This court is not bound by this decision. To the extent it adopts Century's broader reading of the LILCO holding, this court respectfully declines to follow it for the reasons set forth above.
This court concludes, therefore, that given the First Department's 2007 ruling about notice, and the First Department's 2019 ruling that pro rata allocation must be considered in determining Century's liability, the jury's determination about when Brooklyn Union became required to provide Century with notice of an occurrence must consider the effect of pro rata allocation. Century may not introduce evidence at trial, or argue to the jury, that Brooklyn Union's notice obligation was triggered as soon as it was reasonably likely that Brooklyn Union faced $100,001 in covered remediation costs. Century contends that accounting for the effects of allocation in assessing the timeliness of notice will "cause entirely unwarranted confusion, prejudice, and delay." (NYSCEF No. 619 at 14-15.) Even if it were well-taken, though, this practical objection would be insufficient to overcome binding, on-point precedent. And this court is not persuaded in any event that a properly focused presentation on pro rata allocation, accompanied by clear jury instructions, will lead to problems about which Century is concerned.
This court need not, and does not, decide here which pro rata allocation formula should be employed in assessing the timing of Brooklyn Union's notice obligation and the extent of Century's coverage liability (if any).
At oral argument on this motion, Century appeared to suggest that Brooklyn Union was obliged to provide notice as soon as it was reasonably likely that pollution had occurred (as opposed to when Brooklyn Union would likely have to pay to remediate that pollution), assertedly rendering Brooklyn Union's notice to Century decades late. That apparent suggestion cannot be reconciled with the policy language's making Century liable only to cover sums actually paid by Brooklyn Union to satisfy losses for which Brooklyn Union is liable. (See e.g. NYSCEF No. 615 at CEN000401 [scope of coverage], CEN000405 [definitions].)
Accordingly, for the foregoing reasons, it is hereby
ORDERED that Brooklyn Union's motion in limine is granted.