Contra Proferentem Doctrine Does Not Apply
Post 5093
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Polluter's Insurer Loses 25 Year Litigation Over Interpretation of Ambiguous Policies
The Plaintiff (Century) insurer's motion to set aside and modify a jury verdict and for a new trial on certain issues were presented after 25 years of litigation while the defendant sought that its motion to modify the verdict, unanimously modified, on the law.
In Century Indemnity Company v. Brooklyn Union Gas Company, American Reinsurance Co, et al., Brooklyn Union Gas Company v. Century Indemnity Company, Munich Reinsurance America Inc., Appeal Nos. 3551, 3552, 2025 NY Slip Op 03379, Index Nos. 603405/01, 403087/02, Case Nos. 2024-00848, 2024-00850 Supreme Court of New York, First Department (June 5, 2025) the judgment of the trial court was affirmed.
FACTS
Almost 25-year-old litigation continued with a focus on three manufacturing gas plants (MGPs) defendant formerly owned and operated at the Fulton (1880-1928), Citizens (1860-1963) and Metropolitan (1872-1928) sites (collectively, the three sites) in Brooklyn, all of which bordered the Gowanus Canal.
It was undisputed that when processing gas, these MGPs environmentally contaminated the canal and the subsoil at the three sites. In the early to mid-2000s, defendant received a series of orders from both the New York State Department of Environmental Protection and the U.S. Environmental Protection Agency requiring it to investigate and remediate the pollution in the canal and at the three sites.
Century was the excess liability insurer that issued six policies to defendant during the period 1941-1969 to cover liability for third-party property damage. Each of these policies was for a one-year term, contained a self-insured retention of $100,000, and was renewed yearly.
The court was faced with this 2001 action where Century sought a declaration that it lawfully disclaimed excess coverage for contamination remediation and related costs based on defendant's untimely notice of an occurrence. Defendant counter sued to compel coverage.
In 2009, the court affirmed the denial of Century's motion for summary judgment on its claim of untimely notice. Ten years later and relevant to the damages issues raised in this post trial appeal, the court affirmed the motion court's holding that Century's successive policies were subject to a pro rata allocation for all losses resulting from long term, continuous contamination that spanned the successive policy periods.
In 2022, the matter proceeded to trial and the jury returned a verdict for defendant, finding that there was excess coverage for the three sites in differing amounts and that Century's defenses, including untimely notice, lacked merit.
Century argued that no controlling precedent permitted an instruction that the jury must simply perform a pro rata allocation calculation of the potential clean-up costs (damages).
In its cross-appeal, Defendant challenged the court's finding as a matter of law that the per-occurrence limits for multi-year policies and multi-year renewals were for the entire period and did not reset annually.
The Court rejected Century's argument that the trial court should not have apportioned the coverage for cleanup costs.
CONCLUSION
The trial court properly refused to apply the doctrine of contra proferentem to resolve ambiguities in the policy as to whether per-occurrence limits in multi-year policies and multi-year renewals applied on an annual basis. Defendant, which has a large in-house insurance department, processes dozens of claims in house monthly, self-insures for large amounts, and has numerous lawyers and brokers, is sophisticated in insurance coverage matters and thus has sufficient knowledge and bargaining power to craft an agreement to its benefit.
ZALMA OPINION
For 25 years the litigants went back and forth to trial and appellate courts expending much money to obtain or refuse the benefits of an excess insurance policy only to find that since the plaintiff insurer and the defendant gas companies were both sophisticated and a large in-house insurance department, processes dozens of claims in house monthly, self-insures for large amounts, and has numerous lawyers and brokers, is sophisticated in insurance coverage matters and thus has sufficient knowledge and bargaining power to craft an agreement to its benefit and had no argument against the policy it accepted. Everyone was unhappy with the result.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
