United States District Court, D. New Mexico
FACTORY MUTUAL INSURANCE COMPANY (as Assignee of ALBANY MOLECULAR RESEARCH, INC. and OSO BIOPHARMACEUTICALS MANUFACTURING, LLC), Plaintiff,
FEDERAL INSURANCE COMPANY and DOES 1-10, Defendant.
MEMORANDUM OPINION AND ORDER
HONORABLE GREGORY J. FOURATT UNITED STATES MAGISTRATE JUDGE
MATTER comes before the Court upon Defendant's
“Motion for Partial Summary” Judgment [ECF 64]
(“Motion”). The Motion is fully briefed.
See ECFs 81 (Plaintiff's Response), 91
(Plaintiff's Errata Notice), 101 (Defendant's Reply).
For the reasons articulated below, the Court will
GRANT IN PART and DENY IN
PART this Motion.
31, 2014, a lightning storm occurred near a manufacturing
plant of OSO Biopharmaceuticals Manufacturing, LLC
(“OSO”) in Albuquerque, New Mexico. ECF 50 at 11.
At approximately 6:23 p.m. that evening, a lightning strike
was recorded within 0.2 miles of this facility, which at the
time was being used to manufacture an injectable antibiotic,
Cubicin (daptomycin), for treating complicated infections.
Id. at 12. Around this same time, the facility
experienced a power interruption and doors leading from an
interior “clean room” unexpectedly opened, while
certain fans and other equipment shut down. See ECFs
47 at 3; 68 at 4; 71 at 8. Unacceptable levels of mold were
later detected in this room, requiring OSO to discard the
antibiotics that it was producing and cease further
production until remediation efforts concluded in December
2014. See ECFs 47 at 5; 50 at 6; 68 at 3.
result, OSO submitted a claim for over $10 million in losses
to Defendant Federal Insurance Company. See ECF 50
at 5. Defendant paid OSO the maximum sublimit of $600, 000
under two of its contract provisions. Id. OSO then
submitted a claim to Plaintiff Factory Mutual Insurance
Company, which ultimately paid $7, 385, 110 to OSO for its
losses. Id. at 6. Plaintiff, as an assignee of OSO,
now seeks reimbursement from Defendant. Id. at 5.
Plaintiff's fundamental claim is that Defendant breached
its insurance contract by not paying for the loss under its
“Building and Personal Property for Life
Sciences” (“BPPLS”) provision, which
provided much higher limits of coverage. See ECF 64
instant Motion, Defendant seeks summary judgment on a sole
issue. Mot. 1. Specifically, it argues that-if its BPPLS
provision applies-the parties' “other
insurance” provisions would nevertheless “cancel
each other out” and result in a respective 54 and 46
percent “apportionment of the loss” as between
Defendant and Plaintiff. Id. at 1-2, 7.
Coverage Under the Policies
policy caps coverage at $58, 286, 814 for an insured
“Building, ” $56, 340, 820 for “Personal
Property” (e.g., pharmaceutical products), and $32,
000, 000 for any resulting “Business Income” loss
(i.e., business interruption). ECF 47-2 (Defendant's
insurance policy) at 16-17, 19. Defendant's BPPLS provision
states that it will “pay for direct physical loss or
damage to: building; or personal property, that is caused by
or resulting from a peril not otherwise excluded.”
Id. at 92; see also Id. at 75 (separate
provision requiring Defendant to pay for resulting business
interruption losses). Defendant's policy, however,
generally excludes losses resulting from
“contaminants” (e.g., mold), unless an exception
This insurance does not apply to loss or damage caused by or
resulting from the mixture of or contact between property and
a contaminant . . . . [unless] the mixture or contact is
directly caused by or directly results from a specified peril
[e.g., lightning] . . .
Id. at 104.
part, Plaintiff's policy provides coverage, pursuant to
its “Automatic Coverage” provision, up to $50,
000, 000 for “insured physical loss or damage to
insured property at any location” that occurs within 90
days of the property's acquisition. ECF 64-2
(Plaintiff's insurance policy) at 18, 36. This coverage
protects against “all [non-excluded] risks of physical
loss” and applies to “Real Property, ”
“Personal Property, ” and “time element
loss[es]” (i.e., business interruption). Id.
at 14, 26, 54-59. Plaintiff's policy likewise excludes
contamination, while also providing an exception to this
exclusion-one that implicitly incorporates damage caused by
This Policy excludes . . . contamination, and any cost due to
contamination . . . . If contamination due only to the actual
not suspected presence of contaminant(s) directly results
from other physical damage not excluded by this Policy [e.g.,
lightning], then only physical damage caused by such
contamination may be insured . . . .
Id. at 31.
“Other Insurance” Provisions
party's policy has an “other insurance”
provision-a provision that assigns primary liability to the
“other” insurer. Defendant's “other
insurance” provision states the following:
If you have any other insurance covering the same loss or
damage as is insured against by this policy, we will only pay
for the amount of loss or damage which is insured against by
this policy in excess of the amount due from such other
insurance, whether you can collect on such other insurance or
ECF 47-2 at 170. And Plaintiff's “other
insurance” provision states the following:
A. If there is any other insurance that would apply in the
absence of this Policy, this Policy will apply only after
such insurance whether collectible or not.
B. In no event will this Policy apply as contributing