Court of Appeals of Texas,

El Paso.

3D/I  PERSPECTIVA, a Texas Joint Venture, Appellant,

v.

CASTNER PALMS, LTD., Appellee.

No. 08-08-00059-CV.

 

Feb. 10, 2010.

 

Before CHEW, C.J., RIVERA, J., and GARCIA, Judge.

 

OPINION

 

GUADALUPE RIVERA, Justice.

 

3D/I  Perspectiva (“3D/I”)-a joint venture-appeals the jury’s verdict for Castner Palms, Ltd. (“Castner Palms”) stemming from the latter’s suit for negligence. In two issues, 3D/I contends that the trial court erred by denying its: (1) motion for instructed verdict when Castner Palms failed to present expert testimony applicable to a construction-management firm’s standard of care in pursuit of its negligence claim; and (2) jury instruction on the professional standard of care. Finding 3D/I’s first issue dispositive, we reverse and render judgment for 3D/I.

 

BACKGROUND

 

From the limited record presented to this Court, it appears that Patriot Castner Joint Venture previously owned several parcels of land, and Glen Kistenmacher, an engineer, prepared a master drainage plan for the properties in 1994. The master drainage plan provided that each property should include an underground pipe for proper drainage from rainwater. The pipes were not put in and portions of those undeveloped properties were later sold to various entities, including the County of El Paso. Nevertheless, a city ordinance required all drainage plans to conform with the existing approved master plan.

 

The County’s property is adjacent to the Castner Palms’ property. The properties are separated by a rock wall. In 2002, the County contracted with 3D/I to manage the construction of an annex building. The relevant provisions of the contract provided that the County would contract with consultants, architect, engineers, and construction contractors to provide the design, construction, and construction administration for the project, and that 3D/I would supervise, direct, and manage the complete construction of the project. The contract also limited 3D/I’s duties to coordinating and scheduling the parties’ work and funding, reviewing the design documents for adherence to “requirements, clarity, constructability and completeness,” making recommendations to the County regarding design programs, design standards, guidelines, and constructability, and guarding against defects and deficiencies in the contractor’s work as set out in the contracts. The contract further stated that 3D/I would be judged by the “standards and quality prevailing among first-rate, nationally recognized design/construction management firms of knowledge, skill and experience engaged in projects of similar size and complexity.”

 

In accordance with the contract, the County, in 2003, contracted with McCormick Architecture, L.L.C, and Vistacon, Inc. (“Vistacon”) to develop the property and build the annex. Vistacon, in turn, engaged Roe Engineering, L.C., (“Roe”) to perform all engineering work required to prepare the plans for the annex. For drainage purposes, Roe designed a temporary retention pond, and Vistacon constructed it. The pond only accounted for rainwater falling on the County’s property and not for uphill water that might flow onto the property. It did not comply with the drainage master plan; therefore, it did not conform to the city ordinance. In the course of the construction of the annex, the retention pond overflowed during a rainstorm, causing the apartments located on the Castner Palms’ property to flood.

 

When construction reached 50 percent, the plans provided that the contractors would connect to an underground pipe for drainage purposes.

 

At trial, Castner Palms presented expert testimony that the drainage pond was responsible for the flooding. Castner Palms did not present any evidence, apart from the contract itself, as to the standard of care a construction-management firm of the same discipline was required to exercise in supervising contractors. Accordingly, 3D/I moved for an instructed verdict, arguing that expert testimony was necessary to show that it had breached the applicable standard of care: “Plaintiff has not introduced any expert testimony of the standard of care to be exercised by an architectural firm performing project management services similar to those provided by Defendant.” In response, Castner Palms argued that because the standard of care was contained in the contract, which was admitted into evidence, expert testimony was unnecessary. The trial court determined that Castner Palms was not required to present expert testimony on the professional standard of care and denied the motion for instructed verdict.

 

Castner Palms originally sued Roe, Vistacon, and 3D/I; however, the suit against Roe and Vistacon settled.

 

ANALYSIS

 

3D/I’s first issue complains of the trial court’s denial of its motion for instructed verdict. 3D/I does not challenge Kistenmacher’s expert testimony showing the poorly constructed pond was responsible for the damage to Castner Palms. Rather, 3D/I contends that Castner Palms failed to present expert testimony as to the standard of care exercised by a construction-management firm in a supervisory capacity. Castner Palms responds that the jury could have relied on common knowledge in assessing the appropriate standard of care.

 

Standard of Review

 

To avoid an instructed verdict, Castner Palms was required to offer evidence for each element of its negligence claim. Hager v. Romines, 913 S.W.2d 733, 734-35 (Tex.App.-Fort Worth 1995, no writ). Thus, Castner Palms had to show 3D/I owed a legal duty to Castner Palms, 3D/I breached that duty, and damages proximately resulted from the breach. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex.1995).

 

The determination of whether expert testimony is necessary to establish negligence is a question of law, which we review de novo. FFE Transp. Servs., Inc. v. Fulgham, 154 S.W.3d 84, 89 (Tex.2004). Expert testimony is necessary to establish the applicable standard of care “when the alleged negligence is of such a nature as not to be within the experience of the layman.” Id. at 90;Roark v. Allen, 633 S.W.2d 804, 809 (Tex.1982). In determining whether expert testimony is necessary to establish negligence, we consider whether the conduct at issue involved the use of specialized equipment and techniques unfamiliar to the ordinary person. FFE Transp. Servs., Inc., 154 S.W.3d at 91. In such a case, the expert testimony must establish both the standard of care and the violation of that standard. Simmons v. Briggs Equipment Trust, 221 S.W.3d 109, 114 (Tex.App.-Houston [1st Dist.] 2006, no pet.); Hager, 913 S.W.2d at 734-35.

 

Application

 

The pleadings alleged that 3D/I failed to properly supervise the contractors’ design and construction of the drainage retention pond. 3D/I’s understanding of its contractual obligations was that it would oversee the complete construction of the project, and facilitate the development of the plans and the construction between the design and construction contractors, and the County. 3D/I denied that it was responsible for ensuring that adequate provisions for drainage on the site was sufficient to contain water that flows upon it. Rather, 3D/I claimed that was Roe’s responsibility. According to 3D/I, its duties were limited to supervising the work as presented to it by the plans, noting that its obligation to review the design documents only extended to a review for adherence to requirements, clarity, constructability, and completeness. Because there were no indications of any problems with the construction of the pond, and because Roe’s plan achieved the required city permit, 3D/I believed the plans were sufficient to discharge its responsibilities under the contract. As noted before, the contract between the County and 3D/I stated that 3D/I would be judged by the “standards and quality prevailing among first-rate, nationally recognized design/construction management firms of knowledge, skill and experience engaged in projects of similar size and complexity.” In other words, the contract provided that 3D/I’s actions would be judged according to other construction-management firms in the same discipline engaging in similar projects. That discipline’s standard of care, however, is not stated in the contract. Thus, the question presented is whether Castner Palms was required to present expert testimony as to the standard of care such a firm should exercise in supervising a similar project.

 

Castner Palms characterizes the issue as whether 3D/I can limit its common-law duty owed to third parties by contractual arrangements. However, whether any common-law duty may be contractually limited is not the issue. Rather, the issue is what standard of care 3D/I should have exercised in supervising the construction project.

 

In determining whether expert testimony was required in this case, we find guidance in two recent cases. In Fulgham, a truckingcompany leased a trailer to a long-haul trucker, and while transporting goods, the trailer’s upper coupler assembly, which contained a loose or rusty bolt, broke loose, causing the trailer to separate from the tractor and overturn. Fulgham, 154 S.W.3d at 86. The Court found that expert testimony was required to establish the standard of care since “[t]he upper coupler assembly, kingpin, and base rail of a refrigerated trailer are specialized equipment, and the proper inspection and maintenance of those parts involve techniques unfamiliar to the ordinary person.” Id. at 91. Although the Court recognized that a layman may be able to detect whether a visible bolt is loose or rusty, the Court held that whether that looseness or rust is sufficient to create a danger required specialized knowledge in the tractor-trailer industry. Id. Thus, an expert was required to testify as to the standard of care. Id.

 

Similarly, in Simmons, a worker brought a negligence action against his maintenance company when the rail-car mover’s loose or worn hydraulic hose caught fire as he used the mover to transport railroad cars. Simmons, 221 S.W.3d at 111-12. Finding the practices, procedures, and industry standards with respect to the inspection and maintenance of a rail-car mover engine not matters within a lay person’s general knowledge, the court determined that expert testimony regarding the appropriate standard of care and whether the maintenance company breached that standard was required. Id. at 114-15. Although the court acknowledged that an ordinary person would be able to detect whether a hydraulic hose is loose or worn, the court noted that determining when that looseness or wear was sufficient to create a dangerous condition would require specialized knowledge. Id. at 115. “Without expert evidence or testimony, there was no evidence that [the maintenance company] violated the standard of care for the inspection and maintenance of the engine, hydraulic pump, or other internal parts of [the rail-car mover] … [nor was there any] factual or evidentiary support in the record concerning … the actions that a reasonable maintenance company would have taken with respect to the hydraulic pump and hose.” Id.

 

In this case, we cannot conclude that a layman would know whether a construction-management firm’s supervisory duties extended beyond simply overseeing the construction as set out in the approved contractors’ design plans. This is not a case where the construction-management firm hired the contractors and approved their plans; rather, the contract provided, and the record so reflects, that El Paso County hired the contractors and approved the plans while 3D/I supervised the construction of those approved plans. Castner Palms argues that Kistenmacher’s expert testimony that Roe negligently designed the retention pond was sufficient for a layman to determine that 3D/I breached its supervisory duties under the contract. Although a layman may be able to conclude from Kistenmacher’s testimony that the pond was poorly designed and caused the flood, we believe that whether a construction-management firm’s supervisory duties included more than ensuring that the approved plans were built according to the requisite specifications called for in the plans requires specialized knowledge in the construction-management firm industry. See, e.g., Fulgham, 154 S.W.3d at 91;Simmons, 221 S.W.3d at 115 (requiring expert testimony of industry standards).

 

Castner Palms argues that since the standard of care was contained within the contract, whether that standard was breached is a question of law reviewed de novo. Although we agree that interpretations of contractual provisions are reviewed de novo, the contract here did not explain the standard of care; rather, it simply stated that 3D/I would be held to a standard of care as other construction-management firms in the same discipline and engaged in similar projects. There was never any evidence presented as to what that standard of care was. Furthermore, the trial court never determined whether 3D/I breached the standard of care described in the contract, nor was the jury instructed that 3D/I did so. Rather, the jury was instructed on “ordinary care,” and the sole question submitted was whose negligence proximately caused the damage to Castner Palms. In other words, there was never any evidence, interpretation, or determination of the applicable standard of care for the jury to properly decide negligence on the part of 3D/I.

 

Further, even if we were to impute some explanation of the applicable professional standard of care into the contract, expert testimony would still be required to establish that standard of care. In Battaglia, the Supreme Court held that although a contract between a hospital and two anesthesiologists’ professional associations obligated the associations to ensure that the staff they supplied or supervised complied with standards specified in the contract, evidence that staff breached those standards during a patient’s surgery at the hospital did not establish the requisite standard of care for a medical-malpractice action against the professional association; rather, competent expert testimony was necessary to establish the standard of care. See Battaglia v. Alexander, 177 S.W.3d 893, 899 (Tex.2005). Similarly here, even if the contract identified the applicable standard of care, competent expert testimony was nonetheless required to establish that standard for construction-management firms.

 

Castner Palms asserts that Kistenmacher’s expert testimony was sufficient to establish a breach of 3D/I’s contractual duties. However, Kistenmacher’s testimony was solely limited to the cause of the flooding, that is, the poorly designed and constructed retention pond. Thus, Kistenmacher’s opinion solely concerned the negligence of Roe and Vistacon, the contractors that designed and constructed the pond. Kistenmacher did not discuss a construction-management firm’s standard of care in supervising the design and construction of a similar project.

 

Accordingly, because no expert testimony, much less any evidence, was presented as to the applicable standard of care, we find the trial court erred by denying 3D/I’s motion for directed verdict. We therefore sustain 3D/I’s first issue, reverse the judgment of the trial court, and render judgment for 3D/I. See Hager, 913 S.W.2d at 735-36 (rendering take-nothing judgment against plaintiffs who failed to produce necessary expert testimony on applicable standard of care). Given our disposition, we need not reach 3D/I’s second issue.

 

GARCIA, Judge, sitting by assignment.

United States District Court,

D. Connecticut.

FIREMAN’S FUND INS. CO., Plaintiff,

v.

TD BANKNORTH INS. AGENCY INC., f/k/a Morse, Payson & Noyes Ins., Defendant.

No. 3:08-cv-364 (CFD).

 

Feb. 1, 2010.

 

RULING ON MOTIONS FOR SUMMARY JUDGMENT

 

CHRISTOPHER F. DRONEY, District Judge.

 

Fireman’s Fund Insurance Company and TD Banknorth Insurance Agency filed claims against each other for a declaratory judgment that each is entitled to certain funds held in escrow as a result of a settlement agreement. Pending are the parties’ cross motions for summary judgment. For the reasons that follow, Fireman’s Fund’s motion is granted, and TD Banknorth’s motion is denied.

 

I. Background

 

The following facts are taken from the parties’ Local Rule 56(a) statements, summary judgment briefs, and other evidence submitted by the parties. The parties do not dispute the facts.

 

Fireman’s Fund Insurance Company (“FFIC”) provided to TD Banknorth Insurance Agency, Inc. (“TD Banknorth”) Errors & Omissions insurance coverage through an Insurance Agents’ and Brokers’ Professional Liability Policy (“Errors & Omissions Policy”) for the policy term of May 1, 2005 through May 1, 2006. The Errors & Omissions Policy provided claims-made professional liability coverage to TD Banknorth, and included a $150,000 deductible for each claim. Robert M. Sullivan Certification (“Sullivan Cert.”), Ex. A.

 

Haynes Construction Company (“Haynes”) asked TD Banknorth to procure for Haynes a Builder’s Risk Policy and an InlandMarine Policy for one of its developments known as Jensen Farm Estates. TD Banknorth procured for Haynes’ Jensen Farm Estates a Builder’s Risk Policy through Peerless Insurance Company (“Peerless”) and an InlandMarine Policy through the Hartford Insurance Company (“The Hartford”).

 

On February 14, 2006, a fire destroyed a single family home being constructed at Lot 14 on the Jensen Farm Estate. Haynes made a claim against Peerless under its Builder’s Risk Policy, which Peerless denied after finding that Lot 14 was not covered by the Policy. In particular, Peerless denied the claim on the basis that Haynes had neither paid a separate premium for Lot 14 nor listed Lot 14 in the declarations, as required by the Builder’s Risk Policy.

 

After Peerless denied coverage, Haynes asserted a claim against TD Banknorth, arguing that TD Banknorth had made an error or omission in procuring insurance for Haynes by failing to add Lot 14 to the declaration of the Builder’s Risk Policy. Haynes and TD Banknorth then entered into a Settlement Agreement and Release dated July 26, 2006 for $353,989.06 (“July 2006 Agreement and Release”). Sullivan Cert., Ex. B. Pursuant to the TD Banknorth-FFIC Errors & Omissions Policy, TD Banknorth paid toward the settlement its $150,000 deductible, and FFIC paid the remaining $203,989.06. FFIC also claims that it expended $10,055.98 in defense costs, for a total cost of $214,045.04. As part of the July 2006 Agreement and Release, Haynes assigned to FFIC and TD Banknorth all of its rights of claims against Peerless arising from the property damage at Lot 14. In an October 13, 2006 addendum to the July 2006 Agreement and Release, Haynes also assigned to FFIC and TD Banknorth all of its rights of claims against The Hartford arising from the property damage at Lot 14. Sullivan Cert., Ex. C.

 

The Hartford eventually agreed to settle all claims arising from the Lot 14 fire under the InlandMarine Policy for $120,099.96. Peerless subsequently agreed to pay $88,333.33 to settle all claims arising from the Builder’s Risk Policy. TD Banknorth, FFIC, Peerless, and The Hartford, memorialized these settlements in a December 7, 2007 Settlement Agreement and Mutual Release (“December 2007 Agreement and Release”). Sullivan Cert., Ex. D. Pursuant to the December 2007 Agreement and Release, The Hartford and Peerless settlement funds, totaling $208,433.29, were transferred to the escrow agent for TD Banknorth and FFIC. Id. However, the December 2007 Agreement and Release did not allocate the $208,433.29 held in escrow between TD Banknorth and FFIC. Id. In fact, the December 2007 Agreement and Release provided that “[TD] Banknorth and [FFIC] expressly reserve all rights that they may have against each other relating to the allocation of the $208,433.29 … held in escrow.” Id. at 3.

 

FFIC filed the instant action seeking a declaratory judgment that it is entitled to the whole of the $208,433.29 held in escrow. TD Banknorth filed a counterclaim for declaratory judgment that it is entitled to recover its deductible amount of $150,000, plus costs and attorney’s fees, from the $208,433.29 held in escrow. Agreeing on the above-stated facts, both parties moved for summary judgment.

 

II. Summary Judgment Standard

 

In a summary judgment motion, the burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. SeeFed.R.Civ.P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). A court must grant summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)); accord Miner v. Glen Falls, 999 F.2d 655, 661 (2d Cir.1993). A dispute regarding a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. In assessing the record, the trial court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Id. at 255. The parties do not dispute that Connecticut law governs the Court’s ruling in this diversity action.

 

III. Discussion

 

TD Banknorth argues it is entitled to recover the $150,000 it paid to settle the Haynes claim pursuant to the “made-whole doctrine.” That doctrine provides that “absent an agreement to the contrary, an insurance company may not enforce a right to subrogation until the insured has been fully compensated for her injuries, that is, has been made whole.” Barnes v. Ind. Auto. Dealers Ass’n of California Health and Benefit Welfare Plan, 64 F.3d 1389, 1394 (9th Cir.1995)see also In re DeLucia, 261 B.R. 561, 567 (Bankr.D.Conn.2001). Connecticut courts adhere to the made-whole rule. See Wasko v. Manella, 849 A.2d 777, 784 (Conn.2004) (“[U]nder traditional principles of subrogation, if an insured brings an action against a negligent party, an insurer generally is entitled to recover the amount it paid to the insured only if the amount of damages awarded exceeds the difference between the amount the insurer paid and the insured’s actual damages.”). Thus, “in the event of a subrogation dispute between the insurer and its insured, the insured has priority of rights to collect from the responsible third party.” Johnny C. Parker, The Made Whole Doctrine: Unraveling the Enigma Wrapped in the Mystery of Insurance Subrogation, 70 Mo. L.Rev. 723, 737 (2005).

 

FFIC first argues that the made-whole rule does not apply to reimbursement of an insured’s deductible. The FFIC-TD Banknorth Errors & Omissions Policy provided for a $150,000 deductible. FFIC has cited non-Connecticut authority for the proposition that the made-whole doctrine does not apply to deductibles. See, e.g., 2 Allan D. Windt, Insurance Claims and Disputes § 10:6 (5th Ed.2009) (“Note that the made whole doctrine does not apply to deductibles. If the insured were to be reimbursed for its deductible before the insurer is made whole, the insured would be receiving an unbargained for, unpaid for, windfall. Under the terms of the insurance policy, it was agreed that, as a condition precedent to the insurer being out of pocket for even one dollar, the insured had to first be out of pocket the amount of the deductible.”). Nevertheless, the parties have not cited, nor has the Court found, Connecticut decisions explaining how the made-whole rule should apply in a case, such as the instant one, where the insured is responsible for a deductible under the insurance contract. Notwithstanding, the analysis of the Windt treatise is compelling, and this Court agrees. Although in Wasko the Connecticut Supreme Court held that subrogation under these circumstances is equitable in nature, principles of equity would not seem to prohibit such responsibility for a deductible, especially between commercial entities. The Connecticut legislature also has not prohibited such an arrangement.

 

Specifically, Section III.4 of the Errors & Omissions policy provides as follows:

 

a. Before we pay any claim under this policy, we will subtract the Each Claim Deductible Amount shown in the Schedule of this endorsement from damages and defense costs which are incurred with respect to a single claim. We will only pay the lesser of that part of such damages and defense costs which exceeds the Each Claim Deductible Amount, or the Limit of Insurance that applies.

* * * * *

 

c. If we pay part or all of any Deductible Amount to effect settlement of any claim or suit, we will notify the first named insured of our payment of the Deductible. The first name insured shall reimburse us for the part of the Deductible Amount that we paid within 30 days of our notification.

 

Sullivan Cert., Ex. A, Aggregate Deductible Amendment.

 

FFIC also argues that the made-whole rule does not apply to third-party insurance contracts such as the one between FFIC and TD Banknorth. The Court also declines to rule on that issue at this time, particularly as Connecticut courts appear not to have spoken on it.

 

In the alternative, FFIC argues that even if the made-whole rule may apply in the case of a deductible, the Errors & Omissions Policy explicitly contracted around the made-whole rule, and provides that FFIC is entitled to recover any third-party payment to TD Banknorth. The parties agree that they could have contracted out of the made-whole rule. See Wasko, 849 A.2d at 782-83 (discussing whether statutory and contractual language contracted around the made-whole rule); see also United States v. Lara, No. 3:08-cr-00169, 2009 WL 3754069, at(D.Conn. Nov. 6, 2009) (“The agreement contains specific language indicating that [the insurer] is to receive any recoveries from [the defendant] before [the insured] may recover the deductible amount. Therefore, the Court finds that the parties intended their contract to override equitable principles as well as the [Mandatory Victims Restoration Act]. In these circumstances, the Court will not disrupt the agreement between the parties. To hold otherwise would effectively extend insurance coverage to the deductible that [the insurer] agreed to pay and thereby defeat the purpose of requiring a deductible in the first place.”). Section IV.10 of the Errors & Omissions Policy provides:

 

If any insured has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring suit or transfer those rights to us and help us enforce them.

 

Sullivan Cert., Ex. A, Section IV. 10. FFIC argues that pursuant to this provision, any right of recovery by TD Banknorth was automatically transferred to FFIC after FFIC had made “any payment” under the Policy. FFIC therefore argues that this provision contracts around the made-whole rule-which holds that the insurer must fully indemnify the insured prior to commencing a subrogated claim-by providing that FFIC may assert its subrogated rights as soon as it makes any payment, regardless of whether or not the insured had been made whole.

 

In opposition, TD Banknorth argues that Section IV. 10 is inapplicable in this case, where “[n]othing in the … section addresses the relative rights of the insurer and the insured when a partial recovery is made of funds expended by both the insured and the insurer to settle a claim.” Def.’s Mem. at 11. TD Banknorth appears to be arguing that because the Policy language does not specifically state that the insurer takes precedence over the insured, the traditional principles of the make-whole doctrine apply. In support, TD Banknorth cites the Connecticut Supreme Court’s opinion in Wasko v. Manella, 849 A.2d 777, 784 (Conn.2004). In Wasko, the Connecticut Supreme Court was asked to determine whether the following language in a fire insurance contract provided the insurer with an inviolate right of subrogation: “[The insurer] may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by [the insurer].” Id. at 783. The Wasko Court held that the language did not provide the “insurer with a direct, and inviolate, right of subrogation. To the contrary, it merely provides that an insurer ‘may require’ an insured to assign any rights he or she has to the insurer.” Id. (emphasis in original). “Thus,” the Court continued, “under this clear language, the right of recovery belongs to the insured, and the insurer only obtains that right when the insured grants it.” Id.

 

The facts in the instant case are distinguishable from those in Wasko. The language of the Errors & Omissions Policy provides not for transfer of rights only when the insured grants it, Wasko, 849 A.2d at 783, but instead that those rights “are transferred” to FFIC if FFIC has made “any payment” under the Policy. FFIC paid settlement and defense costs in the Haynes settlement, and therefore, under the Errors & Omissions Policy, TD Banknorth’s right to recovery was transferred to FFIC. The language in this case is similar to that at issue in American International Speciality Lines v. United States, No. 05-1020 C, 2008 WL 1990859, at * 11 (Fed.Cl. Jan. 31, 2008). In particular, the contract language in American International was as follows: “In the event of any payment under the Policy, [the insurer] shall be subrogated to all the Insured’s rights of recovery therefore against any person or organization.” Id. The court found that the “fact that [insurer’s] subrogation rights arise upon ‘any’ payment clearly contradicts the make-whole rule. Thus, [the parties] contracted around the make-whole rule by allowing plaintiff to assert a subrogated claim as soon as it made one payment under the policy.” Id. Here, as in American International, the contractual language of the Errors & Omissions Policy contradicted the made-whole rule. Therefore, the Court will apply the bargained-for contractual language and award the escrowed funds to FFIC rather than applying the made-whole rule.

 

IV. Conclusion

 

TD Banknorth’s motion to summary judgment [Dkt. # 20] is DENIED. FFIC’s motion for summary judgment [Dkt. # 23] is GRANTED. A declaratory judgment shall enter that FFIC is entitled to the funds held in escrow. The Clerk is directed to close this case.

 

SO ORDERED.