P/F
`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 1 of 21 PageID #: 4767
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`-X
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`GOVERNMENT EMPLOYEES INSURANCE
`COMPANY,
`
`Plaintiff,
`
`-against-
`
`MEMORANDUM & ORDER
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`12-CV-5633 (NGG) (CLP)
`
`DIANE SACO and SUZANNE KUSULAS,
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`Defendants.
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`-X
`
`SUZANNE KUSULAS, as assignee of the rights
`of DIANE SACO,
`
`Plaintiff,
`
`15-CV-634 (NGG) (CLP)
`
`-against-
`
`GOVERNMENT EMPLOYEES INSURANCE
`COMPANY,
`
`-X
`NICHOLAS G, GARAUFIS, United States District Judge.
`
`Defendant.
`
`The parties in these two related cases seek the court's determination as to the
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`Government Employees Insurance Company's ("GEICO") obligation to pay certain costs under
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`its insurance policy issued to Diane Saco ("Saco"). Underlying the actions is a prior state court
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`trial, in which a jury adjudged Saco to be liable to Suzanne Kusulas ("Kusulas") for injuries
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`sustained in an automobile accident.
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`Before the court are GEICO's Motion for Summary Judgment as to all claims in both
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`actions (see GEICO's Mot. for Summ. J. ("GEICO Summ. J. Mot.") (Dkt. 115),
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`1
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 2 of 21 PageID #: 4768
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`No. 12-CV-5633),^ and Kusulas's Motion for Partial Summary Judgment as to her counterclaim
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`for breach of contract (see Kusulas Summ. J. Mot. (Dkt. 117), No. 12-CV-5633).
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`For the following reasons, the court DENIES Kusulas's Motion for Partial Summary
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`Judgment and GRANTS IN PART and DENIES IN PART GEICO's Motion for Summary
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`Judgment.
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`1.
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`BACKGROUND
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`A.
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`The Parties' Statements of Undisputed Facts
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`The facts in this opinion are drawn, where possible, from the parties' statements of
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`undisputed facts, submitted pursuant to Local Rule 56.1. (See Kusulas Rule 56.1 Statement
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`(Dkt. 117-1); GEICO Rule 56.1 Statement (Dkt. 115-1).) See also Holtz v. Rockefeller &
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`Co.. 258 F.3d 62, 73 (2d Cir. 2001) (The court "is not required to consider what the parties fail to
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`point out in their Local Rule 56.1 statements." (intemal quotation marks and citations omitted)).
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`In addition to submitting their initial statements of "undisputed" facts, the parties both
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`submitted counterstatements to each other's statements, and GEICO additionally submitted a
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`reply to Kusulas's coimterstatement. (See GEICO 56.1 Counterstatement (Dkt. 123-1); Kusulas
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`Rule 56.1 Coimterstatement (Dkt. 121); GEICO Rule 56.1 Reply (Dkt. 128)).) This opinion
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`relies only on facts in the parties' Rule 56.1 statements that are truly undisputed and notes any
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`apparent disagreement over any material allegation.
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`B.
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`Factual Background
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`At issue in both of these cases is a car accident and subsequent state court case, the facts
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`of which are undisputed. On February 23,2006, Saco collided with a car in which Kusulas was
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`' Unless otherwise noted, all docket citations in this opinion are to the first of the two cases filed. No. 12-CV-5633.
`The simunary judgment motions also appear on the docket in Kusulas's parallel proceeding. No. 15-CV-634.
`(GEICO Summ. J. Mot. (Dkt. 26), No. 15-CV-634; Kusulas Summ. J. Mot. (Dkt. 28), No. 15-CV-634.)
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 3 of 21 PageID #: 4769
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`a passenger. (Kusulas Rule 56.1 Statement ^ 2.) At the time of the accident, Saco held two
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`insurance policies issued by GEICO: an automobile policy with a policy limit of $300,000 (the
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`"Automobile Policy") and a personal umbrella policy, with a policy limit of $1,000,000 (the
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`"Umbrella Policy;" collectively, the "Policies"). (See GEICO Rule 56.1 Statement fl 1,5.) The
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`Umbrella Policy provided cumulative "excess coverage" to the Automobile policy, and so Saco's
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`coverage as to the accident in question had a combined limit of $1,300,000 (the "Policy Limits").
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`m
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`In January 2007, Kusulas instituted an action against Saco in the Supreme Court of the
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`State of New York, Kings County (the "Underlying Action"). (Id ^ 3.) On June 16,2010, the
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`state court granted Kusulas's motion for summary judgment as to liability, holding that Saco was
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`fully liable for Kusulas's injuries resulting from the accident. (See id. ^ 16; see also Kusulas
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`Rule 56.1 Statement ^ 5.) On March 5, 2012, a jury considering only the issue of damages
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`returned a verdict of $3,369,066.75. (GEICO Rule 56.1 Statement ^ 100; Kusulas Rule 56.1
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`Statement H 8.) Following further proceedings, the state court entered judgment entered
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`judgment for Kusulas in the amount of $2,857,900.55 on October 10,2014. (GEICO Rule 56.1
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`Statement ^ 106; Kusulas Rule 56.1 Statement f 10.) Significantly for the motions considered
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`here, this judgment included $779,273.26 in interest, calculated at the statutory rate of nine
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`percent per annum from the date of the June 16,2010, judgment as to Saco's liability for
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`Kusulas's injury. (Kusulas Rule 56.1 Statement ^ 10.)^
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`2 On May 12,2012, GEICO paid Kusulas $1,283,500. (Kusulas Rule 56.1 Statement If 9.) Kusulas characterizes
`this amount as "partial satisfaction" of the judgment, a characterization which GEICO disputes based on the claims
`at issue in the present case. (See GEICO 56.1 Counterstatement ^ 9.) The court declines to characterize the
`payment at this point and only notes that this payment represented the remaining policy coverage amount not in
`dispute as between GEICO and Saco at the time of the payment.
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 4 of 21 PageID #: 4770
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`From October 2007 through return of the jury verdict, the parties engaged in off-and-on
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`settlement discussions and GEICO developed internal case valuations, reviewed in greater detail
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`below. (See Section ILC.l, injfra.')
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`C.
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`Procedural History
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`GEICO filed the first of the two captioned cases in this court on November 15,2012, and
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`named both Saco and Kusulas as defendants. (Compl. (Dkt. 1).) That complaint seeks
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`declaratory judgment that (1) GEICO is not required to make any payments in excess of the
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`Policy Limits; (2) the Policies do not require payment for Saco's personal attorney's fees;
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`and (3) GEICO is not subject to any claim for bad faith in relation to its obligations to Saco.
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`(Id. K 41.) In her answer, Kusulas included two counterclaims: (1) GEICO breached its contract
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`in failing to tender to Saco the full Policy Limits plus preiudsment interest^ on that amount; and
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`(2) GEICO acted in bad faith towards Saco in its failure to settle the Underlying Action."* (See
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`Kusulas Answer & Countercl. (Dkt. 51) 21-28; id 29-63.) While, as noted, Saco originally
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`appeared as a defendant in the case, she assigned her rights against GEICO to Kusulas on
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`December 23,2014. (GEICO Rule 56.1 Statement ^ 107.)
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`II.
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`DISCUSSION
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`Pending before the court are the parties' cross-motions for summary judgment. GEICO
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`seeks summary judgment as to all claims in both actions. (See Mem. in Supp. of GEICO's Mot.
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`for Summ. J. ("GEICO Summ. J. Mem.") (Dkt. 116) at 1.) Kusulas moves for summary
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`^ The phrase "prejudgment interesf as it is used in the parties' submissions and this order refers to interest accruing
`from the time that liability was determined (June 16,2010) to the time that the jury returned its verdict (March 5,
`2012), as this is the relief requested by Kusulas in her Motion. (See Kusulas Summ. J. Mem. (Dkt. 120) at 10.)
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`On November 19,2014, Kusulas withdrew her bad faith claim (Nov. 19, 2014, Min. Entry), which she
`subsequently brou^t as a separate action in New York state court (see Kusulas Rule 56.1 Statement 23). GEICO
`removed the separate action to this court (see Not. of Removal (Dkt. 1), No. 15-CV-634, 3-4), and the court
`consolidated the two actions (Aug. 4,2015, Order (Dkt. 99)).
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 5 of 21 PageID #: 4771
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`judgment only as to her claim for breach of contract based on GEICO's failure to pay
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`prejudgment interest on the Policy Limits. (See Mem. in Supp. of Kusulas's Mot. for Partial
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`Summ. J. ("Kusulas Summ. J. Mem.") (Dkt. 120) at 1.) The court concludes that GEICO is
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`entitled to summary judgment as to its liability for prejudgment interest in excess of the Policy
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`Limits, as extrinsic evidence demonstrates that the parties to the Policies lacked intent for
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`GEICO to be liable for those payments. Kusulas's Motion for Partial Summary Judgment must
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`therefore be denied. The court also denies GEICO's request for summary judgment as to
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`whether it discharged its duty of good faith to Saco in the Underlying Action, as conflicting
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`evidence presented by the parties gives rise to a genuine dispute of material fact.
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`A.
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`Legal Standard
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`A court must grant summary judgment where "the movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.
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`R. Civ. P. 56(a). "A 'material' fact is one capable of influencing the case's outcome under
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`governing substantive law, and a 'genuine' dispute is one as to which the evidence would permit
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`a reasonable juror to fmd for the party opposing the motion." Fiaueroa v. Mazza. 825
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`F.3d 89, 98 (2d Cir. 2016) (citing Anderson v. Liberty Lobbv. Inc.. 477 U.S. 242,248 (1986)).
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`"The movant may discharge this burden by showing that the non-moving party has 'fail[ed] to
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`make a showing sufficient to establish the existence of an element essential to that party's case,
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`and on which that party will bear the burden of proof at trial.'" Lantheus Med. Imaging. Inc. v.
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`Zurich Am. Ins. Co.. —F. Supp. 3d—,No. lO-CV-9371 (KPF), 2015 WL 1914319, at *6
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`(S.D.N.Y. Apr. 28, 2015) (citing Celotex Com, v. Catrett. 477 U.S. 317, 322 (1986)).
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`"In determining whether an issue is genuine, '[t]he inferences to be drawn from the
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`underlying affidavits, exhibits, interrogatory answers, and depositions must be viewed in the
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`light most favorable to the party opposing the motion.'" SCW West LLC v. Westnort Ins. Corp.,
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 6 of 21 PageID #: 4772
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`856 F. Supp. 2d 514, 521 (S.D.N.Y. 2012) (quoting Cronin v. Aetna Life Ins. Co., 46
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`F.3d 196,202 (2d Cir. 1995)). "[T]he judge's function is not [] to weigh the evidence and
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`detennine the truth of the matter but to determine whether there is a genuine issue for trial."
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`Redd V. N.Y. Div. of Parole. 678 F.3d 166,173-74 (2d Cir. 2012) (quoting Liberty Lobby. 477
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`U.S. at 249). However, "[a] party may not rely on mere speculation or conjecture as to the true
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`nature of the facts to overcome a motion for summary judgment," and "[m]ere conclusory
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`allegations or denials ... cannot by themselves create a genuine issue of material fact where
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`none would otherwise exist." Hicks v. Baines, 593 F.3d 159,166 (2d Cir. 2010) (intemal
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`quotation marks and citation omitted).
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`B.
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`Breach of Contract Claim
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`Both Kusulas and GEICO move for summary judgment as to GEICO's obligation to pay
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`the prejudgment interest that accrued between the June 16, 2010, decision regarding liability and
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`the March 5,2012, jury verdict on damages. fSee Kusulas Summ. J. Mem. at 10; GEICO
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`Summ. J. Mem. at 7-10). Kusulas does not claim payment for all prejudgment interest on the
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`total judgment; rather, she seeks the interest accrued "on the portion of the Judgment up to
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`GEICO's policies' limits (i.e. up to $1,283,500)." (See Kusulas Summ. J. Mem. at 10.)
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`The parties raise two issues for the court's consideration: (1) Is GEICO required to pay
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`prejudgment interest in excess of the Policy Limits as a matter of New York law? (2) If not, do
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`the Policies' terms require such payment? The court finds that neither state law nor the Policies'
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`terms obligate GEICO to pay prejudgment interest in excess of the Policy Limits and so
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`concludes that GEICO is entitled to summary judgment on the issue.
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`1.
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`Obligation to Pay Prejudgment Interest Under New York Law
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`In the court's previous decision on the parties' cross-motions for judgment on the
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`pleadings, the undersigned determined that 'TMew York regulations do not require that an
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`6
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 7 of 21 PageID #: 4773
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`automobile insurance policy cover prejudgment interest in excess of the policy limit."
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`(Apr. 2, 2015, Mem. & Order (Dkt. 90) at 7.) Kusulas urges the court to reconsider its position
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`and argues that the previous decision misconstrued the applicable cases. (Kusulas Summ. J.
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`Mem. at 20.) The court finds no support for her argument that New York requires insurers to
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`pay prejudgment interest.
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`Kusulas's argument hinges on the New York Court of Appeals' decision in Dingle v.
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`Prudential Property & Casualty Ins. Co.. 85 N.Y.2d 657 (N.Y. 1995). In a bifurcated trial, the
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`defendant was found to be 100% liable for a car accident. Id at 659. The defendant's insurance
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`policy did not address payment of interest accrued between the dates on which liability was
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`adjudged and damages were set in a bifurcated trial, but the insurer agreed to pay interest during
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`that period on an amount up to the policy limit. Id Following the damages determiaation, the
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`insurer-defendant paid out the policy limit amount, the interest on the policy amount "accruing
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`from the date of the liability verdict to the date of the damages award" (i.e. prejudgment iaterest
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`on the policv limitsV and interest on the entire verdict from the date of the damages award to the
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`date of tender. Id at 659-60. The issue before the court was thus not the payment of interest on
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`the policy limit, but rather the plaintiff's request for the "difference between the interest on the
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`entire judgment... and the amount actually tendered." Id at 660.
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`Dingle therefore takes as a given the precise issue that is in dispute here: the defendant-
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`insurer had already agreed to pay prejudgment interest on the policy limits in addition to the
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`entire policy limit, exactly what GEICO is refusing to do here. In support of her contrary
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`reading of the case, Kusulas points to the first "Question Presented" in the Dingle plaintiff's
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`brief: "Must an insurance carrier... pay interest on the judgment against its insured from the
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`date of liability determination to the date of the tender of the policy?" (Ex. E to Kusulas
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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 8 of 21 PageID #: 4774
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`Summ. J. Mot. at 1.) However, she presents this argument entirely without context, as the
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`remainder of the cited brief reaffirms that the defendant insurer had already agreed to pay
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`prejudgment interest and was not contesting that point. (Id, at 3-4.) For the same reason,
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`Kusulas's citations to broad policy statements in Dinsle do not bind the court here: they were
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`made without consideration of the particular issue here, and it is not the place of this court to
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`determine whether the Court of Appeals would have made the same statements in reviewing
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`different contract language.^
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`Stripped of support from Dingle, Kusulas's remaining arguments do not further her
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`position.^ The court is not persuaded by Kusulas's characterization of the holding in Dingle and
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`reaffirms its prior decision that insurers in New York are not bound by law to pay prejudgment
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`interest in excess of policy limits.
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`2.
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`Obligation to Pav Prejudgment Interest Under Saco's Policies
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`In the absence of a legal rule requiring insurers to pay prejudgment interest on their
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`policy limits, the parties dispute whether the Policies' terms require such payments. The court
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`previously concluded that the Policies were susceptible to "more than one reasonable
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`inteipretation." (Apr. 2, 2015, Mem. & Order at 7.) Due to the resulting ambiguity as to
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`^ Kusulas particularly relies on the Court of Appeals' statement that "the controlling inquiry should be who has
`retained or benefitted from the money belonging to the plaintiff during that period." ("See Kusulas Summ. J. Mem.
`at 12 (citing Dinele. 85 N.Y.2d at 662).) She argues that, as GEICO retained the money in the prejudgment period,
`this language indicates that they "benefitted from the money" in the context of this inquiry. (Id.)
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`^ In addition to Dingle. Kusulas cites two other cases, Sinn v. Nationwide Mut. Ins. Co. 666 N.Y.S.2d 89 (App.
`Div. 1997) and Raeins v. Hospitals Ins. Co. 22 N.Y.3d 1019 (N.Y. 2013), neither of which supports her contention
`that insurers are required to pay prejudgment interest on their policy limits regardless of the language of the policies.
`(See Kusulas's Summ. J. Mem. at 13-14.) While Sinn, considering a policy that was "not more generous than...
`required by regulation," awarded interest from the date of the liability determination, the opinion offers no
`suggestion that the parties contested prejudgment interest or that the court specifically considered that issue. 666
`N.Y.S.2d at 89. The Court of Appeals' decision in Ragins offers even less support to Kusulas's position, as the
`interest determination is based on the "plain meaning of the ... policies" and not an obligation imposed by law. 981
`N.Y.2datl023.
`
`8
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 9 of 21 PageID #: 4775
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`prejudgment interest, the court invited the parties to submit extrinsic evidence to elucidate the
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`intent behind the relevant provisions. (Id. at 9-11.)
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`Kusulas argues again that the Policies unambiguously demonstrate the parties' intent for
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`GEICO to pay prejudgment interest, including interest in excess of the Policy Limits. Both
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`parties also present extrinsic evidence as to the parties' intent. The court once again finds the
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`Policies' language to be ambiguous, but concludes that the extrinsic evidence demonstrates that
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`the parties lacked intent for GEICO to be liable for prejudgment interest payments in excess of
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`the Policy Limits.
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`a.
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`Ambiguity in the Policies
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`"When a dispute arises involving the terms of an insurance contract, New York insurance
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`law provides that an insurance contract is interpreted to give effect to the intent of the parties
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`expressed in the clear language of the contract." Parks Real Estate Purchasing Grp. v. St. Paul
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`Fire & Marine Ins. Co.. 472 F.3d 33, 42 (2d Cir. 2006) (internal quotation marks and citation
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`omitted). Where "an insurance policy is 'clear and unambiguous,' it is to be given its 'plain and
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`ordinary meaning,' and courts are to refrain from rewriting the agreement." Duane Reade. Inc.
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`V. St. Paul Fire and Marine Ins. Co.. 600 F.3d 190,201 (2d Cir. 2010) tquoting Dalton v.
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`Harlevsville Worcester Mut. Ins. Co., 557 F.3d 88, 90 (2d Cir. 2009)). Whether or not a contract
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`is ambiguous is an issue of law for the court to assess in view of whether the challenged
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`language "is reasonably susceptible of more than one interpretation," a judgment which "the
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`court makes by reference to the contract." Banque Arabe et Intemationale D'Investissement v.
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`Md.Nat'lBank. 57 F.3d 146,152 (2d Cir. 1995).
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`Thus, the court is charged with deciding in the first instance whether the Policies
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`unambiguously demonstrate the parties' intent that GEICO should pay prejudgment interest,
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`including where that interest is in excess of the Policy Limits. The Automobile Policy contains
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 10 of 21 PageID #: 4776
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`only one reference to payment of interest, contained in a list of "additional payments [GEICO]
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`will make under the liability coverages": "falll interest accruing on the amount of a judgment
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`which represents our limit of liability, until we have paid, offered, or deposited in court that part
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`of a judgment not exceeding the limit our liability." (Ex. 9 to Kusulas Summ J. Mot.
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`(Dkt. 117-10) at ECF pp. 10-11 (emphasis added).) The Umbrella Policy likewise contains only
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`one reference to interest, contained in a section titled "defense of suits not covered by other
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`insurance," which states: "[w]hen [GEICO] provide[s] defense, we will... pay interest accruing
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`after a judgment is entered in a suit we defend; our duty to pay interest ends when we offer to
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`pay that part of the judgment which does not exceed our liability limits." (Ex. 10 to Kusulas
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`Summ J. Mot. (Dkt. 117-11) at ECF pp. 8-9 (emphasis added).)^
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`Kusulas argues that the wording and placement of these policies demonstrate that
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`GEICO's responsibility for interest payments is not constrained by the Policy Limits. Pointing
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`particularly to the fact that the Automobile Policy language regarding interest is listed as an
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`"additional payment," she argues that the Policy Limits apply only to damages and do not affect
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`GEICO's obligations as to interest on judgments imder the policy. (Kusulas Summ. J. Mem.
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`at 15-16.) However, this discussion does not resolve the ambiguity identified by the court's
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`previous decision and reaffirmed here. The policy language is ambiguous as to both: (1) whether
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`GEICO agreed to pay prejudgment interest or solely post-judgment interest; and (2) in that
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`event, whether GEICO agreed to pay interest amounts in excess of the Policy Limits. While the
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`' Additionally, in discussing its "limits of liability," the Umbrella Policy states that "[i]f both primary insurance and
`this policy cover an occurrence, we pay only those damages which exceed the liability limits listed in Item V of the
`declarations, or any applicable primary policy, whichever is greater." (Ex. 10 to Kusulas Summ J. Mot. at ECF p.
`8). The "liability limits in Item V of the declarations" appears on a separate page of the policy, which lists the
`"Minimum Required Limits of Primaiy Insurance" as "$300,000/300,000/100,000." (Id at ECF p. 2.) This is an
`apparent reference to the automobile insurance policy limits. The significance of this language is not clear and is
`not addressed by the parties.
`
`10
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 11 of 21 PageID #: 4777
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`policies clearly envision that some interest payments will exceed the Policy Limits, Kusulas'
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`arguments do not provide any further information as to whether the interest provisions in each
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`policy evince intent that GEICO should pay preiudgment interest, or how the different passages
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`in the Automobile and Umbrella Policies should be read together.
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`Thus, the court is remains unable to determine from the language of the Policies
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`themselves whether the parties intended that GEICO would pay prejudgment interest and, if so,
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`whether such pa5nnents could exceed the Policy Limits. Accordingly, the court is unable to mle
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`on the meaning of the Policies based solely on the four comers of the contract.
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`b.
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`Extrinsic Evidence of the Parties' Intent
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`"When a court decides, after examination of the contractual language, that an insurance
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`policy is ambiguous, it looks outside the policy to extrinsic evidence, if any, to ascertain the
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`intent of the parties." Andv Warhol Found, for Visual Arts. Inc.. v. Fed. Ins. Co., 189
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`F.3d 208,215 (2d Cir. 1999). The purpose of this examination is to determine the "meaning
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`intended by the parties during the formation of the contract." Morgan Stanlev Grp. Inc. v. New
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`Eng. Ins. Co.. 225 F.3d 270, 276 (2d Cir. 2000) (quoting Alexander & Alexander Servs.. Inc. v.
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`These Certain Underwriters at Llovd*s. London. Eng.. 136 F.3d 82, 86 (2d Cir. 1998)).
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`The meaning of an ambiguous contract is generally an issue of fact and so unsuitable for
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`siraunary judgment. See Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 567
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`(2d Cir. 2011). However, summary judgment may be appropriate "if the non-moving party fails
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`to point to any relevant extrinsic evidence supporting that party's interpretation of the language."
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`Id. (intemal quotation marks and citation omitted). Said differently, a court can determine the
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`meaning of an ambiguous contract on summary judgment "if the extrinsic evidence is 'so one
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`sided that no reasonable person could decide the contrary.'" Sarinskv's Garage Inc. v. Erie
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`II
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`

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`Case 1:15-cv-00634-NGG-CLP Document 44 Filed 03/31/17 Page 12 of 21 PageID #: 4778
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`Ins. Co.. 691 F. Supp. 2d 483,486 (S.D.N.Y. 2010) rquoting 3Com Corp. v. Banco do Brasil
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`S.A.. 171 F.3d 739,746 (2d Cir. 1999)).
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`GEICO points to two primary sources of evidence of the parties' intent: deposition
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`testimony of its own employees stating that its policies do not cover any prejudgment interest in
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`excess of policy limits (see Ex. AA to GEICO Summ. J. Mot. ("Indjeyianms Dep. Tr.")
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`(Dkt. 151-34) 37:15-18; Ex. CCto GEICO Summ. J. Mot. ("Feinman Dep. Tr.") (Dkt. 115-36)
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`at 181:23-183:6; Ex. II to GEICO Summ. J. Mot. ("Siegelwax Dep. Tr.") (Dkt. 115-42)
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`42:14-19), and the undisputed fact that Saco herself has no recollection of obtaining the policies
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`at issue (GEICO Rule 56.1 Statement K 112). Based on these two pieces of evidence, GEICO
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`asserts that "[t]he probative evidence establishes that GEICO never intended to cover
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`prejudgment [interest] in either policy" and that Saco "cannot refute the evidence regarding
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`GEICO's intentions regarding prejudgment interest." ISee GEICO Summ. J. Mot. at 9.)
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`Kusulas attempts to contradict GEICO's assertions as to its intent in several ways. She
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`notes that, by GEICO's own admission, it pays prejudgment interest where the combined interest
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`and damages fall within policy limits. (Kusulas Mem. in Opp'n to GEICO Summ. J. Mot.
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`("Kusulas Opp'n Mem.") (Dkt. 122) at 4-5 (citing Aff. of Byron Wobeter (Dkt. 115-3) H 118).)
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`From this, she argues that "[ujnless GEICO is in the business of making gratuitous payments to
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`injured plaintiffs," the only "reasonable conclusion" is that GEICO makes those payments in
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`recognition of its obligation to do so.^ (Id) Kusulas also points to statements by the trial lawyer
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`retained by GEICO in the Underlying Action that, in his understanding, GEICO was responsible
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`for paying prejudgment interest on the award and that he had discussed the accrual of that
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`® Kusulas appears to argue that the obligation that GEICO is recognizing here is one imposed by New York law.
`(Kusulas Opp'n Mem. at 5.) While the court has already held that she fails to establish this obligation, see supra
`Section II.B.l, this argument may still be relevant to evaluating GEICO's intent in making those payments.
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`interest with GEICO on several occasions prior to trial. (Id. at 5-6 (citing Ex. J to GEICO
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`Sunim. J. Mot. ("Nelson Dep. Tr.") (Dkt. 115-17) 75:11-76:17; see also Kusulas Summ. J. Mem.
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`at 6-7,18.) Finally, she offers testimony from an expert witness who was formerly employed by
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`another large New York state insurer, who testified that his previous employer would have paid
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`prejudgment interest in similar circumstances "without any second thoughts."^ (Ex. 23 to
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`Kusulas Summ. J. Mot. (Dkt. 117-24) at ECF p. 8.)
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`The court concludes that GEICO is entitled to summary judgment on this point. The
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`point in issue—^the intent of the parties—^is best viewed as having two component parts:
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`(1) whether GEICO was obligated to pay prejudgment interest; and (2) whether this obligation
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`would cover amounts in excess of the Policy Limits. In order to satisfy its burden, either on its
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`claim for declaratory judgment or its defense to Kusulas's counterclaim, GEICO need only show
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`that the one of these two elements is answered in the negative. GEICO's proffered testimony
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`meets this requirement, as it supports its claim that the contracting parties did not intend for
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`GEICO to be obligated to pay prejudgment interest in excess of the Policy Limits. Kusulas, on
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`the other hand, would need to demonstrate the parties' affirmative intent as to both of the
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`elements noted above in order to be entitled to relief, and she fails to make any showing as to the
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`second element. While Kusulas relies heavily on the declarations by GEICO's employees that it
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`might pay prejudgment interest where its total payment does not exceed the policy limits, this
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`testimony speaks only to the first element: GEICO's willingness to make prejudgment interest
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`^ Kusulas also offers testimony from both this expert and a second expert, a former justice of the New York State
`Appellate Division, that this court erred in its determination that the insurers are not required by state law to pay
`prejudgment interest in all cases. (See Ex. 23 to Kusulas Summ. J. Mot. at ECF pp. 5-6; Ex. 22 to Kusulas Summ. J.
`Mot. (Dkt. 117-23) at ECF pp. 11-13.) In as much as Kusulas's experts testified regarding of issues of law, and not
`as to their interpretations of the Policies or the practice in the insurance industry, the court does not accord that
`testimony any weight. See Pension Comm. of Univ. of Montreal Pension Plan v. Banc of America Sees.. LLC, 716
`F. Supp. 2d 220,223-24 (S.D.N.Y. 2010) ("It is [] well-established that expert witnesses are not permitted to testify
`about issues of law—^which are properly the domain of the trial judge and jury.").
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`pa5anents in at least some cases. From this, she asks the court to assume GEICO's further intent
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`as to prejudgment interest in excess of policy limits. However, this would require the court to
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`inappropriately engage in "speculation or conjecture as to the true nature of the facts" rather than
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`properly evaluating the evidence that is actually before it. Hicks. 593 F.3d at 166 (internal
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`quotation marks and citation omitted). The testimony from an employee of a different insurance
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`company and an outside attorney employed by GEICO as to their own expectations offers no
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`additional assistance to Kusulas's case, as it does nothing to demonstrate the parties' intent at the
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`time of contracting. Accordingly, GEICO's Motion for Summary Judgment as to prejudgment
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`interest is granted and Kusulas's Motion for Partial Summary Judgment is denied.
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`C.
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`Bad Faith
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`GEICO also moves for summary judgment on its claim that it did not violate its duty of
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`good faith during settlement discussion in the Underlying Action. rSee generallv GEICO Summ.
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`J. Mem. at 10-24.) GEICO contends that, at all times prior to the trial, it valued the settlement at
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`an amount below the Policy Limits and so did not violate its good faith obligation by offering
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`less that the Policy Limits. QdJ Kusulas disputes this characterization, arguing that GEICO was
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`on notice of the significant potential that a jury would return a verdict in excess of the Policy
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`Limits, and that its failure to settle for an amount equal to the Policy Limits evinces bad faith.
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`Kusulas argues that, if the court deteimines that the contract language is ambiguous, it is obligated to interpret any
`ambiguities in favor of Kusulas. (Kusulas Summ. J. Mem. at 16.) Under the doctrine of contra proferentem.
`ambiguity in an insurance policy "'must be resolved against the insurer which drafted the contract.'" Catlin Spec.
`Ins. Co. V. 0A3 Fin. Corp.. 36 F. Supp. 3d 336,341 (S.D.N.Y. 2014) (quoting State v. Home Indem. Co.. 66 N.Y.2d
`669,671 (N.Y. 1985)). However, contra proferentem only applies where a court is unable to determine the meaning
`of a contract even after considering extrinsic evidence. S^ id. at 342 ("Where the words of a contract are
`ambiguous, but there is evidence of parties' intent, the 'fundamental, neutral precept' of contract interpretation still
`must apply, and fact-finders must determine the parties' intent.") Here, the court finds that the one-sidedness of the
`extrinsic evidence resolves the ambiguity, and so it does not apply the doctrine of contra proferentem.
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`" Kusulas also separately moves for summary judgment as to GEICO's alleged continuing accrual of interest.
`(Kusulas Summ. J. Mem. at 22-25.) Plaintiff argues that, because GEICO was required to pay prejudgment interest
`and failed to do so, that unpaid amount has itself accrued interest. The court also denies the motion for summary
`judgment as to this additional, derivative amount of interest.
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`Because of the fact-intensive nature of a bad faith claim, the court discusses GEICO's
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`consideration and attempted negotiation of a settlement in the Underlying Action in detail, noting
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`both the facts upon which the parties agree and those in dispute. The court then reviews New
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`York law on insurers' good faith obligations in settlement. The court concludes that Kusulas
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`presents multiple factual issues that go to the heart of the issue. Summary judgment must
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`therefore be denied.
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`1.
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`Relevant Factual History
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`Following Kusulas's institution of the Underlying Action, but prior to the judgment
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`holding Saco entirely liable for the car accident, Kusulas's then-attorney "demanded that
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`[GEICO] tender its full p