One Request for Declaratory Relief is all that is Needed


Policy Changes Must Be Agreed to by Both Parties

Plaintiff Pilkington North America, Inc. (“Pilkington”), a Delaware manufacturer, moved to dismiss counterclaims brought by Defendant Mitsui Sumitomo Insurance Company of America (“MSI” or “MSI-US”), a New York insurance company. In Pilkington North America, Inc. v. Mitsui Sumitomo Insurance Company Of America and AON Risk Services Central, Inc., No. 18 Civ. 8152 (JFK), USDC, District Of New York (November 10, 2020) the USDC was called upon to resolve competing claims for declaratory relief.


Pilkington incurred a $60 to $100 million loss when a tornado (“the Tornado”) struck its glass manufacturing factory in Ottawa, Illinois on or around February 28, 2017. Pilkington seeks compensation for the loss pursuant to a commercial property and business interruption insurance policy that was issued by MSI to Pilkington’s parent company, and other subsidiaries, “the NSG Group”). Pilkington alleges that MSI is liable for fraudulently revising the insurance policy such that the loss caused by the Tornado is not fully compensable. Pilkington also seeks damages against its insurance broker during the relevant time period, Defendant AON Risk Services Central, Inc. (“AON” or “AON-US”), for allegedly providing faulty advice while brokering the insurance policy, which allowed MSI’s fraud to succeed.

Pilkington alleges that MSI misrepresented the changes it proposed by means of a revision (“the Endorsement”) to an active insurance policy MSI had issued to the NSG Group for the 2015-2016 policy period (“the U.S. Local Policy” or “the Policy”). MSI proposed the changes to AON, who failed to notify Pilkington that, in addition to changing certain currency valuations in the Policy, the Endorsement also revised the wording of a sublimit applicable to certain types of windstorms. AON failed to inform Pilkington that the Endorsement would substantially reduce coverage for windstorms such as the Tornado. The gravamen of Pilkington’s claims center on its allegations that MSI represented to AON that the Endorsement would only change currency valuations when in fact it also reduced the types of losses that MSI was obligated to indemnify; and on AON’s negligence in carelessly helping to trick Pilkington into agreeing to the Endorsement and incorporating the same fraudulently revised terms into the following year’s insurance policy, which was in effect when the Tornado struck.


MSI’s asked the court to declare that coverage for losses arising from a windstorm in the United States is subject to a $15 million sublimit and estopping Pilkington from seeking to recover any additional amounts subject to the agreed upon global program.

The Global Program was developed and marketed by AON-UK, and it consists of the interrelated contracts which were designed to enable the NSG Group to save money by self-insuring many of NSG’s business operations.

The Global Program in effect when the Tornado struck limited to $15 million the total coverage afforded to the NSG Group for damages arising from a windstorm in the United States. As was common practice between the parties, AON-US acted as Pilkington’s agent with respect to the negotiation and placement of the U.S. Local Policy. In or around March 2016, AON-US prepared and transmitted a market submission for the 2016-2017 U.S. Local Policy to MSI-US. In accordance with the terms negotiated and agreed to at the global level, AON-US’s submission requested a $15 million windstorm sublimit (“the Windstorm Sublimit”). MSI-US quoted the requested coverage, and AON-US subsequently instructed MSI-US to issue the policy while noting that AON-US had “reconciled [MSI-US’s] quote with our instructions from U.K.” MSI-US issued the U.S. Local Policy with the $15 million Windstorm Sublimit, which was consistent with the coverage provided under the Master Policy for windstorms in the United States every year since 2009, when the MSI group of companies first participated in the Global Program.

In early-2017, the Tornado struck Pilkington’s facility. MSI paid Pilkington $15 million in satisfaction of its coverage obligations under the U.S. Local Policy, after which Pilkington sued to recover the balance of its losses from the Tornado.


MSI argued that it fully satisfied its coverage obligations to Pilkington

MSI argues that AON’s 2016 market submission, which included the $15 million Windstorm Sublimit, and AON’s accompanying representation that it had “reconciled” the proffered policy terms with instructions from AON-UK, constitute false statements because Pilkington now claims that it did not knowingly assent to the $15 million Windstorm Sublimit. Further, MSI argues, it is entitled to equitable relief against Pilkington because MSI justifiably relied on AON’s representations when it issued the insurance policy under which Pilkington now seeks to hold MSI liable for tens of millions of dollars.

MSI’s counterclaims do not allege any facts which give rise to an inference that AON’s statements were false when made. Indeed, contrary to MSI’s conclusory assertions, Pilkington’s present claims do not make AON’s earlier statements false where, as here, Pilkington does not contest that AON’s proposal included the $15 million Windstorm Sublimit, nor that it agreed to the 2016-2017 U.S. Local Policy as written. In addition, MSI fails to plausibly allege injustice or unfair prejudice.

If Pilkington is successful on its claims against MSI, there will be no injustice or unfair prejudice to MSI where Pilkington is the aggrieved party entitled to relief due to MSI’s wrongdoing.

The USDC noted that insurance contracts involve unique promises, including an element of trust from a policyholder to its insurer—here, Pilkington’s trust that if it paid an agreed-upon premium to MSI every year, MSI would indemnify Pilkington for certain losses which may or may not arise. MSI offers no facts to support an inference that a sophisticated insurance company such as itself, which repeatedly sought to materially change the terms of its policyholder’s insurance contract, somehow innocently misled that policyholder into agreeing to something that MSI did not intend.

Pilkington’s nearly identical claim to that made by MSI already provides the vehicle for the Court to declare all relevant rights and obligations of the parties with respect to the insurance policy in effect at the time of the Tornado, including the Windstorm Sublimit that is at the center of this dispute.

Indeed, in adjudicating whether Pilkington is entitled to the declaratory relief it seeks, MSI will have a full opportunity to make any counterarguments it wants regarding the Global Program. Accordingly, leave to amend would be futile, and the counterclaim is dismissed with prejudice.


Declaratory relief is an important tool used by insurers and insureds to resolve disputes over coverage. In this case both parties sought declaratory relief concerning the $15 million windstorm sub-limit. The USDC, with a Solomon-like decision found that it did not need to deal with two competing claims for declaratory relief when one was sufficient to allow the insurer and the insured to resolve the dispute. What seemed complex turned out to be simple and direct: Did the insured agree to the $15 million sub-limit or was the insured or the insurer deceived by the agent? The trial will be shorter and will resolve the issue.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. last two issues of ZIFL here. 

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