WPCL ЖGli𱏽ZݻS86 V/vߑgpx}zB{CKP(*v$#Gsj.#dgIUn[#GkKElԵ[|pt'g:ESC:h zC,-.ޖ!-|ꖒ H20Y4\M0`E)FGqVE<ÄGh d!u1Ѝ&K0 zVDlouV1oϼ'_*b׉l'}0fwb@yf6/tvJn;ae*'BÃUYPNLovb6ace/PfnĜOYL: l+1|/ۤh5PS0_/!mZ2MUt8vQp#  % 0D 0G+ U:r 0 U8 nT N UN UFm ^ w 4   E f a m' 0/^U6mU>NU*UB 0F 00[b 0UU6 0 0 0 B 0 0 0 0{ 0CO 0 0i 0= 0 0 0 0o 04 0@ 04 0! 0! 0" 0r# 0:$ 0$ 0% 0<~& 0& 0>x'.' 0v* 0`Z+ 0`+ 0`, 0`z, 0`, 08:- 0r- 02D. 0v. 0:r/ 0Y/ 0_0 0 d0 0jn1 02 B*\4 D/4 D+4 04 D/d6 06 06a7 07 0:8 0^8 AY799 0cV:: 0<= 1e==> A2E2E2E 1u!I 72IIIIIIIIHP LaserJet 5/5M - Standard,,,,0X(#$  0  ($XXXX<6X9`("Courier NewTT(:2$ !XOXXX    =OXdd=    0  <4 9Z+ Courier New <6X9`("Courier NewTTXXx6X@DQX@<6X9`(CourierTTXXw6X@QX@(9 Z6Times New Roman RegularQ 9Z+.Courier New Regular~2s 6x2s52v0Backup3|xTABLE AU  $X_XXX  =_Xdd=    *    _OftheDistrictofNewHampshire,sittingbydesignation. *>+M (_22   &hhp x &23  ..  5+ ` hp x 5  L:\JUDGES\Boudin\TEMPLATE\OPINIONS\ALDRICH.WPT<6X9`(Courier New\  `&Times New RomanLevel 1Level 2Level 3Level 4Level 5%2A`Arial<6X9`(*Courier 12pt10cpi(n$ (  1  ) 0.Normal- -*+ (_2623  ..<4 9Z+Courier New*G+M (_25   /%` ` hp x /23  ..  5+ ` hp x 5  *D+M (_24   ," hp x ,23  ..  5+ ` hp x 5  *A+M (_23  ` ) hp x )23  ..  5+ ` hp x 5   d*;+M (_21   #p x #23  ..  5+ ` hp x 5  *8+M (_20  h  p x 23  ..  5+ ` hp x 5  *5+M (_19   pp x 23  ..  5+ ` hp x 5  *2+M (_18    x 23  ..  5+ ` hp x 5  * (_1723  Ԁ*GM (_16   /%` ` hp x /23  Ԁ  5+ ` hp x 5  *DM (_15   ," hp x ,23  Ԁ  5+ ` hp x 5  *AM (_14  ` ) hp x )23  Ԁ  5+ ` hp x 5  *>M (_13   &hhp x &23  Ԁ  5+ ` hp x 5  *;M (_12   #p x #23  Ԁ  5+ ` hp x 5  *8M (_11  h  p x 23  Ԁ  5+ ` hp x 5  *5M (_10   pp x 23  Ԁ  5+ ` hp x 5  (2M &_9    x 23  Ԁ  5+ ` hp x 5  ( &_823  (GM &_7   /%` ` hp x /23   5+ ` hp x 5  (DM &_6   ," hp x ,23   5+ ` hp x 5  (AM &_5  ` ) hp x )23   5+ ` hp x 5  (>M &_4   &hhp x &23   5+ ` hp x 5  (;M &_3   #p x #23   5+ ` hp x 5  (8M &_2  h  p x 23   5+ ` hp x 5  (5M &_1   pp x 23   5+ ` hp x 5  &2M $_    x 23   5+ ` hp x 5  <:Definition T<AA:Definition L , 5+ ` hp x 5  5+ ` hp x 586Definition $ $X_XXX  =_Xdd=    1    _Thedistrictcourtdeterminedthatthesubstantivelawof  eitherMassachusettsorNewYorkgovernedthedispute,andthatthe  twodidnotdifferinanypertinentrespect.Thepartiesdonot \ disputethisassessmentand,theapproachbeingcolorable,we 2 followsuit.SeeRoyalBus.Group,Inc.v.Realist,Inc.,933F.2d X 1056,1064(1stCir.1991);seealsoLexingtonIns.Co.v.Gen. . AccidentIns.Co.ofAm.,338F.3d42,46(1stCir.2003).(''&H1      (&H2  (&H3  (&H4 XXX (&H5  (&H6  20Address8MM6Blockquote , , 5+ ` hp x 5   5+ ` hp x 5,*CITE,dl*CODEK<6X9`(Courier NewKS\  `&Times New RomanS42Emphasis64Hyperlink    <:FollowedHype    4go2Keyboard K<6X9`(Courier NewKS\  `&Times New RomanS <:Preformatted/%  ,Kk %#/K<6X9`(Courier NewKS\  `&Times New RomanS/%  ,Kk %#/<:zBottom of 7S(X7  ?%2A`Arial?  S\  `&Times New RomanS7T(X7&  d dR)1dxd'dxd<:zTop of For7V(X7  ?%2A`Arial?  S\  `&Times New RomanS7T(X7R)2dxd0KS.SampleK<6X9`(Courier NewKS\  `&Times New RomanS0.Strong 8dl6TypewriterK<6X9`(Courier NewKS\  `&Times New RomanS42Variable: 8HTML MarkupB      ]^O  , deUULevel 1Level 2Level 3Level 4Level 5(;3$ !XOXXX    $X_XXX  =_Xdd=    2    _Theseincludedlandfills,leakingchemicaldrums,  contaminatedlagoonsandasbestos-contaminatedsoil,abandoned  drumsofindustrialwasteandleakingstoragetanks,plant \ operationsthatinvolvedammoniawastewaterbeingdisposedofin 2 unlinedpitsorinjecteddirectlyintotheground,improper X disposalofpesticideresidue,inadvertentspreadingofdrywaste . particles,andburiedradioactiverubble.2 0CommentB  ,-./0123 35;AGMSY_11.1.1.1.1.1.1.1.  $X_XXX  =_Xdd=    3    _See,e.g.,Soc'yofRomanCatholicChurchofDioceseof  Lafayette&LakeCharles,Inc.v.InterstateFire&Cas.Co.,26  F.3d1359,1366(5thCir.1994);Bd.ofTrs.ofUniv.ofIll.v. \ Ins.Corp.ofIre.,Ltd.,750F.Supp.1375,1376,138081(N.D. 2 Ill.1990);Hercules,Inc.v._AIU_ԀIns.Co.,784A.2d481,49596 X (Del.2001).  $X_XXX  =_Xdd=    4    _See,e.g.,AssociatedIntlIns.Co.v.Blythe,286F.3d780,  782(5thCir.2002)( TheAssociatedPolicy,asafollowingform  policy,adoptedthecoverageprovisionsanddefinitionsofthe \ underlyingProgressivePolicy.);ColemanCo.v.Cal.UnionIns. 2 Co.,960F.2d1529,153334(10thCir.1992)(notingthatfollow X theformclause manifestsanintenttoconsidertheunderlying . policyindeterminingthecoverageundertheumbrellapolicy,and   concludingthattheamountoflossintheexcesspolicyshouldbe   computedaccordingtothemethodintheprimarypolicy). X_XXX_Ԁ `    $X_XXX  =_Xdd=    6    _See,e.g.,Unigard,4F.3dat107071(followtheform);  BellefonteReinsuranceCo.v.AetnaCas.&Sur.Co.,903F.2d910,  914(2dCir.1990)(followthefortunes);Travelers,760N.E.2dat \ 328n.9( [A]followthefortunesclausedoesnotsupersede 2 specificlanguageinareinsurancecontract....);seealso X Ostrager&Vyskocil,supra,2.03[a],at29(followingform . reinsurancecontractincorporatestermsofthereinsuredpolicy to   theextenttheyarenotinconsistentwiththeexpresstermsofthe   reinsurancecontract). X_XXX_3#37=CIQYag1.a.i.(1)(a)(i)1)a)gi)  $X_XXX  =_Xdd=    5    _N.RiverIns.Co.v.ACEAm.ReinsuranceCo.,361F.3d134,  13940(2dCir.2004); ChristianiaGen.Ins.Corp.ofN.Y.v.Great  Am.Ins.Co.,979F.2d268,280(2dCir.1992);Aetna,882F.Supp. \ at134647;IntlSurplusLinesIns.Co.v.CertainUnderwriters& 2 UnderwritingSyndicatesatLloydsofLondon,868F.Supp.917, X 92021(S.D.Ohio1994). !X_XXX  _TRY,3'X3' Letter 3' Letter3'T ? * ! XXXX_ /X X     UnitedStatesCourtofAppeals  /  FortheFirstCircuit    X_X   A') ` dE<` A   No.041709  @  COMMERCIALUNIONINSURANCECOMPANYand u  @  AMERICANEMPLOYERSINSURANCECOMPANY, K  @Plaintiffs,Appellants,  G  @tt)v.   @  SWISSREINSURANCEAMERICACORPORATION, O  @<< Defendant,Appellee. K  A') ` dE<` A  @ APPEALFROMTHEUNITEDSTATESDISTRICTCOURT  @0 0 FORTHEDISTRICTOFMASSACHUSETTS b @[Hon.DouglasP.Woodlock,U.S.DistrictJudge] ^ A') ` dE<` A   @'Before    @@((Boudin,ChiefJudge, u Torruella,CircuitJudge, K andDiClerico, #  *      ׀DistrictJudge. !q A') ` dE<` A        CarterG.PhillipswithwhomWilliamM.Sneed,StephenC. ! Carlson,SidleyAustinBrown&WoodL.L.P.,RichardA.Johnstonand " WilmerCutlerPickeringHaleandDorrLLPwereonbrieffor ^ # appellants. 4!$   EdwardP.Krugman,CahillGordon&ReindelLLP,EricS.  "Z% Kobrick,AssociateGeneralCounsel,AmericanInternationalGroup, "0& Inc.,onbriefforTheMemberandAffiliatedCompaniesofAmerican #' InternationalGroup,Inc.,AmiciCuriae. $(   DavidA.AttisaniwithwhomJohnA.Nadas,RobertA.Koleand b% ) Choate,Hall&Stewartwereonbriefforappellee. 8&!* *'ddd Xdd Xdd X(#(#,( dd ,( dd ,( dd +  '4#,'4# H SIH(#-  @38529 @SJune27,2005 )n$/  RHC)D%0"  @38529  @ R ," H(#1 ? ,* !  8_XXdd8!*,X` XX* ` BOUDIN,ChiefJudge. 󀀀Thisisadisputebetweenan  insurancecompanyCommercialUnionInsuranceCompany("Commercial x Union")andoneofitsreinsurers,SwissReinsuranceAmerica $t Corporation("SwissRe").Theprincipalissueiswhether,under   severalthreeyearreinsurancepolicies,SwissRewasprotectedby |  asingleperoccurrencelimitonitsliabilityforthethreeyear ( x  policyperiodorwhetherthelimitappliesseparatelyforeach $  policyyear,therebyenlargingSwissRe'stotalexposure.    ` Thebackgroundeventsinvolvethreedifferenttiersof ,|  insurance,coverageperiodsthatdonotpreciselyoverlapbetween ( tiers,andpertinentclausesthatarenotevenidenticalfromone  policytoitssuccessor.Accordingly,insettingthestage,some 0 oversimplificationastothepoliciesandsomepostponementof , detailarebothnecessary.Webeginatthegroundfloorwiththe  insured,W.R.Grace&Co.("Grace"),awellknowncompanywithmany 4 differentfacilitiesatdifferentlocations,andthenworkup 0 throughthetiers.    ` Astothesitesatissueinthiscase,Grace'sprimary 8!" insurerduringtheperiodinquestion(roughly1962to1974)was "4$ MarylandCasualtyCo.( Maryland).Withaoneyearexceptionthat $& isnotimportanttoourcase,thatcompanyprovidedcoverageto <&!( GraceunderfivesuccessiveoneyearpoliciesbetweenJune30, '8#* 1962,andJune30,1967,andtwothreeyearpoliciesfromJune30, )$, 1967,toJune30,1973.Thepoliciescoveredpersonalinjuryand @+&. propertydamageupto$1millionperoccurrencebutwithmuchlower  limits($25,000,later$100,000)forlossesfrom"gradual \ pollution." X  ` BetweenOctober20,1962,andJune30,1974,Commercial   Union'spredecessorsininterestprovidedexcessliabilitycoverage `  toGracethatis,coveragestartingatthepointthattheMaryland  \  policiesleftoffintheformoffoursuccessivemultiyear   umbrellapolicies.X_XX X_Ԁ(# X_XXX_#Thefirst,secondandfourthpolicieseachran d  forthreeyears;thethirdranforabouttwoyearsandeight `  months.X_XX X_)Thepoliciesprovidedcoverageintheamountof$5   millionforeach"occurrence,"defining"occurrence"toinclude# X_XXX_f##X_XX X_Ԁ an h event,orcontinuousorrepeatedexposuretoconditions,# X_XX#X_1##X_XX X_Ԁwhich d unexpectedlyresultsinpersonalinjury[or]propertydamage  duringthepolicyperiod,andcontinued:# X_XX#X_#X_XX X_ l 8 ` [A]llpersonalinjuryandpropertydamage.. h .arisingoutofoneeventorcontinuousor > repeatedexposuretosubstantiallythesame  generalconditionsexistingatoremanating  fromonepremiseslocationshallbedeemedto p  beoneoccurrence.F !` x` x  ` TheCommercialUnionpoliciesalsoincludedclauses, !B# knownas"followtheform"clauses,thataredesignedtomake #% coverageunderahighertierpolicy(here,CommercialUnion's) J% ' conformsubjecttocertainqualificationstothecoverage &F") providedbytheunderlyingpolicy(here,Marylandspolicies).See (#+ 2Ostrager&Newman,HandbookonInsuranceCoverageDisputes N*%- 13.01[a],at868(12thed.2004).Thus,inthefirsttwopolicies, +J'/ _thefollowtheformlanguageprovidedthat"theterms,conditions  andlimitationsofthispolicywillnotbeconstruedanymore \ restrictive[sic]thantheterms,conditionsandlimitationsof X UnderlyingInsurance.# X_XXX_##X_XX X_Thelattertwoprovided:# X_XX#X_'!#X_XX X_   # X_XXX_!##X_XX X_8 ` [_s]uch_Ԁcoverageasisaffordedbythispolicy `  shallapplytooccurrencescoveredbythe 6   termsandconditionsof[theunderlying  \  policy]orbythetermsofconditionsofthis  2  policyexceptthatthedefinitionofProperty   Damageascontainedinthispolicyshall   apply.!# X_XX#X_!##X_XX X_#a X#X_d ` x` x # a  #a##a   a#X_X a$# ` Thetoptierofcoverageinthiscasewasprovidedby `  SwissRe,whichofferednotinsuranceforGracebut"reinsurance"   toCommercialUnion.SwissReagreed,underspecifiedconditions, h toindemnifyCommercialUnionforspecifiedlossesitmightsuffer d underitsexcessinsurancepolicies.Theformofreinsuranceused,  called"facultative,"coversrisksthatthe"_cedent_"(here, l CommercialUnion)bearsunderaspecificpolicyorpolicies.2 h _Ostrager_Ԁ&Newman,supra,15.03[a],at99697.   ` SwissReissuedthreemultiyear"certificates"to p  CommercialUnion,correspondingtoeachofthelastthree(outof !l" atotaloffour)multiyearexcessliabilitypoliciesthat "$ CommercialUnionhadwrittenforGrace,i.e.,roughlyforthe t$& period1965to1974.EachSwissRecertificatewasskeletal,  &p!( identifyingtheCommercialUnionexcessliabilitypolicyin '#* questionandagreeingtoshareaspecifiedportionofCommercial x)$, Union'sliabilitytoGrace.# X_XXX_q$#Specifically,underthefirst $+t&. certificateSwissReagreedtoshare50percentofCommercial  Union'sfirst$1millioninlossfor"eachoccurrence";underthe \ second,50percentofthefirst$500,000;underthethird,37.5 X percentofthefirst$500,000.X_XX X_    ` Eachcertificatecontainedonthebacksideseveral `  standardconditions.Theseincludedvariouslyphrasedfollowthe  \  formclausessayingthatexceptas otherwisespecifically   providedinthecertificateSwissResliabilitywould follow d  or besubjecttothe termsandconditionsofCommercialUnions `  policies.Thus,throughfollowtheformclauses,SwissRe's   policieslookedbacktoCommercialUnion's,andthelatter's h policieslookedbacktoMaryland'spolicieswithGrace. d  ` Inaddition,theSwissRecertificatescontained"follow  thefortunes"provisions,whichwherethecaseinvolves l settlementsaresometimescalled followthesettlementsclauses. h Suchprovisionsaredesignedtogivethe_cedent_Ԁreasonablelatitude  tosettleclaimsagainstitbytheprimaryinsuredandtobindthe p  reinsurer(insomemeasure)fromcontestingtheextentofthe !l" _cedent_'sliabilitytotheprimaryinsured.See_Ostrager_Ԁ& "$ _Vyskocil_,ModernReinsuranceLaw&Practice9.01.02(1996); t$& Travelers_Cas_.&Sur.Co.v.CertainUnderwritersatLloyd'sof  &p!( London,760N.E.2d319,328(N.Y.2001).Here,thefollowthe '#* fortunesclauseineachcertificatereadsasfollows: x)$, 8 ` Allclaimsinvolvingthisreinsurance,when $+t&. settledby[CommercialUnion],shallbe +J'/ bindingon[SwissRe],whichshallbeboundto  payitsproportionofsuchsettlements  promptlyfollowingreceiptofproofofloss.2\` x` x  ` Inthe1980s,GracebegantonotifyCommercialUnionof X potentialpropertydamagelossesduetohazardouswastepollution   atvariousGracesites.In1988,Marylandfiledadeclaratory `  judgmentactioninfederaldistrictcourtinNewYorkagainstGrace  \  seekingtoclarifyMaryland'sobligationsunderitsprimary   policies.SeeMd._Cas_.Co.v._Contl_Ԁ_Cas_.Co.,332F.3d145,148 d  49(2dCir.2003).CommercialUnionandotherinsurerswereadded `  tothesuit,andeventuallythecaseexpandedtoinvolveover200   wastesites. h  ` InOctober1998,CommercialUnionsettledwithGrace d basedoninformationaboutnine focuswastesites(outofthe  fortyforwhichGraceclaimedCommercialUnionwasliable),fora l singleimmediatepaymentof$57.6million.Thesettlementwas h premisedonestimatesofprojectedliabilityoverasubstantial  periodduetodamageateachsiteandoncertainassumptions.Two p  suchassumptionswere(1)thatthehazardouswasteliabilityat !l" eachsiteshouldbeallocatedprorataacrosstheyearsofrelevant "$ insurancecoverageateachsiteand(2)thatthe$5millionper t$& occurrencelimitineachpolicyshouldbeviewedasapplying  &p!( separatelytoeachpolicyyear,i.e.,$15millionforathreeyear '#*  policy. x)$,  ` WhenCommercialUnionthensoughtindemnityfromSwissRe   for$13.7million(outofthe$57.6millionpaidtoGrace),Swiss \ Repaidlessthanhalfthatamount.Itwithheldpartofthe X balance(about$6million)onthegroundthatitsreinsurance   certificatesprotecteditfromanycalculationofCommercial `  Union'sliabilitytoGrace,orSwissRe'stoCommercialUnion,  \  premisedonthenotionthattheperoccurrencelimitapplied   separatelytoeachpolicyyear(asopposedtotheentiremultiyear d  policyperiod).SwissRealsodisputedanotheraspectofthe `  demandbutthatissuewasapparentlysettled.    ` Oncrossmotionsforsummaryjudgment,thedistrictcourt h concludedthatSwissRewascorrectonthe"_annualization_"issue. d ThecourtheldthatSwissRe'sliabilityshouldbebasedonthe  premisethattheperoccurrencelimitappliedoncetoacontinuing l leakageatasiteoverthemultiyearpolicyperiodandnotonce h foreachyearoftheperiod.Thecourtdeemedthistobean  explicitlimitineachcertificate,overridinganyfollowtheform p  orfollowthefortunesprovision.ThisappealbyCommercialUnion !l" followed. "$  ` Wereviewagrantofsummaryjudgmentdenovo. t$& CommercialUnionIns.Co.v._Walbrook_ԀIns.Co.,7F.3d1047,1050  &p!( (1stCir.1993).Thepresentcontractinterpretationdisputeis '#*  governedeitherbythesubstantivelawofNewYorkor x)$, Massachusetts.A #  1      ׀Further,interpretationofaninsurancecontract   isatleastabsentextrinsicevidenceaquestionoflawforthe \ court.# X_XXX_j+#SeeFishmanv._LaSalle_Ԁ_Natl_ԀBank,247F.3d300,303n.2 X (1stCir.2001).Accord_Lumbermens_ԀMut._Cas_.Co.v.Offices   Unlimited,Inc.,645N.E.2d1165,1168(Mass.1995);Suttonv.E. `  River_Sav_.Bank,435N.E.2d1075,107778(N.Y.1982).X_XX X_Ԁ  \   ` Inadisputebetweeninsurersandreinsurers,certain   canonsofconstructionthatprotectpurchasersofdirectinsurance d  policiesdonotapply._Unigard_ԀSec.Ins.Co.v.N.RiverIns.Co., `  4F.3d1049,1065(2dCir.1993);BostonIns.Co.v._Fawcett_,258   N.E.2d771,776(Mass.1970).BothNewYorkandMassachusetts h authoritiesrecognizetheoperationoffollowtheformandfollow d thefortunesclauses.SeeCommercialUnionIns.Co.v.Seven  ProvincesIns.Co.,217F.3d33,42(1stCir.2000),cert.denied l 531U.S.1146(2001);Aetna_Cas_.&Sur.Co.v.HomeIns.Co.,882 h F.Supp.1328,1337,134546(_S.D.N.Y._Ԁ1995);Metro.Leasing,Inc.,  v.Pac.EmployersIns.Co.,633N.E.2d434,439&n.6(Mass.App. p  Ct.1994).Againstthisbackgroundweturntothemeritsofthe !l"  dispute. "$  ` Agooddealaboutthiscase,inadditiontotheill   wordedpoliciesandcertificatesthemselves,remainsobscure. \ Ordinarily,courtsconstruepolicylanguageinrelationtospecific X facts,thepolicylanguagedrawingmeaninginpartthrough   interactionwithagivenfactpattern.Here,bycontrast,the `  briefstellusverylittleaboutwhatwentwrongatanysite,  \  althoughtherecordmodestlydescribestheactualconditionsthat   gaverisetoliability._ #  2      ׀Seeminglytheconditionsvaried. d   ` OnSwissRe'sviewofthematter,theleakageatanyone `  siteduringthethreeyearperiodcoveredbyitscertificate   comprisedasingle"occurrence."Theterm"occurrence"isnot h definedintheSwissRecertificatesbutoneplausiblereadingof d thetermwouldtreattheentirecontinuousleakageasasingle,  albeitdrawnout,occurrence;and,forsuchareadingSwissRecan l pointtothedefinitionof"occurrence"intheCommercialUnion h policiesquotedabovenamely,thatcontinuousexposuretothesame  condition"shallbedeemedtobeoneoccurrence." p   ` Iftheleakageduringthethreeyearperiodcomprisedone !l" occurrence,thenCommercialUnion'sliabilitytoGraceforathree "$ yearleakwouldbecappedat$5millionandSwissRe'sliabilityto t$& CommercialUnionwouldbe$500,000(50percentofthefirst$1  million).Bycontrast,ifleakageduringeachyearinthethree \ yearperiodweretreatedasaseparateoccurrence,or(put X differently)thecapappliedyearbyyear,SwissRecouldbeliable   for$1.5million($500,000timesthree).ThesettlementwithGrace `  assumedthelatterviewofthematter.  \   ` Ifthequestionwereconsideredasamechanicalexercise   inlanguagewithouttheaidof followclausesorpolicy d  argumentsSwissRemightwellhavethestrongerargument,justas `  thedistrictcourtfound.Thepolicyperiodisthreeyears,the   continuousreleaseoftheonepollutantatonesitecaneasilybe h describedasoneoccurrence.SoSwissRecouldbeseenasmerely d insistinginrelianceonitsowncertificate's"peroccurrence"  languageonacapof$500,000inreinsuranceforasingle l occurrence. h  ` Anumberofcasesconstruingmultiyearpolicies,and  applyingvaryinglanguagetodifferentfactualscenarios,have p  construedcapsinthefashionurgedbySwissReandhaverejected !l" "_annualization_"glossesofthekindpressedbyCommercialUnion.b #  3      ׀ "$ OnlyNewJerseyhassuggestedan_annualization_Ԁapproachmay t$& normallyapply.See,e.g.,BenjaminMoore&Co.v.Aetna_Cas_.&  Sur.Co.,843A.2d1094,1103(N.J.2004);OwensIllinois,Inc.v. \ UnitedIns.Co.,650A.2d974,995(N.J.1994).Butforthemost X partthe majorityviewcasesdidnotimplicatefollowtheform   andfollowthesettlementclauses,andthoseclausesmakea `  differenceinourcase.  \   ` LetusstartwithCommercialUnionsliabilitytoGrace.   CommercialUnionsownpoliciescontainedlanguageintheir d  definitionofoccurrencequotedabove,hostileto_annualization_. `  YetthemultiyearMarylandpoliciesexplicitlyprovidedfortheir   peroccurrencelimitstoapplyonanannualbasis,asdidthe h earlieroneyearpolicies.SoGracecouldargueinanylitigation d withCommercialUnionthatthelatter'sobligationsweregoverned  bytheformer'spolicygiventhatCommercialUnion'sexcess l insurancepoliciescontainedastrongfollowtheformclauseofits h own.   ` Specifically,thefollowtheformprovisionsin p  CommercialUnionsexcessliabilitypoliciesstate(inoneform) !l" thattheexcesspolicyisnomorerestrictivethantheMaryland "$ policyand(intheother)thatCommercialUnionwouldcoverany t$& occurrencescoveredbytheMarylandpolicy.# X_XXX_7F#Thusin_Hatco_ԀCorp.v.  &p!( W.R.Grace&Co.,801F.Supp.1334,135455(_D.N.J._Ԁ1992),the '#* courtheldthataparticularexclusioninCommercialUnionspolicy x)$, wasoverriddenbythefollowformprovisionasconstruedinfavor $+t&. theinsured.X_XX X_So,althoughNewJerseylawhasnoapplicationhere,  arguablyCommercialUnionspolicylanguageshouldbereadto \ dovetailwith Marylandspolicy,i.e.,byapplyingthecapsonthe X sameannualizedbasis.c #  4          ` CommercialUnionsoutsidecoveragecounselconducteda |  studyofitsexcessliabilitypoliciesandpertinentcaselaw, ( x  reachingvarioustentativeconclusions(attimesconcludingthat $  _annualization_Ԁwasunlikely,andatothertimesconcludingthat   variationsinlanguagemade_annualization_Ԁlikelyundersomeof ,|  CommercialUnionspoliciesbutnotunderothers).Intheend, ( counselconcludedinasettlementanalysisandrecommendationthat  _annualization_ԀwasalikelyoutcomeinthethenongoingNewYorklaw 0 suitbetweentheparties. ,  ` WhetherthisviewofCommercialUnionsliabilityto  Graceiscorrectornot,itisbindinguponSwissReunderits 4 followthefortunesclausesolongasthesettlementwasreasonable 0 andmadeingoodfaith.Thefollowthefortunesdoctrine,designed   inparttoencouragesettlement,seeN.RiverIns.Co.v._CIGNA__ 8!" ReinsuranceCo.,52F.3d1194,1206(3dCir.1995),encompasses  settlementsthatarearguablybeyondthestrictlimitsofthe \ underlying_cedent_'spolicy(i.e.,theCommercialUnionpolicies). X The# X_XXX_a#Ԁreinsurermustabideby_cedent_s goodfaithpaymentsolong   asitis arguablywithinthescopeoftheinsurancecoverage. `  MentorIns.Co.(U.K.)v._Brannkasse_,996F.2d506,517(2dCir.  \  1993).X_XX X_o #  5      # X_XXX_Fk#    ` Thepremisethatthesettlementwasbasedonannualized d  per-occurrencelimitsforCommercialUnion,whichcouldintheory `  bedebated,cf.EmployersReinsuranceCorp.v._NewCap_ԀIns.Co.,209   F.Supp.2d1184,119091(D._Kan_.2002),issupportedbyseveral h factors:testimonythatsomecomponentsinGrace'ssettlement d demandscouldnothavebeenachievedwithoutannualization,  testimonythatGrace'srepresentativessaidduringsettlementthat l theirvaluationuseda"prorataannualized"approach,andtheuse h ofannualizationasapremiseintheultimatesettlementanalysis  andrecommendationbyCommercialUnion'scoveragecounsel.Swiss p  Reapparentlypursuedtheissueduringdiscoverybuthasnot !l"  developedanyobjectiononappeal. "$ X_XX X_ ` Ofcourse,ifthesettlementwereflatlyinconsistent   withtheexcessliabilitypolicy,SwissRewouldnotbeboundto \ respectitbyafollowthesettlementsclauseinitsown X certificate.N.RiverIns.Co.,52F.3dat1212( Wasthepaid   riskclearlyoutsidethescopeoftheoriginalpolicys `  coverage?);Aetna,882F.Supp.at1347( manifestlyoutsidethe  \  _cedent_spolicy).ButeachCommercialUnionpolicyasawhole   includesnotonlyitsownantiannualizationlanguagebutitsown d  followtheformclause,seeminglyinvokingtheproannualization `  languageoftheunderlyingMarylandpolicy.Further,theinsured   wouldbenefitfromtheusualcanonsofinterpretationfavoringthe h policyholder. d  ` ThisbringsustoSwissResliabilitytoCommercial  Unionunderthetermsofthereinsurancecertificates.Evenif l CommercialUnionweredeemedliabletoGrace,CommercialUnion's h righttotheindemnityfromSwissReisonlyforaspecifiedshare  ofCommercialUnion'sliability(e.g.,50percentofthefirst$1 p  million)for"eachoccurrence."The"occurrence"languagedelimits !l" SwissRe'sliability;thequestioniswhatthe"eachoccurrence" "$ languagemeans. t$&  ` Thedistrictcourtreadthephraseasifitmeant,fora  &p!( multiyearleak,thattheleakwasasingleoccurrenceforthe '#* entirepolicyperiodsothatthe$500,000capappliedonceforthe x)$, policyperiod.Thisisadefensiblereading,asthecasescited $+t&. aboveshow,butonecouldalsocallthecontinuingleakanew  occurrenceeverydayoreverydrop.Oronecould,asNewJersey \ seeminglydoes,adoptaprudentialcompromisereadingthattreated X itasanoccurrenceforeachyearregardlessofpolicyperiod.    ` TheSwissRecertificatescouldhavecontaineda `  definitionof"occurrence"inrelationtocontinuingleaks,  \  expresslynegating_annualization_,butSwissRechosetoprovideno   definitionatallforthismalleableword.Ofcourse,onecould d  readtheSwissRepolicyasadoptingtheCommercialUnion `  definitionofthetermviaSwissResfollowtheformclausesbut   whichCommercialUnionsdefinition?Theexplicitanti h _annualization_Ԁreadingbasedontheoccurrencedefinitionorthe d pro_annualization_ԀfollowtheformversiondrawingontheMaryland  policies'_annualization_Ԁprovisions? l  ` Here,CommercialUnionsliabilitytoGracehasbeen h establishedbyaseeminglyreasonablesettlementmade(sofaraswe  know)ingoodfaith.UnderSwissResfollowthesettlements p  clauseitisboundtoacceptthispro_annualization_Ԁreadingofthe !l" CommercialUnionpolicyforpurposesofestablishingCommercial "$ UnionsliabilitytoGrace.Inourview,SwissResfollowthe t$& formclauseshouldbedeemedtoextendthisreadingintothe  &p!( parallellanguageinSwissRe'sowncertificatessubjectonlyto '#*  anyclearlimitationtothecontraryintheSwissRedocuments. x)$,  ` Thisviewofthematteraccordswiththebasic   presumptionofconcurrencethatwethinkexistswherethereisa \ skeletonreinsurancecontractcoupledwithfollowtheformand X followthesettlementsclauses.AccordingtoaNewYorkcase,   consistentwithotherauthorities, `  8 ` [_w]here_Ԁafollowingformclauseisfoundin  \  thereinsurancecontract,_concurrency_Ԁbetween  2  thepolicyofreinsuranceandthereinsured   policyispresumed,suchthatapolicyof   reinsurancewillbeconstruedasofferingthe d  sameterms,conditionsandscopeofcoverage :  asexistinthereinsuredpolicy,i.e.,inthe `  absenceofexplicitlanguageinthepolicyof 6 reinsurancetothecontrary. ` x` x  # X_XXX_,p##X_XX X_Aetna,882F.Supp.at1337# X_XX#X_Մ#X_XX X_.# X_XXX_5##X_XX X_ԀAccord_Ostrager_Ԁ&_Vyskocil_,supra, h 2.03[a],at29.# X_XX#X_~#X_XX X_ԀIndeed,concurrenceadvancesoneofthebasic d purposesofreinsurance,whichis [_s]preading_risktoprevent a  catastrophiclossfromfallingupononeinsurer._Unigard_,4F.3d l at1053. h  ` Ofcourse,ifsufficientlyclear,specificlimitsinthe  certificatecontroloverthegeneralaimofconcurrenceand p  ordinary"follow"clauses.d #  6      ׀UnfortunatelyforSwissRe,thekey !l" "reinsuranceaccepted"provisioninthecertificatewhichreads "$ "50%QuotaSharepartoffirst$1,000,000eachoccurrence"is  simplycrypticasappliedtocontinuingleaksoveramultiyear \ periodunderamultiyearpolicy.Insuchasituation,thebalance X istippedinfavorofmakingSwissReshareliabilityonabasis   thatconformsitsliabilitytothatofthe_cedent_Ԁwherethe_cedent_ `  hassettledreasonablyandingoodfaith.  \   ` Neithersidehaspointedtoextrinsicevidencesuchas   premiumcomparisons,experttestimony,orpertinentnegotiations d  thatcouldilluminatethisdispute.Nothingwehavesaidinthis `  decisionshouldbetakentocontrolacaseinwhichasimilar   disputeisbetterilluminatedbyextrinsicevidenceofanykind. h See,e.g.,_Natl_ԀTaxInst.,Inc.v.TopnotchatStoweResort&Spa, d 388F.3d15,2021(1stCir.2004).   ` Itisunclearfromthebriefsandtherecordwhat l consequenceourconclusionsentailbeyondaremand.Forexample, h wedonotknowifthequestionwhetherthesettlementwasmadein  goodfaithisatissue,Aetna,882F.Supp.at135152.Such p  mattersareforthepartiesandthedistrictcourttosortouton !l" remand. "$  ` Thejudgmentofthedistrictcourtisvacatedandthe t$& matterremandedforfurtherproceedingsconsistentwiththis  &p!( decision. '#*  ` Itissoordered.# X_XXX_Z#