The Clerk of the Court is directed to amend the official caption as set forth… v. American Home Assurance Company UNITED STATES COURT OF APPEALS 1 FOR THE SECOND…

* The Clerk of the Court is directed to amend the official caption as set forth above.
1
09-4779-cv (L), 09-4842-cv (XAP)
Federal Insurance Company v. American Home Assurance Company
UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2
August Term 2010 3
Docket Nos. 09-4779-cv (L), 09-4842-cv (XAP) 4
Argued: October 26, 2010 Decided: April 7, 2011 5 _____________________________________________________________________________ 6
FEDERAL INSURANCE COMPANY, as subrogee of AAA Mid-Atlantic, Inc., 7
8 Plaintiff-Appellant-Cross-Appellee, 9
- v.- 10
AMERICAN HOME ASSURANCE COMPANY, NATIONAL UNION FIRE 11 INSURANCE COMPANY OF PITTSBURGH, PA, 12
Defendants-Appellees-Cross-Appellants. *
13 _____________________________________________________________________________ 14
Before: MINER, KATZMANN, and HALL, Circuit Judges. 15
Appeal and cross-appeal from a judgment entered October 21, 2009, in the United States 16 District Court for the Southern District of New York (Marrero, J.,), granting in part and denying in 17 part the motion for summary judgment made by plaintiff insurance company and granting in part 18 and denying in part the motion for summary judgment made by defendant insurance companies in 19 an action brought by plaintiff as subrogee of a regional affiliate of the American Automobile 20 Association, Inc. (“AAA”) against the liability insurers of AAA seeking indemnification for 21 payments made by plaintiff in settlement of a personal injury action, the District Court having 22 determined, inter alia, that liability for the injury arose out of the operations of AAA and that 23 contribution therefore was warranted in accordance with the terms of the policies issued by 24 defendant insurers. 25
Reversed. 26

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2
J UDITH F EINBERG GOODMAN, Thomas J. Cirone, 1 Goodman & Jacobs, L.L.P., New York, New York, 2 for Plaintiff-Appellant-Cross-Appellee. 3
Lisa C. Wood, Saiber Schlesinger Satz & Goldstein, 4 LLC, Newark, New Jersey, for Defendants-Appellees- 5 Cross-Appellants. 6
BARBARA I. M ICHAELIDES , Paula M. Carstensen, 7 Agelo Reppas, Bates & Carey L.L.P., Chicago, Illinois, 8 for Defendants-Appellees-Cross-Appellants. 9
M ICHAEL HERBERT COHEN, Saiber LLC, Florham 10 Park, New Jersey, for Appellees-Cross-Appellants. 11

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3
MINER, Circuit Judge: 1
Plaintiff-appellant-cross-appellee Federal Insurance Company (“Federal”), as subrogee of 2
regional automobile club AAA Mid-Atlantic, Inc. (“AAAMA” or “AAA Mid-Atlantic”), appeals 3
from a judgment entered October 21, 2009, in the United States District Court for the Southern 4
District of New York (Marrero, J.), granting in part and denying in part its motion for summary 5
judgment. Federal Ins. Co. v. Am. Home Assurance Co., 664 F. Supp. 2d 397 (S.D.N.Y. 2009). 6
Defendants-appellees-cross-appellants, American Home Assurance Company (“AHA”) and 7
National Union Fire Insurance Company of Pittsburgh, PA (“NUIC”) (collectively, the 8
“defendants”), cross appeal from that same judgment, which granted in part and denied in part their 9
motion for summary judgment. 10
Federal originally brought this action in New York Supreme Court, New York County, 11
against defendants, seeking a declaratory judgment and ancillary relief to establish the obligation of 12
the defendants to indemnify AAAMA in a personal injury action arising from an accident involving 13
a tow truck operator who was a preferred service provider for AAAMA. Federal paid $26.5 million 14
out of a $27.25 million settlement of the underlying action. Defendants, invoking diversity 15
jurisdiction pursuant to 28 U.S.C. § 1332(a), removed the action to the United States District Court 16
for the Southern District of New York, pursuant to 28 U.S.C. § 1441. 17
In its October 13, 2009 Decision and Order, the District Court determined that (1) Florida 18
law governed interpretation of the commercial general liability (“CGL”) policies issued by 19
defendants; (2) Federal reserved its right to proceed in an action for equitable contribution against 20
the defendants under the policies; (3) defendants’ policies provided coverage to AAAMA, and 21
AAAMA’s loss was within the coverage of the policies; (4) contribution was not limited by (a) a 22
jury’s assessment of AAAMA’s percentage of fault in the underlying personal injury action or (b) an 23
amount attributable to AAAMA’s direct liability, as found by the jury; (5) contribution of $1 million 24
by AHA, the primary insurer, and $12 million by NUIC, which provided umbrella coverage, was 25
warranted; and (6) Federal was entitled to prejudgment interest, accruing from the date of 26

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1 Of the $26.5 million paid to settle the underlying personal injury action, Federal does not
seek reimbursement for the $500,000 paid under its business auto policy ($500,000 per accident) or
for the $1 million paid under its $1 million primary policy. Am. Home Assurance Co., 664 F. Supp.
2d at 409 n.5.
4
settlement. Accordingly, the court entered judgment ordering (1) AHA to pay Federal $1 million 1
plus prejudgment interest from June 13, 2007, at the rate set by Florida law, of $235,095.89; and (2) 2
NUIC to pay Federal $12 million plus prejudgment interest from June 13, 2007, at the rate set by 3
Florida law, of $2,821,150.69. 4
On appeal, Federal claims that the District Court erred in its determination that the umbrella 5
policies issued by Federal and NUIC, each in the amount of $25 million, must share equally in the 6
payment obligation of the settlement of the underlying personal injury action after the $1 million 7
limit of Federal’s primary policy and the $1 million limit of AHA’s primary policy were paid. 8
Federal seeks to recover from AHA and NUIC $25 million of Federal’s $26.5 share of the $27.25 9
million settlement paid on behalf of Federal’s named insured, AAAMA, in the underlying personal 10
injury action brought by Richard Cannon in New Jersey state court. 1 Federal claims that its policy 11
was excess to NUIC’s policy and, as such, the $25 million NUIC umbrella policy must be exhausted 12
before Federal’s $25 million umbrella policy applies. 13
The defendants argue on cross-appeal that the settlement and verdict in the underlying 14
personal injury action establish that AAAMA’s liability “arises out of” its own operations and not 15
AAA’s operations. Alternatively, the defendants claim that if AAAMA’s liability to Cannon arose 16
out of AAA’s operations, then Federal and NUIC should share that loss equally, as the District 17
Court found. They argue that the “other insurance” provisions in both umbrella policies purport to 18
be excess of each other and that those provisions therefore cancel each other out, resulting in an 19
equal obligation to cover the loss. Defendants also argue that ratable contribution should apply and 20
that contribution should be limited to that portion of the underlying settlement reasonably 21
attributable to AAAMA’s direct negligence. Finally, defendants argue that the District Court abused 22
its discretion in awarding to Federal prejudgment interest on any amount owed to Federal. 23

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2 In reciting the background for our analysis in this case, we rely essentially on the factual
findings made by the District Court.
5
For the reasons stated below, we reverse the judgment of the District Court and remand for 1
entry of judgment in favor of defendants-appellees. 2
BACKGROUND2
3
I. The AAA Organization and the Member Clubs 4
The American Automobile Association, Inc. (“AAA” or “AAA National”) is an affiliation of 5
seventy independently operated and managed automobile clubs (“Member Clubs”), including 6
AAAMA. AAA’s activities include maintaining “a strong federation of not-for-profit Member Clubs 7
organized to achieve the objects and purposes of [AAA] in assigned service territories.” Am. Home 8
Assurance Co., 664 F. Supp. 2d at 402. These objectives and purposes, as set forth in AAA’s 9
Certificate of Incorporation and Bylaws (the “Bylaws”), include “serv[ing] the personal and 10
motoring needs of individual Member Clubs.” Id. “Each Member Club operates in an assigned 11
service area as an independent and sovereign entity chartered under the laws of the state in which it 12
operates.” Id. AAA does not own or operate the Member Clubs; does not issue memberships to 13
the public; does not directly receive revenue from members; and does not contract with the towing 14
companies that provide emergency road service. Id. 15
Approximately forty-six million individuals are members of the Member Clubs. These 16
individuals can obtain emergency roadside service anywhere in the United States by calling 1-800- 17
AAA-HELP, the number listed on the AAA membership card distributed to all members. Id. 18
“[E]mergency road service is the ‘core service offering of AAA’” and its Member Clubs, and 19
“emergency road service is the number one reason members join and renew their membership” with 20
the Member Clubs. App. 1123. When a member of one Club is serviced by another Club, the 21
former Club is reimbursed by the latter. Am. Home Assurance Co., 664 F. Supp. 2d at 402. AAA 22
coordinates payment through a reciprocal clearing bureau that allocates charges among the Member 23
Clubs. Id. In most cases, the member does not know which AAA Member Club will respond to his 24

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6
or her call or even that there are different Member Clubs. Id. at 407–08. Each responding tow 1
truck and driver designated by a Member Club to provide emergency roadside service displays the 2
same AAA insignia, aims to arrive within a thirty-minute response window set by AAA, and reports 3
estimated times of arrival and actual times of arrival to AAA, all to comply with AAA’s automotive 4
quality standards. Id. at 408. 5
Member Clubs must go through AAA’s accreditation process every five years or whenever a 6
Member Club is determined not to be in compliance with AAA’s rules and regulations. The 7
accreditation process includes an inspection to verify that the procedures, services rendered, 8
documents, and appearance of the Member Club are in compliance with AAA’s standards. Id. at 9
402. In addition to each Member Club being accredited at least once every five years, Member 10
Clubs must submit their audited financial statements on an annual basis to AAA. Id. 11
One requirement of AAA’s accreditation process is an evaluation of the automotive services 12
rendered by the Member Club, and emergency roadside services are emphasized within that 13
evaluation. Id. Once accredited, AAA monitors individual Member Clubs’ emergency roadside 14
services based on response times and requires certain member satisfaction scores on emergency 15
roadside Member Satisfaction Surveys. Id. 16
Pursuant to its Bylaws, AAA has the right to assign service areas to Member Clubs; approve 17
activities to be undertaken by Member Clubs; make, publish, amend, and enforce rules and 18
regulations defining Member Club services to assure their uniform availability to motorists 19
throughout the United States and Canada; and censure, expel, or revoke the accreditation of any 20
Member Club that violates the Bylaws, quality standards, or any of AAA’s rules and regulations. Id. 21
at 402–03. 22
II. The Underlying Personal Injury Action 23
On September 6, 2001, on Route 1 South in the Township of Woodbridge, New Jersey, a 24
tow truck operated by Gerard M. Taber collided with a stalled vehicle operated by Richard Douglas 25
Cannon, then twenty-one years of age, causing Cannon’s stalled vehicle to explode. The accident 26

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3 A mobile data terminal is an electronic device placed in an emergency response vehicle to
receive information pertaining to a AAA-member’s break-down location.
7
resulted in permanent injuries to Cannon including “horrific burn injuries.” Am. Home Assurance 1
Co., 664 F. Supp. 2d at 403. At the time of the accident, Taber was responding to a roadside 2
assistance call to change a flat tire in Parlin, New Jersey. The call originated from the 1-800-AAA- 3
HELP line. Id. Taber’s employer and the owner of the truck, E & D Auto Repair Towing (“E & 4
D”), was an AAAMA Preferred Service Provider (“Provider”). Id. As an AAAMA Provider, E & D 5
was contractually obligated to provide roadside assistance to AAA Members within the region of 6
AAAMA’s coverage, and E & D was authorized to display the AAA insignia and emblem. Id. 7
After the accident, Cannon filed an action for damages in Superior Court of the State of 8
New Jersey, County of Middlesex, against Taber, E & D, AAAMA, and AAA, among other 9
defendants. Cannon’s Fourth Amended Complaint alleged that “E & D and Taber were the agents 10
and/or servants and/or employees and/or acting on behalf of and/or acting for the benefit of 11
and/or acting under the supervision and control of AAA and AAAMA.” Id. The Fourth Amended 12
Complaint also alleged that Taber, E & D, AAA, and AAAMA “‘did act in a negligent and careless 13
manner so as to cause the motor vehicle being operated by defendant [Taber] to strike the 14
automobile of[Cannon].’” Id. Cannon further alleged that a mobile data terminal (“MDT”)3 was 15
installed in the flat-bed truck being operated by defendant Taber and that the MDT was not 16
reasonably fit, suitable, or safe for its intended purposes and reasonably foreseeable uses and was 17
designed in a defective manner, and exposed the public to an unreasonable risk of injury. 18
The Cannon trial began on April 10, 2007, and at trial, Taber testified that while he was en 19
route to provide roadside assistance, the MDT caused him to become distracted when it beeped, 20
prompting him to check with it to obtain information about the roadside assistance call to which he 21
was en route. Id. He then heard horns honking, turned to look at the flat-bed rear of his truck to 22
determine whether any chains were loose, and then glanced at a woman in a nearby vehicle for 23
approximately 10–15 seconds before turning back to look out his front windshield. At that time he 24

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8
saw Cannon’s car stopped in the road. Id. Taber testified that he tried to stop but could not before 1
rear-ending Cannon’s car. Id. 2
Before the close of trial, AAAMA and Cannon agreed on May 31, 2007, to settle all claims 3
against AAAMA for $27.25 million, with Federal contributing $26.5 million and AAAMA’s excess 4
insurer, Fireman’s Fund, contributing $750,000. AHA and NUIC did not make any settlement 5
offers on AAAMA’s behalf. The defendants never contested the reasonableness of the settlement 6
of the Cannon action and did not assert any affirmative defenses that the settlement was 7
unreasonable. 8
Following the settlement of the claim against AAAMA, the Cannon action proceeded to trial 9
on various issues. The state trial court instructed the jury that as a matter of law E & D controlled 10
Taber, the agent and employee of E & D. The court also instructed the jury that E & D and Taber 11
were negligent on the date of the accident and that this was not an issue for their consideration. The 12
court then instructed the jury to resolve the direct negligence and agency issues. With respect to 13
agency, the court instructed the jury to consider whether AAAMA was the master of E & D and 14
whether AAA National was the master of AAAMA. The court explained that this issue required the 15
jury to resolve whether AAA National controlled AAAMA’s operations: 16
You must determine whether or not either of these entities had a right to control the 17 day-today basis of operation of a particular institution. In other words, did 18 [AAAMA] have the right to . . . control the day-to-day operation of E & D Towing? 19 That’s up to you. Did . . . AAA National have the right and did they exercise a [sic] 20 control over [AAAMA]? 21
App. 971. 22
In its verdict, the jury made the following findings. First, as to agency, the jury found that E 23
& D and Taber were agents of AAAMA and that AAAMA was the agent of AAA. Id. Second, as 24
to direct negligence, while the jury found AAA National negligent, it also found that AAA National’s 25
negligence did not proximately cause Cannon’s injuries. In contrast, the jury found that AAAMA 26
was both negligent and that AAAMA’s negligence proximately caused Cannon’s injuries. The jury 27
also found that Cannon was negligent and that his negligence was a proximate cause of the accident. 28

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9
The jury awarded Cannon $12 million to compensate him for his pain, suffering, disability, 1
impairment, and loss of enjoyment of life. Examining the combined negligence the jury, inter alia, 2
found E & D 85% liable, AAAMA 14% liable, AAA National 0% liable, and Cannon 1% liable. Id. 3
III. The Insurance Policies 4
Federal issued three liability policies insuring AAAMA for the relevant time period, including 5
a CGL primary policy with a limit of $1 million for each occurrence (the “Federal Primary Policy”); 6
a CGL umbrella policy with a limit of $25 million (the “Federal Policy”); and a business auto policy 7
with a limit of $500,000 per accident (the “Federal Business Auto Policy”). 8
AHA issued a primary CGL policy with a limit of $1 million per occurrence (the “AHA 9
Policy”) to AAA, insuring AAA for the relevant time period. The AHA Policy contained an 10
endorsement numbered CL 261 (the “Endorsement” or the “AHA Endorsement”) naming Member 11
Clubs as additional insureds under the AHA Policy “but only with respect to liability arising out of 12
[AAA] operations or premises owned by [AAA].” Id. (emphasis supplied). 13
NUIC issued to AAA a CGL umbrella policy with a limit of $25 million that covered AAA 14
during the relevant time period (the “NUIC Policy”). The parties have not disputed that the NUIC 15
Policy would provide coverage for the Member Clubs to the extent that the clubs qualified as 16
insureds under the AHA Policy. Id. at 403–04. 17
By letter dated April 19, 2007, AAAMA and Federal first tendered demands for insurance 18
coverage under the AHA Policy and the NUIC Policy. Id. at 404. On May 8, 2007, the defendants 19
disclaimed coverage under both policies. Id. 20
IV. Proceedings in the District Court 21
Federal first brought this action in New York Supreme Court, New York County, against 22
defendants, seeking a declaratory judgment and ancillary relief relating to the obligations of the 23
parties to defend and indemnify AAAMA in the Cannon action. Id. at 401. Defendants removed 24
the action to the District Court, 28 U.S.C. § 1441, invoking that court’s diversity jurisdiction 25
pursuant to 28 U.S.C. § 1332(a). 26

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10
In the District Court, Federal moved for summary judgment under Federal Rule of Civil 1
Procedure 56 arguing that AAAMA is insured under policies issued to AAA by AHA and NUIC, 2
and Federal is therefore entitled to reimbursement for $25 million of the $26.5 million it paid to 3
settle the Cannon action. Defendants also moved for summary judgment, arguing that they do not 4
insure AAAMA with respect to any liability arising from the Cannon action, and alternatively, if they 5
do insure AAAMA, that they are obligated to pay, according to the principles of equitable 6
contribution, only half of the $25 million that Federal seeks. 7
In ruling on the motions for summary judgment, the District Court first examined whether 8
New York or Florida law should apply. In support of the application of Florida law, the court noted 9
that it was presented with the question of “interpret[ing] the AHA Policy issued to AAA,” and 10
“AAA, the named insured, is headquartered in Florida, and the AHA Policy was issued to AAA in 11
Florida. Thus, Florida law should be used to interpret the AHA Policy.” Am. Home Assurance Co., 12
664 F. Supp. 2d at 404–05. Both parties argued to the District Court, however, that New York law, 13
as the law of the forum state, should be applied because “absent an actual conflict, the [c]ourt 14
[would be] free to apply New York law.” Id. at 405 (citing In re Allstate Ins. Co. (Stolarz), 613 15
N.E.2d 936, 937 (N.Y. 1993)). The parties contended that there was no conflict in this case between 16
the laws of New York and Florida on the issues raised. Federal did recognize, however, that a 17
possible conflict between Florida and New York law existed with respect to insurance policy notice 18
requirements, which Federal suggested was not at issue in this case. 19
The District Court disagreed with the parties’ contention that New York law should be 20
applied and applied Florida law. In so ruling, the District Court first noted that the defendants’ 21
policies require that the insured give notice to the defendants of the need for coverage ‘‘as soon as 22
practicable.’’ Id. at 405. As to New York’s law on the failure to comply with a notice provision in 23
an insurance contract, the District Court stated that failure to comply with such a notice provision in 24
New York would relieve an insurer of its duty to indemnify. Id. at 405 (citing New York v. Blank, 25
27 F.3d 783, 794 (2d Cir.1994) (‘‘[A]lthough the duty to provide notice rests primarily upon the 26

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11
insured, a co-insurer hoping to benefit from the presence of another insurer, must ensure that the 1
notice provisions of the insured policy with the second insurer are complied with.”)). Thus, if 2
Federal failed adequately to provide the defendants with notice, Federal would be prohibited from 3
receiving any contribution from defendants. Id. 4
With regard to Florida law, however, the District Court noted that failure to comply with an 5
insurance contract’s notice provision can be excused if the insurer has not been prejudiced. Id. 6
(citing Tiedtke v. Fid. & Cas. Co., 222 So.2d 206, 209 (Fla. 1969); Zurich Am. Ins. Co. v. Cutrale 7
Citrus Juices USA, Inc., No. 5:00–CV–149–OC–10GRJ, 2002 WL 1433728, at *1–2 (M.D. Fla. Feb. 8
11, 2002) (‘‘[L]ate notice raises a rebuttable presumption of prejudice to the insurer that the insured 9
can overcome if it can demonstrate that the insurer was not in fact prejudiced by the delay.’’)). In 10
concluding that there was no prejudice here, the District Court found as follows: 11
[E]ach jurisdiction provides substantively different rules. 12
As a matter of Florida law, Federal can rebut the presumption of prejudice to 13 Defendants. The rationale driving the notice requirement is that insurers should be 14 provided the opportunity to investigate the occurrence, control litigation, and 15 participate in settlement negotiations. None of those rationales apply here because 16 Cannon sued AAA as well as AAAMA[.] As AAA’s insurers, Defendants were able 17 to perform their own investigation of the accident. Defendants’ counsel worked 18 with Federal’s counsel throughout the litigation, and Defendants’ counsel was asked 19 to participate in the settlement. Though Defendants did not receive an official 20 request to defend and indemnify until April 2007, they were fully aware of the matter 21 and were in no way prejudiced by any delay. Having found that Federal satisfies the 22 threshold notice requirement, the [c]ourt will proceed to the merits of Federal’s 23 claim. 24
Id. 25
The court next turned to the language of the Endorsement that provided for liability arising 26
out of AAA’s operations, finding that the language was “generally accepted” and “unambiguous.” 27
Id. at 408. Applying that language to the facts of this case, the court found that AAA National’s 28
operations “include a level of emergency roadside oversight and coordination that is, at the very 29
least, ‘connected to’ the Cannon accident and AAAMA’s liability.” Id. at 407. The court found as 30
follows: “[t]he accident ‘arises out of’ the call to an AAA number, which is serviced by AAA. The 31
accident was ‘originating from, incident to, or having a connection with’ the AAA number, an AAA 32

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12
operation.” Id. at 408. Accordingly, the court determined that the Endorsement provision was 1
satisfied. 2
As to the defendants’ contention that any purported contribution should be limited to 14% 3
of the settlement, AAAMA’s fault percentage found by the jury, the District Court rejected that 4
argument and found that “[a]ny attempt to determine settlement contribution amounts based on 5
actual jury outcome would distort the parties’ ex ante assessment of liability.” Id. at 408–09. Thus, 6
the District Court held that the entire settlement amount was subject to equitable contribution. Id. 7
at 409. The court also found that the defendants’ contribution should not be limited by an 8
apportionment of AAAMA’s direct and vicarious liability. Id. at 409. 9
Having found that the AHA Policy and the NUIC Policy insure AAAMA as an additional 10
insured with respect to liability arising out of the Cannon action, the District Court examined 11
whether defendants must reimburse Federal for all or a portion of the settlement amount. The 12
court noted that under the $27.25 million settlement, (1) the Federal Business Auto Policy, a primary 13
policy not at issue, “provided $500,000 of coverage”; (2) the Federal Primary Policy “paid $1 14
million”; (3) the Fireman’s Fund, an excess policy also not at issue, contributed $750,000; and (4) the 15
Federal Policy paid $25 million. Id. 16
With regard to the Federal Primary Policy and AHA Policy, each primary policies, the court 17
found that the AHA Policy should have been exhausted to its limits — $1 million — before the 18
Federal Policy was applied to pay the settlement amount. Id. The defendants did not “dispute that 19
any primary coverage obligation found by the court would be shared by the AHA Policy with the 20
Federal Primary Policy.” Id. Thus, the court found that AHA must therefore reimburse Federal $1 21
million under the AHA Policy. Id. 22
As to the Federal Policy and the NUIC Policy, both excess or umbrella policies, each policy 23
contained “other insurance” provisions requiring the policy to be considered excess over any other 24
applicable excess policy. Id. at 410–11. The District Court found that each policy was “written to 25
provide coverage beyond primary business auto and general liability policies, and although their 26

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13
precise language varies, the [c]ourt finds that they are incompatible.” Id. at 411. The court held that 1
under Florida law, the “mutually repugnant clauses drop out, and each policy must share equally the 2
remainder of the settlement amount.” Id. Thus, after contribution by the primary insurers totaling 3
$2.5 million (and the Firemen’s Fund excess policy in the amount of $750,000), the court found the 4
amount due to be $24 million and ordered NUIC to reimburse Federal $12 million. Id. 5
Finally, the District Court awarded Federal prejudgment interest, as Federal was found to 6
have suffered an out-of-pocket loss. Id. The court found that Federal paid the entire sum of the 7
settlement, a portion of which the defendants were obligated to pay, and fixed the date of loss as the 8
date of settlement, June 13, 2007. The court ordered that Federal was entitled to prejudgment 9
interest from that date at the statutory rate under Florida Law. Id. (citing Fla. Stat. § 55.03 (2010)). 10
Judgment was entered accordingly, and a timely appeal and cross appeal followed. 11
Federal appeals only that part of the District Court’s judgment that held that the “other 12
insurance” provisions required equal sharing, arguing that the court erred by disregarding the 13
Federal Policy’s language that “[it] will not make any payments until the other insurance has been 14
exhausted by payment of claims.” Id. at 411. Federal therefore claims that the NUIC Policy should 15
be exhausted before any amount is paid from the Federal Policy. 16
The defendants argue in the cross-appeal that under the plain language of the Endorsement 17
contained in the AHA Policy, that AAAMA’s liability did not “arise out of” AAA’s operations, and, 18
thus, neither the AHA Policy nor the NUIC Policy should be required to contribute to Federal’s 19
settlement obligations. In the alternative, AHA argues that while the District Court correctly 20
apportioned the loss between Federal and NUIC, Federal is not entitled to prejudgment interest. 21
ANALYSIS 22
I. Standard of Review 23
We review a district court’s grant of summary judgment de novo, “construing the evidence 24
in the light most favorable to the non-moving party and drawing all reasonable inferences in its 25
favor.” Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 720 (2d Cir. 2010) (internal 26

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14
quotation marks omitted). “Summary judgment is appropriate where there exists no genuine issue 1
of material fact and, based on the undisputed facts, the moving party is entitled to judgment as a 2
matter of law.” O & G Indus., Inc. v. Nat’l R.R. Passenger Corp., 537 F.3d 153, 159 (2d Cir. 2008) 3
(brackets and internal quotation marks omitted); see also Fed. R. Civ. P. 56(a) (“The court shall grant 4
summary judgment if the movant shows that there is no genuine dispute as to any material fact and 5
the movant is entitled to judgment as a matter of law. The court should state on the record the 6
reasons for granting or denying the motion.”). We also review de novo a district court’s choice of 7
law determination. Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir. 2001). We 8
review a district court’s award of prejudgment interest for an abuse of discretion. New England Ins. 9
Co. v. Healthcare Underwriters Mut. Ins. Co., 352 F.3d 599, 602–03 (2d Cir. 2003). 10
II. Choice of Law 11
The District Court held that Florida law applies because the law of the forum state, New 12
York, and the law of Florida differ as to the effect of an insured’s late notice to its insurer. While 13
the defendants asserted affirmative defenses of late notice in their answers, the defendants did not 14
raise this issue in their cross-motion for summary judgment or in opposition to Federal’s motion for 15
summary judgment. Nor do the defendants contest the application of New York law on appeal, as 16
the parties agree that New York law should apply. Under New York choice of law rules, the first 17
inquiry in a case presenting a potential choice of law issue is whether there is an actual conflict of 18
laws on the issues presented. Fieger, 251 F.3d at 393. If not, no choice of law analysis is necessary. 19
Id. Moreover, where the parties agree that New York law controls, this is sufficient to establish 20
choice of law. See Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 138 (2d Cir. 2000) (applying 21
New York law and stating that “implied consent . . . is sufficient to establish choice of law” 22
(quotation marks and internal citation omitted)). Because the only potential conflict between New 23
York and Florida law pertains to the late notice issue and neither party raises that issue on appeal, we 24
accept the agreement of the parties that the law of the forum controls, and we therefore apply New 25
York law. 26

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15
III. Whether AAAMA Qualifies as an Additional Insured Under the Endorsement 1
The AHA Endorsement names Member Clubs, such as AAAMA, as additional insureds 2
under the AHA Policy “but only with respect to liability arising out of [AAA’s] operations or 3
premises owned by [AAA].” (emphasis supplied). Thus, whether or not defendants must contribute 4
to the settlement payment made by Federal depends on a threshold determination of whether 5
AAAMA qualifies as an additional insured under the AHA Policy issued to AAA National. This 6
determination requires us to examine the meaning of the phrase “arising out of” in conjunction with 7
the word “operations.” 8
A. The Operative Phrase Defined 9
“The New York approach to the interpretation of contracts of insurance is to give effect to 10
the intent of the parties as expressed in the clear language of the contract.” Mount Vernon Fire Ins. 11
Co. v. Belize NY, Inc., 277 F.3d 232, 236 (2d Cir. 2002) (internal quotation marks omitted). In 12
doing so, “[w]e must give ‘unambiguous provisions of an insurance contract . . . their plain and 13
ordinary meaning.’” 10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co., – F.3d – , 2011 14
WL 285140, *6 (2d Cir. Jan. 31, 2011) (quoting Essex Ins. Co. v. Laruccia Constr., Inc., 898 15
N.Y.S.2d 558, 559 (App. Div. 2010). “We cannot disregard ‘the plain meaning of the policy’s 16
language . . . in order to find an ambiguity where none exists.’” Id. (quoting Empire Fire & Marine 17
Ins. Co. v. Eveready Ins. Co., 851 N.Y.S.2d 647, 648 (App. Div. 2008)). “[I]t is common practice 18
for the courts of [New York] State to refer to the dictionary to determine the plain and ordinary 19
meaning of words to a contract.” Id. (quoting Mazzola v. Cnty. of Suffolk, 533 N.Y.S.2d 297, 297 20
(App. Div. 1988) (internal citation omitted)). We have also explained that “[i]f the court finds that 21
the contract is not ambiguous it should assign the plain and ordinary meaning to each term and 22
interpret the contract without the aid of extrinsic evidence and it may then award summary 23
judgment.” Int’l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 83 (2d Cir. 2002) 24
(citations and quotation marks omitted). 25
On the other hand, under New York law, contract claims are generally not subject to 26

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16
summary judgment if the resolution of a dispute turns on the meaning of an ambiguous term or 1
phrase. See Haber v. St. Paul Guardian Ins. Co., 137 F.3d 691, 695 (2d Cir. 1998) (“Language in an 2
insurance contract will be deemed ambiguous if reasonable minds could differ as to its meaning.”); 3
see also State v. Home Indem. Co., 486 N.E.2d 827, 829 (N.Y. 1985) (per curiam) (“If . . . the 4
language in the insurance contract is ambiguous and susceptible of two reasonable interpretations, 5
the parties may submit extrinsic evidence as an aid in construction, and the resolution of the 6
ambiguity is for the trier of fact.”). However, where language in a contract is ambiguous, summary 7
judgment can be granted “if the non-moving party fails to point to any relevant extrinsic evidence 8
supporting that party’s interpretation of the language.” Compagnie Financiere de CIC et de L’Union 9
Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 158 (2d Cir. 2000). 10
The question of “whether the language of a contract is clear or ambiguous” is one of law, 11
and therefore must be decided by the court. Id. at 158. In making this decision, the “court should 12
not find the language ambiguous on the basis of the interpretation urged by one party, where that 13
interpretation would strain the contract language beyond its reasonable and ordinary meaning.” 14
Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990) (internal quotation marks 15
and citation omitted). 16
The New York Court of Appeals has held that the phrase “arising out of” is “‘ordinarily 17
understood to mean originating from, incident to, or having connection with.’” Maroney v. N.Y. 18
Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467, 472 (2005) (quoting Aetna Cas. & Sur. Co. v. Liberty Mut. 19
Ins. Co., 459 N.Y.S.2d 158, 160 (App. Div. 1983)); Mount Vernon Fire Ins. Co. v. Creative Hous. 20
Ltd., 668 N.E.2d 404, 406 (N.Y. 1996) (“There is no significant difference between the meaning of 21
the phrases ‘based on’ and ‘arising out of’ in the coverage or exclusion clauses of an insurance 22
policy. Moreover, we find neither phrase to be ambiguous.” (internal citations omitted)). The 23
phrase “requires only that there be some causal relationship between the injury and the risk for 24
which coverage is provided.” Maroney, 5 N.Y.3d at 472 (emphasis supplied); see also Consol. 25
Edison Co. v. Hartford Ins. Co., 610 N.Y.S.2d 219, 221 (App. Div. 1994) (stating that the phrase 26

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17
“arising out of” in the context of an additional insured clause in an insurance policy “focuses not 1
upon the precise cause of the accident . . . but upon the general nature of the operation in the course 2
of which the injury was sustained”); accord Turner Constr. Co. v. Kemper Ins. Co., 198 F. App’x 28, 3
30 (2d Cir. 2006). 4
Further, additional insured provisions, extending coverage for liability “arising out of” the 5
named insured’s work or operations, are applied consistent with “‘common speech’ and the 6
reasonable expectations of a businessperson.” Belt Painting Corp. v. TIG Ins. Co., 795 N.E.2d 15, 7
17 (N.Y. 2003). Because the term “operations” is not defined in the AHA Policy, “operations” is 8
given its ordinary meaning, considering “the general nature of the operation in the course of which 9
the injury was sustained.” Consol. Edison Co., 610 N.Y.S.2d at 221. The ordinary meaning of the 10
word in the context of this case is the “doing or performing” of work. Webster’s Third New 11
International Dictionary 1581 (2002 ed.); see also In re Chateaugay Corp. v. LTV Steel Co., 891 F.2d 12
1034, 1039 (2d Cir. 1989) (stating, in the context of the coal industry, that “the meaning of the word 13
‘operations’ should cover those methods of . . . mining, production, preparation, transportation and 14
other ancillary activities in which the [parties] were engaged”). Within the bankruptcy context, we 15
have held that the word “operations” includes a business’ “ancillary activities.” Chateaugay Corp., 16
891 F.2d at 1039 (finding “transportation and other ancillary activities” within the coal production 17
operation). 18
We agree with the District Court insofar as it found that the plain language “arising out of . . 19
. operations” in the AHA Policy’s Endorsement is unambiguous. It seems to us, however, that the 20
learned District Court misapplied the unambiguous language of the Endorsement here. 21
B. The Operative Phrase in Other Evidentiary Contexts 22
Federal seeks indemnification for its settlement with Cannon on behalf of AAAMA, arguing 23
that the Cannon accident arose out of AAA National’s operations, in particular, AAA’s activities 24
involving “emergency road service.” In determining that the action did not arise out of the 25
operations of AAA National, we examine some cases in which the operative phrase has been 26

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4 Although the parties cite to Regal Construction Corp. v. National Union Fire Insurance
Co. of Pittsburgh, PA, 15 N.Y.3d 34 (2010), Regal is distinguishable from Worth because in Regal
the court found a causal relationship while reaffirming Worth’s holding. As discussed infra, it is the
absence of a causal relationship that also distinguishes Regal Construction Corp. from the facts of
this case.
18
applied. 1
In Worth Construction Co. v. Admiral Insurance Co., 888 N.E.2d 1043 (N.Y. 2008), a 2
subcontractor, Pacific, named the general contractor, Worth, as an additional insured on its policy 3
but only with respect to liability “arising out of” Pacific’s operations. Id. at 1044. Pacific 4
constructed a staircase frame, and another subcontractor was hired to apply the fireproofing. A 5
second subcontractor’s employee slipped on the fireproofing. Id. After a personal injury claim was 6
filed against Worth, Worth filed a third-party action against Pacific and its insurer, Farm Family 7
Casualty Insurance Company (“Farm Family”). Id. Pacific sought summary judgment on Worth’s 8
third-party claim in the underlying injury suit. Worth thereafter conceded that the underlying 9
personal injury claim did not arise out of Pacific’s work or operations and that Pacific was not 10
negligent, and thus the trial court granted summary judgment to Farm Family. Id. at 1045. The 11
Appellate Division disagreed, holding that for “coverage purposes, it was sufficient that [the 12
subcontractor’s employee’s] injury was sustained on the stairs.” Id. (internal quotation marks 13
omitted). 14
The New York Court of Appeals disagreed with the Appellate Division. Although 15
recognizing that “[g]enerally, the absence of negligence, by itself, is insufficient to establish that an 16
accident did not ‘arise out of’ an insured’s operations,” the court agreed with Farm Family that 17
Worth’s admission that its claims of negligence against Pacific were without factual merit — and 18
“that the staircase was merely the situs of the accident” — established that the accident did not 19
“arise out of” Pacific’s operations. See id. (stating that after Worth’s admission, “it could no longer 20
be argued that there was any connection between [plaintiff’s] accident and the risk for which 21
coverage was intended”).4
22
In Bovis Lend Lease LMB, Inc. v. Garito Contracting, Inc., 885 N.Y.S.2d 59 (App. Div. 23

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19
2009), a subcontractor, Garito, named a general contractor, Bovis, as an additional insured on its 1
policy, but only with respect to liability “arising out of” Garito’s work for Bovis. Bovis, 885 2
N.Y.S.2d at 60. Garito removed a garbage chute enclosure, leaving a hole in the concrete slab floor, 3
and another subcontractor’s employee was injured when he fell through the hole. Id. The injured 4
plaintiff brought suit against Bovis, and Bovis filed a third-party claim against Garito. Id. at 60–61. 5
The jury in the personal injury case found that both Bovis and Garito were negligent but that 6
Garito’s negligence was not a substantial factor causing the accident because the named insured did 7
not agree to provide protection at the worksite. Id. at 61. The Appellate Division agreed with 8
Garito’s insurer — i.e., that Bovis’s liability arose out of its own operations, and not Garito’s work. 9
Id. at 61–62. Applying Worth, the Appellate Division reasoned that “the jury’s finding that Garito’s 10
negligence was not a substantial factor . . . is as conclusive as the admission by Worth that Pacific’s 11
activities were not a proximate cause of the underlying accident.” Id. 12
In Greater N.Y. Mutual Insurance Co. v. Mutual Marine Office, Inc., 769 N.Y.S.2d 234 13
(App. Div. 2003), a contract between a parking garage owner, Seward, and operator, Ulltra, provided 14
that Ulltra was responsible for all repairs except for structural ones. Greater N.Y., 769 N.Y.S.2d at 15
235. Ulltra’s policy with Mutual Marine Office (“MMO”) named Seward as an additional insured, 16
providing coverage for damage to cars in the garage “in connection with the insured’s [Ulltra’s] 17
‘garage operations.’” Id. at 236. Coverage under the MMO policy was therefore limited to “claims 18
arising out of Ulltra’s parking garage operations.” Id. After the garage roof collapsed and Seward 19
paid numerous property damage claims, its insurer, Greater New York Mutual Insurance Company, 20
sought additional coverage from Ulltra’s MMO policy. The Appellate Division determined that the 21
parties had not intended for the additional insurance to cover Seward’s liability since the contract 22
established that Seward alone would be responsible for structural repairs. Id. at 239. The court 23
reasoned that “[t]he collapse of the parking garage roof clearly did not arise out of Ulltra’s parking 24
garage operations but, rather . . . out of structural defect in the building housing the parking garage, 25
as to which, under the lease, Seward had the duty of repair.” Id. at 237–38. Under the provisions of 26

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20
the MMO policy, the court determined that “it is clear that the additional insured endorsement was 1
never intended to extend to Seward’s liability arising out of a roof defect in a building it owns and 2
which, under its lease with Ulltra, it is obligated to maintain.” Id. at 238. Thus, “the additional 3
insured endorsement was never triggered.” The court also noted that additional insurance is often 4
used to ensure that the party closest to the operations is the one held responsible when there is a 5
loss. Id. at 238. 6
C. The Operative Phrase in the Case at Bar 7
Contending that AAA was engaged in “operations” at the time of the accident, Federal 8
argues that AAA’s activities were “far more than ‘ancillary’ or ‘incidental’ to AAAMA’s emergency 9
road service,” especially given that emergency roadside service was AAA’s “core” operation. We 10
disagree. AAA National is a “not-for-profit affiliation of independently operated automobile clubs.” 11
At the time of the accident, AAA National’s activities included “maintaining the federation of clubs” 12
and “accredit[ing] member clubs; promot[ing] use of the MDTs; issu[ing] towing, service, and 13
lockout manuals to the member clubs; disseminat[ing] quality standards, including a thirty-minute 14
response time goal; and maintain[ing] the toll-free telephone number that directed service calls to the 15
member club operating in the area of the call’s origin.” Its activities were therefore much different 16
from the operations of AAAMA, which provided actual roadside emergency services, including 17
towing. At the time of Cannon’s accident, AAAMA “owned” and “operated” over 100 trucks and 18
also contracted with towing contractors, including E & D. AAAMA also financed the truck Taber 19
was driving, required E & D to use the MDT, trained E & D to use the MDT, and equipped the 20
truck with the MDT. 21
In addition, the minimum causal relationship between “the injury and the risk for which 22
coverage is provided” is lacking here. See Maroney, 5 N.Y.3d at 472. AAA National’s accreditation 23
process and other activities did not contribute to Cannon’s injuries. And although AAA National 24
promulgated a suggested 30-minute response time for responding to roadside-assistance calls from 25
members, Taber testified that he was not speeding while en route to the call in Parlin, New Jersey, 26

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21
and that he had more than adequate time to get to his next service call. Moreover, the accident 1
occurred only six minutes after Taber received the service call and started to drive. We therefore 2
conclude that AAAMA’s liability to Cannon is not causally connected to AAA National’s 30-minute 3
response time standard in this case. 4
We also note that while AAA National recommended the MDT after evaluating its 5
technology, it never mandated its use. And although Taber testified that while he was initially 6
distracted by the MDT, he subsequently turned to check the flat-bed, and then became distracted by 7
a woman in a passing car, having stared at her for 10–15 seconds before immediately thereafter 8
slamming into Cannon’s vehicle. 9
Furthermore, we reject the District Court’s conclusion that “AAA’s operations include a 10
level of emergency roadside oversight and coordination that is, at the very least ‘connected to’ the 11
Cannon accident and AAAMA’s liability,” i.e., AAA National’s role in operating the 1-800-AAA- 12
HELP line. Am. Home Assurance Co., 664 F. Supp. 2d at 407. The court found that the 13
connection was supported by the following evidence: 14
Most importantly, an AAA member can call 1-800-AAA-HELP anywhere in the 15 country and receive emergency roadside assistance twenty-four hours a day, seven 16 days a week. All of the service calls are processed by AAA’s reciprocal clearing 17 bureau, which allocates charges among the clubs. In most cases, the member does 18 not know which AAA Member Club will respond to his or her call, or that there are 19 even different Member Clubs. Each responding tow truck and driver displays the 20 same AAA insignia, aims to arrive within the thirty-minute window set by AAA, and 21 reports estimated times of arrival and actual times of arrival to AAA, all to comply 22 with AAA’s automotive quality standards. . . . At the time of the accident, Taber was 23 responding to an AAA member call. The record shows that the member called the 24 AAA nationwide 1-800 number and was then directed to the Member Club, which 25 dispatched E & D. Taber hit Cannon’s car on his way to help an AAA member who 26 had called the AAA number. 27
Id. at 407–08. We find, however, that reliance upon such evidence is akin to the general contractor’s 28
claim in Worth that its liability arose out of Pacific’s operations simply because Pacific had built the 29
stair frame that was the site of the injury, Worth Constr. Co., 888 N.E.2d at 1045–46, or to the 30
parking garage owner’s claim in Greater New York that the damage to cars caused by the garage 31
roof’s collapse arose out of the operator’s operations simply because the cars were parked in the 32

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22
garage at the time of the collapse, Greater N.Y. Mut. Ins. Co., 769 N.Y.S.2d at 236–37. We 1
conclude that AAAMA’s liability to Cannon did not arise out of AAA National’s operations. Here, 2
AAA National served only as a centralized helpline, limiting its role to directing calls to the proper 3
Member Club in which an AAA member’s call originated. 4
Similarly, the organizational structure of AAA National and its member organizations 5
precludes us from concluding that AAA National’s operations include emergency road service. The 6
record establishes that the AAA organization has divided its activities and operations into sets of 7
distinct functions –– AAA National directs policies, accredits member clubs, and maintains a 8
centralized telephone number; and the Member Clubs issue memberships to the public and engage 9
in physical roadside assistance. AAA National does not employ towing companies or maintain 10
towing trucks. In this way, while roadside assistance may be the AAA family’s “core operation,” 11
actual roadside service is provided by the Member Clubs. AAA National’s participation is limited to 12
accreditation, policy making, and oversight. Its operations pertain only to those functions. 13
* * * * 14
In sum, we conclude that AAAMA’s liability did not “arise out of” AAA National’s 15
“operations.” Because we conclude that the AAA National contract does not insure AAAMA as an 16
additional insured in this action, we need not consider the parties’ remaining arguments — that the 17
“other insurance” provision in the Federal Policy renders it excess to the NUIC Policy, that the 18
defendants’ contribution should be limited to the 14% liability that the jury assigned to AAAMA, or 19
that Federal is entitled to prejudgment interest. 20
CONCLUSION 21
In accordance with the foregoing, we conclude that the District Court erred in finding that 22
AAAMA is an additional insured in the Cannon action, and we REVERSE the judgment of the 23
District Court and remand for the entry of summary judgment in favor of the defendants-appellees. 24

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