Full opinion text
MEMORANDUM OPINION AND ORDER JOSEPH R. GOODWIN, Chief Judge. This multi-party insurance case involves a dispute over which insurance company, if any, must provide coverage to Charleston Area Medical Center, Inc. (“CAMC”) for a multi-million dollar verdict against CAMC and a resulting settlement. As is the case with most hospitals, which incur significant risks in their day-to-day operations, CAMC holds several insurance policies with varying levels of coverage for different risks, and is insured by multiple insurance companies, some of whom are then reinsured by other insurance companies. Three such companies are involved in this suit: Executive Risk Indemnity, Inc. (“ERI”), Employers Reinsurance Corporation, n/k/a Westport Insurance Corporation (“ERC”), and Vandalia Insurance Company (‘Vandalia”). The convoluted relationship among the parties, who have asserted various claims against each other and are also all involved in a related case pending before this court, adds an additional layer of complexity to this matter, which already poses complex issues of reinsurance law, contract interpretation, and equitable principles. To summarize the basic allegations in this case, the plaintiff, ERI, claims that its policy does not provide coverage for punitive damages, and also argues that Vandalia (allegedly a captive insurance company) and ERC (allegedly an assumption rein-surer) are liable to CAMC. Vandalia, who also alleges that it was just a conduit between CAMC and ERC, argues that ERC has assumed all of its liability to CAMC and therefore owes coverage to CAMC. CAMC contends that ERI and ERC are obligated to provide coverage to CAMC, but that Vandalia does not. ERC denies that it owes coverage to CAMC or that it is obligated to provide contribution to ERI or Vandalia. This Order addresses the several pending motions by Defendant/Cross-Defendant ERC, namely, its Motion to Dismiss the Second Amended Complaint [Docket 39], Motion to Dismiss the Cross-Claim of Vandalia Insurance Company [Docket 59], and Motion to Dismiss the Cross-Claim of Charleston Area Medical Center, Inc. [Docket 61]. In the Second Amended Complaint, ERI asserts two claims: (1) a declaratory judgment action and (2) a claim for equitable contribution against ERC and Vandalia. ERC moves to dismiss ERI’s Complaint against it insofar as ERI asserts a claim for equitable contribution against ERC. Although ERC has not explicitly sought to dismiss ERI’s declaratory judgment action, insofar as ERC may be seeking its dismissal, the Motion is DENIED because there is a substantial live controversy between the parties, who have adverse interests, and this issue is of sufficient immediacy and reality to warrant the issuance of a declaration of rights or other legal relations. See 28 U.S.C. § 2201(a); Energy Corp. of Am. v. Bituminous Cas. Corp., 543 F.Supp.2d 536, 541 (S.D.W.Va.2008); Majeed v. North Carolina, 520 F.Supp.2d 720, 724-25 (E.D.N.C.2007). However, ERC’s Motion to Dismiss the Second Amended Complaint is GRANTED as to ERI’s claim for equitable contribution against ERC because ERI and ERC do not insure the same risk. See Union Indent. Ins. Co. of N.Y. v. Certain Underwriters at Lloyd’s, 614 F.Supp. 1015, 1016 (S.D.Tex.1985). ERC also seeks to dismiss CAMC’s cross-claim. CAMC asserts the following claims against ERC: a declaratory judgment cause of action, a breach of contract claim, claims for statutory and common law bad faith, and a claim for unjust enrichment. Insofar as ERC is seeking to dismiss CAMC’s declaratory judgment action, the Motion is DENIED because, as I have stated, there is a substantial live controversy between the parties and this issue is of sufficient immediacy and reality to warrant the issuance of a declaration of rights. ERC’s Motion to Dismiss CAMC’s Cross-Claim is also DENIED as to CAMC’s claims for breach of contract, statutory and common law bad faith, and unjust enrichment because CAMC has alleged sufficient facts to state those claims against ERC under Federal Rule of Civil Procedure 8 and to avoid dismissal under Rule 12(b)(6). Finally, ERC has moved to dismiss Vandalia’s cross-claim. Vandalia has asserted a declaratory judgment action as well as breach of contract and unjust enrichment claims against ERC. ERC’s Motion to Dismiss Vandalia’s Cross-Claim is DENIED as to Vandalia’s declaratory judgment action for the same reasons I have discussed as to the other declaratory judgment actions — there is a substantial live controversy between the parties and this issue is of sufficient immediacy and reality to warrant the issuance of a declaration of rights. The Motion is also DENIED as to Vandalia’s breach of contract claim because Vandalia has alleged sufficient facts to state such a claim and avoid dismissal under Rule 12(b)(6). However, ERC’s Motion to Dismiss Vandalia’s Cross-Claim is GRANTED as to Vandalia’s claim for unjust enrichment against ERC because Vandalia has not alleged that Vandalia (rather than CAMC) has paid any money to ERC and that ERC has been unjustly enriched as a result. I. Background The alleged facts giving rise to this matter are as follows. On February 7, 2008, a jury in the Circuit Court of Kanawha County, West Virginia returned a verdict against CAMC for $5,000,000 in compensatory damages and $20,000,000 in punitive damages in the case of Hamrick v. CAMC et al. (“Underlying Litigation”). The award was reduced by the trial judge to $2,000,000 in compensatory damages and $8,000,000 in punitive damages. The Underlying Litigation subsequently settled for $11,500,000, including interest, attorneys’ fees, and all contingencies. The settlement was funded in part by CAMC, which contributed a portion of its self-insured retention, and the balance was to be funded by CAMC’s three insurers: ERI, ERC, and Vandalia. CAMC has alleged, however, that Vandalia contributed no monies to fund the settlement, while the other parties contributed as follows: ERI $8,050,000; CAMC $1,995,000; and ERC $1,495,000. Vandalia agrees that it has not contributed any funds to the settlement. As part of the settlement, the parties agreed to reserve all rights pertaining to the respective insurance policies. Thereafter, this dispute arose over which of CAMC’s three insurers, if any, must provide coverage to CAMC for the verdict in the Underlying Litigation and the subsequent settlement. I will now briefly describe the insurance policies at issue. ERI provided Directors, Officers and Trustees Liability Insurance to CAMC effective from May 1, 2004 to May 1, 2005. (2d Am. Compl. ¶ 12 & Ex. A [Docket 37].) The ERI policy provides $10,000,000 of coverage, and ERI undertook the defense of CAMC in the Underlying Litigation. (CAMC Crossclaim ¶ 10 [Docket 49].) On March 12, 2008, ERI issued a reservation of rights letter notifying CAMC that its policy did not provide coverage for punitive damages. (Id. ¶ 12.) Vandalia issued the Hercules policy to CAMC, which provided the following coverage to CAMC effective from May 1, 2004 to May 1, 2005: Health Care Professional Liability, Directors and Officers Liability, and General Liability. (Id. ¶¶ 14-15; 2d Am. Compl., Ex. B.) Under the Hercules policy, CAMC agreed to pay $2,573,988 in premiums, including captive fees, to Vandalia and Vandalia agreed to indemnify CAMC under certain circumstances. (2d Am. Compl., Ex. B.) Groups II and III of the Hercules policy are relevant to this case. Group II provides Directors and Officer’s Liability coverage for all amounts in excess of ERI’s coverage up to $25,000,000 per loss event and in the aggregate. (Id. at 22; Vandalia’s Cross-Claim ¶ 18 [Docket 48].) Under Group III of the Hercules policy, which insures General Liability, CAMC has a self-insured retention amount of $2,000,000, and the policy provides coverage to CAMC for all amounts above the $2,000,000 self-insured retention up to $25,000,000 per loss event and in the aggregate. (Id. ¶ 19.) Vandalia has maintained that it does not have any rights or obligations to CAMC under the Hercules policy because Vandalia was set up by ERC and CAMC to serve as a “straw man” and ERC therefore assumed all of Vandalia’s rights and obligations to CAMC under a reinsurance agreement. ERC issued a Facultative Reinsurance Certificate and Reinsurance Schedule (“Reinsurance Certificate”) to Vandalia for 100% of the liability of the Hercules policy effective from May 1, 2004 to May 1, 2005. (Id. ¶ 16.) Vandalia was not obligated to pay a retention amount. (2d Am. Compl., Ex. C.) The annual premium amount due to ERC from Vandalia was $2,573,899. (Id.) The parties disagree about the terms of the Reinsurance Certificate, and whether ERC assumed all of Vandalia’s rights and obligations-to CAMC under that agreement. It is evident that the dispute about which party must provide coverage for the verdict/settlement is complicated by the parties’ representations about their relationship to Vandalia. ERI, Vandalia, and CAMC allege that ERC worked with CAMC and West Virginia United Health Systems, Inc. to establish Vandalia as a pass-through company between ERC and CAMC for insurance coverage. They claim that Vandalia was established to allow CAMC to access the reinsurance market and ERC’s services without the involvement of an independent primary insurer and to provide a legal conduit for ERC to provide primary coverage under the guise of 100% reinsurance for the Hercules policy. ERI, Vandalia, and CAMC allege that ERC assumed all of Vandalia’s rights and obligations under the Hercules policy and became the primary insurer for CAMC (1) by contracting for such assumption in the relevant contracts, the Reinsurance Certificate and the Hercules policy, and (2) through ERC’s relationship and dealings with CAMC and Vandalia outside of the contract. Specifically, they contend that CAMC directly paid ERC an annual premium under the Hercules policy, rather than CAMC paying premiums to Vandalia under the Hercules policy and Vandalia paying premiums to ERC under the Reinsurance Certificate. ERI, Vandalia, and CAMC further allege that for twenty-five years, ERC and CAMC dealt directly with each other in all matters, including the handling of claims. ERC disputes these contentions. It argues that the contracts do not reflect the relationship alleged by the other parties and that the language of the contracts governs this matter to the exclusion of all other evidence. Moreover, ERC alleges that it would not owe payment to Vandalia or CAMC in any case because neither party has made a specific claim for payments under the Hercules policy or Reinsurance Certificate. ERC also argues that Vandalia has not asserted that it has made any payments that have not been reimbursed, or that payments are owed to CAMC over its self-insured retention amount. A. ERI’s claims In this action, ERI is seeking a declaration that the verdict/settlement is not covered by the ERI policy, but that the Hercules policy provides such coverage to CAMC. In the alternative, ERI argues that CAMC is not insured in whole or in part for the verdict/settlement by any of the insurance companies involved in this suit. In the event that the court finds that coverage exists under the ERI policy, ERI seeks equitable contribution from Vandalia and ERC and asks this court to make an equitable allocation of coverage between the three companies. Furthermore, to the extent that any or all of the verdict/settlement is uninsured or in excess of the applicable coverage limits, ERI asks that the court allocate all or part of the monies owed to CAMC. To support its claim for equitable contribution, ERI contends that ERC worked with CAMC and West Virginia United Health Systems, Inc., to establish Vandalia as a pass-through between ERC and CAMC to allow CAMC to access the reinsurance market and ERC’s services without an independent primary insurer. (2d Am. Compl. ¶¶ 39M0, 47.) ERI also alleges that Vandalia is a captive or fronting company that was established to provide a legal conduit for ERC to provide CAMC with primary insurance coverage under the 100% reinsurance of the Hercules policy. (Id. ¶¶ 41-42.) ERI alleges that the Hercules policy was written by ERC and that CAMC paid ERC premiums under the Hercules policy rather than paying Vandalia. (Id. ¶¶ 43, 45.) ERI claims that Vandalia was relieved of any risks under the Hercules policy by the Reinsurance Certificate and that its rights and obligations were entirely assumed by ERC who became the primary insurer. (Id. ¶¶ 44, 46, 49.) ERI goes on to allege that ERC did not observe any of the formalities relating to Vandalia for twenty-five years, but. worked directly with CAMC in handling claims. (Id. ¶ 48.) ERI states that CAMC and Vandalia complied with all of the terms in the Hercules policy and Reinsurance Certifícate and that ERC is required to provide coverage in this matter. (Id. ¶¶ 50-54.) B. Vandalia’s claims Vandalia has filed a cross-claim against ERC in which it seeks a declaratory judgment that ERC is directly liable to CAMC because, although ERC nominally provided reinsurance coverage to Vandalia, ERC in fact provided primary insurance coverage to CAMC. (Vandalia Cross-Claim ¶ 28.) Vandalia also alleges that it was created at the direction of and with the assistance of ERC to serve as a “captive or fronting insurer[ ] that serve[d] as [a] legal conduit[] that permit[ted] ERC to ‘rein-sure’ 100% of an underlying ‘primary’ insurance risk.” (Id. ¶ 8.) Vandalia alleges that it is jointly owned by CAMC and West Virginia United Health Systems, Inc., and served as a “pass-through company” between ERC and CAMC to allow CAMC to access the reinsurance services of ERC without the involvement of an independent primary insurer. (Id. ¶¶ 11-12, 35.) It further alleges that ERC wrote both policies and that ERC is one of a limited number of reinsurance companies that use policies like the Hercules policy, which was created and written by ERC, to reinsure 100% of the primary risk through a captive arrangement. (Id. ¶¶ 14-15, 36-37.) Vandalia therefore claims that ERC’s reinsurance agreement relieved Vandalia of any risks under the Hercules policy because ERC reinsured 100% of any amount Vandalia was obligated to pay under the Hercules policy. (Id. ¶¶ 20-22.) Vandalia alleges that it does not have any independent rights or obligations under the Hercules policy because those rights and obligations were assumed by ERC, including the control over the payment of monies to CAMC and claim-handling. (Id. ¶ 23.) Vandalia states that ERC or its representative Myron Steves, Inc. have always handled claims directly with CAMC in the twenty-five years that the reinsurance agreement has been in place. (Id. ¶ 28.) While CAMC sometimes provided notice of claims to Myron Steves, Inc., CAMC would also notify ERC directly and never issued such notices through Vandalia. (Id. ¶ 40.) No notices ever came from Vandalia. (Id.) In fact, all of the communications and coordination under the Reinsurance Agreement, which that agreement states were to be handled by Vandalia, were routinely accomplished by CAMC. (Id. ¶ 43.) Vandalia states that “[a]s an example of ERC’s indifference to the very terms of the ERC Reinsurance agreement, it is undisputed that with regard to the two claims ERC paid on the Hercules policy, ERC paid such claims without any proof whatsoever that Vandalia had paid anything on those claims.” (Id. ¶ 42.) Vandalia also alleges that CAMC paid ERC directly for its coverage and that ERC has accrued profits of approximately $38,000,000 over twenty-five years of business dealings. (Id. ¶ 22.) Vandalia asserts that ERC will be unjustly enriched if it is permitted to accept those premiums, but avoid its obligations. (Id. ¶ 38.) • Alternatively, Vandalia argues that ERC should provide coverage to Vandalia under the Reinsurance Certifícate. Vandalia asserts that it and CAMC have complied with all of their obligations under the Hercules policy and the ERC reinsurance agreement, but that ERC has denied coverage to both entities in breach of those contracts. (Id. ¶ 33, 51-55.) Vandalia alleges that “to the extent that CAMC is entitled to coverage under the Hercules policy, ERC is obligated to provide coverage to Vandalia under the ERC Reinsurance agreement.” (Id. ¶ 54.) These allegations may constitute a breach of contract claim against ERC, which I will discuss in greater detail. C. CAMC’s claims CAMC has also filed a cross-claim against ERC in which it asserts a declaratory judgment action as well as claims for breach of contract, unfair settlement practices, bad faith, and unjust enrichment against ERC. CAMC reiterates ERI and Vandalia’s arguments about Vandalia’s status as a captive or fronting insurance company that merely provides a legal conduit for ERC to provide primary insurance to CAMC. (CAMC Cross-Claim ¶¶ 11-13.) In addition, CAMC alleges that ERC is a reinsurance company that has a longstanding business relationship with insurance broker Myron Steves, Inc., and that issues reinsurance policies to primary insurers, some of which are captive or fronting insurers permitting ERC to reinsure 100% of an underlying insurance risk. (Id. ¶¶ 8-10.) CAMC further alleges that the Hercules policy, which was drafted entirely by ERC, is a unique ERC product that the company has sold to others in the insurance market. (Id. ¶ 15.) ERC allegedly “is one of a limited number of reinsurance companies that write primary insurance risks using products such as the Hercules policy by reinsuring 100% of the primary risk through a captive arrangement.” (Id.) CAMC contends that ERC relieved Vandalia of any risks under the Hercules policy, that CAMC paid ERC directly for reinsurance coverage under the Hercules policy, and that Vandalia retained no independent rights or obligations. (Id. ¶¶ 21-22.) CAMC adds that ERC completely controls the payment of all insurance monies above CAMC’s self-insured retention amount and that during over twenty-five years of business dealings, all communications ran directly from ERC or Myron Steves, Inc. to CAMC. (Id. ¶¶ 25, 27.) CAMC describes in some detail email correspondence between ERC and CAMC to illustrate this relationship, and contends that ERC paid two claims on the Hercules policy without any proof that Vandalia had paid those claims. (Id. ¶ 42-44, 57, 67, 70-71.) CAMC argues that “[u]nder the terms of the Hercules Policy and the ERC Reinsurance agreement, which were drafted by ERC for use to implement this captive situation, the rights normally vested in the ‘primary insurer’ were vested in ERC.” (Id. ¶ 46.) CAMC therefore claims that ERC stands in Vandalia’s shoes and is in privity of contract with CAMC. (Id. ¶ 37.) CAMC further alleges that CAMC and Vandalia have complied with all of their obligations under the contracts but that ERC has denied coverage. (Id. ¶ 33.) Alternatively, CAMC asserts that it is a third-party beneficiary of the Reinsurance Certificate. (Id. ¶ 38.) CAMC asserts that ERC has waived the formalities of the ERC-Vandalia-CAMC relationship and cannot “hide behind the formalities of Vandalia in order to attempt to deny coverage to CAMC.” (Id. ¶ 48.) CAMC additionally has asserted an unjust enrichment claim against ERC, arguing that if ERC is permitted to deny coverage to CAMC, it will have been unjustly enriched because CAMC paid ERC an annual premium amount of approximately $2,568,646.51. (Id. ¶ 22, 39.) CAMC estimates that ERC has accrued approximately $38,000,000 in profits from the CAMC-Vandalia-ERC relationship from premiums and interest (minus the amount of two claims ERC paid to Vandalia). (Id. ¶ 28, 39.) II. Motion to Dismiss standard There are three pending motions to dismiss: ERC’s Motion to Dismiss the Second Amended Complaint, its Motion to Dismiss Vandalia’s Cross-Claim, and its Motion to Dismiss CAMC’s cross-claim. A motion to dismiss filed under Rule 12(b)(6) tests the legal sufficiency of a complaint or pleading. Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008). Federal Rule of Civil Procedure 8 requires that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8. As the Supreme Court recently reiterated in Ashcroft v. Iqbal, that standard “does not require ‘detailed factual allegations’ but ‘it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.’ ” — U.S. -, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “[A] plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conelusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) for the proposition that “on a motion to dismiss, courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation’ ”). A court cannot accept as true legal conclusions in a complaint that merely recite the elements of a cause of action and are supported by conclusory statements. Iqbal, 129 S.Ct. at 1949-50. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. at 1949 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). To achieve facial plausibility, the plaintiff must plead facts that allow the court to draw the reasonable inference that the defendant is liable, and those facts must be more than merely consistent with the defendant’s liability to raise the claim from merely possible to plausible. Id. In determining whether a plausible claim exists, the court must undertake a context-specific inquiry, “[b]ut where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged— but it has not ‘show[n]’ — ‘that the pleader is entitled to relief.’ ” Id. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)). A complaint must contain enough facts to “nudge[ ] [a] claim cross the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. The Iqbal court suggested a two-pronged inquiry to determine if the complaint survives a motion to dismiss, which I will apply here. First, I will identify any pleadings that are not entitled to the assumption of truth because they are conclusory and unsupported by factual allegations. See Iqbal, 129 S.Ct. at 1949-50. Where there are well-pleaded factual allegations, I will assume the veracity of those facts and then determine whether they plausibly give rise to a valid claim for relief. See id. III. ERC’s Motion to Dismiss the Second Amended Complaint ERI has asserted two claims for relief in its Second Amended Complaint: (1) a request for declaratory judgment as to the rights and obligations of the parties under the ERI policy, the Hercules policy, and the Reinsurance Certificate and (2) an equitable contribution claim against Vandalia and ERC for all or part of the verdict/settlement. Despite indicating an intent to dismiss the entire Second Amended Complaint, in its motion ERC only seeks to dismiss ERI’s claim for equitable contribution. As an initial matter, to resolve the question of whether ERI has stated a claim against ERC for equitable contribution, I must determine whether there are any pleadings which are conclusory and unsupported by factual allegations to satisfy my duty under Twombly and Iqbal. ERC does not argue that the factual allegations contained in the Second Amended Complaint are insufficient, but rather that the factual allegations cannot support a claim for equitable contribution as a matter of law. After examining the Second Amended Complaint, which is described in detail above, I FIND that the factual allegations contained therein as to ERC’s relationship with Vandalia and CAMC are well-supported and that none of the factual assertions are conclusory. The Second Amended Complaint does much more than contain a formulaic recitation of the elements of equitable contribution, but rather ERI alleges details regarding ERC’s status as a primary insurer, including a description of key contract provisions, citations to specific monetary amounts, and references to past dealings between the companies. Cf. Iqbal, 129 S.Ct. at 1949. Moreover, ERI attached its policy, the Hercules policy, and the Reinsurance Certificate in their entirety to the Complaint. Accordingly, I will assume the veracity of ERI’s allegations to determine whether they plausibly give rise to a valid claim for relief. See id. at 1949-50. In order to state a claim for equitable contribution against ERC, ERI must show that the companies insure the same entity (CAMC) and the same risk. “For an insurer to be entitled to equitable contribution from other insurers, the policies in question must insure the same party, the same interest, and the same risk.” Union Indem. Ins. Co. of N.Y., 614 F.Supp. at 1016; see also, e.g., Lexington Ins. Co. v. Allianz Ins. Co., 177 Fed.Appx. 572, 574 (9th Cir.2006); State Farm Fire & Cas. Co. v. Zurich Ins. Co., 111 F.3d 42, 44 (6th Cir.1997); Aetna Cas. & Sur. Co. v. Chicago Ins. Co., 994 F.2d 1254, 1257 n. 2 (7th Cir.1993); Clarendon Am. Ins. Co. v. Steadfast Ins. Co., 2008 WL 5221048, at *3 (S.D.Cal. Dec. 12, 2008). Equitable contribution ‘applies to apportion costs among insurers that share the same level of liability on the same risk as to the same insured.’ Equitable contribution ‘arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others.’ Clarendon Am. Ins. Co., 2008 WL 5221048, at *3 (citing Md. Cas. Co. v. Nationwide Mut. Ins. Co., 81 Cal.App.4th 1082, 1089, 97 Cal.Rptr.2d 374 (Cal.App.Ct.2000)). This is known as double or overlapping insurance. If one insurer pays the insured’s entire loss in such a situation, that insurer is entitled to pro rata contribution from any other insurer who issued double insurance. The purpose of the doctrine of equitable contribution is to prevent the insured from making a double recovery. Union Indem. Ins. Co. of N.Y., 614 F.Supp. at 1016-17 (citations omitted); see also State Farm Fire & Cas. Co., 111 F.3d at 44. The doctrine also prevents an insurer who does not pay from profiting at the expense of others. Am. Cont’l Ins. Co. v. Am. Cas. Co., 86 Cal.App.4th 929, 937-38, 103 Cal.Rptr.2d 632 (Cal.Ct.App.2001). In ruling on this particular motion, I need not resolve the issue raised by all of the nonmoving parties, that is, whether ERC stands in the place of a primary insurer to CAMC, rather than a reinsurer, and thus whether ERC and ERI insure the same entity (CAMC). Whether ERC is a primary insurer to CAMC becomes irrelevant because I FIND that ERI and ERC do not insure the same risk. ERI therefore has not stated a claim for equitable contribution against ERC. See Am. Cas. Co. of Reading, Pa. v. Health Care Indem., Inc., 520 F.3d 1131, 1136-39 (10th Cir.2008); Lexington Ins. Co., 177 Fed.Appx. at 573. ERC argues that ERI has failed to state a claim against it upon which relief can be granted pursuant to Rule 12(b)(6) because ERC and ERI do not insure the same entity or risk. I FIND that, regardless of whether ERC stands in the place of a primary insurer to CAMC, ERI has not stated a claim for equitable contribution against ERC because they insure different risks. I have reached this conclusion because (1) the Hercules policy is in excess of the ERI policy with respect to Directors and Officers Liability coverage, and (2) the Hercules policy’s Professional Liability and General Liability coverages insure different risks than the ERI policy’s Director and Officers Liability coverage. A. ERI and ERC’s Directors & Officers Liability Coverages do not insure the same risk because the Hercules policy is in excess to ERI’s policy ERC first maintains that ERI has not stated a claim for equitable contribution with respect to the Directors and Liability coverage under Group II of the Hercules Policy because that coverage is in excess of the ERI policy. ERC claims that the Hercules policy’s Group II Directors & Officers Liability coverage is only triggered after the following has occurred: CAMC has paid its $2,000,000 self-insured retention, ERI has paid its full policy limits of $10,000,000, and National Union Fire Insurance Company of Pittsburgh has paid its full policy limits of $10,000,000. ERC refers to the language of the Hercules policy and its attached Schedule of Underlying Insurance to support its argument. By their very nature, primary and excess insurance policies do not insure the same risk. Primary insurance coverage is the first layer of insurance coverage which attaches immediately upon a covered occurrence or claim. See Gauze v. Reed, 219 W.Va. 381, 633 S.E.2d 326, 332 (2006) (quoting Douglas R. Richmond, “Rights and Responsibilities of Excess Insurers,” 78 Denv. U.L.Rev. 29-30 (2000)). Excess insurance coverage provides coverage above an underlying limit of primary insurance and is not triggered until the underlying primary policy limits have been paid. Id. Although West Virginia state law does not speak to this issue directly, West Virginia courts have recognized the difference between the levels of coverage in primary and excess insurance policies. See id. Because the West Virginia Supreme Court of Appeals has held that the doctrine of equitable contribution arises when there is a common obligation and one party has to pay more than its fair share of that obligation, the court would be unlikely to find such a common obligation in the context of primary insurers and excess insurers. See Mackey v. Irisari, 191 W.Va. 355, 445 S.E.2d 742, 747 (1994); see also Reliance Ins. Co. v. Doctors Co., 299 F.Supp.2d 1131, 1151-52 (D.Haw.2003); Reliance Nat’l Indem. Co. v. Gen. Star Indem. Co., 72 Cal.App.4th 1063, 1078, 1080, 85 Cal.Rptr.2d 627 (Cal.App.Ct.1999); cf. Am. Cas. Co. of Reading, Pa., 520 F.3d at 1137 (citing precedent where doctrine of equitable contribution applied to two excess insurers who insured the same risk at the same level of coverage) (citing St. Paul Mercury Ins. Co. v. Underwriters at Lloyds of London, England, 365 F.2d 659, 662 (10th Cir.1966)). I will now turn to the language of the Hercules policy to determine if its Group II Directors and Liability coverage is an excess policy to ERI’s coverage. Group II of the Hercules policy covers Directors and Officers Liability, Employment Practices Liability, and Fiduciary Liability. (2d Am. Compl., Ex. B at 2.) The Hercules policy states that With respect to those coverages designated as Group II only, the COMPANY hereby agrees to indemnify THE INSURED against ULTIMATE NET LOSS in excess of the UNDERLYING LIMIT(S) OF LIABILITY set forth in the Schedule of UNDERLYING INSURANCE as set forth in Schedule A, which the INSURED is legally obligated to pay by reason of liability imposed by law or assumed under contract for DAMAGES to which this policy applies arising out of.... [Directors and Officers Liability]. (Id. at 3 (emphasis added).) The Hercules policy goes on to explain that In addition to the indemnification of ULTIMATE NET LOSS ... the COMPANY agrees to indemnify the INSURED against EXPENSES AND COSTS incurred and paid by the INSURED arising out of and in connection with claim which are covered under this policy, but: 2. only after ULTIMATE NET LOSS and EXPENSES AND COSTS exceed the RETAINED AMOUNT with respect to those coverages designated as Group II as set forth in Item 5. of the Declarations. (Id. at 3.) “UNDERLYING INSURANCE” is defined as “the insurance policies set forth in Schedule A. Schedule of UNDERLYING INSURANCE” and “‘UNDERLYING LIMIT(S) OF LIABILITY’ means the limits of liability of the UNDERLYING INSURANCE and the IMMEDIATE UNDERLYING INSURANCE set forth in Schedule A. Schedule of UNDERLYING INSURANCE.” (Id. at 10.) ‘“IMMEDIATE UNDERLYING INSURANCE’ means that layer of UNDERLYING INSURANCE which immediately precedes the layer of excess insurance provided by this policy.” (Id. at 8.) The Hercules policy incorporates those policies and states that “[t]he COMPANY’S obligation to indemnify the INSURED for loss in excess of the UNDERLYING LIMIT(S) OF LIABILITY applies only after the UNDERLYING LIMIT(S) OF LIABILITY have been paid by or on behalf of the NAMED INSURED.” (Id. at 4, 10.) CAMC agreed in the Hercules Policy to maintain the “UNDERLYING INSURANCE.” (Id. at 20.) Schedule A. Schedule of Underlying Insurance, indicates that Group II Directors and Officers Liability coverage is in excess of the coverage provided by National Union Fire Insurance Company of Pittsburgh, which is in turn in excess of ERI’s coverage. (Id. at 22.) I FIND that the unambiguous language of Group II of the Hercules Policy, including Schedule A of that policy, demonstrates that its Directors and Officers Liability coverage is in excess of ERI’s policy. ERI also argues that its own excess clause cancels out any excess provision in the Hercules Policy. ERC responds that ERI’s excess clause does not apply in this case. Where more than one insurance policy includes an excess coverage provision, the excess coverage clauses are held to cancel each other out as mutually repugnant and each insurer is therefore liable to contribute to the settlement or judgment. Md. Cas. Co. v. Cont’l Cas. Co., 189 F.Supp. 764, 772 (N.D.W.Va.1960) (“[T]he excess insurance clauses must be completely disregarded, as they are all the same and mutually repugnant, and no one insurance company can be held to have primary liability.”); see also Philadelphia Indem. Ins. Co. v. Employers Ins. Co. of Wausau, 318 F.Supp.2d 170, 172 (S.D.N.Y. 2004); Am. Alliance Ins. Co. v. IARW Ins. Co., Ltd., No. 97 C 4980, 1998 WL 214708, at *7 (N.D.Ill. April 24,1998). ERI’s policy states in pertinent part that This Policy shall be excess of and not contribute with (1) other existing insurance, including but not limited to any insurance under which there is a duty to defend, unless such other insurance is specifically in excess of this Policy, and (2) indemnification to which an Insured is entitled from any other entity other than the Insured entity. This Policy shall not be subject to the terms of any other insurance. (2d Am. Compl., Ex. A, at 11.) ERI’s policy language belies its argument because ERI’s policy states that it is an excess policy “unless such other insurance is specifically in excess of this Policy.” (Id. (emphasis added).) As discussed above, Schedule A of the Hercules policy provides that its coverage is specifically in excess of the ERI policy. ERI’s excess clause is therefore inapplicable to this matter and is not mutually repugnant with the Hercules policy’s excess clause. I therefore FIND that ERC and ERI do not insure the same risk with regard to Directors and Officers Liability coverage because ERC is an excess insurer to ERI. Accordingly, ERI has not stated a claim for equitable contribution against ERI as to that coverage. B. ERI’s Directors & Officers Liability Coverage also insures a different risk from the Hercules policy’s Professional Liability & General Liability Coverages ERC also argues that ERI cannot claim equitable contribution with respect to the remaining coverages, that is, the Hercules policy’s Professional Liability (Group I) or General Liability (Group III), because those coverages do not insure the same risks as the ERI policy, which only provides Directors and Officers Liability coverage. I have already determined that the two policies’ Directors and Officers Liability cover different risks because the Hercules policy is in excess to the ERI policy. Moreover, Groups I and III of the Hercules policy cover different risks than the ERI policy as demonstrated by the different treatment of those risks within the Hercules policy. According to ERC, the Hercules policy provides that if coverage exists under the Directors and Officers Liability provision, then it is excluded under the Professional Liability and General Liability Coverages, and vice versa. First, I will examine the ERI policy. It is undisputed that the ERI policy provides directors, officers and trustees’ liability insurance and that ERI agreed to “pay on behalf of the Insured Persons Loss from Claims first made against them during the Policy Period, except for Loss which the Insured Entity pays to or on behalf of the Insured Persons as indemnification” and to “pay on behalf of the Insured Entity Loss from Claims first made against the Insured Persons during the Policy Period which the Insured Entity pays to or on behalf of the Insured Persons as indemnification.” (2d Am. Compl., Ex. A, at 8.) The ERI policy defines a claim as “(1) written noticed received by an Insured that any person or entity intends to hold any Insured Responsible for a Wrongful Act, or (2) a legal, injunctive or administrative proceeding against an Insured Person solely by reason of his or her status as such.” (Id.) An “Insured Person” is defined as “any past, present or future director, officer, trustee, employee, volunteer, or any member of the staff, faculty or any duly constituted committee of the Insured Entity ...” (Id. at 9.) “Wrongful Act” means any actual or alleged error, omission, misstatement, misleading statement or breach of duty (1) by an Insured Person solely in his or her capacity as such, or while serving as a director or trustee of any other non-profit entity at the express written direction of the Insured Entity; or (2) with respect to coverage under Insuring Agreement C [OPTIONAL COVERAGE], by the Insured Entity. (Id.) I will now examine the Hercules policy allegedly issued by ERC. The Hercules policy provides three groups of coverage. They are designated in Item 5 of the Declarations as: Group I: HEALTH CARE PROFESSIONAL LIABILITY; Group II: Directors and Officers Liability, Employment Practices Liability and Fiduciary Liability; and Group III: All coverages provided under this policy which are not listed in Group I and Group II above. (Id., Ex. B, at 2.) Group II, as I have discussed, is an excess policy. (Id. at 8.) Aside from its being an excess policy, however, Group II insures the same type of risk or occurrence as the ERI policy, namely, liability arising by virtue of the conduct of directors, officers, and trustees. As to Groups I and III, Vandalia agreed to indemnify CAMC for an entirely different type of occurrence, namely, “HEALTHCARE PROFESSIONAL LIABILITY” (Group I) is defined as liability arising out of any act, error or omission: 1. which results in an injury to a PATIENT, unless such injury arises from a NAMED PERIL; 2. in the performance of the service by any persons or members of a formal accreditation, standards review or similar board or committee of the NAMED INSURED or a person charged with executing the directives of such board or committee: or 3. in the furnishing of services related to the business operations of a Health Maintenance Organization, Preferred Provider Organization or similar organization which provides, or arranges to provide, healthcare services to members under written contracts or agreements which set forth a directory of participating physicians (where applicable), the scope of healthcare services to be provided and the costs associated therewith. (Id. at 7.) Group III then provides coverage for “[a]ll coverages provided under this policy which are not listed in Group I and Group II.... ” (Id. at 2.) Under the heading of “Exclusions,” Hercules policy further provides that: With respect to those coverages designated as Group I and Group III only, this policy does not apply: B. to any liability for which coverage is provided, or would be provided except for limits thereof or exclusions therein, by coverages designated in Item 5. of the Declarations as Group II [Directors and Officers Liability]. (Id. at 12.) Similarly, With respect to those coverages designated as Group II. only, this policy does not apply: T. to any liability for which coverage is provided or would be provided except for limits thereof or exceptions therein, by coverages designated in Item 5. of the Declaration as Group I and III. (Id. at 14.) The Hercules policy clearly provides insurance coverage for three different and distinct risks. The Hercules policy provides that if coverage exists under Directors and Officers Liability coverage, then coverage is excluded under the Health Care/Professional Liability and General Liability coverages, and vice versa. Because Group II of the Hercules policy and ERI’s policy cover the same type of occurrence, albeit at different risk levels, and because Group I and Group III cover risks that are different from Group II, I conclude that Groups I and III of the Hercules policy cover different risks than ERI. The ERI policy and Group II of the Hercules policy insure directors, officers, and trustees acting in their official capacity and who commit a wrongful act. By contrast, the Hercules policy’s Health Care/Professional Liability provision covers injury to patients arising out of any act, error, or omission or the provision of health care services. (2d Am. Compl., Ex. B, at 7.) And the General Liability coverage insures risks not otherwise covered by either type of coverage. Consequently, I FIND that ERI and ERC do not insure the same risk with regards to the remainder of the coverages in the Hercules policy. Based on the above analysis, I have determined that the ERI policy provides Directors and Officers Liability coverage, while the Hercules policy provides excess Directors and Officers Liability Coverage, Health Care/Professional Liability Coverage, and General Liability coverage. ERI has not stated a claim for equitable contribution against ERC because, even if ERI and ERC both insure CAMC, they do not insure the same risk. See Am. Cas. Co. of Reading, Pa., 520 F.3d at 1136-39; Lexington Ins. Co., 177 Fed.Appx. at 573. ERC’s Motion to Dismiss ERI’s Second Amended Complaint is hereby GRANTED. The Second Amended Complaint is DISMISSED in part insofar as ERI is seeking equitable contribution from ERC. IV. ERC’s Motion to Dismiss CAMC’s Cross-Claim I will now turn to ERC’s Motion to Dismiss CAMC’s Cross-claim for failure to state a claim under Rule 12(b)(6). I FIND that CAMC has stated a claim for breach of contract and for unjust enrichment against ERC under Rule 12(b)(6). A. CAMC has stated a claim for declaratory judgment As an initial matter, I note that ERC is not challenging CAMC’s claim for declaratory judgment, but to the extent that ERC seeks a dismissal of the claims in their entirety, I have considered the issue. I FIND it should not be dismissed because CAMC has demonstrated that there is a substantial live controversy between the parties, who have adverse interests, and this issue is of sufficient immediacy and reality to warrant the issuance of a declaration of rights or other legal relations. See 28 U.S.C. § 2201(a); Energy Corp. of Am., 543 F.Supp.2d at 541 (discussing standing requirements for a declaratory judgment action); Majeed, 520 F.Supp.2d at 724-25. B. CAMC has stated a claim for breach of contract CAMC also asserts a breach of contract claim against ERC. CAMC alleges that Vandalia is a straw man and that ERC therefore stands in Vandalia’s shoes and is in privity of contract with CAMC. As such, CAMC alleges that ERC has breached its contractual obligations to CAMC. CAMC also contends that it has standing as a third-party beneficiary to assert such a breach of contract action and that ERC has waived the formalities of the CAMC-Vandalia-ERC relationship. In its motion to dismiss CAMC’s cross-claim against it, ERC contends that there is no valid, enforceable contract to support CAMC’s breach of contract claim because ERC has no contract with CAMC. ERC argues that any attempt by CAMC to demonstrate that ERC is an assumption reinsurer to CAMC through ERC’s conduct violates the parol evidence rule. Finally, ERC asserts that, even if there was such a contract, CAMC has not pled sufficient facts to show that it was breached or that CAMC was injured as a result of a breach. To state a claim for breach of contract under Rule 12(b)(6), CAMC must allege facts sufficient to support the following elements: the existence of a valid, enforceable contract; that the plaintiff has performed under the contract; that the defendant has breached or violated its duties or obligations under the contract; and that the plaintiff has been injured as a result. See 23 Williston on Contracts § 63:1 (Richard A. Lord, ed. 4th ed. West 2009). To sufficiently state a claim for breach of contract, a plaintiff must allege in his complaint “the breach on which the plaintiffs found their action ... [and] the facts and circumstances which entitle them to damages.” White v. Romans, 29 W.Va. 571, 3 S.E. 14, 16 (1887); see also Charleston Nat’l Bank of Charleston v. Sims, 137 W.Va. 222, 70 S.E.2d 809, 813 (1952) (explaining that a plaintiff must show that it complied with the terms of the contract in order to allege a breach of contract claim); Harper v. Consolidated Bus Lines, 117 W.Va. 228, 185 S.E. 225, 225-26 (1936) (finding that a complaint alleging the existence of a contract, the satisfaction of conditions precedent, the defendant’s conduct constituting breach, and resulting damages is sufficient to state a claim for breach of contract); Rhoades v. Chesapeake & O. Ry. Co., 49 W.Va. 494, 39 S.E. 209, 211 (1901). If, however, the plaintiff can allege a breach of duty by the defendant, then the court can infer that the plaintiff has suffered at least nominal damages suffieient to state a claim. Harper, 185 S.E. at 226. ERC argues that CAMC has not alleged sufficient facts to state the following three elements of a breach of contract claim: that there was a valid, enforceable contract, that ERC breached such contract, and that CAMC was injured as a result. I disagree. 1. CAMC has alleged the existence of a valid, enforceable contract ERC first contends that CAMC’s breach of contract claim must be dismissed because there is no contract for primary insurance coverage between ERC and CAMC. Rather, ERC alleges that it is a reinsurer who entered into a contract of indemnity reinsurance with Vandalia, and Vandalia is CAMC’s primary insurer. ERC alleges that CAMC therefore has no contractual relationship with it. As I will explain, although I conclude that CAMC has no contractual relationship with ERC under the Reinsurance Certifícate, I FIND that CAMC has alleged sufficient facts to support its claim for breach of contract under a theory that CAMC and ERC subsequently modified or superceded that contract by dealing with each other directly. a. ERC did not assume liability to CAMC under the Reinsurance Certificate In arguing that ERC is not contractually liable to CAMC, ERC relies upon the principles of reinsurance to support its argument. A reinsurer generally is not directly liable to a primary insured. “Reinsurance is defined as ‘insurance purchased by one underwriter from another, the latter wholly or partially indemnifying the former against the risks that it has assumed. The rights as between the underwriters are governed by the terms of the reinsurance contract.’ ” Higginbotham v. Clark, 189 W.Va. 504, 432 S.E.2d 774, 780 (1993) (quoting Allan D. Windt, Insurance Claims and Disputes § 7.10 (2d ed. 1998)). Under a primary insurance contract, a primary insurer indemnifies the insured, while under a reinsurance contract the ceding insurer (reinsured) cedes all or part of the risk from that primary insurance contract to another insurer (reinsurer). See, e.g., British Ins. Co. of Cayman v. Safety Nat’l Cas., 335 F.3d 205, 211 (3d Cir.2003). . This type of standard reinsurance agreement is also known as an indemnity reinsurance agreement. As the Supreme Court explained, in an indemnity reinsurance agreement it is the ceding company that remains directly liable to its policyholders, and that continues to pay claims and collect premiums. The indemnity reinsurer assumes no direct liability to the policyholders. Instead, it agrees to indemnify, or reimburse, the ceding company for a specified percentage of the claims and expenses attributable to the risks that have been reinsured, and the ceding company turns over to it a like percentage of the premiums generated by the insurance of those risks. Colonial Am. Life Ins. Co. v. Comm’r of Internal Revenue, 491 U.S. 244, 247, 109 S.Ct. 2408, 105 L.Ed.2d 199 (1989). Accordingly, “[a] reinsurance contract confers no rights on the insured. In fact, the reinsurer is not directly liable to the insured. The reinsurer’s only obligation is to indemnify the ceding insurer on the risk transferred.” British Ins. Co. of Cayman, 335 F.3d at 211 (citations omitted). Therefore, unless the contract between the parties provides otherwise, a reinsurer owes no duty to the insured because the insured is not a party to the reinsurance contract. (See Higginbotham, 432 S.E.2d at 780 (“Where a typical reinsurance contract is involved, ‘there is no privity .., between the original insured and the reinsurer; as a result, it is generally recognized that the original insured cannot recover directly from the reinsurer.’ ”) (quoting Allan D. Windt, Insurance Claims and Disputes § 7.10)); see also In re Liquidation of Union Indent. Ins. Co. of N.Y., 200 A.D.2d 99, 611 N.Y.S.2d 506, 511-12 (1994) (“[I]t is well-established that, a contract of reinsurance being one between the reinsurer and the insurer/reinsured, absent language in the policy indicating the reinsurer’s intent to be directly liable to the insured, the reinsurer has no obligation to the original insured .... ”), aff'd 89 N.Y.2d 94, 651 N.Y.S.2d 383, 674 N.E.2d 313 (1996). In an assumption reinsurance agreement, however, the reinsurer does become liable to the primary insured. Unlike in an indemnity reinsurance agreement, as part of an assumption reinsurance agreement, the reinsurer steps into the shoes of the ceding company with respect to the reinsured policy, assuming all its liabilities and its responsibility to maintain required reserves against potential claims. The assumption reinsurer thereafter receives all premiums directly and becomes directly liable to the holders of the policies it has reinsured. Colonial Am. Life Ins. Co., 491 U.S. at 247, 109 S.Ct. 2408; see also Gerling Int’l Ins. Co. v. Comm’r of Internal Revenue, 839 F.2d 131, 133 n. 1 (3d Cir.1988) (“There are two main kinds of reinsurance arrangements, indemnity reinsurance and assumption reinsurance. In the former, the reinsurer simply promises to indemnify the reinsured, i.e., the original insurer of the risk. In the latter, the reinsurer actually deals directly with the policyholder, replacing the reinsured.”); Modern Am. Life Ins. Co. v. Comm’r of Internal Revenue, 830 F.2d 110, 110 n. 2 (8th Cir.1987) (“Indemnity reinsurance differs from assumption reinsurance in that under the former the reinsurer indemnifies the reinsured company for losses, but does not become directly liable to policyholders, as it would in the case of assumption reinsurance.”); 44A Am. Jur. 2d Insurance § 1814 (West 2009) (“Strictly speaking, reinsurance is the sale of an insurance policy to a ceding company, while an assumption agreement results in the elimination of the ceding company’s participation or interest in insurance policies it sells to the company assuming the risks.”). “The existence of an assumption [reinsurance agreement] depends on proof of all the ordinary elements of novation, including the agreement of all parties to the new contract, and the extinguishment of the old one.” 44A Am. Jur. 2d Insurance § 1814; see also Sec. Benefit Life Ins. Co. v. F.D.I.C., 804 F.Supp. 217, 226 (D.Kan.1992); 19 Couch on Insurance 2d § 80:64, at 670 (Rev. ed. 1983) (“Regardless of the nature of the reinsurance contract, the original insurer remains liable to the original insured, in the absence of a novation; that is, an original insurer cannot, without the knowledge or consent of the insured, enter into any contract of reinsurance with another company which abrogates or alters the rights of the insured against it, the insurer.”). A novation is a type of substituted contract that adds a party who was not a party to the original duty and which discharges the original duty. Restatement (Second) of Contracts § 280 (1981). To determine whether ERI is an assumption reinsurer with direct contractual liability to CAMC, I will begin with the language of the Reinsurance Certificate. A reinsurance contract must be interpreted like any other contract to ascertain the intent of the parties, a proposition with which all of the parties to this case agree. See In re Acceptance Ins. Cos. Inc., 567 F.3d 369, 378-79 (8th Cir.2009). Accordingly, I must determine whether the language of the relevant contracts is clear and unambiguous. “Language in an insurance policy should be given its plain, ordinary meaning.” Syl. pt. 1, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986), overruled on other grounds by Natl Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987). “It is well-established that ‘[w]here the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended.’ ” Blankenship v. City of Charleston, 223 W.Va. 822, 679 S.E.2d 654, 655 (2009) (quoting Syl. pt. 1, Christopher v. U.S. Life Ins. Co., 145 W.Va. 707, 116 S.E.2d 864 (I960)); see also, e.g., Kopf v. Lacey, 208 W.Va. 302, 540 S.E.2d 170,175-76 (2000); Syl. pt. 2, Orteza v. Monongalia County Gen. Hosp., 173 W.Va. 461, 318 S.E.2d 40 (1984) (“Where the terms of a contract are clear* and unambiguous, they must be applied and not construed.”). The language of the Reinsurance Certificate reveals that it is an indemnity reinsurance agreement, not an assumption reinsurance agreement. When courts have found a contract to be an assumption reinsurance agreement rather than a contract of indemnity, they have relied upon explicit language of assumption that is entirely absent from the Reinsurance Certificate. See, e.g., Cleveland v. Commonwealth Nat’l Ins. Co., 269 F.Supp.2d 752, 756 (S.D.Miss.2003) (classifying a contract as an assumption reinsurance agreement based on the contract’s language, including, “ ‘[i]t is the intent of the parties to this Agreement to accomplish ... a complete transfer of all of the Company’s contractual rights, obligations, liabilities and risks with respect to the [policies] then being assumed to the Reinsurer, with the Result that the Reinsurer ... shall succeed the Company as the insurer ... as though the Reinsurer had originally issued such Assumed Policies, and to transfer to the Reinsurer ... full and complete responsibility for servicing and administering the Assumed Policies....”); State Dep’t of Pub. Welfare v. Cent. Standard Life Ins. Co., 19 Wis.2d 426, 120 N.W.2d 687, 691-92 (1963) (describing the assumption reinsurance contract which ceded all of the reinsured’s insurance policies to the reinsurer, and in which the reinsurer assumed all the liabilities under those policies, agreed to send policyholders certificates of assumptions, and agreed to investigate, settle, defend, and bear expenses of all claims on those policies); see also 10 Am.Jur. Legal Forms 2d § 149:34 (West 2009) (example of an assumption clause in reinsurance agreement). By contrast, the Reinsurance Certificate shows that Vandalia remained CAMC’s primary insured and retained rights and responsibilities to ERC as a reinsured even though ERC agreed to indemnify 100% of the Hercules policy’s limits. (2d Am. Compl., Ex. C at 1.) For instance, the Reinsurance Certificate names Vandalia as the Reinsured and CAMC as the insured. Vandalia agreed to pay an annual premium of $2,573,899 to ERC, and ERC agreed to “indemnify the Reinsured against that proportion of ‘claim expenses’ paid by the Reinsured that the amount of the loss ultimately borne by the Corporation bears to the total amount of the loss.” (Id. at 1-2.) Vandalia further agreed to investigate and settle or defend all claims arising under the reinsured policy. Vandalia agreed to meet certain notice requirements in which it would notify ERC according to the contract’s terms. More specifically, Vandalia was required to give notice to ERC of certain types of losses or events which might result in a claim for indemnity, and Vandalia agreed to forward copies of all pleadings and investigation reports to ERC. (Id.) Moreover, “[a]s a condition precedent to indemnification hereunder, [Vandalia] [was required to] notify and obtain the prior, written approval of [ERC] of any payment or offer of settlement for any claim that would involve indemnification under this certificate.” (Id.) That section goes on to state that “[n]otice to the Reinsured by any insured does not constitute notice to [ERC].” (Id.) The unambiguous language of the Reinsurance Certificate demonstrates that ERC entered into an indemnity reinsurance agreement, not an assumption reinsurance agreement. The language of the Reinsurance Certificate states that ERC agreed to “indemnify” Vandalia and there is nothing in the contract to suggest that ERC assumed all of Vandalia’s rights and responsibilities under the Hercules policy, or that CAMC agreed to such an arrangement. Furthermore, the Reinsurance Agreement does not provide that ERC assumed responsibility for servicing and administering the Hercules policy in place of Vandalia. On the contrary, Vandalia retained many such responsibilities. There is no language in the Reinsurance Certificate indicating ERC’s intention to be directly liable to CAMC, the primary insured, or that a novation occurred. See Cleveland, 269 F.Supp.2d at 756-57; see also Sec. Benefit Life Ins. Co. v. F.D.I.C., 804 F.Supp. at 226; In re Integrated Resources Life Ins. Co., 562 N.W.2d 179, 182 (Iowa 1997); Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729, 735 (1986). ERI, Vandalia, and CAMC’s arguments to the contrary are unpersuasive. Although ERC agreed to indemnify 100% of the Hercules policy, that does not automatically indicate that the Reinsurance Certificate is an assumption reinsurance agreement. An indemnity reinsurance agreement can involve the transfer of all of the reinsured’s liability on the policy. See Higginbotham, 432 S.E.2d at 780; see also Colonial Am. Life Ins. Co. v. Comm’r of Internal Revenue, 843 F.2d 201, 202 (5th Cir.1988), aff'd 491 U.S. 244, 109 S.Ct. 2408, 105 L.Ed.2d 199 (1989). Additionally, despite the non-moving parties’ arguments that CAMC’s direct premium payments to ERC demonstrate that ERC did assume all of Vandalia’s rights and obligations to CAMC, the Reinsurance Certificate itself gives no indication that CAMC rather than Vandalia should pay the premium to ERC. The Reinsurance Certificate provides that Vandalia would pay ERC an annual premium of $2,573,899, and that the “premium payment must be received within 30 days of the effective date.” It does not provide that CAMC would pay premiums directly to ERC or that ERC become directly liable to CAMC. Also, this case is not governed, as ERI, Vandalia, and CAMC contend, by Delp v. Missouri State Life Insurance Company, 116 W.Va. 508, 182 S.E. 580 (1935). In that case, the West Virginia Supreme Court of Appeals held that a reinsurer who had contracted with the reinsured to assume the primary insurance policy was directly liable to the original insured: The effect of a strictly technical contract of reinsurance