Old Republic Insurance Co. v. Stratford Insurance Company

United States Court of Appeals
For the First Circuit

Nos. 14-1179
14-1229

OLD REPUBLIC INSURANCE COMPANY,

Plaintiff, Appellant, Cross-Appellee,

v.

STRATFORD INSURANCE COMPANY,

Defendant, Appellee, Cross-Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

[Hon. Landya McCafferty, U.S. District Judge]

Before

Lynch, Chief Judge,
Howard and Barron, Circuit Judges.

Daniel W. Gerber, with whom Jonathan L. Schwartz, Goldberg
Segalla LLP, Naomi L. Getman, Andrew R. Schulman, and Getman,
Schulthess & Steere, P.A. were on brief, for appellant, cross-
appellee.
Laurence J. Rabinovich, with whom Hiscock & Barclay LLP,
Richard C. Nelson, and Nelson Kinder & Mosseau PC were on brief,
for appellee, cross-appellant.

January 26, 2015
 LYNCH, Chief Judge. This appeal arises out of a dispute

between two insurers as to their respective duties to defend and

indemnify a tractor-trailer involved in an auto collision causing

serious injuries. The owner of the tractor, Ryder Truck Rentals

("Ryder"), obtained primary insurance for the tractor through Old

Republic Insurance Company ("Old Republic"). The operator of the

tractor, DAM Express ("DAM"), obtained separate insurance through

Stratford Insurance Company ("Stratford"). Old Republic brought

this suit to determine Stratford's insurance obligations.

The first question is whether the Stratford Policy is co-

primary with the coverage provided by Old Republic for the tractor

leased from Ryder. The answer hinges on the intent of the

contracting parties, and, more specifically, on which sources a

court may consult to determine that intent under New Hampshire law.

We conclude that the district court committed no legal error in

considering the Stratford Policy as a whole and turning to

objective extrinsic evidence to resolve inconsistencies found

therein. We affirm the district court's conclusion that DAM and

Stratford never intended the Stratford Policy to provide primary

coverage to the tractor otherwise covered by Old Republic.

We must then determine Stratford's corresponding duty to

defend as an excess insurer of the tractor. The answer is far from

clear under New Hampshire law. The district court interpreted a

New Hampshire case from 1991 as establishing a rule whereby an

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insurer's duty to defend is the same regardless of whether its

designation is as primary or excess. After a close analysis of New

Hampshire precedent, we conclude that the best course of action is

to certify this question of New Hampshire law to the New Hampshire

Supreme Court.

I. Factual Background

On April 7, 2010, a tractor-trailer crashed into Daniel

and Karla Bendor's vehicle in Connecticut, causing bodily injury.

The tractor was owned by Ryder, who had leased it to DAM in order

to transport a trailer owned by Coca-Cola. The driver, Antoine

Girginoff, was employed by DAM.

DAM is a for-hire motor company which operates out of

Manchester, New Hampshire. As described by the office manager,

DAM's work "falls into two categories." "One category is small

package delivery such as consumer goods which is conducted in vans

and small trucks owned by D.A.M." When business is particularly

busy, DAM rents an extra van of a similar type, for approximately

$5,000 per year. "The second category [is] transportation of

larger shipments in tractor-trailers." DAM leases these tractors

from Ryder for approximately $240,000 per year.

DAM and Ryder's lease agreement specified that Ryder was

responsible for obtaining liability insurance for the tractor. The

lease agreement reads:

A. Liability Insurance. The party designated
on Schedule A (the "Insuring Party") agrees to

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 furnish and maintain, at its sole cost, a
policy of automobile liability insurance with
limits specified on each Schedule A for death,
bodily injury and property damage, covering
both you and Ryder as insureds for the
ownership, maintenance, use, and operation of
each Vehicle ("Liability Insurance"). . . .
The Liability Insurance must provide that its
coverage is primary and not additional or
excess coverage over insurance otherwise
available to either party . . . . The
Insuring Party agrees to designate the other
party as an additional insured on the
Liability Insurance . . . .

On the form titled "Schedule A," the Insuring Party is identified

as Ryder alone. DAM agreed that "Ryder shall have the sole right

to conduct accident investigations and administer claims handling

and settlements and [DAM] shall adhere to and accept Ryder's

conclusions and decisions."

Ryder obtained liability insurance from Old Republic,

under which Old Republic agreed to "pay all sums an 'insured'

legally must pay as damages because of 'bodily injury' or 'property

damage' to which this insurance applies, caused by an 'accident'

and resulting from the ownership, maintenance or use of a covered

'auto'" and to "defend any 'suit' asking for these damages."

"Insureds" included Ryder "for any covered 'auto'" and "[a]ny

person or organization for whom [Ryder] is obligated by written

agreement to provide liability insurance . . . ." Covered "autos"

included "any 'auto,'" the definition of which included

"'[t]railers' with a load capacity of 2000 pounds or less designed

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primarily for travel on public roads." For a coverage limit of

$1,000,000, Ryder paid a premium of $459,961.

In a section titled "Other Insurance," Old Republic

specified: "For any covered 'auto' you own, this Coverage Form

provides primary insurance." "However, while a covered 'auto'

which is a 'trailer' is connected to another vehicle, the Liability

Coverage this Coverage Form provides for the 'trailer' is: . . .

[p]rimary while it is connected to a covered 'auto' you own."

DAM separately obtained insurance from Stratford.

Stratford agreed to "pay all sums an 'insured' legally must pay as

damages because of 'bodily injury' or 'property damage' to which

this insurance applies, caused by an 'accident' and resulting from

the ownership, maintenance or use of a covered 'auto,'" and to

"defend any 'insured' against a 'suit' asking for such damages."

The Stratford Policy specified three categories of vehicles as

covered "autos:" (1) "specifically described 'autos,'" (2) "hired

'autos,'" and (3) "nonowned 'autos.'" For a maximum coverage of

$1,000,000, DAM paid a premium of $4,808.

"Specifically described 'autos'" are defined as "[o]nly

those 'autos' described in Item Three of the Declarations for which

a premium charge is shown (and for Liability Coverage any

'trailers' [DAM doesn't] own while attached to any power unit

described in Item Three)." Item Three lists two Chevy Express vans

and "any non-owned trailer while attached to a covered auto."

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"Hired 'autos'" are defined as "[o]nly those 'autos' [DAM]

lease[s], hire[s], rent[s] or borrow[s]." In Item Four, DAM

estimated the cost of hire of these autos to be $5,000 per year.

The $5,000 per year estimate yielded a liability premium of $400.

"Nonowned 'autos'" are defined as "[o]nly those 'autos' [DAM]

do[es] not own, lease, hire, rent or borrow that are used in

connection with [DAM's] business."

In the "Other Insurance" section, the Stratford Policy

specifies that it provides primary coverage for autos that fall

into one of these three categories of covered autos. It reads:

This Coverage Form's Liability Coverage is
primary for any covered "auto" while hired or
borrowed by [DAM] and used exclusively in
[DAM's] business as a "trucker" and pursuant
to operating rights granted to [DAM] by a
public authority. This Coverage Form's
Liability Coverage is excess over any other
collectible insurance for any covered "auto"
while hired or borrowed from [DAM] by another
"trucker." However, while a covered "auto"
which is a "trailer" is connected to a power
unit, this Coverage Form's Liability Coverage
is:

(1) On the same basis, primary or excess, as
for the power unit if the power unit is a
covered "auto".

(2) Excess if the power unit is not a covered
"auto".

The Bendors sued Ryder, DAM, and Girginoff in federal

court in Connecticut on December 3, 2010, for damages in connection

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with the April 7, 2010, accident.1 As required by its policy with

Ryder, Old Republic immediately began providing a defense. In

March 2011, Old Republic asked Stratford to participate in the

defense of its insureds.

In August 2011, after learning about the underlying

lawsuit, Stratford proposed a general change endorsement to its

policy with DAM that was retroactively "effective on the inception

date of the policy." That endorsement specified: "For a covered

'auto' leased or rented to [DAM] by [Ryder] or any related entity,

LIABILITY COVERAGE is excess over any other collectible insurance."

Stratford and DAM executed the agreement on November 29, 2011.

By letter dated December 1, 2011, Stratford informed Old

Republic that it had no obligation to share in the cost of

defending or indemnifying its insureds against the underlying

lawsuit. Stratford's Senior Litigation Specialist, Sandra

McFarlane, wrote that the "endorsement reflects [DAM]'s

understanding that [it] had opted to purchase primary insurance for

[its] Ryder vehicles through Ryder." McFarlane stated that "[a]ny

coverage provided to either DAM or Mr. Girginoff by Stratford is

excess to the coverage provided by Ryder and/or Old Republic." For

this reason, McFarlane took the position that "Stratford is

not . . . obligated to, and will not, share in the cost of

defending or indemnifying [their] mutual insureds at this time."

1
Coca-Cola was subsequently added as a defendant.

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 II. Present Litigation

Old Republic filed suit against Stratford on June 1,

2012, in state court in New Hampshire. Old Republic sought a

declaratory judgment pursuant to New Hampshire Revised Statute

§ 491:22 et seq. that Old Republic and Stratford have co-primary

obligations to defend and indemnify DAM, Girginoff, and Coca-Cola,

with accompanying claims for equitable reformation, unjust

enrichment, and waiver and estoppel. Stratford removed the case to

the United States District Court for the District of New Hampshire,

and counterclaimed for a declaratory judgment that Old Republic

provides primary coverage, and Stratford provides excess coverage,

for the liability of DAM, Girginoff, and Coca-Cola.

The district court granted in part and denied in part

both parties' motions for summary judgment. Old Republic Ins. Co.

v. Stratford Ins. Co., No. 12-cv-256-LM, 2014 WL 309390, at *1

(D.N.H. Jan. 27, 2014). The district court concluded that, as to

the tractor, "the Stratford policy, as initially issued, did not

require Stratford to provide primary coverage for any losses that

may ensue in the underlying action." Id. at *5. Nevertheless,

"because Stratford concedes that its policy provides excess

coverage," the district court held that Stratford "is obligated to

share equally in the costs of defending its insureds in the

underlying action." Id. at *7. Old Republic's additional claims

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for equitable reformation, unjust enrichment, and waiver and

estoppel were dismissed. Id.

Both parties appealed. Old Republic argues that "the

district court erred in finding that coverage under the Stratford

Policy is excess over coverage under the [Old Republic] Policy."

According to Old Republic, the plain language of the original

policy made Stratford's coverage primary as to the tractor in

addition to its own, and the subsequent endorsement changing the

coverage to excess is invalid and unenforceable. Stratford defends

the district court's holding that it is an excess insurer, but

contends that the district court erred in requiring it to share

equally the costs of defense nonetheless.

We review the district court's grant of summary judgment

under Federal Rule of Civil Procedure 56 de novo, and affirm "only

if the record discloses no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law."

Tropigas de P.R., Inc. v. Certain Underwriters at Lloyd's of

London, 637 F.3d 53, 56 (1st Cir. 2011). In this analysis, we view

the facts in the light most favorable to the nonmoving party and

draw all reasonable inferences in that party's favor. Id. The

presence of cross-motions for summary judgment does not affect this

analysis. Scottsdale Ins. Co. v. Torres, 561 F.3d 74, 77 (1st Cir.

2009).

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 III. Stratford's Coverage

In New Hampshire, "[t]he fundamental goal of interpreting

an insurance policy, as in all contracts, is to carry out the

intent of the contracting parties." Bates v. Phenix Mut. Fire Ins.

Co., 943 A.2d 750, 752-53 (N.H. 2008) (quoting Tech-Built 153, Inc.

v. Va. Sur. Co., 898 A.2d 1007, 1009 (N.H. 2006)); see also Hansen

v. Sentry Ins. Co., 756 F.3d 53, 61 (1st Cir. 2014). Analyzing the

language of the policy and an extrinsic agreement, the district

court concluded that DAM and Stratford never intended to provide

co-primary coverage to the tractor DAM leased from Ryder. Old

Republic, 2014 WL 309390, at *5-6.

The key question here under New Hampshire law is what

sources a court may consult -- and in what circumstances -- to

ascertain the parties' intent for coverage. "The interpretation of

a contract, including whether a contract term is ambiguous, is

ultimately a question of law . . . ." Birch Broad., Inc. v.

Capitol Broad. Corp., 13 A.3d 224, 228 (N.H. 2010). "[T]o

determine what the parties, as reasonable people, mutually

understood the ambiguous language to mean necessarily involves

factual findings . . . ." Id.

Our search for the parties' intent as to the coverage of

the tractor begins with the words of the policy itself. Bates, 943

A.2d at 753. The New Hampshire Supreme Court recently summarized:

In interpreting policy language, we look to the
plain and ordinary meaning of the policy's

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 words in context. We construe the terms of the
policy as would a reasonable person in the
position of the insured based upon more than a
casual reading of the policy as a whole.
Policy terms are construed objectively, and
where the terms of a policy are clear and
unambiguous, we accord the language its natural
and ordinary meaning. . . .

White v. Vt. Mut. Ins. Co., No. 2013-569, 2014 WL 6533298, at *3

(N.H. Nov. 21, 2014) (quoting Bates, 943 A.2d at 753). In this

inquiry, we are not constrained to the specific terms of the

provision involved; we must read the policy "as a whole." See

Great Am. Dining, Inc. v. Phila. Indem. Ins. Co., 62 A.3d 843, 848

(N.H. 2013).

To go beyond the four corners of the policy, however,

generally requires ambiguity. See White, 2014 WL 6533298, at *3;

Birch Broad., 13 A.3d at 228; Lawyers Title Ins. Corp. v. Groff,

808 A.2d 44, 48 (N.H. 2002). Clear and unambiguous policy language

is generally the best evidence of the parties' intent, and courts

do not lightly disregard it. See White, 2014 WL 6533298, at *3.

When faced with an internally inconsistent policy, the

New Hampshire Supreme Court has looked to "objective extrinsic

evidence," such as other agreements between relevant parties, to

"conclusively resolve[]" the intent of the contracting parties.

See Tech-Built, 898 A.2d at 1010. In Tech-Built, the New Hampshire

Supreme Court considered a contract between Surge, an employee

leasing company, and its insurer, Virginia Surety. Id. at 1008-09.

At issue was whether Surge's Virginia Surety policy extended

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coverage to Surge employees who were leased to Tech-Built, a

corporation involved in the construction industry, or to Tech-Built

itself. Id. at 1009. In the section titled, "Who Is Insured," the

policy stated: "You are insured if you are an employer named in

Item 1 of the Information Page." Id. The court "acknowledge[d]

that Item 1 of the information page itself reference[d] Surge 'etal

[sic]' and the '[o]ther workplaces' subsection reference[d] the

endorsement entitled 'Additional Named Insured and/or Locations.'"

Id. (third and fourth alterations in original). The endorsement in

turn listed over 150 companies, including Tech-Built. Id. The

court noted, however, that "[o]ther language within the policy

itself . . . reveal[ed] that the contracting parties anticipated

that a single employer was named as the insured, namely Surge, and

that coverage for that employer extended to all 'workplaces' of

that employer listed in the endorsement . . . ." Id. at 1009-10.

In examining the entire policy, the court found a lack of clarity

as to what the parties intended. See id.

The New Hampshire Supreme Court used Surge's leasing

agreement with Tech-Built to "inform[]" its understanding of the

Virginia Surety Policy. Id. at 1011. The court concluded that

Surge's leasing agreement with Tech-Built "memorialized" Surge's

"clear intent . . . to secure workers' compensation coverage only

for its leased employees." Id. at 1010. The court recognized

that, "in general, we do not look beyond the four corners of the

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insurance contract to discern the intent of the contracting parties

regarding the scope and extent of insurance coverage." Id. But,

the court explained, "we will not ignore that [objective extrinsic]

evidence in favor of dogmatic adherence to insurance maxims." Id.

In this case, the Stratford Policy provides primary

insurance coverage to three categories of "autos," including, as is

relevant here, "hired 'autos.'" "Hired 'autos'" are defined as

"those 'autos' [DAM] lease[s], hire[s], rent[s] or borrow[s]." The

Stratford Policy states that "[t]his Coverage Form's Liability

Coverage is primary for any covered 'auto' while hired or borrowed

by [DAM] and used exclusively in [DAM's] business as a

'trucker' . . . ."

To repeat, DAM leased or rented two types of vehicles in

the course of its business. First, DAM rented small vans, similar

to those it owned, for approximately $5,000 per year to deliver

small packages during busy periods. Second, DAM leased large

tractors from Ryder for approximately $240,000 per year to

transport palletized freight. There is no dispute that the parties

intended the Stratford Policy to provide primary coverage for the

small vans DAM owned and rented. We must determine whether the

parties intended the policy's primary coverage to also extend to

the large tractors leased from Ryder.

If we were to confine our consideration to only the

definition of "hired 'autos,'" primary coverage would apply to the

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large tractors in the same way as the small vans.2 Since DAM

leased the large tractors from Ryder, they would qualify as "hired

'autos,'" for which coverage would be primary. Indeed, Stratford's

Senior Litigation Specialist, Sandra McFarlane, conceded that the

definition of "hired 'autos'" would include the Ryder tractor, but

maintained that this was not the parties' intent. She explained,

"I think the problem was that there was an exposure out there that

wasn't intended to be covered by the policy."

The district court noted that, "read in isolation, the

policy's coverage provision and its definition of 'hired auto'

would appear to provide primary coverage for the tractor that

Girginoff was driving." Old Republic, 2014 WL 309390, at *5. But,

the district court found, "[t]he rest of the policy reveals" a

contrary intent. Id. We agree.

It is a cardinal principle of contract interpretation

that we must read the policy "as a whole." See Great Am. Dining,

62 A.3d at 848. For this reason, our analysis cannot begin and end

with the definition of "hired 'autos.'" Here, other provisions

2
We need not dwell on Stratford's argument that the trailer
would not be covered even if the tractor was. "Specifically
described 'autos'" are defined as "those 'autos' described in Item
Three of the Declarations for which a premium charge is shown (and
for Liability Coverage any 'trailers' you don't own while attached
to any power unit described in Item Three)." The definition of
"auto" includes trailers. Item Three includes "any non-owned
trailer while attached to a covered auto," with a liability premium
of $254. The trailer is therefore an "'auto' described in Item
Three of the Declarations for which a premium charge is shown" so
long as the tractor to which it is attached is a covered auto.

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within the policy itself reveal a more tailored intent to insure

only the smaller side of DAM's business, which conducted small

package delivery in small vans and trucks. Highlighting this side

of DAM's business, the Stratford Policy describes DAM's business as

the delivery of office supplies and small household appliances.

There is no mention in the policy of the additional portion of the

business concerned with the transportation of palletized freight.

DAM listed two of its small vans in the itemization of

"specifically described 'autos,'" and provided an estimate for the

cost of "hired 'autos'" that is consistent with similar small vans.

DAM did not describe the portion of the business concerning

palletized freight involving Ryder tractors.

We find the estimated cost of hire for "hired 'autos,'"

listed in the Stratford Policy, to be particularly instructive as

to the parties' intent. The estimated cost of hire is a term

within the four corners of the policy and cannot be ignored. For

"hired 'autos,'" DAM estimated the yearly cost of hire to be

$5,000. The parties agree that the cost of hire for small vans

similar to those DAM owned was $5,000 per year, and that the cost

of hire for the Ryder tractors was approximately $240,000 per year.

The $5,000 estimate is not binding on the parties, but it is

informative of their intent when the policy was created. Although

the concurrence posits that an insured might lowball his estimate

to reduce his premium, the dramatic $235,000 difference between the

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estimate listed in the contract and the yearly cost to hire the

Ryder tractors in this case belies any suggestion that Stratford

and DAM intended their policy to provide primary coverage for those

tractors.3 This incredibly low amount evidences that DAM attempted

to insure its own vans as "specifically described 'autos'" and

similar hired vans as "hired 'autos,'" and not the Ryder tractors.

Further, contract interpretation rules require consideration of the

cost estimate within the four corners of the policy as indicative

of the intent as to what was being covered.

As in Tech-Built, DAM's lease agreement with Ryder

provides objective extrinsic evidence of the intent animating the

Stratford Policy as to the scope of coverage. There, the New

Hampshire Supreme Court used an extrinsic lease agreement as a

means to obtain clarity as to whom coverage applied. See 898 A.2d

at 1010. Tech-Built made it clear that inconsistent policy

language must be viewed in terms of the background, circumstances,

and context in which the policy was negotiated. See id. Here, we

use a similar extrinsic lease agreement to obtain clarity as to

3
In addition, there is no indication that DAM "lowballed"
its estimate in the hopes of reducing its premium for an intended
coverage. As noted at oral argument, "[t]here has been no
suggestion whatsoever that DAM misrepresented its cost of hire.
The question rather was whether, when DAM represented its cost of
hire, it was referring to the vans, which is what they say they
were referring to, or whether they were referring to something
else." Indeed, when Stratford subsequently learned of the Ryder
tractors, it chose not to retroactively increase the premium, but
to simply include the tractors in the negotiations for renewal
going forward.

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which vehicles coverage applied given the potential inconsistency

within the Stratford Policy. DAM and Ryder's lease agreement

specified that Ryder was the "party responsible for liability

insurance" for the tractors. DAM agreed that "Ryder shall have the

sole right to conduct accident investigations and administer claims

handling and settlements and [DAM] shall adhere to and accept

Ryder's conclusions and decisions."

The district court found that this agreement between DAM

and Ryder was "entirely consistent" with the portions of the

Stratford Policy that suggest that DAM intended to insure only its

small vans through Stratford. See Old Republic, 2014 WL 309390, at

*5. "When providing information on the scope of the coverage it

needed for hired autos," the district court explained, "DAM knew

that Ryder was responsible for liability insurance on the tractors

it leased to DAM, and DAM said nothing to Stratford about those

tractors." Id. at *6. "In sum, it cannot have been the intent of

the parties for Stratford to provide primary coverage on a risk

that DAM never sought to insure and that . . . Stratford knew

nothing about when it issued DAM its policy and set the premium for

it." Id.

Considering the entirety of the Stratford Policy,

including the pricing estimate, background, and circumstances, as

informed by the lease agreement between DAM and Ryder, we agree

with the district court that the Stratford Policy was never

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intended to provide primary insurance for the Ryder tractors.

Neither Old Republic nor the concurrence suggests that the policy

or the extrinsic evidence supports the proposition that the parties

did intend to provide primary coverage for the tractors; rather,

they argue that the parties should be restricted to the one

provision in the policy defining "hired 'autos'" despite any

evidence of a contrary intent. The district court committed no

legal error in its analysis of the Stratford Policy and DAM's lease

with Ryder. Even viewing the facts in the light most favorable to

Old Republic, the record demonstrates that DAM and Stratford did

not intend the Stratford Policy to provide primary insurance for

the Ryder tractors, which Ryder was already insuring through Old

Republic as per its agreement with DAM. See Tech-Built, 898 A.2d

at 1010 (finding "no genuine dispute of material fact concerning

the clear intent memorialized in the lease agreement"). We repeat

what the unanimous court in Tech-Built stated: under New Hampshire

insurance law, "where the intent of the contracting parties can be

conclusively resolved by objective extrinsic evidence, . . . we

will not ignore that evidence in favor of dogmatic adherence to

insurance maxims." Id. So too, here.

Because we conclude that Stratford's policy with DAM

never provided co-primary coverage for the Ryder tractor, we,

unlike the concurrence, need not consider whether New Hampshire law

would conclude that Stratford and DAM's later post-loss General

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Change Endorsement is a valid contract modification, which Old

Republic disputes. We do note that Stratford has now committed

itself to provide excess coverage as to the Ryder tractor both in

its endorsement and independently in its representations to the

district court and this court.

IV. Stratford's Duty to Defend

The district court stated that, in New Hampshire, "'the

duty of an insurer to defend is the same whether its potential

liability is either as a primary or as an excess carrier.'" Old

Republic, 2014 WL 309390, at *7 (quoting Universal Underwriters

Ins. Co. v. Allstate Ins. Co., 592 A.2d 515, 517 (N.H. 1991)).

"[B]ecause Stratford concedes that its policy provides excess

coverage," the district court concluded, "it is obligated to share

equally in the costs of defending its insureds in the underlying

action." Id. Stratford appeals and argues that, as an excess

insurer, its duty to defend should be excess to that of the primary

insurer.

In 2011, the New Hampshire Supreme Court noted that it

"ha[s] never addressed the precise issue of allocation of defense

costs between a primary insurer and an excess insurer."

Progressive N. Ins. Co. v. Argonaut Ins. Co., 20 A.3d 977, 983

(N.H. 2011). In that case, the court declined to review a trial

court's requirement that an excess insurer pay its pro rata share

of defense costs since the issue was not properly raised in the

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notice of appeal. Id. at 980, 983. The court was also unwilling

to hold that the trial court had committed plain error given the

unsettled nature of the issue. Id. at 983.

A previous New Hampshire Supreme Court decision,

Universal Underwriters, had touched on the same issue briefly. In

Universal Underwriters, the New Hampshire Supreme Court analyzed

the coverage provided by two insurance companies, Universal and

Allstate, for a leased vehicle when both purported to be excess

carriers. Universal Underwriters, 592 A.2d at 516. The court held

that Universal provided primary coverage up to $25,000, and that

both Universal and Allstate provided co-primary coverage past that

amount. Id. at 517. On the duty to indemnify, the court held that

"the cost of settlement in this case in excess of $25,000 is to be

shared pro rata by Universal and Allstate." Id. On the duty to

defend, however, the court split the total defense costs equally

between the two carriers. Id. at 517-18. Rejecting the trial

court's pro rata division, the New Hampshire Supreme Court stated

that "the duty of an insurer to defend is the same whether its

potential liability is either as a primary or as an excess

carrier." Id. at 517.

The district court interpreted Universal Underwriters to

require primary and excess carriers to equally share the costs of

defense. See Old Republic, 2014 WL 309390, at *7. The majority

rule is that "the excess liability carrier is not obligated to

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participate in the defense until the primary policy limits are

exhausted." 14 Couch on Insurance § 200:41 (3d ed. 2014); see also

id. § 200:38; Schneider Nat'l Transp. v. Ford Motor Co., 280 F.3d

532, 538 (5th Cir. 2002). The district court's contrary conclusion

follows from the statement of the New Hampshire Supreme Court in

Universal Underwriters, and the court's holding that the two

insurers must split the defense costs equally despite the fact that

only Universal provided primary coverage for the first $25,000.

See Universal Underwriters, 592 A.2d at 517-18.

Stratford nevertheless argues that Universal Underwriters

cannot be taken at its word. Stratford stresses that it is not

asking this court to "overrule" the New Hampshire Supreme Court on

an issue of New Hampshire state law. Instead, Stratford claims

that "[i]t is . . . not at all clear that the Supreme Court of New

Hampshire actually held that excess insurers must share defense

costs equally with primary insurers" given the context within which

Universal Underwriters was decided and the citations on which it

relies.

First, Stratford argues that the New Hampshire Supreme

Court would have explained its dramatic shift away from the general

rule if this was actually its intent. Critically, a federal

district court decision interpreting New Hampshire law two years

before Universal Underwriters appears to follow the general rule.

See Town of Stoddard v. N. Sec. Ins. Co., 718 F. Supp. 1062, 1065-

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66 (D.N.H. 1989) (Devine, C.J.). In that case, the district court

differentiated between the primary and excess insurer, and held

that the primary insurer alone was obligated to reimburse the

insured for the costs of the defense. See id. at 1066. Stratford

concedes that "[i]t is certainly possible . . . that Universal

Underwriters reflects the announcement by the Supreme Court of New

Hampshire of a new position on the issue and a repudiation of the

approach reflected in Town of Stoddard." But, "[t]here is no

indication . . . in Universal Underwriters itself that the court

was introducing a new rule of law . . . ."

Second, Stratford argues that the two cases cited by the

New Hampshire Supreme Court in Universal Underwriters do not

support reading the decision as adopting a new rule. In Universal

Underwriters, the court cited a decision from the Georgia Court of

Appeals, Zurich Insurance Co. v. New Amsterdam Casualty Co., 160

S.E.2d 603, 605 (Ga. Ct. App. 1968); an earlier decision from the

New Hampshire Supreme Court, Liberty Mutual Insurance Co. v. Home

Insurance Indemnity Co., 351 A.2d 891, 895 (N.H. 1976); and a

treatise, 14 Couch on Insurance § 51:148 (2d ed. 1982). See 592

A.2d at 517.

In Zurich Insurance, the Georgia Court of Appeals stated

that one insurer, Zurich, "had a potential liability, either as

primary or excess carrier, in either of which cases its duty to

-22-
defend was the same." 160 S.E.2d at 605.4 Zurich had defended the

insured and paid the judgment when the other carrier refused. Id.

at 604. Ultimately vindicated as the excess carrier, the Georgia

Court of Appeals held that Zurich had a duty to defend its insured

even though it was excess when the primary refused, but that it had

a right to recover from the primary insurer "in the same manner

that its insured would have had." Id. at 606. A later case in

Georgia cites Zurich Insurance for the uncontroversial position

that an excess insurer "ha[s] a duty to defend the claims against

its insured after the primary insurer denied coverage and refused

to defend." Motors Ins. Co. v. Auto-Owners Ins. Co., 555 S.E.2d

37, 39 (Ga. Ct. App. 2001).

In Liberty Mutual, the New Hampshire Supreme Court held

that two insurers provided primary coverage for an accident to

varying limits. 351 A.2d at 895. On a motion for rehearing, the

court clarified: "As both policies afford primary coverage, Liberty

Mutual and Home Insurance have a joint obligation to defend [the

insured] and to share equally the costs of defense." Id. The case

has no bearing on the respective duties to defend when one insurer

is primary and the other excess.

4
Other Georgia cases that held that, "whether an insurer is
'a primary or excess carrier, its obligation to defend is the same
under the contract,'" are limited to "cases involv[ing] policies
with excess clauses or coverage and defense agreements which are
not expressly made excess." Cont'l Cas. Co. v. Synalloy Corp., 667
F. Supp. 1523, 1540 n.9 (S.D. Ga. 1983) (citations omitted).

-23-
 The district court's reading of the statement in

Universal Underwriters draws the most support from the second

edition of Couch's treatise, published in 1982. The cited

provision of the treatise explained:

The duty to defend is absolute, even if the
policy turns out to be excess insurance. For
example, where a truck driver's car insurer
and truck owner's insurer both covered the
accident and each policy contained the defense
provision, each had the duty to defend the
driver against [the] injured party's claim,
even if the car insurer's coverage was excess.

14 Couch on Insurance § 51:148 (2d ed. 1982) (collecting cases,

including Zurich Insurance). In Hawaii, for example, "[when] both

primary and excess insurer[s] shared a duty to defend the action,

each insurer was responsible for half of the costs and expenses of

defending regardless of the pro rata division of principal

liability." Id. (citing Indus. Indem. Co. v. Aetna Cas. & Sur.

Co., 465 F.2d 934 (9th Cir. 1972)). Elsewhere in the treatise,

however, the general rule is stated as follows: "[w]here the

insured maintains both primary and excess policies, . . . an excess

liability insurer is not obligated to participate in the defense

until the primary policy limits are exhausted." Id. § 51:36.

The modern version of Couch's treatise on insurance law

reaffirms that, "[a]s a general rule, a true-excess insurer is not

obligated to defend its insured until all primary insurance is

exhausted or the primary insurer has tendered its policy limits."

14 Couch on Insurance § 200:38 (3d ed. 2014). "However," the

-24-
treatise continues, "a minority of jurisdictions have held an

excess carrier's duty to defend may be triggered if there is a

possibility that excess coverage may be reached." Id. The

treatise cites Universal Underwriters for the proposition that

"[o]nce an excess carrier's obligation to defend arises, the duty

to defend is the same as the duty of a primary insurer." Id. This

reading of Universal Underwriters is plausible if we assume that

the low threshold of $25,000 triggered both carriers' duty to

defend and the New Hampshire Supreme Court then required them to

split defense costs equally. It is still unclear how this rule, if

New Hampshire has adopted this minority position, would apply to

the facts of our case when the primary carrier had a coverage limit

of $1,000,000 and the complaint does not estimate the damages

sought.

The New Hampshire Supreme Court has not provided clarity

on its holding in Universal Underwriters regarding an excess

insurer's duty to defend since that opinion was issued.5 When

5
The subsequent citations to Universal Underwriters by the
New Hampshire Supreme Court have not focused on this part of the
holding. See Peerless Ins. v. Vt. Mut. Ins. Co., 849 A.2d 100, 103
(N.H. 2004) (requiring two insurers to share defense costs equally
after finding both excess provisions mutually repugnant);
Progressive N. Ins. Co. v. Enter. Rent-A-Car Co. of Bos., Inc., 821
A.2d 991, 993-94 (N.H. 2003) (characterizing the decision as
"interpret[ing] [] conflicting provisions in the parties' insurance
policies"); Allstate Ins. Co. v. Armstrong, 738 A.2d 1280, 1282
(N.H. 1999) (quoting language concerning parties' attempts to limit
the coverage required by New Hampshire's Financial Responsibility
Law); Calabraro v. Metro. Prop. & Cas. Ins. Co., 702 A.2d 310, 313
(N.H. 1997) (characterizing the decision as one which "discuss[ed]

-25-
denying Stratford's motion to alter or amend its decision, the

district court stated that, "if presented with the precise facts of

this case, the New Hampshire Supreme Court might be inclined to

revisit Universal Underwriters, and reassess that opinion's

reliance upon Zurich Insurance . . . ." The district court felt

"obligated" to stand by its prior ruling "given the law as

currently enunciated by the New Hampshire Supreme Court." On

appeal, Stratford invites certification to the New Hampshire

Supreme Court, which Old Republic does not oppose.

We are permitted to certify questions of law to the New

Hampshire Supreme Court when questions of New Hampshire law are

determinative of the case, and there is no controlling precedent

from the New Hampshire Supreme Court. N.H. Sup. Ct. R. 34. In

Progressive, the New Hampshire Supreme Court explicitly stated that

it had never addressed the issue that we now find before us and

that it could not say that the state law on the issue is settled.

See 20 A.3d at 983. We conclude that certification is the

appropriate route in this case given the important, and unsettled,

question of New Hampshire law.

We certify the following questions to the New Hampshire

Supreme Court:

two policies that contained conflicting excess coverage
provisions").

-26-
 1) Under New Hampshire law, when is an excess
insurer's duty to defend triggered? Does New
Hampshire follow the general rule that the
excess insurer's duty to defend is triggered
only when the primary insurer's coverage is
exhausted? If not, what rule as to allocation
of defense costs and timing of payment does
New Hampshire follow?

V. Conclusion

We conclude that DAM and Stratford never intended

Stratford to provide co-primary coverage to the tractor-trailer

involved in the automobile accident. This leaves Old Republic as

the primary insurer, and Stratford as the excess insurer. We

certify to the New Hampshire Supreme Court the attendant question

of Stratford's duty to defend under New Hampshire law in light of

Universal Underwriters.

The clerk of this court is instructed to transmit to the

New Hampshire Supreme Court, under the official seal of this court,

a copy of the certified questions and our opinion in this case,

along with copies of the parties' briefs, appendix, and

supplemental filings under Rule 28(j) of the Federal Rules of

Appellate Procedure. We retain jurisdiction over this appeal.

So ordered.

- Concurring Opinion Follows -

-27-
 BARRON, Circuit Judge, concurring in part and concurring

in the judgment. I fully join the decision to certify the duty-to-

defend question to the New Hampshire Supreme Court. I do not

agree, however, that the Stratford policy, as originally issued,

provided no coverage for the Ryder tractor. In my view, the

original policy did provide such coverage, but the retroactive

endorsement then made such coverage excess instead of primary. And

thus I end up where the majority does, but by a different route.

As the majority notes, Stratford's Senior Litigation

Specialist, on reviewing the language of Stratford's policy,

concluded "there was an exposure out there that wasn't intended to

be covered by the policy." Maj. Op. at 14. But Stratford's

response was not to argue the parties' intent trumped the policy's

text nor to suggest the text was less than clear. Instead,

Stratford reached an agreement with its insured to change the

policy's text via a retroactive endorsement that expressly limited

that otherwise concerning exposure.

Thus, it is not surprising that in the District Court,

even Stratford -- following its Senior Litigation Specialist's lead

-- did not dispute that the original policy covered the Ryder

tractor. Of course, now that the District Court has bypassed the

parties' arguments about how best to deal with the exposure and, of

its own accord, ruled such exposure never existed, Stratford

-28-
agrees. But I believe Stratford had it right the first time. It

did provide such coverage, even if it did so due to poor drafting.

No matter, though. Stratford worked out a deal. That

deal limited the exposure by making coverage of tractors hired from

Ryder excess rather than primary. And thus, the parties to the

Stratford policy reached a sensible and practicable result. I

think we should bless it rather than read the policy in a way that,

I worry, may suggest to some that insureds should have less

confidence in the text of their policies than I read precedent to

show they should.

I.

The majority accepts, as it must, that the most directly

pertinent portion of the policy -- the definition of "hired 'auto'"

-- indisputably includes the Ryder tractors. Maj. Op. at 13-14.

That definition includes any "land motor vehicle, 'trailer,' or

semitrailer designed for travel on public roads" that DAM

"lease[s], hire[s], rent[s], or borrow[s]" from third parties. And

the policy then states that it broadly covers "all sums an

'insured' legally must pay as damages because of 'bodily injury' or

'property damage' to which this insurance applies, caused by an

'accident' and resulting from the ownership, maintenance or use of

a covered 'auto'" -- including, for this policy, a "hired 'auto.'"

The language could not be clearer.

-29-
 Nonetheless, I can understand the temptation to look

beyond the policy's plain text. It does seem, from what the law

calls extrinsic evidence (which is to say, evidence not found

within the language of the policy itself), that neither party

thought, at the time of drafting, about the kind of tractor at

issue in this case. Stratford apparently did not know about this

part of the insured's business, and the insured apparently did not

think Stratford was the source of coverage for these tractors.

But the majority acknowledges -- as it must -- that

extrinsic evidence becomes relevant to limit exposure only if the

text is actually ambiguous. White v. Vt. Mut. Ins. Co., -- A.3d --

, 2014 WL 6533298, at *3 (N.H. 2014) ("[A]bsent ambiguity, our

search for the parties' intent is limited to the words of the

policy." (quoting Bates v. Phoenix Mut. Fire Ins. Co., 943 A.2d

750, 753 (N.H. 2008))). And that rule reflects the fact that while

the intent of the parties controls, that intent is found first and

foremost in the words of the policy -- words that, when clear, are

determinative. See id. I do not read the majority's key case,

Tech-Built, to say otherwise. See Tech-Built 153, Inc. v. Va. Sur.

Co., 898 A.2d 1007 (N.H. 2006). There, the court first found the

text of the policy at issue ambiguous and only then turned to

extrinsic evidence to limit the reach of the coverage. Id. at

1009-10.

-30-
 Nor does Tech-Built, as I read it, support finding

ambiguity here. In that case, Tech-Built, a construction company,

was a client of an employee leasing company called Surge. Id. at

1008. Tech-Built claimed the insurance policy that covered Surge

actually also covered Surge's clients. Id. at 1009. Tech-Built

based that surprising contention on the following policy language:

Surge's policy listed the "insured" as Surge "etal [sic]." Id.

(alteration in original). The policy then listed both Surge's

address and its "other workplaces," which Surge described by

listing the various companies (Tech-Built included among them) to

which it had leased employees. Id. From this thin textual basis

-- an "interplay," the court charitably called it -- Tech-Built

claimed Surge's carrier had plainly agreed to supply insurance

coverage to 150 or so of Surge's clients, id., a most implausible

claim. The New Hampshire Supreme Court had no trouble rejecting

it. It simply noted that "[o]ther language" in the policy would be

rendered "nonsensical" if Tech-Built's interpretation was right.

Id. at 1009-10.

That case is thus very far from this one. The definition

of "hired 'auto,'" unlike the definition of "insured" in Tech-

Built, is crystal clear. And while the majority is quite right

that the policy text must be considered as a whole, giving this

"hired 'auto'" language its plain meaning does not make nonsense of

other parts of the policy. In fact, a plain reading of "hired

-31-
'autos'" does not even lead to an "internally inconsistent policy."

Maj. Op. at 11 (citing Tech-Built, 898 A.2d at 1010). A review of

the three other aspects of the policy the majority relies on in

finding ambiguity reveals why.

First, the majority notes the policy describes DAM's

business as consisting of the delivery of office supplies and

appliances, and makes no reference to any business involving the

transport of "palletized freight." Maj. Op. at 15. If the

majority's point is that the description of DAM's business is not

consistent with a policy term that plainly covers leased tractors,

I cannot agree. After all, such tractors could readily be used to

deliver office supplies and appliances.

More fundamentally, Stratford's policy does not contain

explicit language tying coverage to the description of DAM's

business. And the general rule (which, so far as I can tell, New

Hampshire does not reject) is that "business descriptions" do not

limit coverage to the precise type of business described. See,

e.g., Mount Vernon Fire Ins. Co. v. Belize NY, Inc., 277 F.3d 232,

239 (2d Cir. 2002) (rejecting the argument that a policy's

description of the insured's business as "Carpentry" served to

limit the coverage "to carpentry operations," because "[t]he Policy

simply fails to provide that the classifications define the covered

risks"); GRE Ins. Grp. v. Metro. Bos. Hous. P'ship, 61 F.3d 79, 82

(1st Cir. 1995) (rejecting the argument that a "business

-32-
description" of "office" meant "only liability arising from [the

insured]'s office operations was covered" because while the fact

that the type of business was "office" rather than "skating rink"

was "obviously relevant to coverage," the description "d[id] not

show a clear understanding to restrict coverage to liability

arising out of [insured]'s office only").

That rule makes sense. An insurer may require the

description to inform the premium the insurer sets. But if the

insurer wants to strictly limit coverage to activities within that

description, it should explicitly say so. Mount Vernon Fire Ins.,

277 F.3d at 239; see also, e.g., Wickramasekra v. Associated Int'l

Ins. Co., 890 So.2d 569, 574 (La. Ct. App. 2003) (construing a

policy with an endorsement that explicitly restricted coverage to

the type of business shown on the declaration); Sun Indem. Co. v.

Lovell, 6 Conn. Supp. 337 (Conn. C.P. 1938) (same).

Second, the majority notes the policy covers

"specifically described 'autos'" and that the two "specifically

described 'autos'" listed in the policy are smaller vans and not

Ryder tractors. Maj. Op. at 15. But the policy provided coverage

for two separate categories of "autos": "hired 'autos'" that, by

terms, DAM does not own, and "specifically described 'autos'" that,

by terms, must be described on a separate schedule. That schedule

in turn refers to the listed vehicles as "covered autos you own."

The leased Ryder tractors, therefore, were not listed as

-33-
"specifically described 'autos'" for the simple reason that DAM did

not own them. As vehicles DAM only leased, these tractors would be

covered as "hired 'autos.'" If the majority's point is that an

objective reader would have to assume that the rented vehicles

necessarily would be similar in type to the owned vehicles

specially listed on the schedule, I do not see why. Companies

might rent vehicles of a different type precisely because the ones

they own are not adequate to every task.

Finally, the majority notes the policy lists an

"estimated cost of hire" for all hired autos at $5,000 per year.

Maj. Op. at 15. That number is small. It does seem fit for a

modest business using vans rather than for a large one using

tractors. But the text of the policy contemplates insureds may

lowball their estimates -- presumably to reduce their premiums.

That is why -- as the majority acknowledges, Maj. Op. at 15 -- the

policy expressly provides that estimates supplied by the insured on

this portion of the policy are not binding. In fact, the policy

further provides that Stratford may audit the insured's actual

hired-auto expenditures and retroactively increase the premium

should the estimate prove too low. In other words, even though no

intentional low-balling occurred here, Stratford's policy made

clear that an insured's low estimate is not binding in the

insured's favor. I thus do not believe we should rely on the

-34-
estimate to create an ambiguity in what is otherwise clear and

plainly binding policy language -- the "hired 'auto'" definition.

For these reasons, I would hold the policy language is

clear. That being the case, it seems to me that New Hampshire law

requires us to give effect to the plain meaning of the "hired

'autos'" definition. White, 2014 WL 6533298, at *3; Bates, 943

A.2d at 753. And thus we may not limit the coverage by looking

about for outside evidence of the parties' understandings (here,

the contract between DAM and Ryder). But that does not mean

Stratford is without recourse, as I will now explain.

II.

Faced with an exposure it wished to limit, Stratford

reached out to DAM to provide excess coverage, rather than primary

coverage, for the leased Ryder tractors. I would give the deal

Stratford and DAM struck full effect.

True, as Old Republic points out, a party's affirmation

of a preexisting duty is not generally adequate consideration for

a new contract. Melotte v. Tucci, 66 N.E.2d 357, 358 (Mass. 1946).

But relinquishing a contestable claim is. Pitkin v. Noyes, 48 N.H.

294, 304 (1869); see also Mathewson Corp. v. Allied Marine Indus.,

Inc., 827 F.2d 850, 856 (1st Cir. 1987) (Massachusetts law). I

conclude Stratford's pre-existing duty to provide coverage was

clear. But I do not believe a contrary claim would be frivolous.

And, of course, neither would the majority. Thus, Stratford gave

-35-
up something real. It foreclosed its right to argue it could deny

coverage altogether. See Chisholm v. Ultima Nashua Indus. Corp.,

834 A.2d 221, 225 (N.H. 2003) ("Consideration is present if there

is either a benefit to the promisor or a detriment to the

promisee."); see also Pitkin, 48 N.H. at 304 ("[C]ompromise of

doubtful claims" is consideration unless the claims are "utterly

without foundation and known to be so"); Mathewson Corp., 827 F.2d

at 856 (finding consideration if the surrendered claim is not

"'vexatious or frivolous'" (quoting Blount v. Dillaway, 85 N.E.

477, 479 (Mass. 1908)).

Old Republic also argues the endorsement prejudiced Old

Republic without Old Republic's consent. But no term in the

Stratford policy protected Old Republic from such modification.

See Restatement (Second) of Contracts § 311(2) (absent a term in

the contract forbidding modification of a duty to a third party

"the promisor and promisee retain power to discharge or modify the

duty by subsequent agreement"); see also Brooks v. Trs. of

Dartmouth Coll., 20 A.3d 890, 900 (N.H. 2011) (following the Second

Restatement's description of third-party beneficiary rules --

though not mentioning this particular one -- as a matter of New

Hampshire law).

Nor does New Hampshire law make Old Republic a vested

third-party beneficiary entitled to such protection in the absence

of such a policy term. The original Stratford policy did not

-36-
"satisfy some obligation owed by the promisee [DAM] to the third

party [Old Republic]," nor was that policy "so expressed as to give

the promisor [Stratford] reason to know that a benefit to a third

party [Old Republic] is contemplated by the promisee [DAM] as one

of the motivating causes of his making the contract." Brooks, 20

A.3d at 900. In fact, Stratford did not have reason to know about

the Old Republic policy, much less to know DAM contemplated Old

Republic would benefit from the Stratford policy.

That leaves only Old Republic's argument that the

endorsement violates a public policy against "post-claim

underwriting." The out-of-New Hampshire cases on which Old

Republic exclusively relies (from Louisiana and Mississippi,

respectively) are readily distinguished. They involved retroactive

policy alterations that limited the coverage for an injured party

(in two instances, for an injured party who was also a party to the

policy). See Mattox v. W. Fid. Ins. Co., 694 F. Supp. 210, 216

(N.D. Miss. 1988); Washington v. Savoie, 634 So. 2d 1176, 1180 (La.

1994); Lewis v. Equity Nat'l Life Ins. Co., 637 So. 2d 183, 188-89

(Miss. 1994). And those alterations were made without the insurer

first obtaining the injured party's consent. See Mattox, 694 F.

Supp. at 216; Washington, 634 So. 2d at 1180; Lewis, 637 So. 2d at

188-89.

Nothing like that happened in this case. Here, the

insured consented to the change at the time it was made. And,

-37-
further, the party injured by the insured will not suffer any

reduction in total coverage in consequence of the change. Thus,

the only party "harmed" by this change is an insurer, Old Republic,

who is not a party to the policy changed and whose harm is hard to

divine. Old Republic simply must provide coverage it thought it

was on the hook for all along -- coverage Old Republic also must

provide under the majority's approach.

III.

An insured should be able to rely on what the policy

says. New Hampshire agrees. Like other states, it provides that

even ambiguous policies "will be construed against the insurer,"

Catholic Med. Ctr. v. Exec. Risk Indemn., Inc., 867 A.2d 453, 456

(N.H. 2005), at least absent sufficient extrinsic evidence to show

the parties intended otherwise. All the more reason, therefore, to

be wary of resorting to extrinsic evidence too easily and then

relying on it to defeat coverage for the insured. As this case and

others I refer to show, the non-binding aspects of a policy may not

reflect the full extent of the coverage contained in a policy's

binding passages. But it is those binding passages that should

control when clear. And as I find them clear here, I also find

them controlling.

-38-