United States Court of Appeals,
Fifth Circuit.
No. 95-20544.
ST. PAUL MERCURY INSURANCE COMPANY; Centennial Insurance
Company, Plaintiffs-Appellant Cross-Appellees,
v.
LEXINGTON INSURANCE COMPANY; Landmark Insurance Company,
Defendants-Appellee Cross-Appellants.
March 27, 1996.
Appeal from the United States District Court for the Southern
District of Texas.
Before KING, WIENER and BENAVIDES, Circuit Judges.
WIENER, Circuit Judge:
The primary issue presented by this appeal is the effect of
conflicting "other insurance" clauses on the obligations of primary
and excess insurance carriers to contribute to a settlement entered
into by the insured. Applying Texas law, the district court
prorated liability first among the primary carriers, and then among
the excess carriers, in proportion to the amount of insurance
provided by the insurers' respective policies. In the final
analysis, proration as to the primary carriers was immaterial
because they had to pay their full policy limits; however, the
excess carriers were required to contribute pro rata to satisfy the
remaining settlement amount. Agreeing with the district court's
interpretation and application of Texas law, we affirm.
I.
FACTS AND PROCEEDINGS
In March of 1992, Blake Foret was severely injured in the
1
course and scope of his employment for the Campbell Wells
Corporation, a wholly owned subsidiary of Sanifill, Inc.
(collectively, Sanifill). While unloading nonhazardous oil field
waste from a barge that was docked at Bateman Island, near Morgan
City, Louisiana, Foret was pinned between the counter-weight of an
excavator and the side of the barge. As a result, Foret suffered
a fractured dislocation of the pelvis, a ruptured bladder and
urethra, and a perineal and rectal tear.
In July of 1992, in an effort to recover damages arising from
the accident, Foret and his wife filed suit in Texas state court
against Sanifill. It was covered by insurance policies from four
insurers: Centennial Insurance Company (Centennial)1, which issued
a primary hull and protection and indemnity policy with a limit of
$500,000; Centennial's excess carrier, St. Paul Mercury Insurance
Company (St. Paul), which provided an excess protection and
indemnity policy with a $4,500,000 limit per occurrence; Landmark
Insurance Company (Landmark), which issued a primary workers'
compensation and employers' liability policy with a $1,000,000
limit per occurrence; and Landmark's excess carrier, Lexington
Insurance Company (Lexington), which provided an excess policy with
a $5,000,000 limit per occurrence. Centennial assumed the defense
of Sanifill in the Foret suit; and St. Paul provided associate
counsel. Both Landmark and Lexington were given notice of the
1
As Centennial Insurance Company is a member of the Atlantic
Mutual Companies, some of the parties use the designation "Atlantic
Mutual" for this insurer. Nevertheless, throughout this opinion we
refer to this party as Centennial.
2
suit; and both participated in the settlement negotiations between
Sanifill and the Forets.
In December of 1993, the Foret suit settled for $4.8 million.
Sanifill's four insurers contributed to the Foret settlement as
follows: Centennial paid its policy limit, $426,352.55 in
settlement fees and $73,647.45 in attorneys fees; St. Paul
contributed $1,773,647.50; Landmark paid its policy limits of
$1,000,000; and Lexington contributed $1,600,000. Each of the
insurers reserved the right to seek a judicial determination of its
contribution obligation to the settlement.
On December 27, 1993, Lexington filed a diversity action
against St. Paul in federal district court, seeking a declaratory
judgment of the parties' respective contribution obligations to the
Foret settlement. In April of 1994, Lexington added Centennial as
a party and brought an additional claim in which it alleged
negligent handling of the Foret suit by Centennial and St. Paul.
Shortly thereafter, Landmark was joined in the action. St. Paul
and Centennial, seeking reimbursement for their contributions to
the Foret settlement, asserted counterclaims against Lexington and
Landmark. The parties were eventually realigned, with St. Paul and
Centennial proceeding as plaintiffs, and Landmark and Lexington
proceeding as defendants.
After each of the four parties moved for summary judgment, the
magistrate judge issued a memorandum recommending that summary
judgment of dismissal be granted in favor of St. Paul and
Centennial on the negligence claim brought by Landmark and
3
Lexington. With respect to the issue of the parties' respective
obligations to contribute to the Foret settlement, the magistrate
judge recommended a grant of summary judgment declaring that (1)
Sanifill's primary carriers, Landmark and Centennial, were
obligated to contribute the entirety of their policy limits to the
settlement of the Foret suit, with the attorneys fees and costs
incurred by Centennial in the defense of the suit deducted from the
amount owed by Centennial; and (2) Sanifill's excess carriers, St.
Paul and Lexington, were obligated to contribute the difference
(i.e. the amount still owing to the Forets after full payment by
Landmark and Centennial) prorated on the basis of the amount of
coverage provided in the excess insurers' respective policies.
In June of 1995, the district court issued a final judgment
which incorporated the magistrate judge's memorandum as the opinion
of the court. The district court also issued an order adopting the
magistrate judge's recommendations with one minor modification
involving the obligations of Centennial and Landmark regarding the
costs incurred in the defense of the Foret suit. Each of the
parties timely appealed to this court.
II.
ANALYSIS
A. STANDARD OF REVIEW
When reviewing a grant of summary judgment, we view the facts
and inferences in the light most favorable to the non-moving
4
party2; and we apply the same standards as those governing the
trial court in its determination.3 Summary judgment must be
granted if a court determines "that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law."4
B. CHOICE OF LAW
The first argument presented by St. Paul and Centennial is
that the district court erred in applying Texas law rather than
Louisiana law. A federal court must follow the choice-of-law rules
of the state in which it sits.5 Under Texas choice-of-law rules,
disputes are governed by the law of the state with "the most
significant relationship to the particular substantive issue."6
As both Louisiana and Texas have some connection to this
appeal, we must examine the nature of both states' contacts. On
the one hand, Louisiana is connected almost exclusively to the
underlying Foret suit: Campbell-Wells is a Louisiana corporation;
the Forets are Louisiana citizens; and Foret was injured in
2
See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256,
266 (5th Cir.1995).
3
See Neff v. Am. Dairy Queen Corp., 58 F.3d 1063, 1065 (5th
Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 704, 133 L.Ed.2d
660 (1996).
4
FED.R.CIV.P. 56(c).
5
See Atlantic Mut. Ins. Co. v. Truck Ins. Exch., 797 F.2d
1288, 1291 (5th Cir.1986) (citing Stuart v. Spademan, 772 F.2d
1185, 1193 (5th Cir.1985)).
6
See id. (internal quotations omitted); see also W.R. Grace
& Co. v. Continental Casualty Co., 896 F.2d 865, 873 (5th
Cir.1990).
5
Louisiana. By contrast, Texas has more significant ties to the
insurance dispute that is the direct subject of this appeal: Three
of the four insurance policies involved in the case—the Lexington
policy, the Centennial policy, and the St. Paul policy—were issued
and delivered to Sanifill in Texas. Sanifill operates a place of
business in Texas; and the dispute regarding the priority of
coverage arose in Texas state court during the defense of the Foret
suit there. We have held that when the issues of a case require
the construction and application of insurance policies, as they do
in the instant case, the relevant inquiry is what contacts the
state has with the insurance dispute, and not with an underlying
lawsuit.7 Accordingly, we reject the argument that the district
court should have applied Louisiana law to the issues presented by
this appeal.8
C. PRIORITY OF COVERAGE
With the choice of law question behind us, we turn to the
issue of the parties' respective obligations to the Foret
settlement. Each of the four insurers asserts arguments to
establish that it is entitled to full reimbursement of the sums
that it has contributed to the settlement.
7
See W.R. Grace, 896 F.2d at 873; Atlantic Mut. Ins. Co., 797
F.2d at 1291-92.
8
As an alternate ground for its decision to apply Texas law,
the district court held that "[e]ven if Texas did not have the most
significant relationship to the parties and issues in this case,
the Texas Insurance code compels the application of Texas law in
instances such as this." As we affirm the district court's
conclusion that Texas has the most significant connection to the
case, we need not address the court's interpretation of the Texas
Insurance Code.
6
1. The "Other Insurance" Clauses
In evaluating the validity of the parties' attempts to avoid
contribution to the settlement, we must first examine the terms of
each of the policies. Of particular importance are the policies'
"other insurance" clauses. "Other insurance" clauses are generally
designed by insurers to "avoid an insured's temptation or fraud of
over-insuring ... property or inflicting self-injury."9 Such
clauses typically fall into three categories: (1) pro rata
clauses, which restrict the liability of concurring insurers to an
apportionment basis; (2) excess clauses, which restrict the
liability of an insurer to excess coverage after another insurer
has paid up to its policy limits; and (3) escape clauses, which
avoid all liability in the event of other insurance.10 When only
one of the concurrent policies covering a matter contains an "other
insurance" clause, it is given effect without complication.
However, "[p]roblems arise when more than one policy covers the
same insured and each policy has an "other insurance' clause which
restricts its liability by reason of the existence of other
coverage."11
Three independent "other insurance" clauses are found in the
policies that were issued to Sanifill. First, Centennial's policy
contains an escape clause which provides that "where the Assured
9
Hardware Dealers Mut. Fire Ins. Co. v. Farmers Ins. Exch.,
444 S.W.2d 583, 586 (Tex.1969).
10
Id.
11
Id.
7
is, irrespective of this insurance, covered or protected against
any loss or claim which would otherwise have been paid by the
Assurer, under this policy, there shall be no contribution by the
Assurer on the basis of double insurance or otherwise."
Additionally, St. Paul's policy incorporates Centennial's escape
clause. Even though St. Paul's policy does not independently
contain an "other insurance" clause, the policy includes a
"following form" provision, which states that the policy is to
"[f]ollo[w] [the] terms and conditions of [Centennial's] insurance,
including named assureds, special additional assureds, loss payees,
and waivers of subrogation." Accordingly, the district court
correctly concluded that "all the provisions in the Centennial
policy which are not in direct conflict with a provision in the St.
Paul policy, including the escape type "other insurance' clause,
are to be considered part and parcel of the St. Paul policy." The
district court based this conclusion on the language of the
agreement and the summary judgment evidence regarding the intent of
the parties with respect to this issue.
Lexington argues that the doctrine of expressio unius est
exclusio alterius compels the conclusion that St. Paul's policy
does not incorporate Centennial's escape clause. Under that
doctrine, the enumeration of one or more of the elements of a class
" "implies [the] exclusion of all not expressed, even though all
would have been implied had none been expressed.' "12 Accordingly,
12
See Allied Chem. Corp. v. Am. Indep. Oil Co., 623 S.W.2d 760,
763 (Tex.App.1981, writ ref'd n.r.e.).
8
Lexington argues that by including a list of Centennial's terms and
provisions to be incorporated by reference into St. Paul's policy,
St. Paul is presumed to have excluded any unlisted terms and
provisions, such as the escape clause.
We decline Lexington's invitation to overrule the district
court's conclusion on this issue. First of all, we are not
convinced that the rule of expressio unius est exclusio aterius
applies in the instant case, as the challenged list of provisions
in St. Paul's contract is prefaced by the word "including," which
is generally given an expansive reading, even without the
additional if not redundant language of "without limitation."13
Moreover, assuming arguendo that Lexington has properly invoked the
rule of expressio unius est exclusio alterius, the Texas courts
have held that "a rule of construction in law does not overrule or
supersede the intention of the parties to the contract."14 The
application of the rule in this case is accordingly inappropriate
in any event, as it would produce a result that contravenes the
intention of the parties with respect to St. Paul's policy. We
therefore affirm the district court's holding that St. Paul's
13
Cf. Maley v. 7111 Southwest Freeway, Inc., 843 S.W.2d 229,
231 (Tex.App.1992, writ denied) (referring to "including" and
"etc." as words which "open the door" for courts to expand a list).
14
See id. (refusing to apply the rule of expressio unius est
exclusio alterius in the face of contrary evidence with respect to
the parties' intentions); see also Jochec v. Clayburne, 863 S.W.2d
516, (Tex.App.1993, writ denied) (recognizing that general rules of
construction "[are] necessarily arbitrary and should be used only
as a "tie-breaker' where more direct evidence does not resolve the
ambiguity").
9
policy incorporates Centennial's escape clause.
The second "other insurance" clause that is of significance to
this appeal is a pro rata clause found in the policy issued by
Landmark. The pro rata clause states that Landmark "will not pay
more than [its] share of damages and costs covered by this
insurance and other insurance or self-insurance. Subject to any
limits of liability that apply, all shares will be equal until the
loss is paid." Lexington's policy also contains an excess clause
which stipulates that "[i]f other valid and collectible insurance
with any other insurer is available to the Insured covering a loss
also covered hereunder, this insurance shall be excess of, and
shall not contribute with such other insurance."
2. Alleged Waiver of Right to Rely on "Other Insurance" Clauses
a. Direct Application of Reservation of Rights Rule
Landmark and Lexington contend that St. Paul and Centennial
have waived the right to rely on the escape clauses in their
policies because they assumed Sanifill's defense in the Foret suit
without obtaining a reservation of rights, even though they had at
least constructive knowledge that Landmark and Lexington had issued
policies to Sanifill which might trigger the escape clauses.15 For
15
It is unclear whether Landmark and Lexington take the
position that St. Paul and Centennial should have issued a
reservation of rights letter regarding the "other insurance" clause
issue to Sanifill, or to Landmark and Lexington, or to all three
parties. As support for their argument, Landmark and Lexington
point out that (1) Centennial never sent a reservation of rights
letter to Sanifill; (2) Centennial waited until shortly before
settlement negotiations began in the Foret suit to demand the
participation of Landmark and Lexington; and (3) St. Paul sent an
"eleventh hour" reservation of rights letter to Sanifill that did
not discuss the "other insurance" clauses. Our analysis remains
10
this argument, Landmark and Lexington rely on cases which hold that
an insurer must reserve its rights vis à vis its insured: "[I]f an
insurer assumes the insured's defense without declaring a
reservation of rights, or obtaining a non-waiver agreement, and
with knowledge of facts indicating noncoverage, all policy
defenses, including those of noncoverage, are waived, or the
insurer may be estopped from raising them."16
Landmark and Lexington cite no authority for the proposition
that an insurer must reserve its rights vis à vis another insurer
when it assumes the defense of an insured. The distinction between
the company's own insured and another insurer is significant, as
the waiver principle invoked by Landmark and Lexington constitutes
a narrow exception to a general rule that "the doctrines of waiver
and estoppel cannot be used to create insurance coverage where none
exists under the terms of the policy,"17 Moreover, this exception
is specifically intended to protect an insured for reasons that
simply do not apply to other insurers:
At least one of the reasons for the rule appears to be the
existence of a conflict of interests, either actual or
potential, between the insured and the insurer in connection
the same, whether we characterize the argument as a challenge to
the failure deliver a reservation of rights to the insured or as a
challenge to the failure to deliver a reservation of rights to
other insurers.
16
See, e.g. Pitts, by and through Pitts v. Am. Surety Life Ins.
Co., 931 F.2d 351 (5th Cir.1991); Ideal Mut. Ins. Co. v. Myers,
789 F.2d 1196 (5th Cir.1986); Pacific Indem. Co. v. Acel Delivery
Serv., Inc., 485 F.2d 1169 (5th Cir.1973), cert. denied, 415 U.S.
921, 94 S.Ct. 1422, 39 L.Ed.2d 476 (1974); State Farm Lloyds, Inc.
v. Williams, 791 S.W.2d 542, (Tex.App.1990, writ denied).
17
See State Farm Lloyds, 791 S.W.2d 542.
11
with the conduct of the defense of the insured. For example,
a conflict of interests might arise when the insurer
represents the insured in a lawsuit and simultaneously
formulates its defense of noncoverage against the insured. A
number of cases indicate or suggest that the rule is also
justified by the fact that the insured is deprived of the
right to completely control his defense; some of these cases
further suggest that this situation is inherently prejudicial
to the insured in the absence of a reservation of rights.18
In sum, the waiver rule invoked by Landmark and Lexington is simply
not intended to be applied to the relationship among insurers.
Accordingly, like the district court, we reject the argument that
St. Paul and Centennial waived the right to rely on their "other
insurance" clauses by failing to reserve the right to avoid
coverage on the basis of those clauses.
b. Waiver Through Equitable Subrogation and the Negligence Claim
Landmark and Lexington also attempt to raise their waiver
argument through the theory of equitable subrogation. Under this
theory, "[an] insurer paying a loss under a policy becomes
equitably subrogated to any cause of action the insured may have
against a third party responsible for the loss. The excess insurer
would thus be able to maintain any action that the insured may have
against the primary carrier for mishandling the claim."19 As the
excess carrier "stands in the shoes" of the insured vis à vis the
primary carrier, the excess carrier is subject to any policy
defense assertible by the primary carrier against the insured20;
18
See id. at 551.
19
Am. Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480,
482 (Tex.1992).
20
See Am. Centennial, 843 S.W.2d at 483.
12
and in turn, according to Landmark and Lexington, "[i]t is
axiomatic that if the excess carrier is burdened by policy defenses
assertible against the insured, the excess carrier must also be
allowed to reap the benefit of any waiver arguments that the
insured would have against the primary carrier." More
specifically, Landmark and Lexington argue that (1) Sanifill has a
cause of action against Centennial and St. Paul for negligence in
the handling of its defense; (2) as excess insurers, Landmark and
Lexington can assert this cause of action for Sanifill against
Centennial and St. Paul; and (3) in the context of this negligence
action, Landmark and Lexington can assert any waiver argument that
Sanifill would have been able to raise against Centennial and St.
Paul.
This equitable subrogation argument fails from the start if
Landmark and Lexington are unable to establish that Sanifill would
have a cause of action against Centennial and St. Paul for
negligence.21 In determining whether Sanifill would have a
21
See Employers Nat'l Ins. Co. v. Gen. Accident Ins. Co., 857
F.Supp. 549, 552 (S.D.Tex.1994) (holding that before an excess
carrier can recover under a theory of equitable subrogation, "the
excess carrier has to prove that the primary carrier was negligent
in fulfilling its duties to the insured under the primary policy's
terms").
It is also significant that Centennial and St. Paul
reached a settlement whose value fell within the combined
limits of their policies, as the purpose behind the doctrine
of equitable subrogation is to create an incentive for
insurers defending a case to work to settle a case within the
limits of their policies, even when it is reasonably clear
that their policies will be consumed:
[I]f an insurer with a policy limit of $1,000,000
believes that there is only a five percent chance that it
13
negligence claim, we examine whether Landmark and Lexington have
presented any evidence establishing that (1) the estimate made by
Centennial and St. Paul regarding the insurers' potential liability
in the Foret suit was unreasonable, or (2) Landmark and Lexington
failed to perform in good faith.22
Landmark and Lexington have produced no evidence establishing
that the settlement reached in the Foret suit was unreasonable,
particularly in light of the gruesome nature of the injuries
sustained by Foret. According to uncontroverted testimony
submitted in the summary judgment proceedings, Foret was "lacerated
from his scrotum to his rectum. He was basically just ripped open.
His pelvis was completely crushed.... He lost bladder control,
became impotent, had to wear a colostomy bag, [and] had to walk
with a cane.... It was just a horrible injury." Moreover, even
though Landmark and Lexington are dissatisfied with a number of
actions taken by Centennial and St. Paul in the defense of
Sanifill, they have produced nothing more than conclusionary
will win at trial, it might refuse a settlement offer of
$950,000, because it would at most be risking $50,000 if
a jury found for the plaintiff, even if the verdict was
$5,000,000. Because it is the insured's or an excess
carrier's money that is at risk above the ... policy
limits, the [insurer] must have a duty to handle the
claim with the insured's best interests in mind as well
as its own.
Employers Nat'l Ins. Co., 857 F.Supp. at 552; see also Am.
Centennial, 843 S.W.2d at 482-83. Thus, the fact that
Centennial and St. Paul brokered a settlement within their
combined policy limits supports our conclusion that Landmark
and Lexington may not rely on the theory of equitable
subrogation.
22
See Employers Nat'l, 857 F.Supp. at 552.
14
allegations in support of their contention that the actions of
Centennial and St. Paul caused any increase in the value of the
settlement. Finally, Landmark and Lexington cannot support a claim
that Centennial and St. Paul failed to operate in good faith: It
is undisputed that Centennial and St. Paul informed Landmark and
Lexington of their defense strategy as the Foret suit unfolded, and
it is also undisputed that Landmark and Lexington made no timely
objections to the actions taken by Centennial and St. Paul. In
sum, Landmark and Lexington have failed to establish that the
defense provided by Centennial and St. Paul gave rise to a
negligence cause of action; accordingly, the district court
properly held that they were not entitled to proceed under a theory
of equitable subrogation.
Landmark and Lexington also brought an independent negligence
claim seeking recovery in their own right for the alleged
mishandling of the Foret defense. Just as they have offered
insufficient evidence to establish that Sanifill could bring a
negligence cause of action against Centennial and St. Paul,
Landmark and Lexington cannot survive summary judgment on their
independent negligence claim. They offer no proof that the Foret
settlement was unreasonable and no proof that the actions of
Centennial and St. Paul increased the value of the settlement.
Accordingly, we affirm the grant of summary judgment in favor of
Centennial and St. Paul on this issue.
3. The Primary and Excess Policies
Having determined that Centennial and St. Paul have not
15
waived their right to rely on the "other insurance" clauses in
their policies, we must next address the issue of how the "other
insurance" clauses affect the liabilities of the insurers involved
in the Foret settlement. We first examine the impact of the "other
insurance" clauses in the policies issued by primary carriers
Centennial and Landmark, as Texas law dictates that primary
policies' limits must be exhausted before excess insurers become
liable.23
Centennial argues that the escape clause in its policy
relieves it of liability and renders Landmark the sole primary
carrier that must contribute to the Foret settlement. In response,
23
This rule results from the difference in the nature of
primary policies and excess policies. The rationale behind the
rule was explained at length in Emscor Mfg., Inc. v. Alliance Ins.
Group, 879 S.W.2d 894, 903 (Tex.App.1994, writ denied) (citations
omitted) (internal quotations omitted) (emphasis added):
Primary insurance coverage is insurance coverage whereby,
under the terms of the policy, liability attaches
immediately upon the happening of the occurrence that
gives rise to the liability. An excess policy is one
that provides that the insurer is liable for the excess
above and beyond that which may be collected on primary
insurance. In a situation where there are primary and
excess insurance coverages, the limits of the primary
insurance must be exhausted before the primary carrier
has a right to require the excess carrier to contribute
to a settlement. In such a situation, the various
insurance companies are not covering the same risk;
rather, they are covering separate and clearly defined
layers of risk. The remote position of an excess carrier
greatly reduces its chance of exposure to a loss. This
reduced risk is generally reflected in the cost of the
excess policy.
See also Utica Nat'l Ins. Co. v. Fidelity & Casualty Co. of
New York, 812 S.W.2d 656 (Tex.App.1991, writ denied) (citing
Atlantic Mut. Ins. Co. v. Truck Ins. Exchange, 797 F.2d 1288
(5th Cir.1986)); Union Indem. Ins. Co. v. Certain
Underwriters, 614 F.Supp. 1015, 1017 (S.D.Tex.1985).
16
Landmark and Lexington argue that Centennial's escape clause must
yield to Landmark's pro rata clause. In Hardware Dealers Mut. Fire
Ins. Co. v. Farmers Ins. Exch.,24 emphasizing that "dominant
consideration" should be given to the rights of the insured, the
Texas Supreme Court adopted the following rule with regard to
conflicting "other insurance" clauses:
When, from the point of view of the insured, she has coverage
from either one of two policies but for the other, and each
contains a provision which is reasonably subject to a
construction that it conflicts with a provision in the
concurrent insurance, there is a conflict in the
provisions....
... It seems to us that the only reasonable result to be
reached [in such cases] is a proration between the two
insurance companies in proportion to the amount of insurance
provided by their respective policies.25
In the instant case, Sanifill would be entitled to full coverage
under Landmark's policy were it not for the existence of
Centennial's policy; and Sanifill would be entitled to full
coverage under Centennial's policy were it not for the existence of
Landmark's policy. In other words, Landmark's pro rata clause
conflicts with Centennial's escape clause, so we must prorate
liability. In the context of this case, proration amounts to
payment of the full amount specified in each policy, as primary
coverage policy limits must be exhausted before excess policies
24
444 S.W.2d 583 (Tex.1969).
25
Id. at 590 (internal quotations omitted). Centennial argues
that Hardware Dealers is not applicable to this case, as it
involved a conflict between an escape clause and an excess clause,
rather than an escape clause and a pro rata clause. We disagree.
Hardware Dealers set forth a general principle for resolving
conflicting "other insurance" clauses, and that principle controls
our decision in this case.
17
kick in. Here, the amount of the Foret settlement exceeded the
aggregate limits of the two primary policies; and, as both
Centennial and Landmark contributed their policy limits to that
settlement, the district court was correct in holding that they are
not entitled to reimbursement for their contributions.
The Hardware Dealers decision also guides our determination
of the liability of the excess carriers involved in this appeal.
Centennial and St. Paul argue that Hardware Dealers does not
control this issue because it addressed conflicting "other
insurance" clauses in primary policies, not excess policies. We
note, however, that nothing in the Hardware Dealers opinion
suggests that its holding or the reasoning behind it should be
limited to disputes involving primary policies. As Centennial and
St. Paul have raised no compelling argument in support of limiting
the principle espoused in Hardware Dealers to primary policies, we
conclude that this argument raises at most a "distinction without
a difference." In fact, with regard to the instant excess
policies, we face the same substantive task presented to the
Hardware Dealers court—resolving a conflict between an escape
clause and an excess clause. Accordingly, we affirm the district
court's decision to prorate the remaining settlement amount between
St. Paul and Lexington.
D. ATTORNEYS FEES AND COSTS
As a final issue, we consider the parties' various appeals
for an award of attorneys fees and costs. First, St. Paul argues
that it was entitled to reimbursement of the costs and attorneys
18
fees it incurred in defending the Foret suit. The district court
refused to allow recovery of those costs and fees on the grounds
that St. Paul elected to hire its own counsel after Centennial had
already hired defense counsel. We agree with the district court's
assessment of this issue.
Additionally, each of the four insurers requests an award of
the costs and attorneys fees incurred with respect to the instant
case. As no party raises a persuasive argument in support of its
request, we affirm the district court's refusal to award to any of
the parties the attorneys fees or costs incurred in the insurance
litigation that followed the Foret settlement.
III.
CONCLUSION
For the foregoing reasons, we affirm the district court's
grant of summary judgment declaring the respective obligations of
the insurers to contribute to the Foret settlement, as well as the
district court's grant of summary judgment in favor of Centennial
and St. Paul on Landmark and Lexington's negligence claim.
AFFIRMED.
19