838 F.2d 829 (6th Cir. 1988), 86-2127, Ford Motor Co. v. Northbrook Ins. Co.

Docket Nº:86-2127, 87-1025.
Citation:838 F.2d 829
Party Name:FORD MOTOR COMPANY, Plaintiff-Appellee Cross-Appellant, v. NORTHBROOK INSURANCE COMPANY; et al., Defendants, Claude James Ayliffe, on his own behalf and as representative of those Underwriters at Lloyds, London, Subscribing Policy UHL 1294; Stronghold Insurance Company, Ltd.; North Atlantic Insurance Company, Ltd.; Turegum Insurance Company, Ltd.;
Case Date:January 26, 1988
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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838 F.2d 829 (6th Cir. 1988)

FORD MOTOR COMPANY, Plaintiff-Appellee Cross-Appellant,

v.

NORTHBROOK INSURANCE COMPANY; et al., Defendants,

Claude James Ayliffe, on his own behalf and as

representative of those Underwriters at Lloyds, London,

Subscribing Policy UHL 1294; Stronghold Insurance Company,

Ltd.; North Atlantic Insurance Company, Ltd.; Turegum

Insurance Company, Ltd.; Puritan Insurance Company; and

Mutual Fire, Marine & Inland Insurance Company, Defendants-Appellants,

Mutual Fire, Marine & Inland Insurance Company,

Defendant-Cross-Appellee.

Nos. 86-2127, 87-1025.

United States Court of Appeals, Sixth Circuit

January 26, 1988

Argued Dec. 7, 1987.

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[Copyrighted Material Omitted]

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Charles J. Porter (argued), Beier, Howlett, Hayward, McCann, Jones, Kingsepp & Shea, Bloomfield Hills, Mich., Konrad D. Kohl, Kohl, Secrest, Wardle, Lynch, Clark & Hampton, Farmington Hills, Mich., Janet G. Callahan, Daniel J. Zollner, Lord, Bissell & Brook, Chicago, Ill., for appellants and cross-appellee.

Michael G. Vartanian, Dickinson, Wright & Moon, Detroit, Mich., John E.S. Scott (argued), for appellee cross-appellant.

Before MARTIN, MILBURN and NORRIS, Circuit Judges.

BOYCE F. MARTIN, Jr., Circuit Judge.

Defendant insurance companies appeal an order granting Ford Motor Company's motion for summary judgment. Ford cross-appeals the denial of its motion for entry of judgment.

Ford commenced this declaratory relief action alleging that excess automotive products liability insurance policies issued by Lloyds of London, Puritan Insurance Company, and Mutual Fire, Marine & Inland Insurance Company included coverage for punitive damages. 1 During policy year 1977, the period from December 15, 1976 to December 15, 1977, Ford had at least three levels of automotive products liability insurance. Ford self-insured for the first $2 million per claim. An umbrella policy issued by Northbrook Insurance Company provided the first layer of excess insurance. Lloyds, Puritan, and Mutual each provided second layer excess insurance policies. These second layer policies, being referred to as "following form policies," followed the insuring agreements, conditions, and exclusions of the Northbrook policy. 2 The Northbrook policy contains Exclusion P.

Except insofar as coverage is available to the Insured under the underlying insurances, set out in the attached schedule, this policy shall not apply.

....

P. To punitive or exemplary damages awarded against any Insured.

The Northbrook policy provided umbrella coverage for automobile products liability in excess of either the limits of the underlying insurance set out in the accompanying schedule or, in the event no underlying insurance was scheduled, a $1 million per occurrence retained limit. Ford's $2 million per claims self-insurance for automotive products liability was scheduled in the Northbrook policy. The "World Wide Schedule of Underlying Policies" reads, in part, as follows:

CARRIER, POLICY NUMBER APPLICABLE AND PERIOD TYPE OF POLICY LIMITS --------------------- ------------------- ------------- (1) Various Companies Automotive Products $2,000,000 and Self-Insured Liability, Public Combined Liability Single Limit and Property Damage Each Claim (United States) The parties have stipulated that the Northbrook policy covers punitive damage awards unless coverage is excluded by Exclusion P.

In granting Ford's motion for summary judgment, the district court concluded that the Northbrook policy indisputably provided punitive damage coverage for automotive products liability claims. The district court rejected the insurance companies' contention that Exclusion P excluded coverage because Ford's primary protection was provided by self-insurance rather than by an insurance policy. The district court held that the intent of Ford and Northbrook to

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include Ford's scheduled self-insurance as one of the "underlying insurances" and to provide punitive damage coverage was clear from (1) the written terms of the Northbrook policy and its schedule, (2) the course of conduct of Ford...

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