Am. Family Mut. Ins. Co. v. Regent Ins. Co.

Decision Date02 May 2014
Docket NumberNo. S–13–297,S–13–297
Citation846 N.W.2d 170,288 Neb. 25
PartiesAmerican Family Mutual Insurance Company, appellee, v. Regent Insurance Company, appellant.
CourtNebraska Supreme Court

288 Neb. 25
846 N.W.2d 170

American Family Mutual Insurance Company, appellee,
v.
Regent Insurance Company, appellant.

No. S–13–297

Supreme Court of Nebraska.

Filed May 2, 2014


[846 N.W.2d 174]


Appeal from the District Court for Lancaster County: John A. Colborn, Judge.
Affirmed.
Mark C. Laughlin and Patrick S. Cooper, of Fraser Stryker, P.C., L.L.O., and Brian D. Nolan and Michael D. Reisbig, of Nolan, Olson, & Stryker, P.C., L.L.O., for appellant.

Joel D. Nelson and Joel A. Bacon, of Keating, O'Gara, Nedved & Peter, P.C., L.L.O., for appellee.


Heavican, C.J., Wright, Connolly, Stephan, McCormack, Miller–Lerman, and Cassel, JJ.

Syllabus by the Court

1. Equity: Appeal and Error. On appeal from an equity action, an appellate court tries factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the conclusion reached by the trial court.

2. Insurance: Contracts: Appeal and Error. The interpretation of an insurance policy presents a question of law that an appellate court decides independently of the trial court.

3. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment was granted and gives that party the benefit of all reasonable inferences deducible from the evidence.

4. Summary Judgment: Appeal and Error. An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law.

5. Contribution: Equity. Contribution is an equitable remedy given to the party who pays a debt that is concurrently owed by another party. The existence of a “common obligation” makes the right to contribution possible.

6. Insurance: Contribution. Among insurers, the right to contribution arises in two basic circumstances: (1) An insurer of a joint tort-feasor has paid all, or greater than its share, of a loss, and (2) a single insured is covered by concurrent or “double” insurance, and one insurer paid all, or greater than its share, of a loss.

7. Insurance: Contribution. In the circumstance of concurrent insurers, contribution is proper only where the policies insure the same entities, the same interest in the same property, and the same risk.

8. Insurance: Contracts: Contribution. When considering whether insurance policies cover the “same risk,” it is not necessary that the policies provide identical coverage in all respects. As long as the particular risk actually involved in the case is covered by both policies, the coverage is concurrent, and contribution will be allowed.

9. Insurance: Contracts: Contribution. In determining whether one insurer is entitled to contribution from another, courts consider the nature of the claim, the relation of the insured to the insurers, the particulars of each policy and any other equitable considerations.

10. Insurance: Liability. The insurer seeking indemnification against a concurrent insurer does so entirely in its own right.

11. Insurance: Contribution: Words and Phrases. Contribution in a concurrent insurer scenario is a right of the insurer flowing from equitable principles designed to accomplish ultimate justice in the bearing of a specific burden.

12. Insurance: Contribution: Proof. A contribution rule based on apportionment of fault would hamper settlements and require the defendant to prove

[846 N.W.2d 175]

its own fault before the defendant's insurer could seek equitable contribution.

13. Contribution. For coverage to be concurrent for purposes of contribution, it must be at the same level—primary to primary or excess to excess.

14. Insurance: Liability. The loss between the primary insurers should be apportioned before considering the excess insurers' exposure.

15. Insurance: Contracts. Among policies at the same level, absent compelling equitable reasons, courts should not impose an obligation on an insurer that contravenes a provision in its insurance policy.

16. Insurance: Contracts: Words and Phrases. A true excess insurance policy is one providing coverage conditioned upon the existence of a primary policy, which coverage does not begin until a loss exceeds a stated level.

17. Insurance: Contracts: Liability. Umbrella policies, as the only true excess insurance policies, incur liability only after the exhaustion of all other policies, including primary policies containing excess insurance clauses.

18. Insurance: Contracts: Liability. Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is usually disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance.

19. Insurance: Contracts: Liability. Excess insurance clauses are mutually repugnant, and the liability should be shared by the insurers pro rata in the proportion that their respective policy limits bear to the entire loss.


McCormack, J.
I. NATURE OF CASE

This is an action for contribution against an insurer to pay a share of a settlement paid by another insurer to an injured guest of a party at an apartment complex. The underlying lawsuit was brought against both the ownership of the complex and its management under theories of joint and several liability. The insurer seeking contribution held liability policies covering both the complex's ownership and management. The insurer being sued for contribution held liability policies covering the management company; the parties dispute whether the policies also covered the “same risk” for the ownership as an additional insured. The insurer seeking contribution argues that it does not matter whether both tort-feasors were coinsureds under all the policies at issue because, either way, the insurers shared a “common obligation.”

II. BACKGROUND

This contribution action stems from a lawsuit to recover for injuries sustained when a guest at an apartment complex fell off a third-story apartment's balcony. Beacon Hill Investment Group (Beacon Hill) owned the apartment complex, and

[846 N.W.2d 176]

N.P. Dodge Management Company (NP Dodge) managed it.

1. Accident

When the decks of the apartment complex were built in 1968, there was no code specifying the minimum height for deck railings. The decks of the complex were remodeled in 1997. This improvement was apparently at the behest of NP Dodge.

According to a representative of Beacon Hill, it was NP Dodge's job to ensure that its properties met safety codes. A representative of NP Dodge generally agreed it was NP Dodge's responsibility to keep the property compliant with current safety codes.

The plans submitted for the permit specified that the old deck railing would be reused, but incorrectly indicated that those deck railings were 36 inches high. In fact, the railings were 30 inches high. The applicable 1994 Uniform Building Code required guardrails within private apartments to be a minimum of 36 inches high. The 1994 Uniform Building Code required most other exterior guardrails to be 42 inches high.

In 2003, NP Dodge's assistant property manager lived in a third-floor apartment at the complex. While off duty, she had a small gathering of her friends at her apartment. There was underage drinking at the gathering, although the assistant property manager stated she did not provide any guests with alcohol.

A neighboring tenant and his friend, the guest, stopped by. The guest went out to the apartment's balcony to smoke. He was 20 years old and very intoxicated. He fell over the railing. Injuries from the fall rendered the guest a quadriplegic.

The guest sued both Beacon Hill and NP Dodge. The complaint alleged that Beacon Hill and NP Dodge were jointly and severally liable for his injuries under theories of premises liability and negligence relating to the dangerous condition of the low railing. The guest also alleged that NP Dodge's assist ant property manager was negligent in allowing alcohol to be served to minors and in failing to warn the guest of the low railing height.

2. Management Agreement

NP Dodge has been managing the Beacon Hill property since 1986. The management agreement in force at the time of the accident provided that Beacon Hill was to obtain and keep in force adequate insurance “against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property.” Beacon Hill was to cover NP Dodge “as an additional insured on all liability insurance maintained with respect to the Property.” For its part, NP Dodge was required by the management agreement to, at all times, maintain “general liability, automobile liability, and worker's compensation insurance on [NP Dodge's] employees.” And NP Dodge was to cover Beacon Hill as an “additional insured on [NP Dodge's] general liability policy.”

A “Liability and Hold Harmless” provision contained in a 2001 amendment to the management agreement stated in relevant part:

To the extent not covered by applicable policies of insurance, [Beacon Hill] shall hold harmless and reimburse [NP Dodge] for expenses incurred by [NP Dodge], including ... claims for personal injury and property damage, reasonable costs and attorney fees, and any liability, fines or penalties, in connection with any claim, proceedings, or suit involving an alleged violation by [NP Dodge] or [Beacon Hill], or both, of any law or duty with respect to any alleged violations of local, federal or state laws occurring after the effective date of this

[846 N.W.2d 177]

Agreement ... provided, however, that [Beacon Hill] shall not be responsible to [NP Dodge] for any such expenses in the event the liability ... is the result of a willful violation by [NP Dodge], or its employees, of any local, federal, or State laws or...

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