American Concept Ins. Co. v. Certain Underwriters at Lloyds of London

• Decision Date: 13 March 1991
• Docket Number: No. 17041,17041
• Parties: AMERICAN CONCEPT INSURANCE COMPANY, Plaintiff and Appellee, v. CERTAIN UNDERWRITERS AT LLOYDS OF LONDON, Defendant and Appellant, and Merrill Reisenweber, Defendant.
• Court: South Dakota Supreme Court

Page 480

467 N.W.2d 480

AMERICAN CONCEPT INSURANCE COMPANY, Plaintiff and Appellee, v. CERTAIN UNDERWRITERS AT LLOYDS OF LONDON, Defendant and Appellant, and Merrill Reisenweber, Defendant.

No. 17041.

Supreme Court of South Dakota.

Argued Sept. 19, 1990.

Decided March 13, 1991.

Derald W. Wiehl, Brenda L. Schnasa, May, Johnson, Doyle & Becker, P.C., Sioux Falls, for defendant and appellant.

Lawrence L. Piersol, Roberto A. Lange, Davenport, Evans, Hurwitz & Smith, Sioux Falls, for plaintiff and appellee.

HENDERSON, Justice.

PROCEDURAL HISTORY/ISSUES

Certain Underwriters at Lloyds of London (Underwriters) appeal from a declaratory judgment action granted in favor of American Concept Insurance Company (American Concept) entered on February 6, 1990. In its complaint, American Concept requested that the trial court determine the obligations of the respective Insurance Companies in relation to insurance policies issued by them to Merrill Reisenweber (Reisenweber) with respect to the $55,000.00 settlement and the attorney's fees and costs incurred in defending Reisenweber in the underlying action of Mammenga v. Reisenweber, (Civil No. 86-0041 Minnehaha County, unreported case).

The trial court conducted a hearing on February 5, 1990, after the parties submitted cross-motions for summary judgment. Subsequently, the trial court granted summary judgment in favor of American Concept to the extent that Underwriters was required to pay one-half of the $55,000.00 settlement in the underlying action. The trial court also entered an Order on February 28, 1990, requiring Underwriters to pay one-half of the $13,424.56 incurred as attorney's fees and expenses.

On appeal, Underwriters allege that:

(1) "The Peacemaker" policy is written as an umbrella or true excess insurance policy and thereby provides only excess coverage to the named insured and,

(2) It is not liable for any portion of the attorney's fees or expenses incurred in defending Reisenweber.

--Holding--

We reverse, holding that American Concept, as the primary insurer, is liable for the entire settlement amount.

FACTS

On or about November 25, 1984, Reisenweber accidentally shot and killed Johnie Dean Mammenga (Mammenga) while hunting in Marshall County, South Dakota. The administrator of Mammenga's estate filed a wrongful death and survival action against Reisenweber. This action was eventually settled for $55,000.00, which was paid by American Concept on behalf of Reisenweber. (Reisenweber held a general homeowner's policy with American Concept). American Concept also incurred $13,424.56 in attorney's fees and expenses in defending Reisenweber in that action.

In addition to the policy with American Concept, Reisenweber held an insurance policy with Underwriters called "The Peacemaker." This policy was issued to Reisenweber as a member of the National Rifle Association (NRA). Reisenweber's membership in the NRA automatically entitled him to coverage under this policy. Underwriters provided the underlying coverage to the NRA and its members at a cost of $1.21 per member through issuance of a master policy to the NRA. The NRA paid the $1.21 premium out of the NRA membership fee paid by its members. Both insurance policies were in full force and effect at all relevant times.

DECISION

I. "The Peacemaker" policy is written as an umbrella or true excess insurance policy and, therefore, provides only excess insurance to Reisenweber.

Initially, it is necessary to set forth the pertinent terms of "The Peacemaker" policy issued by Underwriters and the homeowner's policy issued by American Concept. The relevant portion of "The Peacemaker" states:

With respect to occurrences covered under this policy, but not covered under any other valid and collectible insurance, Underwriters shall be liable as if this policy is primary insurance ...

On behalf of the insured all sums which the insured shall become legally obligated to pay as damages, all as defined by the term ultimate net loss, excess over any other valid and collectible insurance.

Underwriters shall be liable only for the ultimate net loss in excess of the amount payable under any other valid and collectible insurance.

The pertinent portion of the American Concept homeowner's policy states:

This insurance is excess over any other valid and collectible insurance except insurance written specifically to cover as excess over the limits of liability that apply in this policy.

As a general rule, when determining if two insurance companies provide insurance on the same loss, the question of their respective insurance obligations is determined by a construction of the language used by the respective insurers and not upon any arbitrary rule or circumstance. Motor Vehicle Casualty Co. v. LeMars Mut. Ins. Co., 254 Iowa 68, 116 N.W.2d 434 (1962); Travelers Indem. Co. v. National Indem. Co., 292 F.2d 214 (8th Cir.1961); Woodrich Const. Co. v. Indemnity Ins. Co., 252 Minn. 86, 89 N.W.2d 412 (1958).

Both American Concept and Underwriters advocate that the above stated provisions exonerate them from liability. However, we hold that American Concept's argument is without merit. A breakdown of the American Concept policy and an examination of the Underwriters' policy clearly demonstrates this. The first part of American Concept's "other insurance" provision reads: "This insurance is excess over any other valid and collectible insurance ..." This means that if an American Concept policyholder has specific insurance as to a certain claim and that claim has not been satisfied, the American Concept policy will make up the difference.

The second portion of the American Concept provision reads: "except insurance written specifically to cover as excess over the limits of liability that apply in this policy." It is clear from this language that American Concept authorizes a policyholder to purchase additional insurance to cover losses in excess of the American Concept policy. In essence, the American Concept policy is a primary policy which states that it will operate as an excess policy if an insured has other insurance which is considered primary to the loss. Assuming arguendo, an individual has both automobile insurance and a homeowner's policy. If the insured has a car accident, he must collect from his automobile insurance company (the more specific policy). The excess may then be picked up by a homeowner's policy, likened unto American Concept herein.

Reisenweber specifically bought a policy from American Concept to protect against all loss, up to a certain limit. But as mentioned earlier, the American Concept policy allows a policyholder to purchase more insurance. Reisenweber did buy such insurance by joining the NRA and obtaining its insurance. However, the NRA policy language is completely different from the American Concept policy language. We interpret it as saying that if a policyholder has no other insurance than that with the NRA, then the NRA is the primary coverage. However, if a policyholder has other insurance, then the NRA operates as a true excess or umbrella policy. Therefore, the trial court's reliance on Royal Indemnity Co. v. Metropolitan Casualty Insurance Co., 80 S.D. 541, 128 N.W.2d 111 (1964) was misplaced. ^*

Umbrella or true excess insurance is regarded as providing true excess insurance coverage over and above any type of primary insurance coverage. See generally...