American Home Assur. Co. v. Fish
| Decision Date | 06 August 1982 |
| Docket Number | 81-290,Nos. 81-280,s. 81-280 |
| Citation | 122 N.H. 711,451 A.2d 358 |
| Parties | AMERICAN HOME ASSURANCE COMPANY v. Douglas K. FISH et al. |
| Court | New Hampshire Supreme Court |
Ransmeier & Spellman, Irvin D. Gordon, Concord, on brief, for plaintiff.
Bell, Falk & Norton, Ernest L. Bell, III, Keene, on brief, for defendants.
Hall, Morse, Gallagher & Anderson, William S. Hall, Concord, on brief, for Forum Ins. Co.
This appeal, involving an insurance coverage dispute, raises two issues. The first issue is which insurance company, American Home Assurance Company (American Home) or Forum Insurance Company (Forum), is liable to defend these defendants in the underlying lawsuit, and; if both are liable, how that liability should be apportioned. The second issue is whether the insurance companies are liable to pay any exemplary or punitive damages awarded against the defendants. The Superior Court (Pappagianis, J.) held that both insurers were jointly liable to defend the suit and pay any damages, including exemplary or punitive damages, pro rata. We reverse in part.
At the time of the alleged acts giving rise to the underlying action, certain insurance policies were in force covering the City of Keene and certain of its police department officials. The policies issued were American Home's "Police Professional Liability Insurance", naming the City of Keene Police Department as the insured, and Forum's "Public Officials Liability Policy," naming the City of Keene as the insured.
The underlying action (Parker v. City of Keene et al., No. 79-245D (D.N.H. filed Aug. 15, 1979)) is pending in the United States District Court for the District of New Hampshire. The plaintiff, Douglas H. Parker, a former Keene policeman, alleges that an arson indictment returned against him on April 4, 1978, and his subsequent dismissal from the police department, resulted in a breach of his employment contract with the City of Keene, and as such constituted a malicious prosecution, a violation of his civil rights under the provisions of 42 U.S.C. § 1983 (1976), and a conspiracy to violate his civil rights under 42 U.S.C. § 1985 (1976). The defendants named in the underlying action are the City of Keene, Douglas K. Fish, a detective of the Keene Police Department, and Harold A. Becotte, the Keene Chief of Police.
Forum's policy lists the City of Keene as the public entity named as the insured, and includes within the definition of "insured" "those ... duly elected or appointed officials or members or full-time employees of the governing body of such commissions, boards or other units operating by and under the jurisdiction of such governing body ...." The policy contains an exclusion, commonly called a "no liability" clause, stating that Forum "shall not be liable to make any payment in connection with any claim made against the insured ... which is insured by another valid policy ...."
The American Home policy lists the Keene Police Department as the named insured, and includes within the omnibus definition of "insured" "all paid full or part time employees of the [Keene Police Department] and the political subdivision in which the [Keene Police Department] is located, should such political subdivision be named in any action or suit against the [Keene Police Department] or any employee for any act, error or omission for which this policy affords protection." This policy contains a clause providing that "this policy shall be excess insurance over any other valid and collectible insurance available to the Insured, either as an Insured under another policy or otherwise," which is commonly known as an "excess" clause.
This is an issue of first impression in New Hampshire, requiring a resolution of the liability for insurance coverage where two insurance policies apply to the same situation and one company claims an exemption under a "no liability" clause and the other company claims an exemption under an "excess insurance" clause. It is clear that, were we to give literal effect to each policy's exclusion, the defendants would have no coverage.
There are two theories that attempt to resolve this conflict. The minority position, relied upon by the trial court, holds that two such clauses are "mutually repugnant" and should be disregarded, and the insurers would have to prorate, both as to damages and the expense of defending the suits. See e.g., Oregon Auto. Ins. Co. v. United States Fidelity & Guar. Co., 195 F.2d 958, 960 (9th Cir. 1952); 16 R. Anderson, Couch On Insurance, § 62:77, at 522 (2d ed. 1966 & Supp. 1981) and cases cited in id. nn. 3, 4. The other position, followed by the majority of the jurisdictions, is that the "excess" clause should be given effect, thereby making the "no liability" policy the primary one. See e.g., State Farm Mut. Auto. Ins. Co. v. Home Indemnity Ins. Co., 23 Ohio St.2d 45, 47-48, 261 N.E.2d 128, 130 (1970); 16 R. Anderson, Couch on Insurance, supra, § 62.76, at 521 and cases cited in id. n. 1. After consideration of both of these positions, we think that it is more reasonable to adopt the second position. The "no liability" clause states that the exclusion applies only when there is "another valid policy." Because a policy containing an "excess" clause is not triggered until all other collectible insurance is exhausted, we hold that the "excess" policy is not a valid (i.e.--collectible) policy within the meaning of the "no liability" policy. See State Farm Mut. Auto. Ins. Co. v. Home Indemnity Ins. Co., 23 Ohio St.2d at 48, 261 N.E.2d at 130. Accordingly, Forum has the primary liability for defending the underlying action.
The defendants argue that an insurer should be obligated to provide coverage for any exemplary or punitive damages awarded against them in either the § 1983 or § 1985 action. The trial judge ruled that an insurer was to provide coverage against any such award. We agree.
In City of Newport v. FACT Concerts Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616, (1981), the United States Supreme Court held that municipalities, such as Keene, could not be held liable for punitive damages in a § 1983 action, id. at 271, 101 S.Ct. at 2762, although...
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