American Simmental Ass'n v. Coregis Ins. Co.

Decision Date25 July 2000
Docket NumberNo. 4:98CV3327.,4:98CV3327.
Citation107 F.Supp.2d 1064
PartiesAMERICAN SIMMENTAL ASSOCIATION, a Montana Non-Profit Association, Plaintiff, v. COREGIS INSURANCE COMPANY, an Indiana Corporation, Defendant/Third Party Plaintiff, v. St. Paul Fire & Marine Insurance Company, a Minnesota Corporation, Defendant/Third Party Defendant.
CourtU.S. District Court — District of Nebraska

R. Murray Ogborn, Ogborn, Summerlin Law Firm, Lincoln, NE, for Plaintiff.

William R. Johnson, Lamson, Dugan LLP, Omaha, NE, Jeffrey A. Goldwater, Robert S. Marshall, Matthew J. Fink, Bollinger, Ruberry Law Firm, Chicago, IL, for Defendant/Third Party Plaintiff.

P. Shawn McCann, Sodoro, Daly Law Firm, Omaha, NE, Rebeca R. Haller, Vineet Gosain, Oppenheimer, Wolff Law Firm, Chicago, IL, Bethany K. Culp, David W. Wilk, Oppenheimer, Wolff Law Firm, St. Paul, MN, for Defendant/Third Party Defendant.


KOPF, District Judge.

The American Simmental Association (ASA) brings this action against two of its insurers, Coregis Insurance Company and St. Paul Fire & Marine Insurance Company. As against St. Paul, the ASA seeks a declaration that St. Paul breached its duty to defend the ASA in a lawsuit brought against it — known as the Blue Dane Litigation — and whether St. Paul has a responsibility to pay some or all of the defense costs the ASA incurred in defending the lawsuit after St. Paul refused to provide a defense. As against Coregis, the ASA seeks recovery of defense costs and expenses incurred in the Blue Dane Litigation that have not already been paid by Coregis. Coregis brings a third-party claim against St. Paul seeking contribution, indemnity, subrogation, and declaratory relief with regard to the amount of the Blue Dane defense costs that Coregis was forced to pay due to St. Paul's breach of its duty to defend the ASA.

Because the ASA and Coregis have settled the dispute between them prior to the bench trial in this matter, and because the court has previously determined that St. Paul breached its duty to defend the ASA in the Blue Dane Litigation, remaining for the court's consideration are these general issues: the scope of St. Paul's duty to reimburse the ASA and/or Coregis for St. Paul's breach of its duty to defend the ASA; whether the ASA and Coregis are entitled to prejudgment interest; and whether the ASA and Coregis are entitled to attorneys' fees and expenses for bringing this action against St. Paul. (Filing 87, Joint Order on Pretrial Conf. at 4-5.) Following a bench trial on the merits of this case, I now issue my findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52(a).1

The Parties

1. The ASA is a non-profit corporation organized and existing under the laws of the State of Montana, with a principal place of business in Bozeman, Montana. The ASA does business in all 50 of the United States. (Joint Order on Pretrial Conf. ¶ 3.)

2. Coregis Insurance Company, formerly known as Mount Airy Insurance Company, is a corporation organized and existing under the laws of the State of Indiana, with a principal place of business in Chicago, Illinois. (Joint Order on Pretrial Conf. ¶ 4.)

3. St. Paul Fire & Marine Insurance Company is a corporation organized and existing under the laws of the State of Minnesota, with a principal place of business in Minnesota. St. Paul does business in all 50 of the United States. (Joint Order on Pretrial Conf. ¶ 5.)

4. The ASA's principal business is the registration and recordation of performance data on Simmental cattle in North America. (Joint Order on Pretrial Conf. ¶ 6.)

The Insurance Policies

5. On or about October 1, 1991, St. Paul issued to the ASA an insurance policy which included commercial general liability insurance with personal injury and advertising injury coverage. The St. Paul policy was issued with policy number RP06615500, effective from October 1, 1991, through October 1, 1992. The policy was then renewed and in effect from October 1, 1991, through October 1, 1993. The policy was again renewed and a third policy was in force from October 1, 1993, through October 1, 1994. (Joint Order on Pretrial Conf. ¶ 7.) For purposes of this case, there are no material differences between the St. Paul policies (hereinafter "policy"). (Ex. 1; Ex. 2.)

6. The St. Paul policy provides liability insurance to the ASA and its officers, directors, and employees for covered acts or omissions done within the course and scope of the ASA's activities. (Ex. 1 at E-68.)

7. The St. Paul policy provides that St. Paul will "pay amounts any protected person is legally required to pay as damages for covered ... advertising injury that's caused by an offense committed while this agreement is in effect." (Ex. 1 at E-66.) "Advertising injury" is defined in the policy as "injury caused by any of the following offenses that result from the advertising of your products or work ... unauthorized taking of advertising ideas or style of doing business; [or] infringement of copyright, title or slogan." The policy does not define "advertising." (Ex. 1 at E-66 to -67.) The St. Paul policy excludes from coverage "advertising injury that results from written or spoken material made public by or for the protected person if the material is known by that person to be false." (Ex. 1 at E-76.)

8. The St. Paul policy provides that St. Paul has "the right and duty to defend any claim or suit for covered injury or damage made or brought against any protected person." (Ex. 1 at E-67.) The St. Paul policy also contains an "other insurance" provision which states in part:

This agreement is primary insurance. If there is other valid and collectible insurance for injury or damage covered by this agreement, the following applies:

Primary insurance. When there is other primary insurance, we'll share any damages with that insurance using one of the methods of sharing described below [contribution by equal shares or by limits]. However, this agreement will be excess insurance over any part of any other insurance which provides ... property or similar coverage for damage to your work ....

Excess insurance. When this agreement is excess insurance ... [w]e'll have no duty to defend any claim or suit. However, we'll defend a claim or suit for covered injury or damage if the other insurers won't. In return we'll require that the protected persons give us all of their rights against those insurers.

(Ex. 1 at E-77 to—78.)

9. On January 16, 1994, Coregis Insurance Company issued a claims-made and reported Non-Profit Organization Liability Insurance Policy to the ASA, with effective dates from January 16, 1994, to January 16, 1995, Policy No. 524-189304-9. (Joint Order on Pretrial Conf. ¶ 8.)

10. The Coregis policy does not contain a duty to defend the ASA, but provides that Coregis "will pay on behalf of the Insureds all Loss which the Insureds shall be legally obligated to pay for any civil claim or claims first made against them because of a Wrongful Act, provided that the claim is first made during the policy period and written notice of said claim is received by the Company during the policy period." (Ex. 20 at 10.) "Loss," as used in the above provision, is defined as:

any amount which the Insureds are legally obligated to pay or which the Entity shall be required, or permitted by law to pay as indemnity to the Insureds, for any claim or claims made against them, for Wrongful Acts and shall include but not be limited to damages, judgments, settlements and costs, cost of investigation and defense of legal actions (excluding from such cost the salaries of officials or employees of the Entity), claims or proceedings and appeals therefrom, cost of attachment or similar bonds; provided always, however, such subject of loss shall not include fines or penalties imposed by law, or matters which may be deemed uninsurable under the law pursuant to which this Policy shall be construed.

(Id. (emphasis added).) Further, the Coregis policy defines "Wrongful Act" as "any actual or alleged error or misstatement or misleading statement or act or omission or neglect or breach of duty by one or more of the individual Insureds while acting in their capacity as an authorized representative of the Entity, subject to the further terms, conditions and limitations of this policy." (Id.) The Coregis policy excludes from coverage claims made against the ASA "based upon or arising out of ... [a] publication or utterance in the course of or related to advertising ... activities conducted by or on behalf of [the ASA]." (Ex. 20 at 11.)

11. The Coregis policy contains an "other insurance" provision which states, "If the Entity or any Insured has other insurance insuring against a Loss covered by this Policy, the insurance provided by this Policy shall apply in excess of such other insurance." (Ex. 20 at 14.) The Coregis policy also contains a "subrogation" clause which provides that "[i]n the event of any payment under this Policy, the Company shall be subrogated to all the Insureds' rights of recovery therefore against any person or organization and the Insureds shall execute and deliver such instruments and papers and do whatever else is necessary to secure such rights. The Insureds shall do nothing after Loss to prejudice such rights." (Id. at 13.)

12. The ASA paid all premiums and performed all conditions precedent under the St. Paul policy and Coregis policy. (Joint Order on Pretrial Conf. ¶ 21.)

The Underlying Litigation

13. On April 14, 1994, Blue Dane Simmental Corporation, Roland Nuss, Ronald Vlasin, and Dennis Behrhorst filed their initial Complaint against the ASA, Tom Risinger, and John Doe in the United States District Court for the District of Nebraska in what has become known as the "Blue Dane Litigation," Blue Dane Simmental Corp., et al. v. American Simmental Ass'n. et al., No. 4:CV94-3116 (D.Neb.)....

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