Amerisure Ins. Co v. Navigators Ins. Co

• Citation: 611 F.3d 299
• Decision Date: 13 July 2010
• Docket Number: No. 09-20060.,09-20060.
• Parties: AMERISURE INSURANCE CO., Plaintiff-Appellant,v.NAVIGATORS INSURANCE CO., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

611 F.3d 299

AMERISURE INSURANCE CO., Plaintiff-Appellant,v.NAVIGATORS INSURANCE CO., Defendant-Appellee.

No. 09-20060.

United States Court of Appeals Fifth Circuit.

July 13, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

David Morgan Pruessner (argued), Jes Alexander, Law Offices of David M. Pruessner, Dallas, TX, for Plaintiff-Appellant.

Innes A. Mackillop (argued), Ronald Lee White, White, Mackillop & Gallant, P.C., Houston, TX, for Navigators Ins. Co.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, BARKSDALE and ELROD, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

This case arises out of a disagreement between two insurers over their respective duties to indemnify for personal injuries sustained in an automobile accident. Amerisure, the primary insurer, argued that it did not have a duty to indemnify. Navigators, the excess insurer, disagreed, demanding that Amerisure pay the $1 million limit of its policy. The insurers, however, agreed that the personal-injury lawsuit should be settled, and they agreed on the amount of the settlement, $2.35 million. Amerisure paid the $1 million, but reserved its right to seek reimbursement. Navigators and another insurer paid the balance. Amerisure then sought reimbursement from Navigators through equitable and contractual subrogation. On cross-motions for summary judgment, the district court granted summary judgment for Navigators, finding that, although the Amerisure policy did not cover the incident, Amerisure could not recover through equitable or contractual subrogation.

Before us are four issues: (1) whether Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co., 236 S.W.3d 765 (Tex.2007), bars Amerisure's contractual-subrogation claim; (2) whether equitable subrogation is available; (3) whether Amerisure had a duty to indemnify under three exclusions in its policy; and (4) whether the conditional exclusion of the Navigators policy applied. We conclude that contractual subrogation is available, and hence, we do not reach the claim for equitable subrogation. Furthermore, we conclude that there is a genuine issue of material fact as to Amerisure's duty to indemnify. Finally, we conclude that the conditional exclusion does not apply. Accordingly, we VACATE the grant of summary judgment on the contractual-subrogation claim, and we REMAND for the determination of Amerisure's duty to indemnify.

BACKGROUND AND PROCEDURAL HISTORY

On October 9, 2003, William Sylvester drove two employees of Texas Crewboats Inc., Captain Dixie Clanton and Deckhand Jimmy Satterfield, from Freeport, Texas to Morgan City, Louisiana where the two were to board and crew the Florida Lilly, one of Texas Crewboats's vessels. While en route, Sylvester fell asleep at the wheel, thereby causing the vehicle to veer off of the road and flip over. Clanton and Satterfield suffered significant injuries as a result. They sued Texas Crewboats and Sylvester in Louisiana state court, claiming negligence and recklessness against Sylvester and bringing similar claims under the Jones Act against Texas Crewboats. Clanton and Satterfield claimed that Sylvester was driving in the course and scope of his employment with Texas Crewboats and that Texas Crewboats was vicariously liable. They also sued Texas Crewboats for maintenance and cure benefits.

At the time, Texas Crewboats carried three insurance policies that the incident potentially implicated. Amerisure provided $1 million of primary automobile-liability insurance. Under that policy, Sylvester, who was driving the vehicle with the permission of Texas Crewboats, was also an insured. Fireman's Fund Insurance Company provided $1 million of primary coverage for marine protection and indemnity. Navigators was the excess insurer, covering up to $9 million. Under this arrangement, if an incident fell within the coverage of any of the primary insurers, that insurer must indemnify the insured up to $1 million, and then, Navigators would cover the remainder up to $9 million.

The Amerisure policy contains three exclusions that are relevant here:

The insurance does not apply to any of the following: ...

3. WORKERS COMPENSATION

Any obligation for which the insured or the insured's insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.

4. EMPLOYEE INDEMNIFICATION AND EMPLOYER'S LIABILITY

Bodily Injury to:

a. An employee of the insured arising out of and in the course of employment by the insured ...

But this exclusion does not apply to bodily injury to domestic employees not entitled to workers compensation benefits or to liability assumed by the insured under an insured contract.

5. FELLOW EMPLOYEE

Bodily injury to any fellow employee of the insured arising out of and in the course of the fellow employee's employment.

The Amerisure policy also reserves Amerisure's right to subrogation:

If any person or organization to or for whom we make payment under this Coverage Form has rights to recover damages from another, those rights are transferred to us. That person or organization must do everything necessary to secure our rights and must do nothing after accident or loss to impair them.

The Navigators policy contains a conditional exclusion that reads,

As respects all activities of the Assured (except liability arising out of ownership, charter, use, operation, maintenance, loading, unloading, ship repairing or as a bailee of any watercraft not otherwise excluded or limited herein), this insurance shall be free from liability (unless coverage is provided in an underlying policy scheduled hereon, and then coverage hereunder shall only operate as excess of such coverage):

(a) from operation, ownership, use of any automobile, truck or aircraft ....

Under the circumstances, Texas Crewboats wanted the case settled, and all of the interested parties, including the insurers, agreed. Following mediation, the parties agreed to the following settlement: Clanton's claims would be settled for $1,325,000 and Satterfield's for $1,025,000. The insurers, however, could not agree on which of them should pay. Amerisure argued that only the Fireman's and Navigators policies applied. Navigators insisted that the incident also fell within the Amerisure policy, and therefore, demanded that Amerisure pay its $1 million limit.

In April 2006, Amerisure moved for summary judgment in Louisiana state court, seeking a declaration that its policy did not cover the incident. On June 15, 2006, Amerisure voluntarily withdrew that motion. Ultimately, Amerisure paid $1 million and Navigators paid $1.35 million, which included sums from Fireman's. In the settlement agreement, Amerisure reserved its right to seek reimbursement from Navigators through subrogation. During those settlement negotiations, Amerisure filed this subrogation action in the United States District Court for the Southern District of Texas.

The parties filed cross-motions for summary judgment before the district court in 2006. The motions focused on three issues: (1) whether the three exclusions in the Amerisure policy applied, (2) whether the conditional exclusion in the Navigators policy applied, and (3) whether Amerisure could recover through contractual and equitable subrogation. Over two years later, in January 2009, the district court issued its opinion, addressing only the first and third issues. Amerisure Ins. Co. v. Navigators Ins. Co., 04:06-CV-2069, op. at 1-4 (S.D.Tex. Jan. 7, 2009). It decided the former for Amerisure, finding that all three exclusions “equally apply to deny coverage.” Id. at 2. Nonetheless, the court denied reimbursement because it found that Amerisure could not pursue contractual- or equitable-subrogation claims against Navigators. See id. at 3. With respect to contractual subrogation, the court held that Navigators had been released from liability as a party to the settlement. See id. It also held that, under Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co., 236 S.W.3d 765, 776 (Tex.2007), “Amerisure has no contractual right to be subrogated” because the insured parties were fully indemnified. Id. On the question of equitable subrogation, the court found that Amerisure voluntarily contributed to the settlement. See id. Amerisure timely appealed.

STANDARD OF REVIEW

The court reviews de novo, a district court's award of summary judgment, applying the same standard as the district court. Ford Motor Co. v. Tex. Dep't of Transp., 264 F.3d 493, 498 (5th Cir.2001). Summary judgment is proper when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Gates v. Tex. Dep't of Protective & Regulatory Servs., 537 F.3d 404, 417 (5th Cir.2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). “On cross-motions for summary judgment, we review each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” Ford, 264 F.3d at 498 (citation omitted).

DISCUSSION

I. Contractual Subrogation and Mid-Continent

The first issue that we must address is one of first impression for this court: whether Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co., 236 S.W.3d 765, 776 (Tex.2007), precludes contractual subrogation simply because the insured has been fully indemnified. We hold that it does not.

In Texas, parties create contractual-subrogation rights by agreement or contract, granting the right to pursue reimbursement from a third party in exchange for payment of a loss. See id. at 774. When the insurer seeks to recover through contractual subrogation, it “stands in...