Crown Center Redevelopment Corp. v. Occidental Fire & Cas. Co. of North Carolina, WD

• Court: Missouri Court of Appeals
• Writing for the Court: TURNAGE, Presiding Judge, and LOWENSTEIN; NUGENT
• Citation: Crown Center Redevelopment Corp. v. Occidental Fire & Cas. Co. of North Carolina, 716 S.W.2d 348 (Mo. App. 1986)
• Decision Date: 29 July 1986
• Docket Number: No. WD,WD
• Parties: CROWN CENTER REDEVELOPMENT CORPORATION and Hallmark Cards Incorporated, Plaintiff-Respondent, v. OCCIDENTAL FIRE & CASUALTY COMPANY OF NORTH CAROLINA, et al., Defendants. 36791.

Page 348

716 S.W.2d 348

CROWN CENTER REDEVELOPMENT CORPORATION and Hallmark Cards Incorporated, Plaintiff-Respondent, v. OCCIDENTAL FIRE & CASUALTY COMPANY OF NORTH CAROLINA, et al., Defendants.

No. WD 36791.

Missouri Court of Appeals Western District.

July 29, 1986.

Motion for Rehearing and/or Transfer

to Supreme Court Denied

Aug. 28, 1986.

Application to Transfer Denied Oct. 14, 1986.

Perry L. Fuller, Julian C. Campbell, Jr., Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill., Kent Lowry, Jefferson City, for Columbia Cas. Co.

Henry J. Marquard, Kathleen McQeeny, William Spizzirri, Kralovec, Marquard, Doyle & Gibbons Chartered, Chicago, Ill., Charles A. Blackmar, Rich, Granoff, Levy & Gee, Kansas City, for Western World Ins. Co., Tudor Ins. Co., Excess Ins. Co., Ltd., Employers Mut. Ins. Co., Lexington Ins. Co., Granite State Ins. Co., Harbor Ins. Co., Nat. Surety Corp., Puritan Ins. Co., and Integrity Ins. Co.

Alvin D. Shapiro, Kansas City, J. Donald Lysaught, Weeks, Thomas & Lysaught Chartered, Kansas City, Kan., for Pine Top Policy Hel 1554.

Thomas W. Murphy, Nancy K. Caron, Haskell & Perrin, Chicago, Ill., Carl E. Laurent, Independence, for Pine Top Ins. Co., Centaur Ins. Co. and INSCO Ltd.

James K. Horstman, Barry L. Kroll, Anthony P. Katauskas, Lloyd E. Williams, Jr., Williams & Montgomery, Ltd., Chicago, Ill., Kent Lowry, Jefferson City, for Highlands Ins. Co.

Joseph B. Lederleitner, Pretzel & Stouffer, Chartered, Chicago, Ill., J. Kent Lowry, Hendren & Andrae, Jefferson City, for Federal Ins. Co.

G. Spencer Miller, Miller & Dougherty, Kansas City, Ronald A. Jacks, Paul W. Schroeder, Steven R. Gilford, James A. White, Isham, Lincoln & Beale, Chicago, Ill., for Northbrook Excess and Surplus Ins. Co.

Stephen A. Cozen, Robert R. Reeder, Susan M. Danielski, Cozen, Begier & O'Connor, Philadelphia, Pa., James F. Duncan, Watson, Ess, Marshall & Enggas, Kansas City, for Commercial Union Ins. Co. and Republic Ins. Co.

William H. Sanders, Sr., John Keith Brungardt, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, for American Ins. Co.

Norman C. Kleinberg, Theodore V.H. Mayer, Hughes, Hubbard & Reed, New York City, Judith Whittaker, Kansas City, for Hallmark Cards, Inc. and Crown Center Redevelopment Corp.

Before TURNAGE, P.J., and NUGENT and LOWENSTEIN, JJ.

TURNAGE, Presiding Judge, and LOWENSTEIN, Judge.

Crown Center Redevelopment Corporation and Hallmark Cards, as intervenors, and Hyatt Corporation ¹ filed petitions for declaratory judgment seeking a determination as to which insurers owed a duty to defend and indemnify and as to the priority among insurers. The court entered partial summary judgment finding the insurers in the Occidental line and Commercial Union line cover Hyatt, Crown Center and Hallmark, and allocated the defense funding and indemnity burdens. On appeal, Commercial Union, American, Columbia, Northbrook, Highlands, Pine Top, Insco, Centaur and Federal Insurance allege the court erred in its allocation and determination as to coverage. ² Affirmed in part, reversed in part.

In 1977 Crown Center, a wholly owned subsidiary of Hallmark, began plans for the construction of a hotel. In connection therewith, Crown Center entered into a management agreement dated September 30, 1977 with Hyatt Corporation, operator of a chain of hotels. The agreement provided that Crown Center would design, construct, and finance the hotel on property owned by it while Hyatt would manage the hotel upon its completion in exchange for a share of the hotel's gross receipts.

The management agreement provided for how insurance on the project was to be obtained. Section 8.1 provided that Crown Center was to maintain at all times prior to the opening date comprehensive general liability and property insurance for the hotel protecting Crown Center and Hyatt. Section 8.2 provided that Crown Center was to maintain comprehensive general liability insurance on the hotel commencing on the hotel's opening date and continuing for 30 years.

Pursuant to this obligation, Hallmark obtained a line of insurance which will be referred to as the Commercial Union line. Commercial Union issued a $1 million primary liability policy to Hallmark and Crown Center as named insureds. This policy when it expired as of January 1, 1981 was replaced by the Commercial Union policy now at issue, coverage from January 1, 1981 to January 1, 1984. The Commercial Union policy provided comprehensive general liability coverage. The policy contains an "other insurance" clause which provides for how the loss is to be apportioned among insurers if other insurance exists.

The agent for Marsh & McLennan, Hallmark's insurance broker, requested Commercial Union to add Hyatt as an additional insured under the primary policy. Hyatt was named as additional insured under Endorsement # 38, which upon renewal of the policy became Endorsement # 18.

Hallmark also obtained excess insurance policies providing for $100 million in coverage. The first excess policy, issued by Commercial Union, covers Hallmark and Crown Center as named insured and Hyatt as additional insured. The remaining excess policies, issued by American, Republic and Continental are "following-form" policies, meaning the provisions of the underlying policy are incorporated by reference into the excess policies except where terms are specifically excluded. These policies contain variations as to payment of defense costs. The Commercial Union and Republic policies contain "other insurance" clauses, while the American and Continental policies follow the provisions of the primary policy.

Hyatt obtained a line of coverage which will be referred to as the Occidental line. Hyatt obtained a $1 million primary comprehensive general liability policy from Occidental, such policy effective February 1, 1981 to February 1, 1982. This policy replaced one previously issued by National Union. The policy provided comprehensive general liability coverage.

The policy named Hyatt as insured, and Hallmark and Crown Center were named as additional insureds by an insurance certificate dated June 8, 1981. The policy contains an "other insurance" clause which is similar to the "other insurance" clause in the Commercial Union policy.

Hyatt also obtained excess insurance policies, providing for $200 million in coverage. These policies, effective February 1, 1981 to February 1, 1982, provide coverage to Hyatt as named insured and to the insureds on the underlying policy. The policies are similar in their duty to indemnify, though vary in their duty to pay defense costs. Each contains an "other insurance" provision which makes it "excess" to other available insurance.

The following chart outlines the coverage available under the two lines of insurance.

                   OCCIDENTAL LINE            COMMERCIAL UNION LINE
                                   -------------------------  ------------------------
                Primary:           Occidental                 Commercial Union
                                   Limit: 1 million           Limit: 1 million
                1st Level Excess:  Northbrook                 Commercial Union
                                   Limit: 25 million          Limit: 10 million
                2nd Level Excess:  Baccala & Shoop Group      American
                                   ---------------------      Limit: 50 million
                                     Pine Top
                                     Centaur
                                     INSCO
                                   Total Limit: 25 million
                3rd Level Excess:  Columbia                   Republic Group
                                   Limit: 25 million          --------------
                                                                Republic
                                                                Continental
                                                              Total Limit: 40 million
                4th Level Excess:  Highland Group
                                   -------------------------
                                     Highlands
                                     Federal
                                     Pine Top
                                   Total Limit: 25 million
                5th Level Excess:  Super Excess Group
                                   -------------------------
                                    Continental
                                    Employers Mutual
                                    Excess
                                    Integrity
                                    Lexington
                                    Granite State
                                    Harbor
                                    National Surety
                                    Western World
                                    Tudor
                                    Puritan
                                   Total Limit: 100 million
                

On July 17, 1981 two elevated skywalks in the lobby of the Hyatt Regency Hotel collapsed, killing over 100 people and injuring over 200 others. As a consequence, numerous claims were filed against Hallmark and Crown Center, Hyatt, contractors, engineers and architects. In re Federal Skywalk Cases, 680 F.2d 1175 (8th Cir.1982), cert. denied, 459 U.S. 988, 103 S.Ct. 342, 74 L.Ed.2d 383 (1982). The claims contain approximately 35 allegations of negligence, ranging from general negligence to breach of warranty and failure to properly construct and inspect.

Following the collapse, Hyatt, Hallmark and Crown Center notified their insurers. Representatives of Hallmark and Crown Center, Hyatt and Marsh and McLennan Agency consulted in order to determine the insurance coverage available for the claims. Occidental began to make settlement payments, however a number of insurers in the Occidental line claimed their coverage did not extend to Hallmark and Crown Center. Commercial Union denied that Hyatt was covered as an additional insured under its policy. Hallmark and Hyatt were faced with a variety of disclaimers of coverage from their insurance companies. In short, the insureds were unable to obtain the cooperation of all 25 insurers to settle the claims.

As a result, on October 9, 1981 Hyatt filed a declaratory judgment action naming as defendants the insurers in the two lines, and its insurance broker, Marsh & McLennan Agency. ³ Hyatt requested the court to declare that each insurer provide Hyatt coverage and declare that each insurer is...