Empire Fire and Marine Ins. Co. v. Guaranty Nat. Ins. Co., 87-1116
| Decision Date | 10 February 1989 |
| Docket Number | No. 87-1116,87-1116 |
| Citation | 868 F.2d 357 |
| Parties | EMPIRE FIRE AND MARINE INSURANCE COMPANY, Plaintiff-Appellee, v. GUARANTY NATIONAL INSURANCE COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Kevin L. Ward of Best, Sharp, Thomas, Glass & Atkinson, Tulsa, Okl. (Joseph A. Sharp and Renee J. Harter of Best, Sharp, Thomas, Glass & Atkinson, Tulsa, Okl., on the briefs) for defendant-appellant.
Gerald L. Friedrichsen of Fitzgerald & Brown, Omaha, Neb. (Greg Morris of Morris & Morris, Tulsa, Okl., with him on the brief) for plaintiff-appellee.
Before MOORE, BARRETT and EBEL, Circuit Judges.
This appeal involves a dispute between Empire Fire & Marine Insurance Company ("Empire") and Guaranty National Insurance Company ("Guaranty") as to which of their policies affords primary coverage relative to the accident here under consideration. The district court granted summary judgment in favor of Empire, holding that the Interstate Commerce Commission ("ICC") endorsement attached to Guaranty's policy makes Guaranty the primary insurer as a matter of law over any other insurer. In so holding, the district court expressed the view that our opinion in Rodriguez v. Ager, 705 F.2d 1229 (10th Cir.1983) was controlling. We disagree.
The ICC endorsement does not establish automatic priority of the insurance policy to which it is attached, but rather serves only to negate limiting clauses that may appear in that policy. As modified by the endorsement, the policy still must be compared to all other relevant policies in order to determine, under traditional state insurance and contract law, the priorities among the policies. Although it appears on the record before us that this analysis would likely lead to the same conclusion reached by the district court that Guaranty's policy is the primary policy, the district court entered summary judgment for Empire on the ground that the mere existence of the ICC endorsement in Guaranty's policy made it primary over other policies as a matter of law. Therefore, the parties have not had the opportunity to submit evidence concerning a comparative analysis of the policies. Accordingly, we vacate the district court's decision and remand the case for further proceedings.
The underlying facts are not in dispute. Jennings Trucking Service, Inc. ("Jennings") is an interstate motor carrier licensed by the ICC to haul goods over authorized routes. Jennings is insured by Guaranty. Kris Knaus owns an independent trucking company, which owns and leases trucks and drivers to motor carriers, such as Jennings, for hauling goods over ICC certified routes. Knaus is insured by Empire.
On March 3, 1982, Knaus and Jennings entered into a lease agreement whereby Knaus provided Jennings with a Mack truck and a driver by the name of Billy Bellamy for use in Jennings' business. Knaus retained ownership of the truck, and Bellamy remained his employee under the terms of the lease.
On June 27, 1984, Bellamy telephoned Jennings' dispatcher to ask if a hauling job was available. The dispatcher did not have a job available, so Bellamy proceeded to drive toward Jennings' dispatch yard to wait for a job. En route to the dispatch yard, Bellamy collided with an automobile driven by Christopher Gallagher. Gallagher died as a result of the accident.
Following the accident, Gallagher's estate threatened litigation against Knaus and its insurance carrier, Empire. Empire demanded that Guaranty assume the defense, but Guaranty rejected that demand. Empire thereafter negotiated a settlement with Gallagher's estate in the amount of $158,565.71. Empire brought this suit against Guaranty to recover the settlement amount. The district court granted summary judgment for Empire, holding that the ICC endorsement in Guaranty's policy makes Guaranty the primary insurer as a matter of law, and Guaranty therefore was obligated to reimburse Empire for the entire amount paid by Empire in settlement to the Gallagher estate.
Empire's policy with Knaus obligates Empire to pay all sums that Knaus is legally required to pay as damages for bodily injury or property damage resulting from the operation of an auto covered by the policy. 1 In addition to providing coverage for Knaus, the policy covers any other party "using with [Knaus'] permission a covered auto [Knaus] own[s]." 2 With respect to the allocation of liability among other insurance policies that also might be applicable, Empire's policy, as modified by the Truckers Coverage Endorsement, provides as follows:
PART VI--CONDITIONS
1. ... This policy's liability coverage is excess over any other collectible insurance for any covered auto while hired or borrowed from you by another trucker.... 3
2. Except as provided in Paragraph 1 above, this policy provides primary insurance for any covered auto you own and excess insurance for any covered auto you don't own.
3. When two or more policies cover on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the limit of our policy bears to the total of the limits of all the policies covering on the same basis.
B. Guaranty's Policy
Guaranty's policy with Jennings obligates Guaranty to pay all sums that Jennings is legally required to pay as damages for bodily injury or property damages resulting from the use of a covered auto. 4 Guaranty's permissive user clause provides that "[a]nyone else is an insured while using with [Jennings'] permission any covered auto" hired or borrowed by Jennings. 5 The policy also covered the owner of covered autos that Jennings leases "while the covered auto is being used exclusively in [Jennings'] business, and is being used pursuant to operating rights granted to [Jennings] by a public authority." 6 (Guaranty's Policy, Part IV(D)(4).)
With respect to the allocation of liability among other insurance companies that also might be liable, Guaranty's policy provides:
PART VII--CONDITIONS
B. OTHER INSURANCE--PRIMARY AND EXCESS INSURANCE PROVISIONS.
1. This policy's liability coverage is primary for any covered auto while hired or borrowed by you and used exclusively in your business and pursuant to operating rights granted to you by a public authority........
3. Except as provided in Paragraphs 1 and 2 above, this policy provides primary insurance for any covered auto you own and excess insurance for any covered auto you don't own.
4. When two or more policies cover on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the limit of our policy bears to the total of the limits of all the policies covering on the same basis.
Because Jennings is an interstate carrier operating pursuant to an ICC certificate and authority, the following special endorsement, ICC form BMC 90, 7 is attached to the insurance policy provided by Guaranty:
The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured, within the limits stated herein, as a motor carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration's Bureau of Motor Carrier Safety (Bureau) and the Interstate Commerce Commission (ICC).
In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. Such insurance as is afforded, for public liability, does not apply to injury to or death of the insured's employees while engaged in the course of their employment, or property transported by the insured, designated as cargo. It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured. However, all terms, conditions and limitations in the policy to which the endorsement is attached, shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy except for the agreement contained in this endorsement.
(Emphasis added.)
The primary issue raised on appeal is whether the underlined language in the above-quoted endorsement makes Guaranty's policy primary as a matter of law over Empire's policy, which does not contain such an endorsement.
Federal courts have interpreted the effect of this ICC endorsement in at least three ways. (1) The court below held that the endorsement makes the insurance policy to which it is attached primary as a matter of law over all other insurance policies that lack similar provisions. Empire Fire & Marine Ins. Co. v. Guaranty Nat'l Ins. Co., D.C. No. 85-C-713-C (N.D.Okla. Dec. 19, 1986). (2) Other courts have held that the endorsement only negates limiting provisions in the policy to which it is attached, such as an "excess coverage" clause, but does not establish primary liability over other...
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