Federal Ins. Co. v. St. Paul Fire and Marine Ins. Co., 1-93-4341
| Decision Date | 31 March 1995 |
| Docket Number | No. 1-93-4341,1-93-4341 |
| Citation | 208 Ill.Dec. 404,649 N.E.2d 460,271 Ill.App.3d 1117 |
| Court | United States Appellate Court of Illinois |
| Parties | , 208 Ill.Dec. 404 FEDERAL INSURANCE COMPANY, Plaintiff-Appellant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee. |
Rehearing Denied May 18, 1995.
Hinshaw & Culbertson, Chicago, IL (D. Kendall Griffith, Fritz K. Huszagh, Christine L. Olson, of counsel), for appellee.
Barry G. Bollinger, Kelly A. Giampa of Bollinger, Ruberry & Garvey, Chicago, IL, for appellant.
In a dispute between two insurance companies regarding their respective liability, plaintiff Federal Insurance Company (Federal) appeals the trial court's apportionment between Federal and defendant St. Paul Fire and Marine Insurance Company (St. Paul).
The issue on appeal is whether an excess and a primary insurer must share liability on a pro rata basis where the excess insurance policy identifies by name another company issuing a primary policy to which the excess policy relates.
We affirm and find that an excess insurance policy which specifically names the underlying policy to which it relates and makes no general reference to other policies operates as an excess policy only to the named primary carrier and not to any other primary policy which covers the insured.
The facts are not in dispute. Three insurance companies share liability for a $1.7 million settlement in the underlying action where Tracy Swider alleged that she sustained injuries while a patient in the emergency room at Holy Cross Hospital. Swider filed a complaint against Physician's Emergency Room Consulting Organization, Ltd. (a medical corporation referred to as PERCO) which provided emergency room physicians to the hospital and against Dr. Jose Parisi who treated and diagnosed Swider. In May 1992 Swider's case was settled for $1.7 million and payments were made by three insurance companies, each of which insured Dr. Parisi.
At the time of settlement, the three insurers contributed the following payments:
Employers/Commercial Union $100,000
St. Paul $800,000
Federal $800,000
Employers Fire Insurance Company (Employers), also known as Commercial Union Insurance Company, issued to Dr. Parisi a professional liability policy which provided primary insurance liability coverage for $100,000 per claim. In accordance with this policy, Employers paid $100,000 in the Swider action and is not involved in the instant appeal.
Employers' policy contains an "other insurance" clause which designates this policy as primary insurance and that its liability is not reduced by the existence of an excess policy. The remaining portion of this clause provides for contribution with other carriers in equal proportionate shares if the policies so provide or contribution by limits of liability in the policies which do not so specifically provide.
Second, Federal issued an excess professional liability policy to Dr. Parisi and its policy limits were $1 million in excess of $100,000 for each claim. Federal's policy, entitled "Excess Professional," provides:
"IV. LIMIT OF LIABILITY
The company's limit of liability is $1,000,000 [for] each claim but not exceeding $1,000,000 during each annual period commencing on the effective date of this policy in excess of $100,000 [for] each claim $300,000 aggregate of the following policy, or that portion of the following policy which applies to professional liability, herein known as the underlying policy:
Insurance Company Employers Fund Insurance Company"
Emphasis added.
Federal's policy also contains an "other insurance" clause:
The third insurer, St. Paul issued a professional liability policy to PERCO, naming the physicians employed by PERCO as insureds including Dr. Parisi and providing up to $1 million in coverage. St. Paul's policy is entitled "Combination Professional Policy" and provides for professional liability coverage as follows:
St. Paul's policy also contains an "other insurance" clause:
"E. OTHER INSURANCE
With respect to Coverage A, if the Insured has other insurance against a loss covered by this Policy, the Company shall not be liable under this Policy for a greater proportion of such loss than the limit of liability stated in the Declarations bears to the total limit of liability of all valid and collectible insurance against such loss.
. . . . .
When both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, the Company shall not be liable under this Policy for a greater proportion of the loss than that stated in the applicable contribution provision below:
(1) CONTRIBUTION BY EQUAL SHARES
If all of such other valid and collectible insurance provides for contribution by equal shares, the Company shall not be liable for a greater proportion of such loss than would be payable if each insurer contributes an equal share until the share of each insurer equals the lowest applicable limit of liability under any one policy or the full amount of the loss is paid and with respect to any amount of loss not so paid the remaining insurers then continue to contribute equal shares of the remaining amount of the loss until each such insurer has paid its limit in full or the full amount of the loss is paid.
(2) CONTRIBUTION BY LIMITS
If any of such other insurance does not provide for contribution by equal shares, the Company shall not be liable for a greater proportion of such loss than the applicable limit of liability under this Policy for such loss bears to the total applicable limit of liability of all valid and collectible insurance against such loss."
Before the Swider action was settled, Federal filed a first amended complaint for declaratory judgment seeking a declaration that (1) St. Paul's policy provides primary coverage for Dr. Parisi in the amount of $1 million and (2) St. Paul's coverage is primary to the excess coverage provided to Dr. Parisi by Federal.
Thereafter, Federal and St. Paul filed cross-motions for judgment on the pleadings pursuant to section 2-615(e) of the Illinois Code of Civil Procedure. 735 ILCS 2-615(e) (West 1992).
Federal maintained that before it is liable under its excess policy, St. Paul must first pay its maximum obligation as the primary insurer, i.e., $1 million. Thus, under its theory, Federal overpaid in the Swider settlement by $200,000 and St. Paul should reimburse Federal by that amount.
On the other hand, St. Paul contended that it and Federal should share on a pro rata basis pursuant to the "other insurance" clauses of the two policies (Federal's and St. Paul's).
The trial court found that the "other insurance" clauses of all three carriers (Employers, St. Paul and Federal) determined the respective liability of each insurer in the Swider settlement. Based on the "other insurance" clauses, the trial court found that Employers and St. Paul were each responsible on a primary level for $100,000. The remaining $1.5 million of the settlement must be shared between St. Paul and Federal pursuant to the "other insurance" clauses.
From these findings, the trial court apportioned the Swider settlement as follows:
Employers (on a primary level) $100,000
St. Paul (on a primary level) $100,000
St. Paul (on a secondary level with Federal) $710,500
Federal (on a secondary level with St. Paul) $789,500
The trial court thus found that St. Paul's total liability is $810,500 and Federal's total responsibility is $789,500. To adjust the...
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