Liberty Mut. Ins. Co. v. Mid-Continent Ins. Co.

• Decision Date: 14 November 2007
• Docket Number: No. 03-10705.,03-10705.
• Citation: 508 F.3d 261
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff-Counter-Defendant, Appellee-Cross-Appellant, v. MID-CONTINENT INSURANCE COMPANY, Defendant-Counter-Claimant, Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

508 F.3d 261

LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff-Counter-Defendant, Appellee-Cross-Appellant, v. MID-CONTINENT INSURANCE COMPANY, Defendant-Counter-Claimant, Appellant-Cross-Appellee.

No. 03-10705.

United States Court of Appeals, Fifth Circuit.

November 14, 2007.

Richard Anthony Capshaw (argued), Capshaw & Associates, Dallas, TX, for Liberty Mut. Ins. Co.

Brian Lynn Blakeley (argued), Blakeley & Reynolds, Carrie Davis Holloway, Lindow & Treat, San Antonio, TX, for Mid-Continent Ins. Co.

Appeals from the United States District Court for the Northern District of Texas.

Before GARWOOD, JOLLY and BARKSDALE, Circuit Judges.

PER CURIAM:

In this suit between two liability insurers Liberty Mutual Insurance Company (Liberty Mutual) seeks to recover from Mid-Continent Insurance Company (Mid-Continent) a portion of the sums Liberty Mutual paid to settle a third party claim against Kinsel Industries (Kinsel), a covered insured under each of their respective $1 million comprehensive general liability (CGL) policies. Each insurer assumed defense of Kinsel, and the case ultimately settled for $1.5 million, but Mid-Continent would pay only $150,000, so Liberty Mutual (which also had a $10 million excess policy covering Kinsel) paid the remaining $1,350,000 and then brought this suit against Mid-Continent for $600,000, which it contended Mid-Continent was obligated for as its remaining proportionate part of the $1.5 million settlement. Following a bench trial, the district court awarded Liberty Mutual $550,000. Liberty Mut. Ins. Co. v. Mid-Continent Ins. Co., 266 F.Supp.2d 533 (N.D.Tex.2003). Mid-Continent has appealed that judgment.¹ We certified the following questions to the Supreme Court of Texas, viz:

1. Two insurers, providing the same insured applicable primary insurance liability coverage under policies with $1 million limits and standard provisions (one insurer also providing the insured coverage under a $10 million excess policy), cooperatively assume defense of the suit against their common insured, admitting coverage. The insurer also issuing the excess policy procures an offer to settle for the reasonable amount of $1.5 million and demands that the other insurer contribute its proportionate part of that settlement, but the other insurer, unreasonably valuing the case at no more than $300,000, contributes only $150,000, although it could contribute as much as $700,000 without exceeding its remaining available policy limits. As a result, the case settles (without an actual trial) for $1.5 million funded $1.35 million by the insurer which also issued the excess policy and $150,000 by the other insurer.

In that situation is any actionable duty owed (directly or...