Maricopa County v. Federal Ins. Co., 2

• Decision Date: 19 May 1988
• Docket Number: No. 2,CA-CV,2
• Citation: 757 P.2d 112,157 Ariz. 308
• Court: Arizona Court of Appeals
• Parties: MARICOPA COUNTY, Home Indemnity Company, a corporation; C & D Pipeline, Inc., a corporation, Plaintiffs/Appellants, v. FEDERAL INSURANCE COMPANY, a corporation, Defendant/Appellee. 88-0154.

Page 112

757 P.2d 112

157 Ariz. 308

MARICOPA COUNTY, Home Indemnity Company, a corporation; C & D Pipeline, Inc., a corporation, Plaintiffs/Appellants, v. FEDERAL INSURANCE COMPANY, a corporation, Defendant/Appellee.

No. 2 CA-CV 88-0154.

Court of Appeals of Arizona,

Division 2, Department A.

May 19, 1988.

[157 Ariz. 309] Robbins & Green, P.A. by William H. Sandweg III and Paul J. McGoldrick, Phoenix, for plaintiffs/appellants.

Crampton, Woods, Broening & Oberg by James R. Broening and Kenneth C. Miller, Phoenix, for defendant/appellee.

OPINION

HATHAWAY, Judge.

A cross-motion for summary judgment was granted in favor of appellee, Federal Insurance Co. (Chubb), and against appellants Maricopa County and Home Indemnity Co. At issue is whether an excess liability carrier must pay a claim falling within the coverage of the primary insurer where the primary insurer is insolvent. We agree with the trial court and affirm its ruling that the excess carrier is not obligated to pay solely because the primary carrier is insolvent.

FACTS

At the time of his death on August 5, 1983, William W. Wiesermann was employed by Roadjammers Machinery, Inc., a trucking company. Roadjammers was engaged in transporting dirt to a Maricopa County worksite from a separate project site controlled by C & D Pipeline. Wiesermann was electrocuted when the bed of his dump truck came into contact with a high voltage line at the dumpsite. At the time of the accident, Maricopa County was self-insured, C & D had primary liability insurance with Home Indemnity, and Roadjammers had a primary insurance policy for $500,000 with Mission Insurance Company, and a $5 million excess umbrella policy with Chubb. Mission has been found insolvent within the meaning of the Arizona insurance laws.

In the underlying tort action brought by Wiesermann's widow and children against Maricopa County and C & D Pipeline, plaintiffs alleged that the defendants had negligently failed to discharge duties owed to Wiesermann, thereby proximately causing his death. That action was settled before trial for $120,000, consisting of equal contributions by Maricopa County, Home Indemnity (on behalf of C & D Pipeline) and Chubb. In their cross-motions for summary judgment, both appellee and appellants requested that the other compensate them for their $40,000 contributions. Appellants took the position that because Mission was insolvent, Chubb should step into its shoes and become the primary insurer.

Appellants raise three issues on appeal: (1) whether the trial court erred in granting Chubb's motion for summary judgment because appellants were "using" the Roadjammers' vehicle at the time of the accident, and were thus omnibus insureds under the Roadjammers' policy; (2) whether the trial court erred in holding that Chubb was not the primary insurer of the Roadjammers' vehicle, and (3) whether the Arizona Financial Responsibility Act was violated by not holding Chubb as primary insurer of the Roadjammers' vehicle.

We resolved this case primarily on the second issue raised by appellants. Appellants devote a substantial portion of their argument to the contention that they are additional insureds under the Mission policy and, because Mission is insolvent, Chubb must take Mission's place as primary insurer and pay the entire $120,000 settlement. We agree with the trial court that Chubb does not become the primary insurer and it is thus unnecessary for us to address the question whether appellants were additional insureds under the Mission policy. Summary judgment in favor of Chubb was appropriate, as only one inference could be drawn from the facts, entitling Chubb to summary judgment as a matter of law. Giovanelli v. First Federal Savings and Loan Association of Phoenix, 120 Ariz. 577, 587 P.2d 763 (App.1978).

CHUBB AS PRIMARY INSURER

Because Chubb had issued an excess umbrella policy to Roadjammers, it was not obliged to provide coverage until the primary policy limits of $500,000 had been paid. Appellants argue that by virtue of Mission's insolvency, Chubb must step into Mission's place and become the primary insurer, regardless of whether any or all of the $500,000 primary policy amount has been paid. Exhaustion of the $500,000 amount is a fixed policy requirement; it was not satisfied and this fact cannot be altered by language in other policies. The Chubb policy itself provides that:

The Company shall be liable only for the ultimate net loss the excess of the greater of the insured's underlying limit or retained limit defined as:

(a) Underlying limit--an amount equal to the limits of liability indicated beside the underlying insurance listed in the schedule of underlying insurance, ...

The...