McIntosh v. Scottsdale Ins. Co., 92-3164

Decision Date22 April 1993
Docket NumberNo. 92-3164,92-3164
Citation992 F.2d 251
PartiesScott E. McINTOSH and Steven R. McIntosh, Plaintiffs-Appellants, v. SCOTTSDALE INSURANCE COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Jack S. McInteer (Randall K. Rathbun, of Depew, Gillen & Rathbun, Wichita, KS, was with him on the brief), of Depew, Gillen & Rathbun, Wichita, KS, for plaintiffs-appellants.

Stephen M. Kerwick, of Foulston & Siefkin, Wichita, KS, for defendant-appellee.

Before TACHA, McWILLIAMS, and BALDOCK, Circuit Judges.

TACHA, Circuit Judge.

In this garnishment action, Scott McIntosh and his father, Steven McIntosh, appeal from a district court order denying their motion for summary judgment and granting Scottsdale Insurance Company ("Scottsdale") its motion for summary judgment. The district court held that Scottsdale does not owe the City of Wichita, Kansas ("Wichita") coverage for a tort judgment that the McIntoshes won against Wichita. We exercise jurisdiction under 28 U.S.C. § 1291 and reverse.


This case arose when Scott McIntosh suffered injuries from a fall on the premises of Wichita's Century II convention facilities during the 1988 Wichita River Festival. Wichita Festivals, Inc. ("Festivals"), a nonprofit corporation, runs the annual festival as Wichita's official representative pursuant to a city ordinance. See Wichita, Kan., Code of the City §§ 3.14.010-.050 (1985). While attending a street dance sponsored by Festivals, Scott sought one of the portable toilets Festivals provided for its patrons in an effort to answer the call of nature. Feeling the urgency of that call, he left the public pathway to take a more direct route and encountered a low retaining wall which separated the pathway from the entrance to Century II's underground garage. Scott jumped over the wall, fell approximately twenty feet, and suffered several injuries.

The McIntoshes sued Wichita in state court, alleging that Scott's injuries were caused by the city's failure to warn of a dangerous condition. Wichita tendered defense of the suit to Festival's liability insurer, Scottsdale, because Wichita is an additional insured under Festivals' policy. After Scottsdale denied coverage, Wichita tendered the defense to its general liability insurer, Hanover Insurance Co. ("Hanover"), which accepted the tender. Before the case went to trial, Wichita agreed to stipulate that it was 100% at fault. In return, the McIntoshes agreed not to execute against Wichita's assets and to release Hanover from any claims growing out of the accident. The case was tried on damages only, and judgment was entered against Wichita for $74,571.15 plus costs.

The McIntoshes then filed a garnishment action in state court against Scottsdale, alleging that Scottsdale owed Wichita coverage for the tort judgment. Scottsdale removed the case to the United States District Court for the District of Kansas. Following discovery, the parties filed cross-motions for summary judgment relying on essentially the same facts. The McIntoshes argued that Scottsdale is liable for the tort judgment under two separate provisions in Festivals' liability policy. First, they argued that the endorsement which names Wichita as an additional insured covers Wichita for all liability arising out of the festival, including liability based on Wichita's own negligence. Even assuming, as Scottsdale contended, that the endorsement itself provides coverage only in cases where Wichita is vicariously liable for Festivals' negligence, the McIntoshes argued that the policy still provides coverage because it is controlled by a city ordinance that allegedly requires Festivals to purchase insurance covering Wichita for its own negligence.

Second, they argued that Scottsdale owes coverage to Festivals because the same city ordinance also allegedly requires Festivals to indemnify Wichita for its own negligence. Although the policy contains a contractual liability exclusion, an "incidental contracts" clause excepts from the exclusion liability based on agreements to indemnify a municipality. The McIntoshes argued that because Festivals must indemnify Wichita and because the policy covers Festivals for such indemnification, Scottsdale ultimately owes Wichita the amount of the underlying tort judgment.

The district court examined the language of the additional insured endorsement and concluded that it does not cover Wichita for its own negligence. It further concluded that, assuming that the ordinance could override the policy, the ordinance does nothing to amend the policy because it does not require Festivals to obtain insurance covering Wichita for its own negligence. Finally, because the ordinance does not require Festivals to indemnify Wichita for its own negligence, the court held that the McIntoshes cannot prevail under the incidental contracts clause. It therefore granted Scottsdale's motion for summary judgment and denied the McIntoshes' cross-motion, including their request for attorneys fees. McIntosh v. Scottsdale Ins. Co., 789 F.Supp. 1126 (D.Kan.1992). This appeal followed.


We review summary judgment orders de novo, using the same standards the district court applies. Osgood v. State Farm Mut. Auto. Ins. Co., 848 F.2d 141, 143 (10th Cir.1988). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Ordinarily, the denial of the McIntoshes' motion for summary judgment would not be an appealable final order. See Schmidt v. Farm Credit Servs., 977 F.2d 511, 513 n. 3 (10th Cir.1992). Where we reverse a summary judgment order in favor of one party, however, we will review the denial of the other party's cross-motion for summary judgment under the same standards applied by the district court so long as it is clear that the party opposing the cross-motion had an opportunity to dispute the material facts. Id.; cf. Buell Cabinet Co., Inc. v. Sudduth, 608 F.2d 431, 433 (10th Cir.1979). In this diversity case, we ascertain and apply Kansas law such that we reach the result that would be reached by a Kansas court. See Adams-Arapahoe Sch. Dist. No. 28-J v. GAF Corp., 959 F.2d 868, 870 (10th Cir.1992). We review de novo the district court's rulings with respect to Kansas law. See Salve Regina College v. Russell, 499 U.S. 225, ---, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991).


The McIntoshes contend that the district court erred because (1) the additional insured endorsement provides coverage for Wichita's own negligence; (2) the city ordinance controls the Scottsdale policy and amends it to cover Wichita for its own negligence; and (3) the city ordinance requires Festivals to indemnify Wichita for its own negligence so that Scottsdale ultimately owes Wichita under the incidental contracts clause. Because we agree that the policy itself covers Wichita as an additional insured, and because Scottsdale had a fair opportunity to dispute all the material facts, we reverse the district court and order it to enter judgment in favor of the McIntoshes.

The additional insured endorsement provides:

The "Persons Insured" provision is amended to include as an insured the person or organization named below but only with respect to liability arising out of operations performed for such insured by or on behalf of the named insured.

Festivals is the named insured. Wichita is named as an additional insured. The district court interpreted the phrase "arising out of the operations performed ... by ... the named insured" to mean arising from Festivals' negligence, thereby excluding coverage for Wichita's negligence. Put another way, the court concluded that the plain language of the endorsement unambiguously covers Wichita only to the extent that it is held vicariously liable for Festivals' negligence. We disagree.

In Kansas, the construction of an insurance policy is a legal determination subject to de novo review. Farm Bureau Mut. Ins. Co. v. Old Hickory Casualty Ins. Co., 248 Kan. 657, 810 P.2d 283, 285 (1991). Accordingly, we review the district court's determination by applying the Kansas rules of insurance contract interpretation and construction. The Kansas Supreme Court recently summarized those rules:

To be ambiguous, a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it generally uncertain which one of the two or more meanings is the proper meaning. The language of a policy of insurance, like any other contract, must, if possible, be construed in such manner as to give effect to the intention of the parties. Where the terms of a policy of insurance are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail. Since the insurer prepares its own contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage provided in the policy, it must use clear and unambiguous language in doing so; otherwise, the policy will be liberally construed in favor of the insured. When an insurance contract is not ambiguous, the court may not make another contract for the parties. Its function is to enforce the contract as made.

Id. 810 P.2d at 285-86. As an alternative to the rule of liberal construction of ambiguous terms, the Kansas courts sometimes apply the related doctrine of "reasonable expectations." See Penalosa Coop. Exch. v. Farmland Mut....

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