Nat'l Liab. Ins. Co. v. State Farm Fire & Cas. Ins. Co.
| Citation | 276 F.Supp.3d 517 |
| Decision Date | 20 July 2017 |
| Docket Number | Case No.: 1:17–cv–00420–GBL–TCB |
| Parties | NATIONAL LIABILITY INSURANCE COMPANY, Plaintiff, v. STATE FARM FIRE AND CASUALTY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
Christopher Alan Abel, Willcox & Savage PC, Norfolk, VA, for Plaintiff
Dawn Elizabeth Boyce, Bancroft McGavin Horvath & Judkins PC, Fairfax, VA, for Defendant.
THIS MATTER is before the Court on Defendant State Farm and Casualty Insurance Company's ("State Farm") Motion for Judgment on the Pleadings (Dkt. No. 7), and Plaintiff National Liability and Fire Insurance's ("National Liability") Cross–Motion for Judgment on the Pleadings (Dkt. No. 11). This case concerns a maritime insurance coverage dispute between two insurance carriers as to primary coverage responsibility for a common insured's covered loss.
There are two issues before the Court. The first issue is whether National Liability's excess "Other Insurance" clause is valid under Virginia Code § 38.2–2204(a)(e) ("The Omnibus Statute"), which would permit National Liability to provide only excess coverage once State Farm's coverage limits are exhausted. The second issue is whether National Liability's "Other Insurance" clause excuses National Liability from primary insurance and defense coverage obligations on a pro rata basis with State Farm with respect to two personal injury claims arising from a boating incident.
The Court holds that National Liability does not share primary insurance and defense coverage responsibilities with State Farm because its excess "Other Insurance" clause is valid under Virginia's Omnibus Statute, and because dissimilar "Other Insurance" clauses are reconcilable. Accordingly, the Court GRANTS National Liability's Cross–Motion for Judgment on the Pleadings and DENIES State Farm's Motion for Judgment on the Pleadings because in cases with competing excess and pro rata clauses, the pro rata clause generally provides primary coverage.
On August 7, 2016, an accident occurred on the Potomac River involving a 2003 26–foot Sea Ray 245 Weekender (the "Vessel") owned and operated by Dmitry Bocharnikov ("Insured"). (Dkt. No. 1 at ¶¶ 2, 5, 11). Two passengers aboard Bocharnikov's watercraft sustained injuries and made two personal injury claims against Bocharnikov. (Id. at ¶¶ 2, 17).
Both the National Liability policy and the State Farm policy provided insurance for the Insured's Vessel. (Id. at ¶ 2). Bocharnikov's National Liability and State Farm policies provided coverage from June 9, 2016 to June 9, 2017. (Id. at ¶¶ 9, 10). Both policies insured the Vessel for protection and indemnity and for medical payments. (Id. at ¶ 12). "The National Liability Policy provided the Insured and the Vessel coverage up to $100,000.00 under its Boating Liability (protection and indemnity) section." (Id. at ¶ 13). "The State Farm Policy provided the Insured and the Vessel protection and indemnity coverage up to $300,000.00 under its Watercraft Liability coverage and up to $2,000.00, per person, under its Watercraft Medical Payment Section." (Id. at ¶ 15). Within National Liability's General Conditions, its "Other Insurance" section provides:
If there is any other available insurance that would apply in the absence of this policy, this insurance shall apply as excess over the other insurance, unless such other insurance also provides that it will respond on an excess basis in the event of other insurance, in which case this insurance will respond on a pro-rata basis, but the combined amount shall not exceed the limits of the policy for any loss under Coverage A—Boat and Boating Equipment or Coverage E—Boat Trailer.
(Dkt. No. 1 at ¶ 14; Dkt. No. 4 at ¶ 14).
The State Farm Policy provides:
If a loss covered by this policy is also covered by other insurance, we will use this formula to determine our payment: a. divide the applicable coverage limit of this policy by the total amount of insurance covering the loss; b. multiply the result by the amount of the loss; c. the answer is our amount of payment....
(Dkt. No. 1 at ¶ 16; Dkt. No. 4 at ¶ 16).
While each policy contains a different "Other Insurance" clause, National Liability argues that State Farm's pro rata provision is invalid, thus indicating that State Farm shoulders the responsibility as the sole primary insurer for coverage and defense obligations for personal injury claims arising out of the boating incident. (Dkt. No. 1 at ¶ 18). Additionally, National Liability asserts that it only provides excess coverage for injury claims arising out of the boating incident once State Farm exhausts its $300,000.00 coverage limit. Id. Meanwhile, State Farm asserts that it shares the primary defense and indemnity obligation with National Liability to the Insured on a pro rata basis until the combined coverage limits of both policies exhaust. (Dkt. No. 1 at ¶ 21; Dkt. No. 4 at ¶ 3).
After National Liability filed its Complaint, State Farm requested in its Answer for the Court to declare that National Liability's "Other Insurance" clause is void, that the two carriers "share the primary insurance and defense coverage obligations to the Insured for claims arising out of the incident on a pro rata basis, and that National Liability has liability coverage limits of $100,000.00 per person per accident and $300,000.00 aggregate per accident, and $5,000.00 in medical expense coverage per accident." (Dkt. No. 4 at ¶ 24).1
On April 6, 2017, National Liability filed a Complaint for Declaratory Judgment pursuant to 28 U.S.C. § 2201. On May 3, 2017, State Farm filed a Motion for Judgment on the Pleadings. (Dkt. No. 7). On May 9, 2017, National Liability filed an opposition and Cross–Motion for Judgment on the Pleadings. (Dkt. No. 11).
Federal Rule of Civil Procedure 12(c) provides for a motion for judgment on the pleadings "after the pleadings are closed—but early enough not to delay trial." FED. R. CIV. P. 12(c). The standard of review for a 12(c) motion depends on the type of relief a party seeks. Burbach Broad. Co. of Delaware v. Elkins Radio Corp. , 278 F.3d 401, 405–06 (4th Cir. 2002). When parties seek a judgment on the merits of a case and move to show that there are no triable issues of fact, the standard for a Rule 12(c) motion on the pleadings is the same standard courts apply for summary judgment motions. Geoghegan v. Grant , No. DKC 10-1137, 2011 WL 673779, at *3 (D. Md. Feb. 17, 2011). This standard is "more appropriate where the moving party seeks affirmative relief on the basis of the pleadings and not merely a dismissal of claims brought against it." Id. Parties can use motions on the pleadings "to obtain declaratory judgments where the parties' only dispute is the proper interpretation of contractual terms." Id.
The Court must grant a Rule 56 motion for summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). Additionally, "the requirement is that there be no genuine issue of material fact," with a "material fact" being one that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Libertarian Party of Va. v. Judd , 718 F.3d 308, 313 (4th Cir. 2013) (citations omitted).
Because the parties filed cross-motions for judgment on the pleadings, the Court considers "each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law." Deft. of Wildlife v. N. Carolina Dep't of Transp. , 762 F.3d 374, 392–93 (4th Cir. 2014) (citation and internal quotation marks omitted).
In this admiralty law jurisdiction case, the Court must apply Virginia law because state law governs cases involving maritime insurance coverage disputes. Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 321, 75 S.Ct. 368, 99 L.Ed. 337 (1955) (). Additionally, according to Virginia case law, courts must resolve issues on the validity, effect, and interpretation of a contract based off of "the law of the state where the contract was made." Seabulk Offshore, Ltd. v. Am. Home Assurance Co. , 377 F.3d 408, 419 (4th Cir. 2004) (citing Woodson v. Celina Mut. Ins. Co. , 211 Va. 423, 177 S.E.2d 610, 613 (1970) ). Under Virginia law, "a contract is made when the last act to complete it is performed, and in the context of an insurance policy, the last act is delivery of the policy to the insured." 377 F.3d at 419 (citing Metcalfe Bros., Inc. v. Am. Mut. Liab. Ins. Co. , 484 F.Supp. 826, 829 (W.D. Va. 1980) ).
Thus, this Court applies Virginia Code § 38.2–2204 ("the Omnibus Statute") because both State Farm and National Liability's coverage applied to Virginia resident, Dmitry Bocharnikov, for his private watercraft, and the contracts were executed in Virginia. Virginia Code § 38.2–2204 provides, in part:
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