Pennsylvania Insurance Co. v. Allstate Insurance Co.
| Decision Date | 24 January 1964 |
| Docket Number | Civ. A. No. 591. |
| Citation | 226 F. Supp. 99 |
| Parties | The PENNSYLVANIA INSURANCE COMPANY, Plaintiff, v. ALLSTATE INSURANCE COMPANY, J. H. Barlow and Leo E. Humphrey, Defendants. |
| Court | U.S. District Court — Western District of Virginia |
S. J. Thompson, Jr., Caskie, Frost, Davidson & Watts, Lynchburg, Va., for Pennsylvania Ins. Co., plaintiff.
Henry M. Sackett, Jr., Williams, Robertson & Sackett, Lynchburg, Va., for defendant Allstate Ins. Co.
Joseph L. Lyle, Jr., Hickson, Davies & Lyle, Lynchburg, Va., for defendant J. H. Barlow.
Irvin D. Sugg, South Boston, Va., for defendant Leo E. Humphrey.
The Pennsylvania Insurance Company (hereinafter called "Pennsylvania") issued to J. H. Barlow a manufacturers and contractors liability insurance policy covering the premises upon which Barlow operated a gasoline service station. The policy provided, among other things, that Pennsylvania would pay within the policy limits all sums which the insured might become legally obligated to pay as damages because of bodily injury, sickness or disease sustained by any person by accident arising out of the owner's maintenance or use of the premises and the operations thereon. The limits of liability under the policy were for bodily injury $10,000 for each person and $20,000 for each accident. The policy also provided that the insurance company would defend any suit against the insured seeking damages for any such injury, even though the suit were groundless, false or fraudulent.
Paragraph 15 of the conditions of the policy provided as follows:
"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 applicable limit of liability stated in the declaration bears to the total applicable limit of liability of all valid and collectible insurance against such loss."
At the same time the defendant All state Insurance Company (hereinafter called "Allstate") issued a similar policy with the same limits of coverage and including the same paragraph 15 as that found in the Pennsylvania policy.
While these policies were in effect one Leo E. Humphrey was allegedly injured by accident while on Barlow's service station premises and employed an attorney and is claiming that Barlow is liable to him for such injuries. The complaint of Pennsylvania in this Federal Court action alleges that it is probable that Humphrey will file a suit for personal injuries against Barlow in the near future.
The defendant Allstate has denied coverage under its policy and has advised Barlow that it will take no action with respect to any claims made or suits filed against him.
Pennsylvania thereupon instituted this suit for a declaratory judgment to the effect that Allstate's policy to Barlow afforded coverage to Barlow and that Pennsylvania's liability to Barlow is for only one-half of the loss sustained by Barlow within the policy limits and that the limit of plaintiff's liability with respect thereto is $5,000.
Allstate thereupon filed a motion to dismiss the suit filed by Pennsylvania for lack of jurisdiction on the ground that the amount in controversy does not exceed the sum of $10,000. And Barlow has filed a cross-claim against Allstate alleging that he is entitled to full coverage under the Allstate policy of $10,000 for each person injured.
The contentions of the insurance companies appear to be, (1) on the part of Pennsylvania that because of the additional policy taken out with Allstate the coverage of $10,000 for an injury to any person for which Barlow paid Allstate has been reduced to $5,000 and (2) the contention of Allstate presumably is the same. Both of these positions are taken largely upon the theory that the clause above quoted had the effect of reducing the two $10,000 policies to two $5,000 policies and that therefore there cannot be more than $5,000 plus costs involved to either party. The clause relied upon by the companies is quoted above but is worth requoting at this point:
"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 applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss."
The clause limits the liability of each company to the "proportion of such loss that the applicable limit of liability of each bears to the total limit of liability". The total limit of liability of all valid and collectible insurance against such loss is obviously $20,000. In the event of a judgment against Barlow of $20,000 or under, the quoted clause limits the liability of each company to one-half of the judgment plus one-half of the costs. If the judgment is for more than $20,000 the limit of liability of each...
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