St. Paul Fire & Marine Ins. Co. v. Medical Protective Co., 80-2340

• Decision Date: 18 October 1982
• Docket Number: No. 80-2340,80-2340
• Citation: 691 F.2d 468
• Parties: ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff-Appellee, v. The MEDICAL PROTECTIVE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 468

691 F.2d 468

ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff-Appellee, v. The MEDICAL PROTECTIVE COMPANY, Defendant-Appellant.

No. 80-2340.

United States Court of Appeals, Tenth Circuit.

Oct. 18, 1982.

Richard T. Foster, Wichita, Kan. (William Tinker, Wichita, Kan., on the brief), of McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, Kan., for defendant-appellant.

H. W. Fanning, Wichita, Kan. (Harker E. Russell, Wichita, Kan., with him on the brief), of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, Kan., for plaintiff-appellee.

Before DOYLE, McKAY and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

The appeal in this diversity case arises out of a dispute between two insurance companies over which has to pay portions of a medical malpractice settlement against a professional corporation and a doctor it employed. St. Paul Fire & Marine Insurance Company (St. Paul), which had written excess liability policies, paid $300,000 of the $400,000 settlement, and brought suit against The Medical Protective Company (Medical Protective) to recover $200,000 of the amount paid. The trial court ruled in favor of St. Paul, construing the insurance contracts to require $300,000 to be paid by Medical Protective before any amount was payable from the excess policies.

During the time period at issue, Women's Clinic, P.A., a professional corporation, employed three doctors: Ronald D. Linhardt, J. Gilleran Kendrick, and Charles P. McCoy. Although the corporation and all three doctors were sued in the malpractice action, the claim was based upon services rendered by Dr. Linhardt, and the settlement judgment was entered only against Dr. Linhardt and the professional corporation. Five insurance policies were potentially applicable to satisfy the malpractice claim. Medical Protective wrote three base policies with limits of $100,000-one each on Dr. Linhardt, Dr. Kendrick and Dr. McCoy. Although none of the base policies listed any of the other doctors, each declared by endorsement that "(t)his policy extends to and covers Kendrick, Nyberg, and McCoy, P.A. (now, by change of name, Women's Clinic, P.A.) in any claim hereunder." St. Paul wrote two excess policies-one each on Dr. Kendrick and Dr. McCoy. Each excess policy listed the professional corporation as an additional insured.

Medical Protective argues that its liability for the $400,000 settlement is limited to the $100,000 payable under the Linhardt policy. St. Paul contends that the Kendrick and McCoy policies must be exhausted before resort to the excess policies, and therefore, that Medical Protective is liable for $300,000 of the settlement. St. Paul relies on a section contained in its policies which declares that St. Paul's liability

"shall be only for the ultimate net loss in excess of the 'underlying limits' defined as the greater of:

(1) an amount equal to the limit(s) of liability indicated beside underlying policy(ies) listed or insurance described in Schedule A hereof, plus the applicable limits of any other underlying insurance collectible by the Insured."

St. Paul prevailed below because the trial court determined that Medical Protective's policies on Kendrick and McCoy constituted "other underlying insurance collectible by the Insured." Because we agree with that determination, we affirm.

Medical Protective's policies state, "This policy extends to and covers (the professional corporation) in any claim hereunder." The district court construed this language to mean that the professional corporation was insured under the Medical Protective policies on Drs. Kendrick and McCoy, and therefore that each policy constituted "other underlying insurance collectible by the Insured."

Medical Protective asserts that the policies were only intended to cover the professional corporation in the event of claims arising against the named doctor. It argues that the policies' prohibition against partnership liability supports its reading. ¹ We...