Through Transp. Mut. Ins. Ass'n v. Nationwide Mut. Ins. Co.
| Decision Date | 19 September 2022 |
| Docket Number | 21-2262-JAR-RES |
| Parties | THROUGH TRANSPORT MUTUAL INSURANCE ASSOCIATION LIMITED, Plaintiff, v. STARSTONE NATIONAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Kansas |
This action involves a coverage dispute between two insurance companies, each claiming that its policy is excess to the other insurer's policy. Before the Court is Defendant StarStone National Insurance Company's (“StarStone”) Motion for Summary Judgment (Doc 26) and Plaintiff Through Transport Mutual Insurance Association, Ltd.'s (“TT Club”) Motion for Summary Judgment (Doc. 28). The cross-motions for summary judgment are fully briefed, and the Court is prepared to rule. For the reasons explained below, the Court grants TT Club's motion and denies StarStone's motion.
Summary judgment is appropriate when the moving party demonstrates that there is “no genuine dispute” about “any material fact” and that it is “entitled to judgment as a matter of law.”[1] In applying this standard, the court views the evidence and draws reasonable inferences in the light most favorable to the nonmoving party.[2] To prevail on a motion for summary judgment on a claim upon which the moving party also bears the burden of proof at trial, the moving party must demonstrate “no reasonable trier of fact could find other than for the moving party.”[3] An issue of fact is “material” if it can “affect the outcome of the suit under the governing law.”[4] And “[a]n issue of fact is ‘genuine' if ‘the evidence is such that a reasonable jury could return a verdict for the non-moving party on the issue.'”[5]
Summary judgment is not a “disfavored procedural shortcut”; on the contrary, it is an important procedure “designed to secure the just, speedy and inexpensive determination of every action.”[6]
The following facts and insurance provisions are stipulated by the parties.[7]
D&L Transport, LLC (“D&L”), a Kansas limited liability company, was named a defendant in a Texas lawsuit arising out of a 2019 trucking accident. On the date of the accident, D&L carried three insurance policies that provided coverage for the trucking accident: (1) a “Commercial Insurance Portfolio” issued by Nationwide Mutual Insurance Company (“Nationwide”) for the policy period April 1, 2019, to April 1, 2020, which included $1 million in business auto liability coverage; (2) a “Following Form Excess Liability Insurance Policy” issued by StarStone for the policy period April 1, 2019, to April 21, 2020, which provided $5 million in coverage, and specified it was “excess of [the] total limits” of the scheduled followed policies;[8] and (3) a “Certificate of Insurance” issued by TT Club for the April 1, 2019, to March 31, 2020, policy period, which included third-party liability coverage with a limit of $5 million per accident, inclusive of defense costs subject to a $5,000 deductible.
D&L gave notice of the Texas lawsuit to its three insurers. D&L tendered its defense to Nationwide and TT Club, which defended the action under a reservation of rights. StarStone did not participate in D&L's defense but was kept abreast of all developments in the case. The Texas lawsuit ultimately settled at mediation for a confidential amount above the Nationwide policy's $1 million limit and within the StarStone policy's $5 million limit.
Before the mediation, TT Club advised Nationwide and StarStone that it believed its policy “provided coverage excess of both the Nationwide and StarStone policies, which functioned as one tower of liability insurance, and that the StarStone excess following form policy was obligated to respond immediately upon the exhaustion of Nationwide's $1,000,000 of coverage.”[9] StarStone disagreed, maintaining that its policy was a “true excess” policy that was excess not only to Nationwide's policy but also to TT Club's policy. StarStone thus declined to attend the mediation and refused to pay any portion of the settlement. So, Nationwide and TT Club funded the entire settlement. Nationwide contributed its $1 million limit to the settlement, and TT Club paid the rest of the settlement on a without prejudice basis.
The Nationwide policy provides general auto-accident liability coverage with limits of $1 million per occurrence and $1 million in the aggregate. The policy states that Nationwide “will pay all sums an ‘insured' legally must pay as damages because of ‘bodily injury' or ‘property damage' to which this insurance applies, caused by an ‘accident' and resulting from the ownership, maintenance or use of a covered ‘auto'.”[10] Generally, the Nationwide policy insures only “[y]ou for any covered ‘auto'” and “[a]nyone else while using with your permission a covered ‘auto' you own, hire or borrow.”[11] The policy defines “you” as the “Named Insured shown in the Declarations”-here D&L.[12]The premium for Nationwide's policy was $2,545.
The StarStone policy is a “Following Form Excess Liability Policy,” meaning its “coverage follows the definitions, terms, conditions, limitations and exclusions of the Followed Policy in effect at the inception of this Policy.”[13] The Declarations state that the StarStone policy has limits of $5 million per occurrence and a $5 million aggregate limit, [14] The premium for StarStone's policy was $3,355.
The “Coverage” section of the policy provides that StarStone “will pay on behalf of the Insured the sums in excess of the Total Limits of Underlying Policies shown in Item 6. of the Declarations that the Insured becomes legally obligated to pay as damages.”[15] This section also states that [16] Section II, in turn, provides that “[t]his Policy applies only in excess of the Total Limits of Underlying Policies shown in Item 6. of the Declarations.”[17]
Items 6 and 7 of the Declarations direct the insured to “[s]ee [the] Schedule of Followed Policies and Limits” set out in an endorsement to the policy.[18] That endorsement, titled “Schedule of Followed Policies and Total Limits of Underlying Policies,” amends both items.[19]As set out in the endorsement, Item 7 lists four followed insurance policies-identified by insurance company, policy number, coverage type, policy period, and policy limits-that provide underlying coverage to StarStone's excess policy.[20] And Item 6 lists the “Total Limits of [the] Underlying Policies” identified in Item 7.[21] The $1 million Nationwide policy is specifically listed in Items 6 and 7 as one of the four followed insurance policies, but the TT Club policy is not.[22]
The StarStone policy requires D&L “[t]o keep the policies making up the Total Limits of Underlying Policies in Item 6. of the Declarations in full force and effect.”[23] If D&L fails to do so, StarStone “will only be liable to the same extent as if there had been full compliance with the[] requirement[].”[24] The StarStone policy also contains a “Defense” section that provides:
Finally, the StarStone policy includes a “Definition” section. In that section, “Followed Policy” is defined as “the polic[ies] listed in Item 7. of the Declarations of this Policy.”[26]“Underlying Policies” is defined as “those policies that comprise the Total Limits of Underlying Policies scheduled in Item 6. of the Declarations of this Policy and any other applicable underlying insurance, including any self-insured retentions.”[27]
The TT Club policy provides primary coverage to D&L for “Third Party Liabilities,” among other specified risks. The policy's third-party liability coverage carries a limit of $5 million per accident, subject to a $5,000 deductible. The TT Club policy contains a provision entitled “Double Insurance.”[28] That provision reads: “If we and another insurer insure you for the same risk, we will exclude any claim to the extent that it is recoverable from the other insurer, or would be recoverable except for a double insurance exclusion.”[29] The policy defines “risk” as “liability, loss, damage or costs.”[30] The total premium for TT Club's policy was $148,000.
TT Club brings this diversity action against StarStone, seeking equitable contribution for the full amount of the D&L settlement it paid above the $1 million Nationwide covered. The parties stipulate that the issue on summary judgment is the order in which each company's insurance policy is obligated to fund that amount of the D&L settlement that exceeds Nationwide's $1 million limit of liability. TT Club maintains that StarStone's policy is triggered immediately upon the exhaustion of...
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