Torruellas v. Hartford Accident & Indemnity Co.

• Decision Date: 24 January 1972
• Docket Number: Civil No. 138-69.
• Parties: Severo TORRUELLAS, Jr., and in representation of his wife Carmen Lopez Collazo and in his own rights, Plaintiffs, v. HARTFORD ACCIDENT INDEMNITY CO. and National Fire Insurance Co., Defendants.
• Court: U.S. District Court — District of Puerto Rico

357 F. Supp. 311

Severo TORRUELLAS, Jr., and in representation of his wife Carmen Lopez Collazo and in his own rights, Plaintiffs, v. HARTFORD ACCIDENT INDEMNITY CO. and National Fire Insurance Co., Defendants.

Civil No. 138-69.

United States District Court, D. Puerto Rico.

January 24, 1972.

Carlos A. Chavier Stevenson, San Juan, P. R., for plaintiffs.

Miranda-Cardenas & Gallardo, San Juan, P. R., for Hartford Accident.

González & Rodríguez, San Juan, P. R., for National Fire.

MEMORANDUM OPINION AND ORDER

TOLEDO, District Judge.

This cause is before this Court to determine the respective liabilities of the two codefendants' insurance companies under the automobile insurance policies issued by them and involved in this cause.

Plaintiffs filed on February 26, 1969, a complaint against the Hartford Accident Indemnity Company and the National Fire Insurance Company, alleging that while coplaintiff Severo Torruellas, Jr. was a passenger in an automobile owned and driven by Roberto Matanzo, he suffered injuries when said automobile was struck from behind by a car owned by Idalia Ramos Morales and driven by Samuel Gracia Gracia, with the consent of the owner.

On the day of the accident, the public liability of Mr. Gracia Gracia, who was operating the automobile owned by Mrs. Ramos Morales, was covered by Policy No. GF-304897, issued, on a 1970 Mercedes Benz, by Hartford Accident and Indemnity Company. Said policy has a bodily injury liability limit of $100,000 for each person or $300,000 for each accident. Mrs. Ramos Morales' public liability was covered by Policy No. AEC XXX-XX-XX, issued, on a 1968 Volvo, by National Fire Insurance Company. This last mentioned policy has a bodily injury liability limit of $10,000 for each person and $20,000 for each accident. Mr. Gracia Gracia was covered, at the time of the accident, by the policy issued to Mrs. Ramos Morales in view of the omnibus clause of her policy.

All the parties agreed that the reasonable compensation for the damages suffered by plaintiffs was the amount of $7,000. Codefendant National Fire Insurance Company volunteered to pay the entire amount so as to litigate the matter of the distribution of said amount with codefendant Hartford Accident and Indemnity Company, without any hardship to the plaintiffs. On the basis of the aforesaid, this Court accepted plaintiffs' voluntary dismissal of the action against the codefendants.

Both codefendants have filed briefs on the subject at issue and the copies of the involved insurance policies have been filed in the Court.

The policy issued by Hartford Accident and Indemnity Company contains an "Other Insurance" clause which reads as follows:

"Other Insurance: If the insured has other insurance against a loss covered by Section I of 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; provided, however, the insurance with respect to a temporary substitute automobile or nonowned automobile shall be excess insurance over any other valid and collectible insurance."

(Section I is entitled "Liability" and includes both bodily injury and property damage).

National Fire Insurance Company's policy also contains an other insurance clause which reads as follows:

"Other Insurance: If the insured has other insurance against a loss covered by Part III of this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability of this policy bears to the total applicable limit of liability of all valid and collectible insurance against such loss provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any valid and collectible insurance."

(Part III is entitled "Liability" and includes both bodily injury and property damage).

From the above cited clauses of the insurance policies herein under consideration, it can be readily seen that they are identical. Both excess coverage provisions refer to "temporary substitute automobiles or non-owned automobiles" and a reading of other applicable provisions of the policies show both concepts of the excess coverage provision are defined equally.

The only issue before the consideration of this Court is, whether the policy issued by the Hartford Accident and Indemnity Company covering the public liability of Mr. Gracia Gracia, driver of the car owned by Mrs. Ramos Morales, and insured by the National Fire Insurance Company, is to be obligated only on excess of other collectible insurance, or is it to share, in any way, the loss with National Fire Insurance Company.

The issue before us has never been considered by the Supreme Court of the Commonwealth of Puerto Rico; which court's interpretation this Court would have followed being this a matter to be decided according to state law or state doctrinal law. In view of this situation, this Court is not bound by any local interpretation and is completely free to apply the pertinent federal and state doctrines regarding this issue which we deem correctly state the law on the subject.

Within the context of the factual situation leading to this cause, we need to apply the pertinent clauses of the policies under consideration. Since Mr. Gracia Gracia was driving a "temporary substitute automobile or non-owned automobile", Hartford Accident and Indemnity Company, his insurer, would afford coverage in excess of "any other valid and collectible insurance". We cannot give the same application to the policy issued by National Fire Insurance Company to Mrs. Ramos Morales, since she was not using a "temporary substitute automobile or non-owned automobile" at the time of the accident. This is not to say that under the factual context National Fire Insurance Company's "Other Insurance" clause is not operative; but only that the excess insurance disposition of the clause is not operative. Within the context under consideration, the disposition of National Fire Insurance Company's "Other Insurance" clause that could be applicable would be that which reads: "If the insured has other insurance against a loss covered by Part II Liability of this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability of this policy bears to the total applicable limit of all valid and collectible insurance against such loss"¹, that is, the prorata disposition. This means that under the factual context of this cause National Fire Insurance Company will be liable for the loss, either entirely or prorata, dependent on whether there was other valid insurance against the loss.

Since we have said that Hartford Accident and Indemnity Company's policy under the circumstances of this cause only affords coverage in excess of any other valid and collectible insurance, then, National Fire Insurance Company's prorata disposition in the "Other Insurance" clause, is, under the factual circumstances of this cause, inapplicable; that is, National Fire Insurance Company's insured do not have "other insurance against a loss covered by Part II Liability" of said policy. This is so because National Fire Insurance Company's liability limits for bodily injury are $10,000 for each person and $20,000 for each accident and the present cause, as we said before, has been settled for $7,000. Under the circumstances, the only "other insurance" National Fire Insurance Company's insured could have, cannot become effective until the exhaustion of National Fire Insurance Company's limits. For this reason the prorata clause in National Fire Insurance Company's policy does not apply and it is liable to the full extent of its policy limits.

The jurisprudence dealing with this issue are far too numerous for this Court to list and discuss them; nothing will we earn by it. But see, Citizens Mutual Auto Insurance Company v. Liberty Mutual Insurance Company (6 Cir. 1959), 273 F.2d 189 and cases cited therein....