Truck Discount Corp. v. Serrano, FF-486

• Decision Date: 09 August 1978
• Docket Number: No. FF-486,FF-486
• Parties: TRUCK DISCOUNT CORPORATION and Allstate Insurance Company, Appellants, v. Shirley A. SERRANO, as Administratrix of the Estate of Ignacio Serrano, Deceased, Appellee.
• Court: Florida District Court of Appeals

Page 340

362 So.2d 340

TRUCK DISCOUNT CORPORATION and Allstate Insurance Company, Appellants, v. Shirley A. SERRANO, as Administratrix of the Estate of Ignacio Serrano, Deceased, Appellee.

No. FF-486.

District Court of Appeal of Florida, First District.

Aug. 9, 1978.

Rehearing Denied Sept. 19, 1978.

Marion R. Shepard of Mathews, Osborne, Ehrlich, McNatt, Gobelman & Cobb, Jacksonville, for appellants.

Carl D. Dawson of Dawson, Galant, Maddox, Sulik & Nichols, Carle A. Felton, Jr. of Boyd, Jenerette, Leemis & Staas, Jacksonville, for appellee.

ERVIN, Judge.

This appeal concerns the question of which insurer bears the burden of indemnity following a settlement by the insurers of three party defendants to the tort claimant's estate in a wrongful death action.

Ignacio Serrano died when his vehicle was struck by a tractor owned by appellant, Truck Discount Corporation. The tractor had been leased by Truck Discount to Davis Transport and Rental. The tractor in turn was sub-leased by Davis to Lone Star Holding Company, the employer of the driver who was involved in the accident with Serrano. The parties settled the wrongful death action for $250,000. All three insurers provided their insureds with primary maximum coverage of $100,000 per person. Under the agreement, Allstate, Truck Discount Corporation's insurer, paid $50,000; Continental Insurance, Davis Transport and Rental's insurer, paid $100,000, and Hartford, Lone Star's insurer, paid $100,000. Continental Casualty Company, the excess carrier for Davis, made no contribution. It was agreed among the parties that a future judicial determination of the liability among the insurers would be made.

In its final judgment the trial court concluded that Allstate had primary coverage with limits of $100,000 but paid only $50,000 toward the agreed settlement of $250,000; that Continental Insurance Company properly paid its limits of $100,000; that Hartford was a basic insurer following the coverages of Allstate and Continental Insurance Company with limits of $100,000 and it paid its limits of $100,000 toward the agreed settlement; that Continental Casualty Company, the excess carrier of Davis, had excess coverage to the primary coverages of Allstate, Continental Insurance and Hartford, whose combined primary limits totaled $300,000. It concluded that the primary limits of the three insurers were not exceeded; therefore, Continental Casualty Company's excess coverage was not involved. Hartford was allowed to recover $50,000 from Allstate, which appeals.

The Florida dangerous instrumentality doctrine places primary liability upon the owner for damages caused as a result of negligence in the use of the instrumentality. The owner, however, is normally entitled to indemnity from his permittee. His right of indemnity is subject to the exception that if the owner leases a vehicle to another, and the lease provides that insurance will be furnished to the lessee, the lessor will be denied indemnity. Morse Auto Rentals, Inc. v. Lewis, 161 So.2d 235 (Fla. 3d DCA 1964); Bordettsky v. Hertz Corporation, 171 So.2d 174 (Fla. 2d DCA 1965); Morse Auto Rentals, Inc. v. Papandrea, 180 So.2d 351 (Fla. 3d DCA 1965). In the instant case the lease agreement between Truck Discount and Davis specifically provided that Davis would maintain at its own expense an insurance policy providing primary coverage of $100,000 per vehicle per person. Davis obtained such insurance through Continental Insurance Company. The lease also stated, "lessee agrees to indemnify and save harmless the lessor from and against all claims, demands, liability and expenses whatsoever . . . for which lessor is not fully reimbursed and protected by the insurance provided for in the section of the lease." Davis' excess insurance limits with Continental Casualty were $5,000,000.

We find nothing in the insurance policy of Continental Casualty which precludes Continental Casualty from indemnifying Allstate. Coverage "A" of Continental Casualty's policy provides in part:

Coverage A Excess Liability Insurance.

The company will indemnify the insured for Loss in excess of the total applicable limits of liability of Underlying insurance stated in the schedule. The provisions of the immediate underlying policy are, with respect to Coverage A, Incorporated as a part of this policy except for any obligation to investigate and defend and pay for costs and expenses incident to any of the same, the amounts and the limits of liability, an "other insurance" provision and any other provisions which are inconsistent with this policy. (Emphasis supplied)

The provisions of the underlying policy were of course those of Truck Discount's primary insurer, Continental Insurance Company. The underlying policy specifically obligated the insurer to pay on behalf of the insured "all sums which the insured, by reason of contractual liability, . . . shall become legally obligated to pay because of bodily injury. . . ." Coverage "A" of Davis' policy with its excess carrier adopted the provisions of the underlying policy which had obligated it to pay all sums that the insured, by reason of contractual liability, assumed. Continental Casualty argues, however, there is language under a separate section, coverage "B", which excludes Allstate's claim for indemnity since it in effect requires that all primary insurance be exhausted before the excess coverage is activated. We do not believe the exclusionary language under coverage "B" has any applicability to Allstate's claim. Coverage "B" applies where either the occurrence or damages are "not covered by underlying insurance"....