Universal Underwriters Ins. Co. v. Allstate Ins. Co.

Decision Date07 June 1991
Docket NumberNo. 90-081,90-081
Citation134 N.H. 315,592 A.2d 515
CourtNew Hampshire Supreme Court

Yakovakis, McDonough & Lindh, Manchester (James G. Walker, on the brief and orally), for plaintiff.

Wiggin & Nourie, Manchester (Doreen F. Connor and Gary M. Burt (orally), both on the brief), for defendant.


The defendant, Allstate Insurance Company (Allstate), appeals the decision of the Superior Court (Goode, J.) in a declaratory judgment action filed by the plaintiff, Universal Underwriters Insurance Company (Universal), requesting a declaration of Allstate's obligation to share responsibility, where there were two insurance policies covering a single accident. Allstate argues that the trial court erred when it ruled that Allstate was obligated to share defense and indemnity expenses with Universal on a pro rata basis. For the reasons that follow, we reverse.

The facts are not in dispute. On September 18, 1981, Thomas Semeraro was operating a 1981 Honda Accord owned by Peters Auto Leasing of Nashua. Semeraro was using the Honda as a replacement for his own motor vehicle, a 1976 Oldsmobile, which was undergoing repairs at the time. While commuting home from work, in Lexington, Massachusetts, Semeraro ran over a pedestrian who had previously been struck by another vehicle. The pedestrian died as a result of his injuries, and Semeraro was sued by the victim's estate.

Prior to the date of the accident, Universal had issued a policy of insurance to the owner of the accident vehicle, Peters Auto Leasing. Universal's policy provided, pursuant to its "other insurance" clause, that if an owned auto was in the care, custody, or control of any person or organization other than Peters Auto Leasing (the "named insured"), the liability coverage provided in the insurance contract would be "excess." Semeraro insured his personal motor vehicle with Allstate, and his insurance policy provided, under its "other insurance" clause, that when an insured was operating a temporary substitute automobile, Allstate coverage would be excess over any other collectible insurance. Thus, in this case, both Universal and Allstate purport to make their policies "excess" over other insurance.

Universal made demand upon Allstate to provide primary coverage for the loss. Allstate declined on the ground that Allstate's policy provided only excess coverage. Allstate also refused to participate in the $250,000 settlement of the underlying tort claim. Subsequently, Universal instituted this action seeking a pro rata indemnity from Allstate. Indemnity was also sought against Allstate for the pro rata share of the $11,606.07 costs of defense. The case was submitted on an agreed statement of facts, resulting in the trial court's ruling that the "excess" clauses in the two policies were mutually repugnant and must be disregarded, and that each insurer was liable for a pro rata share of the settlement based upon applicable limits contained in each policy. It is from this order that Allstate appeals.

Allstate argues that our decision in Liberty Mutual Insurance Co. v. Home Insurance Indemnity Co., 116 N.H. 12, 351 A.2d 891 (1976), governs this appeal and, therefore, that the provision in the Universal policy that its coverage is "excess" when the insured vehicle is operated by a permissive user is invalid under the Financial Responsibility Act, RSA 259:61. We agree.

In Liberty Mutual we examined the validity of a clause which purported to make coverage for an insured who was operating a non-owned vehicle "excess insurance over any other valid and collectible insurance." Liberty Mutual, supra at 17, 351 A.2d at 894. We held that such a provision was invalid, because it violated the mandate of the Financial Responsibility Law, which prescribed (on that date) a required minimum coverage for injury to any one person of $15,000. Liberty Mutual, 116 N.H. at 17, 351 A.2d at 895; see also RSA 268:1, VII(a) (1975) (currently codified at RSA 259:61, I). The Universal policy that we are asked to examine contains the same attempt to fashion its coverage for non-owned vehicles as "excess" insurance, an attempt which must fail for the same reason.

Universal's "excess clause" language makes the risk which Universal underwrote minimal. Under the Universal policy, it remained primarily liable only when an agent of Peters Auto Leasing was operating the insured vehicles or when the lessee did not have personal coverage. In the vast majority of situations, the liability coverage provided by Universal would become "excess," and the purchased coverage therefore minimal. Even so, Universal contends that such a result does not violate the Financial Responsibility Law.

Universal argues that Liberty Mutual should be distinguished from the present case because the offending "excess" clause in Liberty Mutual was in a policy written by an insurance carrier that was attempting to avoid providing...

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