Utica Nat. Ins. Co. of Texas v. Fidelity & Cas. Co. of New York

• Decision Date: 28 June 1991
• Docket Number: No. 05-90-00821-CV,05-90-00821-CV
• Citation: 812 S.W.2d 656
• Parties: UTICA NATIONAL INSURANCE COMPANY OF TEXAS, Appellant, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellee.
• Court: Texas Court of Appeals

Page 656

812 S.W.2d 656

UTICA NATIONAL INSURANCE COMPANY OF TEXAS, Appellant, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Appellee.

No. 05-90-00821-CV.

Court of Appeals of Texas,

Dallas.

June 28, 1991.

Rehearing Overruled Aug. 6, 1991.

James M. Underwood, David R. Noteware, Dallas, for appellant.

Dennis D. Gibson, Dallas, for appellee.

Before ROWE, LAGARDE and OVARD, JJ.

OPINION

LAGARDE, Justice.

The pivotal issue in this case is which excess insurance policies apply to the total excess insurance obligation of $850,000. Utica National Insurance Company of Texas (Utica) appeals from a summary judgment in its favor against Fidelity & Casualty Company of New York (Fidelity) wherein the trial court determined that Fidelity's pro rata contribution should, as a matter of law, be $283,333.33. In two points of error, Utica complains that the trial court erred in its determination of the pro rata apportionment between Utica and Fidelity. We overrule both points of error and affirm the judgment of the trial court.

FACTS AND PROCEDURAL HISTORY

George R. Pocock recovered $2.2 million in a settlement for injuries he received in an automobile accident while a passenger in a car driven by Bill Landfair. Two lines of insurance existed at the time of the accident, one covering Pocock (the "Pocock line") and the other covering Bill Landfair, president of John F. Beasley Construction Company (the "Beasley line"). Each line of insurance included both primary insurance and excess insurance. ¹ Coverage was as follows:

Primary insurance from both lines, $1,350,000 total, was applied toward settlement, leaving a balance of $850,000 to be paid from the excess insurance. Utica paid the $850,000 excess obligation and sought contribution from Fidelity. Utica admits that its $10 million excess policy applies. Fidelity recognized its joint obligation to pay the balance and acknowledged that its $5 million excess policy applied. Fidelity denies, however, that the remaining excess insurance in the Beasley line applies because the remaining policies all require, as a condition precedent to their performance, exhaustion of Fidelity's $5 million excess policy.

The parties filed cross motions for summary judgment. In its motion, Utica asserted its right, as a matter of law, to the following apportionments of the excess settlement: (a) line total excess to line total excess (Beasley's $50 million to Pocock's $10 million) or a 5:1 ratio, resulting in Fidelity owing Utica $708,333.33, or (b) company total excess to company total excess (Fidelity's $15 million to Utica's $10 million) or a 3:2 ratio, resulting in Fidelity owing Utica $510,000. ² In the alternative, Utica sought a ratio of collectible excess to collectible excess (Utica's $10 million to Fidelity's $5 million) or a 2:1 ratio, resulting in Fidelity owing Utica $283,333.33. ³ Fidelity responded, admitting liability to Utica only in the amount of $283,333.33, and filed a cross-motion for partial summary judgment. Because Fidelity's $5 million excess policy would not be exhausted, the trial court determined that the other policies in the Beasley line should not be considered when determining the pro rata share between Fidelity and Utica; consequently, it granted Fidelity's motion for partial summary judgment. It also granted Utica's motion for summary judgment to the extent of its alternative request of a $283,333.33 contribution, and overruled its requests for greater contribution. On appeal to this Court, Utica complains that the trial court erred in overruling, in part, its motion for summary judgment and in granting Fidelity's motion for partial summary judgment.

STANDARD OF REVIEW

Generally, when parties appeal the grant of a summary judgment, they argue that a material fact issue exists. See, e.g., Sharpe v. Lomas & Nettleton Fin. Corp., 601 S.W.2d 55, 56 (Tex.Civ.App.--Dallas 1980, writ ref'd n.r.e.); TEX.R.APP.P. 166a(c). We note that the parties in this case do not make such an argument. The only question raised for us is whether the trial court correctly applied the law to undisputed facts; that is, whether the trial court correctly determined the pro rata contribution between Fidelity and Utica. See Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex.1984).

1. Cross-Motions For Summary Judgment

When both parties move for summary judgment, each party must carry its own burden, and neither can prevail because of the failure of the other to discharge its burden. Villarreal v. Laredo Nat'l Bank, 677 S.W.2d 600, 605 (Tex.App.--San Antonio 1984, writ ref'd n.r.e.). Where both parties file motions for summary judgment, and one is granted and one is denied, the denial may be considered by the reviewing court if the appealing party complains of both the granting of the opponent's motion and the denial of its own motion. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex.1988).

2. Relief Requested

Utica asks us to reverse and render judgment in its favor, increasing Fidelity's contribution. Ordinarily, an appellate court cannot reverse an improperly granted summary judgment and render summary judgment for the nonmovant. The court can only remand for further proceedings. If, however, both parties have filed for summary judgment in the trial court, the "cross" motion when properly complained of before the reviewing court entitles the court to finally resolve the entire case, including a rendition of the appropriate judgment. See Members Mut. Ins. Co., 664 S.W.2d at 328. Guided by these principles, we now review the trial court's determination that Fidelity's pro rata contribution should, as a matter of law, be $283,333.33.

PRO RATA ASSESSMENT OF LIABILITY AND CONTRIBUTION

In point one, Utica contends that the trial court's pro rata apportionment is incorrect because it did not include all of the excess insurance policies in effect at the time of the accident. Each of the excess policies issued to Beasley and Pocock either contain or incorporate by reference "other insurance" clauses. These clauses seek to make each policy collectible only after all other policies have been exhausted. Utica claims that the "other insurance" clauses in the Beasley line of excess insurance and a similar "other insurance" clause in the Utica excess policy create a conflict because two different lines of insurance exist and neither acknowledges the existence of the other. Utica contends that Texas law provides that when such a conflict is created the clauses cancel each other out and the result is that contribution is prorated between the carriers based on the relative policy limits of each, citing Hardware Dealers Mutual Fire Insurance Co. v. Farmers Insurance Exchange, 444 S.W.2d 583 (Tex.1969). In Hardware, the court held that when "other insurance" provisions in two primary policies conflict with each other, both provisions will be ignored and the insured will be covered by both policies on a pro rata basis. Hardware Dealers Mut. Fire Ins. Co., 444 S.W.2d at 589-90. We note that the policies in Hardware were both primary and that the policies in this case are all nonprimary or excess. Assuming, without deciding, that the above rule applies to nonprimary or excess policies, we consider Utica's next argument regarding proration of the contribution between Utica and Fidelity.

LINE TOTAL EXCESS TO LINE TOTAL EXCESS

Utica argues that because distinct lines of insurance coverage exist, each should have to pay its pro rata share based upon each line's total policy limits. In support of this proposition, Utica relies on Crown Center Redevelopment Corp. v. Occidental Fire & Casualty Co. of North Carolina, 716 S.W.2d 348, 364 (Mo.App.1986), and Canal Insurance Co. v. Ranger Insurance Co., 489 F.Supp. 492 (D.S.C.1980). Utica complains that the trial court confused the issue before it when it favored Fidelity's argument that the only policies which should be included in the pro rata calculations are those from which payment would be made after applying the conditions precedent. Utica contends that because the excess coverage is concurrent coverage, Utica and Fidelity should apportion liability based on the total available policy limits in each of the two lines and should prorate their liability based upon these total limits.

In Canal, the court prorated the liability based on the total limits of the primary and excess policies even though the loss paid did not exceed the primary coverage. Canal Ins. Co., 489 F.Supp. at 498. Under the express terms of the contract, however, the excess carrier in one line would have been bound to pay in the absence of the other line of insurance. Id. In Crown Center, the court concluded that proration of the liability along total limits of the two insurance lines was fair. Crown Center, 716 S.W.2d at 364. Each primary company made the other an insured; the excess carriers adopted the terms of the primary carrier; and the concurrent lines reflected what the parties involved contracted for. Id. Furthermore, in Crown, in the absence of the other line of insurance, the $122 million claim would have bound each excess carrier to pay.

The Fifth Circuit addressed the proper apportionment and priority issues regarding excess policies in Atlantic Mutual Insurance Co. v. Truck Insurance Exchange, 797 F.2d 1288, 1290 (5th Cir.1986). In Atlantic Mutual, the insured, Santini Brothers, Inc., had property damage liability coverage under policies issued by four insurance companies. Primary coverage was provided by Truck Insurance for $1 million and by Atlantic Insurance for $2 million. Aetna Casualty provided an excess policy for $4 million and Midland Insurance provided a $5 million excess policy above Aetna's excess coverage. The Aetna policy referred to the Truck policy as underlying insurance, and the Midland policy listed the Aetna policy as underlying insurance. Atlantic paid a complainant $850,000 in settlement of a claim against Santini and brought suit against...