OSCN Found Document:GENERAL STAR INDEMNITY CO. v. HUDSON INSURANCE CO.
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
¶1 Hudson Insurance Company sought certiorari review of the Court of Civil Appeals' opinion on two narrow issues: (1) did the Court of Civil Appeals misapply Oklahoma law in determining that the Hudson's policy is a primary liability insurance policy and not an indemnity policy; and (2) whether the Court of Civil Appeals erred in determining that General Star Indemnity Company, insurer, was entitled to prejudgment interest as the prevailing party under 36 O.S. § 362936 O.S. § 3629
FACTUAL BACKGROUND
¶2 The Choctaw Nation was sued for damages arising out of an accident that occurred when the Nation hired a bus to carry passengers to one of its casinos. The bus was involved in a serious accident causing the death of three passengers and several more passengers were injured. A lawsuit was filed in a separate action against the Nation seeking damages by the legal representatives for the deceased passengers and for those passengers who were injured.
¶3 At the time of this accident, the Nation was insured by three different insurers, Occidental Insurance Company, Hudson, and General Star. The Nation put its insurers on notice to settle these claims while the lawsuit was pending. A settlement was reached through payments made by all three of the Nation's insurers. Occidental had the first layer of liability insurance, paying its policy limits of five-million-dollar ($5,000,000). It is not a party to this action. The remaining defense costs and settlement payments were made in varied contributions by the remaining carriers, Hudson and General Star, pursuant to a reservation of rights. Both carriers argued that its policy of insurance was "excess" and the other had the next layer of "primary" coverage. Although Hudson argued that the bus did not qualify as an "automobile" under its policy, it was determined by the trial court and affirmed by the Court of Civil Appeals that the bus was a covered "automobile" under the Hudson Insurance policy. This holding was not challenged by Hudson on certiorari.
¶4 General Star filed its "Amended Petition for Declaratory Judgment" and sought a declaration from the trial court that it was entitled to full reimbursement from Hudson for all sums paid in settlement of the claims on behalf of the Nation. Count I of its' Amended Petition is titled "Declaratory Judgment- Equitable Contribution and/or Equitable Subrogation."
General Star Policy
¶5 The General Star insurance policy is titled, "Excess Automobile Liability Policy," on the initial cover page, on the Schedule of Underlying Insurance, and on the first page of the policy. in excess of "all primary policies providing automobile liability insurance." The Insuring Agreement states:
EXCESS AUTOMOBILE LIABILITY POLICY
Section I
Coverages
In consideration of the payment of premium and in reliance upon representations you made to us during the process of obtaining this policy and subject to the Limit of Insurance shown in Item 4. of the Declarations and all the exclusions, terms and conditions of this policy, we agree with you as follows:
1. INSURING AGREEMENT
We will pay on behalf of the insured ultimate net loss in excess of the total of the limits of the underlying insurance, which is covered by the controlling underlying policy and also covered by this policy, arising from an occurrence during the policy period....
"Underlying Insurance" is defined as:
a. Means all of the primary or excess insurance policies providing automobile liability insurance, including the controlling underlying policy," contributing to the limits stated in the SCHEDULE OF UNDERLYING INSURANCE, including any deductible amount(s), insured' participation(s) or self insured retention(s) beneath any such policy, and includes any renewals or replacements thereof; and
b. Includes any other policy or policies' limits of insurance which are not listed in the SCHEDULE OF UNDERLYING INSURANCE, but which provide automobile liability coverage to those polies that are listed in the SCHEDULE OF UNDERLYING INSURANCE. Such policy's or policies' limits are in addition to the limits stated in the SCHEDULE OF UNDERLYING INSURANCE.
The premium was a flat charge of Twelve Thousand Five Hundred Dollars ($12,500) with a limit of insurance of Five Million Dollars ($5,000,000.00) per each occurrence.
Hudson Policy
¶6 Hudson issued a policy to the Nation titled "Sovereign Nations All Lines Aggregate Insurance Policy" which included automobile liability coverage with a retained limit of $25,000; an amount the Nation had to incur for any "covered loss" before Hudson was liable to pay. Hudson agreed to "indemnify" the Nation against "loss," and prescribed the total amount the Nation is legally obligated to pay in settlement for an "occurrence," an accident resulting from the use of the Nation's use of an automobile.
F. INSURING AGREEMENT F. -- AUTOMOBILE LIABILITY, AUTO MEDICAL PAYMENTS and UNINSURED & UNDERINSURED MOTORISTS
"Hudson agrees, subject to the terms, conditions and exclusions of this policy to indemnify [the Nation] against "loss" and "expense" because of "bodily injury" and/or "property damage" caused by an "occurrence" and resulting from the "Assured's" ownership, maintenance or use of an "automobile." "Hudson" further agrees, subject to the terms, conditions and exclusions of this policy to indemnify the "Assured" for compensatory damages an "Assured" is entitled to recover from the owner or driver of an uninsured or underinsured automobile., however, the damages must result from "bodily injury" or "property damage" sustained by the "Assured" and must arise from an accident."/
Hudson defined the following terms:
LOSS: The term "loss", wherever used herein, shall mean the total sum, after making proper deductions for recoveries and salvages, which [the Nation] becomes legally obligated to pay, either through adjudication, settlement or compromise, as compensatory damages, by reason of: (1) liability imposed upon the [Nation] by law ...
EXPENSE: The term "expense" wherever used herein, shall include legal costs ... allocable to a specific "claim" to investigate, settle and/or defend "claims" and/or suits which are paid as a consequence of any "occurrence" [an accident occurring during the policy period], "wrongful act" or "wrongful employment practice" covered hereunder....
OCCURRENCE: The term "occurrence", wherever used herein, shall mean an accident, including continuous or repeated exposure to substantially the same general harmful conditions which takes place or first commences during the "policy period".
D. SPECIAL PROVISION APPLICABLE TO ALL COVERAGE PARTS
This policy is intended to provide coverage under a single Insuring Agreement for any "loss" and/or "expense" arising out of any "claim" or "occurrence" and does not permit coverage for individual "claims" or "occurrences" under more than one Insuring Agreement or more than one Coverage Part.
The Hudson policy also had an "other insurance" clause stating:
OTHER INSURANCE:
If the "Assured" has other insurance providing coverage against "loss" and "expense" that is also covered by this policy, "Hudson" shall be liable, under the terms of this policy, only in excess of that coverage provided by such other insurance and no monies payable or collectible from such other insurance shall accrue to the "retained limit" or, if purchased, the Aggregate Loss Fund.
¶7 We note that the General Star policy limit is Five Million Dollars ($5,000,000.00) and the Hudson policy is capped at a liability limit for automobile coverage per occurrence at Ten Million Dollars ($10,000,000.00).
¶8 The trial court entered an Order and Opinion denying Hudson's motion for summary judgment and granting General Star's summary judgment motion and directing Hudson to reimburse General Star for settlement funds paid in the amount of $990,000 for settlement payments advanced on behalf of one group of claimants, and $2,250,000 for another claimant. After the trial court granted summary judgment, General Star filed a motion asking the trial court to award prejudgment interest against Hudson pursuant to 36 O.S. 2021, § 3629 (B). General Star argued it should be treated as the prevailing "insured" and argued for the first time in this litigation that it was the insured's "subrogee" and stepped into the shoes of the insured in this litigation. The trial court granted the motion and awarded General Star prejudgment interest.
¶9 Hudson appealed. The Court of Civil Appeals affirmed the trial court's judgment in part and reversed in part. The Court of Civil Appeals affirmed the trial court's finding that: (1) the bus involved in the accident met the definition of "automobile" under the Hudson policy; (2) the Hudson policy was primary insurance and that General Star's policy was an excess policy; and (3) that the award of prejudgment interest was authorized under Section 3629 .The Court of Civil Appeals reversed the trial court's order that the judgment be paid within thirty (30) days.
¶10 Hudson filed its petition for certiorari on December 3, 2024. The Order granting certiorari review was entered on April 21, 2025
STANDARD OF REVIEW
¶11 Summary judgments settle only questions of law, and we review a trial court's order granting summary judgment de novo. de novo standard without regard to the district court's reasoning or result. de novo. We enforce the policy to carry out the parties' intentions at the time the parties entered the contract. When a policy's terms are unambiguous and clear, the employed language is given its ordinary, plain meaning. de novo review.
DISCUSSION
Primary Insurance or Excess Insurance
¶12 All parties to this litigation agree that Occidental was first in line to pay for the settlement of the claims against the Nation, and that its policy limits were exhausted. In addressing order of liability between the remaining insurers, General Star and Hudson, we rely on this Court's guidelines in understanding insurance terms and related concepts. An insurance contract is treated as a contract and enforced according to its terms. Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 1987 OK 121747 P.2d 947
¶13 In determining which insurer provides primary coverage this Court relies on the terms of the insurance contract. Primary insurance provides immediate coverage to the insured in the event of a loss giving rise to liability under the policy terms. U.S. Fidelity and Guar. Co. v. Federated Rural Elec. Ins. Corp., 2001 OK 81Equity Mut., supra. at ¶ 19, 747 P.2d at 954. A primary insurer is liable without regard to any other insurance and has the primary duty to "indemnify the insured unless specific language in the policy provides otherwise." Equity Mutual, supra. at ¶ 19. An excess insurance policy provides coverage that is secondary to the primary coverage and where usually there is no obligation to the insured until the primary coverage is exhausted. U.S.F.&G., supra. An escape clause or "no liability clause," disclaims liability if other insurance is available. U.S.F.&G., supra.; Equity Mutual, supra. at ¶ 19. We have been clear that excess insurance coverage is not considered other available insurance which would trigger an "escape" clause. Id. at ¶ 21, 747 P.2d at 954.
¶14 We find Hudson's policy is a primary insurance policy. Under the terms of the insuring agreement, Hudson had immediate responsibility to indemnify the Nation when the settlement was reached resolving litigation for personal injuries arising from the Nation's use of a chartered bus. Following the teachings of U.S.F.& G., and Equity Mutual, Hudson's policy meets the conditions for a primary policy.
¶15 Hudson argued the "escape" clause or "other insurance" clause in its policy moved General Star's coverage responsibility before Hudson. General Star responded that in Oklahoma, because it issued an "excess" insurance policy, it could not be treated as "other" insurance.
¶ 16 General Star limited its liability to the "ultimate net loss in excess of the total of the limits of the underlying insurance" covered by the controlling underlying policy. General Star's liability arises only when the Nation's total loss exceeds the policy limits of both primary insurers, Occidental and Hudson. We also note that General Star included the heading "Excess Automobile Liability Policy," on the title page, the Schedule of Underlying Insurance, and the first page of the General Star policy. We hold that General Star's policy is an "excess" insurance policy and that excess coverage is not "other available insurance" triggering the escape clause. U.S.F.&G. supra. at ¶ 8, 37 P.3d at 831; Equity Mut., supra. at ¶ 19, 747 P.2d at 954. As the excess insurance carrier, General Star has no liability unless the Hudson policy limits are exhausted.
¶17 Hudson's final effort to avoid liability hinges on the application and meaning of the word "indemnify," as used in its policy, a word Hudson failed to define. Hudson offered no argument or analysis to dispute the holdings of Equity Mut., supra. or U.S.F.&G., supra. Instead, Hudson contended that "the Hudson policy is an indemnity policy and, thus, provides no coverage until the Choctaw Nation has first sustained and paid an uninsured liability- which here could only have occurred after the Occidental and General Star policies were both exhausted."
¶18 For more than a century, this Court has held that insurance contracts are to be interpreted in the most favorable manner to the insured and construed most strictly against the insurer.
¶19 Hudson contended that "indemnity policies generally include language -- like in the Hudson policy- whereby the insurer agrees to 'indemnify' the insured 'against loss or damages.'"
¶20 Hudson's interpretation and application of the word "indemnify" would not only produce an absurd result, but it defies its own written policy parameters. In its' "Insuring Agreement," Hudson agreed as follows:
"Hudson" agrees ... to indemnify the "Assured" against "loss" [includes settlement agreements Nation is obligated to pay] ... because of "bodily injury"... caused by an "occurrence" [an accident] ... resulting from the Nation's ... use of an "automobile". "Hudson" further agrees, ... to indemnify the "Assured" [includes any employee or person] for compensatory damages an "Assured" is entitled to recover from the owner or driver of an uninsured or underinsured automobile ... from "bodily injury" or "property damage" sustained by the "Assured" and must arise from an accident.
Hudson further defined a "claim" to include the following:
CLAIM: The term "claim," wherever used herein shall mean:
1. A written judgment for monetary relief;
2. A civil judicial proceeding or alternative dispute resolution proceeding seeking monetary relief; ....
If we applied Hudson's strained interpretation of "indemnify" to the uninsured or underinsured motorist claim section, an "Assured" who was injured by an uninsured automobile, the "Assured" would first have to pay itself for damages caused by the uninsured tortfeasor. This is a distorted reading of the policy.
¶21 Because Hudson failed to define the term "indemnify," the Court may apply the plain and ordinary meaning of this word. Jai Hospitality, supra. n.11. This Court has interpreted "indemnity" to mean "a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person." National Union Fire Ins. Co. v. A.A.R. Western Skyways, Inc., 1989 OK 157784 P.2d 52indemnify the insured unless specific language in the policy provides otherwise." Equity Mutual, supra. at ¶ 19 (emphasis added). We find no merit in Hudson's argument and hold that it is a primary insurance policy.
Section 3629 (B) Does Not Apply to a Prevailing "Insurer" in this Coverage Dispute between Insurers.
¶22 The trial court issued its Order and Opinion granting summary judgment to General Star on March 27, 2023. General Star filed its motion for prejudgment interest on April 6, 2023, after summary relief was granted. General Star asserted a new legal conclusion, that it was the "subrogee" of the Nation and as such, it "stepped into the shoes" of the Nation and should therefore be treated as the "insured" for the purpose of requesting prejudgment interest under 36 O.S. § 3629Weber v. GE Group Life Assurance Co., 541 F3d 1002 (10th Cir. 2008); Murray v. First Marine Ins. Co., 29 Fed. Appx. 503 (10th Cir. 2002); Quail Creek Petroleum Management Corp. v. XL Specialty Co., 129 Fed. Appx. 466 (10th Cir. 2005). We note that none of these cited cases arose from this Court, and none involved an award to the insurer. Rather, in each of these cases, post judgment interest of 15% as authorized by Section 3629 was awarded to the insured, in an action by the insured against the insurer in a coverage dispute. We find these cases are not persuasive or instructive to the issues before us.
¶23 Hudson opposed General Star's request for prejudgment interest urging that the Legislature only authorized an "insured" to recover prejudgment interest in the context of a coverage dispute between the insured and the insurer. Hudson argued that Section 3629 (B) does not authorize prejudgment interest to a prevailing "insurer" and that "equitable subrogation cannot be invoked to change the rights defined by statute."
¶24 General Star replied continuing to assert its first time claim that it was a "subrogee" of the Nation pursuant to a contractual subrogation provision. It argued in its reply that "Condition 12" of its policy which stated: "12. TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US- If the insured has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us." two kinds: (1) legal or equitable, or (2) conventional subrogation." Lawyer's Title Guaranty Fund v. Sanders, 1977 OK 10571 P.2d 454subrogation provision, the Choctaw Nation assigned all rights it had to recover under the Hudson policy. It then concluded that "General Star contractually 'takes the claim' of the Choctaw Nation, General Star may bring the exact same cause of action as the Choctaw Nation could have brought, and General Star can bring such action in its own name." never alleged in its Amended Petition, or in any summary judgment filings that its claims were as a "subrogee" of the Nation. The theories it could advance in support of reimbursement concluded when the trial court granted summary judgment in its favor.
¶25 General Star argued that "when an insurer (like General Star) establishes a claim as a subrogee, the insurer 'takes the claim' of the insured and brings the same cause of action as the insured to recover the same damages as the insured," citing State Farm Mutual Automobile Ins. Co. v. Payne, 2017 OK 95408 P.3d 204McCoy v. Moore, 1939 OK 26191 P.2d 87Great Western Motor Lines v. Cozard, 1966 OK 134417 P.2d 575Aetna Cas. & Sur. Co. v. Assoc. Transports, Inc., 1973 OK 62512 P.2d 137Payne and the litany of cases cited by General Star are "subrogation" claims, where the insurer is stepping into the shoes of its insured to be reimbursed by the actual tortfeasor who caused the damage to its insured. Each of those cases were filed as "subrogation" actions. General Star did not seek relief in subrogation. None of the legal authorities cited by General Star are persuasive or applicable to the issue before us. We express no opinion on this novel hypothetical legal argument.
¶26 The Court of Civil Appeals relied on Federated Rural Electric Ins. Corp. v. Williams, 2002 OK CIV APP 78Federated, the Court of Civil Appeals awarded prejudgment interest citing Section 3629 (B) to a subrogee insurer. Federated brought this action on behalf of its insured, Peoples' Electric Cooperative (PEC), as subrogee against a third party, tortfeasor, Williams and his insurer. Federated was not a declaratory judgment action between two insurers. General Star for the first time relied on Federated in its certiorari reply asserting that this Court of Civil Appeals' opinion supported the trial court's award as it was a "subrogee" of the Nation and "stood in the shoes of the insured." General Star's argument is not instructive. We note that the parties in Federated in a subrogation action did not seek certiorari review from this Court. Because the case before us is not one in subrogation, we decline to comment on whether an insurer when acting as a true subrogee, may be treated as an "insured" for the purpose of being awarded the favorable interest rate under Section 3629 (B).
¶27 Next, we turn to the language of the statute at issue which provides:
Section 3629. Forms of proof of loss -- Offer of settlement or rejection of claim
A. An insurer shall furnish, upon written request of any insured claiming to have a loss under an insurance contract issued by such insurer, forms of proof of loss for completion by such person, but such insurer shall not, by reason of the requirements so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion.
B. It shall be the duty of the insurer, receiving a proof of loss, to submit a written offer of settlement or rejection of the claim to the insured within sixty (60) days of receipt of that proof of loss. Upon a judgment rendered to either party, costs and attorney fees shall be allowable to the prevailing party. For purposes of this section, the prevailing party is the insurer in those cases where judgment does not exceed written offer of settlement. In all other judgments the insured shall be the prevailing party. If the insured is the prevailing party, the court in rendering judgment shall add interest on the verdict at the rate of fifteen percent (15%) per year from the date the loss was payable pursuant to the provisions of the contract to the date of the verdict. This provision shall not apply to uninsured motorist coverage.
36 O.S. § 3629
¶28 This is a matter of first impression, whether Section 3629 (B) authorizes an award of prejudgment interest at the rate of fifteen percent (15%) to the prevailing insurer in an action between two insurers in a coverage dispute. We note unambiguous language used by the Legislature which begins with actions between an insured and the insurer where the insured has sued the insurer for the denial of a claim. The Legislature allowed the "prevailing" party to recover costs and attorney fees. However, the Legislature limited the award of "prejudgment interest" solely to the "insured." In the case before us, we have an insurer seeking prejudgment interest award as a prevailing party in a dispute between two insurers, not a dispute between an insured and an insurer.
¶29 Our fundamental rule in statutory construction is to determine and give effect to legislative intent and "that intent is first sought in the language of the statute." Rowan v. State Farm & Cas. Co., 2025 OK 5566 P.3d 577Rowan, we found Section 3629 unambiguous and noted that its purpose was to incentivize the prompt payment of insurance claims to insureds. When a statute is plain and unambiguous, there is no need for judicial construction, it is given its ordinary meaning apparent from the text. Id. In the context of this dispute, the ordinary meaning in Section 3629 is explicit, the insured is the only identified party entitled to this special prejudgment interest award. Although the Legislature did allow an insurer under certain conditions to be able to recover costs and attorney fees if the conditions were met for "prevailing party" status, it refused to extend the additional benefit of the higher prejudgment interest award to insurers.
¶30 General Star's argument that it should be treated as the "insured" as the "subrogee" of the Nation lacks merit. General Star's reliance on Payne, Federated and the host of other subrogation cases are not persuasive in this first impression question.
CONCLUSION
¶31 We hold that Hudson Insurance Company's "Sovereign Nations All Lines Aggregate Insurance Policy" provided primary insurance coverage after the Occidental policy was depleted. We further hold that General Star Indemnity Company's "Excess Automobile Liability Policy" provided excess insurance and as such cannot be treated as "other insurance" under Hudson's policy. We further hold that General Star has failed to establish that it is an "insured" in the context of 36 O.S. §3629
¶32 The Court of Civil Appeals' opinion is vacated. The Order of the District Court granting summary judgment in favor of General Star Indemnity and denying summary judgment in favor of Hudson Insurance Company is affirmed. The Order of the District Court awarding prejudgment interest to General Star Indemnity is reversed. The Order of Final Judgment Nunc Pro Tunc is reversed.
CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF CIVIL APPEALS VACATED; ORDER OF THE DISTRICT COURT GRANTING SUMMARY JUDGMENT IN FAVOR OF GENERAL STAR INDEMNITY AND DENYING SUMMARY JUDGMENT IN FAVOR OF HUDSON INSURANCE COMPANY AFFIRMED; ORDER OF THE DISTRICT COURT AWARDING GENERAL STAR INSURANCE COMPANY PREJUDGMENT INTEREST REVERSED; ORDER OF FINAL JUDGMENT NUNC PRO TUNC MAY 1, 2024 REVERSED; CAUSE REMANDED FOR FURTHER PROCEEDINGS.