Georgia Casualty & Surety Company, a Corporation v. Universal Underwriters Insurance Company, a Corporation

534 F.2d 1108, 1976 U.S. App. LEXIS 8158

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 6, 1976
• Docket: 75-2106
• Status: Published

Opinions

PER CURIAM:

The judgment appealed from is affirmed on the reasoning and analysis expressed in the unpublished memorandum opinion of the trial court.

The memorandum opinion follows:

MEMORANDUM OPINION

Suit was filed and resulted in a verdict and judgment and settlement for $95,000 in State Court for an injured employee of an independent contractor of M. C. Dixon Lumber Company, Inc., and Dixon Pulpwood Company, Inc., who were insured as to general personal injury liability by Universal Underwriters Insurance Company and Georgia Casualty and Surety Company, respectively. The Universal policy also insured Dixon Pulpwood as hereinafter pointed out. Suit was for negligently selecting a contractor which proximately caused the employee’s injury. Universal’s limit of liability was $500,000 and Georgia Casualty’s limit was $100,000. The companies each paid $47,500 of the settlement and agreed that such payment should not prejudice either party in the instant suit wherein Georgia Casualty sues Universal, seeking to recover the amount paid by it in excess of $16,500 (which Georgia Casualty has agreed to pay). Georgia Casualty insists that each of the insurance companies was liable for a portion of the settlement proportioned in accordance with the limits of their coverage. Universal insists that its maximum (56) liability was no more than an amount equal to that of Georgia Casualty. The cause was submitted for final judgment.

The pertinent provisions of the policies were identical as follows:

“6. Other Insurance: The insurance afforded by this policy is primary insuranee, except when stated to apply in excess of or contingent upon the absence of other insurance. When this insurance is primary and the insured has other insurance which is stated to be applicable to the loss on an excess or contingent basis, the amount of the company’s liability under this policy shall not be reduced by the existence of such other insurance.

“When both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, the company shall not be liable under this policy for a greater proportion of the loss than that stated in the applicable contribution provision below:

“(a) Contribution by Equal Shares: If all of such other valid and collectible insurance provides for contribution by equal shares, the company shall not be liable for a greater proportion of such loss than would be payable if each insurer contributes an equal share until the share of each insurer equals the lowest applicable limit of liability under any one policy or the full amount of the loss is paid, and with respect to any amount of loss not so paid the remaining insurers then continue to contribute equal shares of the remaining amount of the loss until each such insurer has paid its limit in full or the full amount of the loss is paid.

“(b) Contribution by Limits. If any of such other insurance does not provide for contribution by equal shares, the company shall not be liable for a greater proportion of such loss than the applicable limit of liability under this policy for such loss bears to the total applicable limit of liability of all valid and collectible insurance against such loss.”

Universal also insists that it had no liability as to the Dixon Pulpwood Company because, allegedly, its liability thereunto pertaining was limited by provisions of an endorsement to the policy containing “Comprehensive General Liability Insurance” on

form L6180 and a “Description of Hazards.” Defendant insists that (57) the “Description of Hazards” shows that Dixon Pulpwood was covered only as to liability arising from “Surveyors — land not engaged in actual construction — N.P.D.,” which, by stipulation, it was not engaged in at the time of the accident and that, pursuant to the rule set out in United States Fire Ins. Co. v. Hodges, 275 Ala. 248, 154 So.2d 3 (1963), there could be no “pro rata” application because the two policies did not cover the same interest, the same subject matter, the same risk, and the same insured. However, that rule was set aside by the Supreme Court of Alabama in State Farm Mutual Auto Ins. Co. v. Auto- Owners Ins. Co., 287 Ala. 477, 252 So.2d 631, 637 (1971), as follows: “[W]e are now convinced that the Hodges holding * * * is too narrow * * *.” It is not necessary that this Court decide whether or not Dixon Pulpwood was protected by the policy of Universal because, clearly, Dixon Lumber (a co-defendant in the State Court case) is covered by Universal’s policy, and it is no longer necessary, in order that there be “other insurance” (in accordance with Paragraph 6 of Conditions), that the other policy cover “the same interest, the same subject matter, the same risks and the same named insured.”

The question here, in the wording of Condition 6 of the policy, is whether, “ * * * [B]oth this insurance and other insurance apply to the loss on the same basis * * This Court finds that both policies apply to the loss on the same basis and that Paragraph 6 of “Conditions” in the policy is applicable. “ * * * [Exceptions to coverage must be interpreted as narrowly as possible in order to provide maximum coverage for the insured, and * * * insurance policies, like * * * other * * * contracts will be construed most strongly against the drafter.” Argonaut Ins. Co. v. Cotton States Mutual Ins. Co., 373 F.Supp. 817, 820 (M.D.Fla.1974). That case is authority for the proposition that the rule (58) creating a presumption against the scrivener is applicable for and against insurance companies. However, Argonaut is no authority for Defendant’s contention that the Georgia Casualty policy provides for “contribution by equal shares”, because that question was not in issue in the Argonaut case.

The parties in that case apparently conceded that each policy provided for contribution by equal shares. 373 F.Supp. at 820.

The remaining question is whether Paragraph 6(a) or Paragraph 6(b) of “Conditions” is applicable to this case. The policies have the same pertinent provisions as to “Other Insurance”. If either insurance policy provides for contribution by equal shares, then both so provide. Likewise, if either of the policies provides for pro rata contributions, then both so provide. Both policies containing the identical provision do not provide either for pro rata contribution or for contribution by equal shares. Each depends upon the other policy to provide validity and meaning to one or the other of the subparagraphs of Condition 6. This Court, therefore, is of the opinion that the condition of 6(a), “If all of such other valid * * * insurance provides for contribution by equal shares,” has not been met and that the condition of 6(b), “If any of such insurance does not provide for contribution by equal shares,” has been met and that, therefore, each policy provides that the company shall not be liable for a greater proportion of such loss than the applicable limit of liability under the policy bears to the total applicable limit of liability of all valid and collectible insurance against such loss. Accordingly, Universal, subject to the parties’ agreement that Georgia Casualty will accept liability for $16,500, was liable for five-sixths of the obligation and Georgia Casualty was liable for one-sixth thereof. Georgia Casualty, having voluntarily accepted (59) liability for $16,500, was entitled to have Universal pay the balance of the $95,000 settlement or $78,500. Both companies having paid $47,500 each, Georgia Casualty is entitled to a judgment against Universal for the sum of $31,000. Judgment will be entered accordingly.

DONE THIS 27th day of March, 1975.