Mountain Fuel Supply, a Utah Corporation, and Cna Insurance Company v. Reliance Insurance Company

933 F.2d 882, 1991 U.S. App. LEXIS 9895, 1991 WL 78862
CourtCourt of Appeals for the Tenth Circuit
DecidedMay 17, 1991
Docket87-1564
StatusPublished
Cited by66 cases

This text of 933 F.2d 882 (Mountain Fuel Supply, a Utah Corporation, and Cna Insurance Company v. Reliance Insurance Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mountain Fuel Supply, a Utah Corporation, and Cna Insurance Company v. Reliance Insurance Company, 933 F.2d 882, 1991 U.S. App. LEXIS 9895, 1991 WL 78862 (10th Cir. 1991).

Opinion

HOLLOWAY, Chief Judge.

Defendant-appellant, Reliance Insurance Company (Reliance), appeals from a judgment for $392,525 in favor of plaintiffs-ap-pellees, Mountain Fuel Supply Company (Mountain Fuel) and CNA Insurance Company (CNA). The judgment resulted from a suit filed by Mountain Fuel and one of its insurers, CNA 1 , against Reliance, an insurer of Darenco, Inc. (Darenco), and Freberg & Freberg (Freberg), Darenco’s insurance agent. Darenco is a general contractor that was employed by Mountain Fuel to build a gas sweetening plant at Butcherknife Springs, Wyoming. Mountain Fuel sued to obtain reimbursement for all settlement and defense costs incurred in a prior personal injury suit filed by Albert McDonald against Mountain Fuel regarding an accident which occurred at Butch-erknife Springs. Mountain Fuel claims that although Darenco’s comprehensive liability policy issued by Reliance does not specifically mention Mountain Fuel, the return and approval of Mountain Fuel certificates of insurance, by Reliance’s agent Fre-berg, gave Mountain Fuel named insured status and protection from liability at Butcherknife Springs.

I

Many companies, including Mountain Fuel, require any hired company to present a certificate of insurance as evidence that the hired company has insurance. The certificate often used, called an ACORD certificate, lists a number of basic policy details and states that it “is issued as a matter of information only and confers no rights upon the certificate holder” and that it “does not amend, extend or alter the coverage afforded by the policies listed below.” 2 See Brief of Appellant, Attachment F. Although the ACORD certificate is used for many insurance certificates, it is not the exclusive format used. 3

Mountain Fuel had its own insurance certification form, which included a number of provisions not found in the ACORD certificate, two of which are critical in the instant case. The first is paragraph (f) stating that

*885 Mountain Fuel Supply Company is a named insured under each of the policies listed above, and each of the policies above is primary coverage to Mountain Fuel Supply Company. This primary coverage applies to the full policy limits prior to any other insurance coverage which Mountain Fuel Supply Company may have in the event of a claim under any of said policies.

The second is a clause stating that

[t]his certificate of insurance does not amend, extend or otherwise alter the terms and conditions of the insurance coverage in the policies identified above, except as above set forth.

I R. Doc. 51, Ex. B.

II

On December 15, 1977, Mountain Fuel entered into a contract with Darenco for the construction of Buteherknife. The contract contained a “hold harmless” agreement specifying that Darenco would obtain liability insurance to cover both Darenco’s and Mountain Fuel’s liability regarding Darenco’s work at Buteherknife. 4 Such indemnification was to be demonstrated by submission of a completed Mountain Fuel insurance certificate. See I R. Doc. 51, Ex. E at 9-10.

On June 10, 1977, Freberg, an insurance agency used by Darenco, returned to Mountain Fuel a Mountain Fuel certificate, filled out and signed by Freberg. The certificate identified Highlands Insurance Company as Darenco’s insurer until June 9, 1978. I R. Doc. 51. Freberg signed the certificate as “agent” of Highlands. Id.

The following year, at the expiration of the Highlands policy, Reliance began to insure Darenco with a policy which was to run from June 9, 1978, until June 9, 1979. There is no record that any certificate of insurance, either an ACORD or a Mountain Fuel form, had been issued to Mountain Fuel regarding the 1978-1979 Reliance policy. See Mountain Fuel Supply and CNA Ins. Co. v. Freberg & Co. and Reliance Ins. Co., No. C-84-2175W at 4, II R. Doc. 83 (D.Utah Oct. 23, 1986) (unpublished memorandum decision and order granting partial summary judgment to Mountain Fuel) (hereinafter “II R. Doc. 83, Mem. Dec. 10/23/86”).

The Reliance policy (stated on the certificate to be issued by Reliance and Harbor Insurance Companies) was renewed on June 9, 1979, for a one year period. Id. On June 11, 1979, a signed Mountain Fuel certificate regarding this policy was returned to Mountain Fuel by Freberg. Id; I R. Doc. 51, Ex. B. The certificate indicated that Mountain Fuel was to receive fifteen days’ notice prior to cancellation of the policy. I R. Doc. 51, Ex. B. Mountain Fuel returned this certificate and requested the completion of a new one with a sixty day notice period. On July 24, 1979, Fre-berg returned the new Mountain Fuel certificate, identical to the one of June 11, except it indicated a 60 day notice period and it was not signed by Freberg. See Brief of Appellees, Attachment F. Both the June 11 and July 24 certificates indicated that the Reliance/Harbor insurance policy involved was “Expiring” on June 9, 1980. Despite Freberg’s issuance of these certificates, containing paragraph (f), see Part I, supra, no endorsement was made to the Reliance/Harbor policy to include Mountain Fuel as a named insured.

On June 9, 1980, Reliance issued a renewal policy, due to expire on June 9, 1981, to Darenco. As in the previous Reliance/Harbor policies issued to Darenco, no mention was made of Mountain Fuel. At this time, Freberg issued an ACORD *886 certificate to Mountain Fuel. This is the first ACORD certificate received by Mountain Fuel regarding Darenco.

Although the ACORD certificate did not meet Mountain Fuel’s certification requirements, they did not notify Darenco of this problem until some months later. On January 9, 1981, Mountain Fuel sent a letter to Darenco with three paragraphs checked to show why the submitted certificate was not acceptable. The checked paragraphs read:

Information must be provided on Mountain Fuel Supply Company Certificate of Insurance Exhibit ‘B’ form. 1 Form(s) attached.
Paragraph (F) must not be excluded from Certificate. It is our intent that your company’s insurance is primary but only with respect to operations performed for or on behalf of Mountain Fuel Supply Company.
The Certificate does not reflect at least a 30 day notice of cancellation requirement.

I R. Doc. 46, Ex. B. The letter was attached to a Mountain Fuel certificate. 5 Darenco forwarded the letter to Freberg, but Freberg did not notify Reliance about the letter until January 27, 1981, one day after the McDonald accident. 6 Reliance subsequently endorsed Mountain Fuel on the policy as an additional insured, effective January 27, 1981, the date of the request. I R. Doc. 46, Ex. E.

Ill

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Bluebook (online)
933 F.2d 882, 1991 U.S. App. LEXIS 9895, 1991 WL 78862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mountain-fuel-supply-a-utah-corporation-and-cna-insurance-company-v-ca10-1991.