McCormack, J.
This is an action for contribution against an insurer to pay a share of a settlement paid by another insurer to an injured guest of a party at an apartment complex. The underlying lawsuit was brought against both the ownership of the complex and its management under theories of joint and several liability. The insurer seeking contribution held liability policies covering both the complex's ownership and management. The insurer being sued for contribution held liability policies covering the management company; the parties dispute whether the policies also covered the "same risk" for the ownership as an additional insured. The insurer seeking contribution argues that it does not matter whether both tort-feasors were coinsureds under all the policies at issue because, either way, the insurers shared a "common obligation."
This contribution action stems from a lawsuit to recover for injuries sustained when a guest at an apartment complex fell off a third-story apartment's balcony. Beacon Hill Investment, Group (Beacon Hill) owned the apartment complex, and
When the decks of the apartment complex were built in 1968, there was no code specifying the minimum height for deck railings. The decks of the complex were remodeled in 1997. This improvement was apparently at the behest of NP Dodge.
According to a representative of Beacon Hill, it was NP Dodge's job to ensure that its properties met safety codes. A representative of NP Dodge generally agreed it was NP Dodge's responsibility to keep the property compliant with current safety codes.
The plans submitted for the permit specified that the old deck railing would be reused, but incorrectly indicated that those deck railings were 36 inches high. In fact, the railings were 30 inches high. The applicable 1994 Uniform Building Code required guardrails within private apartments to be a minimum of 36 inches high. The 1994 Uniform Building Code required most other exterior guardrails to be 42 inches high.
In 2003, NP Dodge's assistant property manager lived in a third-floor apartment at the complex. While off duty, she had a small gathering of her friends at her apartment. There was underage drinking at the gathering, although the assistant property manager stated she did not provide any guests with alcohol.
A neighboring tenant and his friend, the guest, stopped by. The guest went out to the apartment's balcony to smoke. He was 20 years old and very intoxicated. He fell over the railing. Injuries from the fall rendered the guest a quadriplegic.
The guest sued both Beacon Hill and NP Dodge. The complaint alleged that Beacon Hill and NP Dodge were jointly and severally liable for his injuries under theories of premises liability and negligence relating to the dangerous condition of the low railing. The guest also alleged that NP Dodge's assistant property manager was negligent in allowing alcohol to be served to minors and in failing to warn the guest of the low railing height.
NP Dodge has been managing the Beacon Hill property since 1986. The management agreement in force at the time of the accident provided that Beacon Hill was to obtain and keep in force adequate insurance "against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property." Beacon Hill was to cover NP Dodge "as an additional insured on all liability insurance maintained with respect to the Property." For its part, NP Dodge was required by the management agreement to, at all times, maintain "general liability, automobile liability, and worker's compensation insurance on [NP Dodge's] employees." And NP Dodge was to cover Beacon Hill as an "additional insured on [NP Dodge's] general liability policy."
A "Liability and Hold Harmless" provision contained in a 2001 amendment to the management agreement stated in relevant part:
Likewise, NP Dodge agreed to hold harmless and reimburse Beacon Hill
American Family Mutual Insurance Company (American Family) insured Beacon Hill as its named insured, and Regent Insurance Company (Regent) insured NP Dodge as its named insured. Pursuant to the management agreement, Beacon Hill was an additional insured under Regent's policies for NP Dodge and NP Dodge was an additional insured under American Family's policies for Beacon Hill.
American Family provided a primary "Businessowners Package Policy" for Beacon Hill as the named insured in the amount of $1 million per occurrence. The coverage included bodily injury liability. The annual premium was $37,006. The policy included as an "insured" "any organization, while acting as [Beacon Hill's] real estate manager."
The "
American Family provided an umbrella policy in the amount of $5 million for Beacon Hill as the named insured. The annual premium for the umbrella coverage was $5,714.
NP Dodge was an additional insured under the umbrella policy pursuant to a provision that the policy would cover any person "(other than
The "
Regent provided a primary comprehensive insurance policy for NP Dodge as the named insured. The policy included general liability coverage in the amount of $1 million per occurrence. The premium for this policy was $144,403 annually.
A "Blanket Additional Insured Endorsement" for the Regent primary policy defined as an additional insured "[a]ny person or organization whom you are required to add as an additional insured on this policy under a written contract or agreement...."
The endorsement provided that such "person or organization is only an insured with respect to liability arising out of premises you [NP Dodge] own, rent, lease or occupy; or `your work' for that additional insured by or for you [NP Dodge]." The policy elsewhere defines "Your work":
The blanket additional insured endorsement further stated that the insurance for such person or organization does not apply to:
As to the named insured under the policy, the "
This insurance is excess over:
But as to an additional insured under the blanket additional insured endorsement, the other insurance provision of Regent's primary policy stated: "Any coverage provided hereunder shall be excess over any other valid and collectible insurance available to that person or organization whether primary, excess, contingent or on any other basis unless a contract specifically requires that this insurance be primary."
Regent provided a commercial umbrella policy in the amount of $4 million for NP Dodge as the named insured. The premium for this policy was $22,522 annually.
The umbrella policy covered "[a]ny person or organization who is an additional insured in the `underlying insurance,'" with the caveat that "[t]he coverage afforded under this insurance will be no broader than that of the `underlying insurance.'"
Similarly to Beacon Hill's umbrella policy, the other insurance clause of Regent's umbrella policy stated, as to both its named and additional insureds, that it was "excess over any of the other insurance" and will pay only its "share" of the amount of the loss that exceeds the sum of the "total amount that all such other insurance would pay for the loss in the absence of this insurance" and the total of all deductible and self-insured amounts under all other insurance.
American Family hired an attorney to represent the interests of both Beacon Hill and NP Dodge in the guest's suit against them. American Family's litigation attorney filed an answer to the guest's complaint, generally denying liability on the part of Beacon Hill or NP Dodge and alleging contributory negligence to a degree sufficient to bar his recovery.
American Family's claims analyst wrote to Regent requesting that it share in the costs of the litigation attorney's representation. The analyst explained that "it appears that both our policies have primary coverage." Therefore, "each insurer is to contribute in equal amounts until each has paid its applicable limit of insurance or none of the loss remains, which ever [sic] comes first."
In consideration of this letter, Regent suggested in its internal communications that "[d]ifferent court's [sic] might reach different results" but that NP Dodge could "make the argument" that "the fact of insurance coverage for [NP] Dodge is beside the point," because the claim did not "fall within those defined by the [liability and hold harmless] paragraph." Furthermore, the agreement required Beacon Hill to "have coverage for injury to property or persons arising out of the occupancy of the Property and is to name [NP Dodge] as an additional insured," but NP Dodge "has no
On October 30, 2006, Regent sent a letter to American Family advising that "at this time, we are unable to agree with your assessment regarding sharing in the defense of this matter and contributing one-half of the legal fees incurred by American Family." The October 30 letter "direct[ed] [American Family's] attention" to the hold harmless provisions of the management agreement and asserted that under this agreement, Beacon Hill must "defend and hold harmless [NP] Dodge." Regent asserted that "the fact that [NP] Dodge has insurance coverage is moot to the argument." Regent further stated: Paragraph 5 on page 3 [of the management agreement] clearly provides that the owner is to have coverage for injury to property or persons arising out of the occupancy of the property and is to name the agent as an additional insured. [NP] Dodge has no similar requirement. The fact that [NP] Dodge has coverage under a [Regent] policy at a cost that it incurred for any lapse of other protection does not make such coverage applicable to this loss except as "excess" coverage for [NP] Dodge.
American Family's claims analyst responded in a letter dated December 18, 2006:
For a period of time, there were no further communications between American Family and Regent discussing the priority of coverage under their respective policies. Regent assumed that both its primary and umbrella policies would be excess to both the primary and umbrella coverage provided for in American Family's policies. Because Regent estimated the value of the underlying action to be less than the $6 million combined amount of coverage through American Family, it did not think it would ever be liable for a payout.
Regent hired its own litigation attorney to represent the interests of NP Dodge and to keep Regent informed of the underlying litigation. Regent instructed the attorney to "only monitor the litigation, and to not actively participate in the defense of my insured NP Dodge." According to Regent's claims analyst, had he known that American Family was not "providing a full defense and indemnification to my insured, NP Dodge," he would have instructed the litigation attorney to "take different action in the underlying litigation, including the filing of a cross-claim against Beacon Hill for indemnification pursuant to the property Management Agreement."
American Family's litigation attorney generally kept Regent's litigation attorney abreast of the matters pertaining to the underlying lawsuit by the guest. At no
American Family's litigation attorney sought partial summary judgment on the issue of whether NP Dodge's assistant property manager was acting within the scope of her employment at the time of the fall. That motion was overruled on August 28, 2008. Another motion for summary judgment brought on behalf of both Beacon Hill and NP Dodge was overruled on April 2, 2009. In its April 2 order, the court directed the parties to submit to mediation on or before June 1. American Family's litigation attorney apprised Regent's litigation attorney of these matters in a letter dated April 3, 2009.
On April 21, 2009, Regent sent a letter to American Family noting an upcoming scheduled mediation for May 2, "as a courtesy to remind American Family of its duties to our insured, NP Dodge ..., as an additional insured on the American Family Policy." The letter also took "this opportunity to remind you of the duties owed to [Regent] as the excess carrier in this matter." Finally, Regent stated:
On May 1, 2009, American Family sent a fax in response to Regent's letter, which American Family said it had not received until April 28. American Family stated:
American Family further stated in the May 1, 2009, fax:
Setting forth various policy provisions, American Family explained it did "not agree with your assertion that American Family has $6 Million in coverage before the [Regent] policies." American Family stated its position that its $1 million primary policy was first, then Regent's primary policy, then both umbrella policies on a pro rata basis.
Regent did not participate in the mediation. During the mediation, American Family's litigation attorney reached a tentative settlement with the guest. The settlement was signed on June 10, 2009. It released all liability for Beacon Hill, NP Dodge, American Family, and Regent in exchange for an initial payment of $2 million and monthly payments of $4,375.20 for 25 years. American Family reserved any rights of contribution against Regent. American Family, pursuant to the settlement,
American Family sued Regent for equitable contribution toward the payment it made to the guest under the settlement agreement. American Family's complaint alleged that "American Family's and Regent's liability and excess/umbrella coverages applied to at least one of the two defendants in the personal injury case (Beacon Hill and [NP] Dodge), applied to the same risk and loss, and applied to the same potential liability and exposure." The complaint further alleged that American Family had borne more than its share of the "common obligation" from Regent. American Family asked for reimbursement of $1 million plus four-ninths of the cost of future monthly payments under the settlement.
In Regent's answer, it generally denied the allegations and affirmatively asserted the defense of estoppel, lack of privity, waiver, and unjust enrichment. American Family and Regent filed cross-motions for summary judgment.
American Family asserted in its motion for summary judgment that, as a matter of law, Regent's primary and umbrella coverages applied to the underlying injury claims and that no policy provision or other agreement negated Regent's obligation to pay damages under those coverages. At the hearings on the motions for summary judgment, American Family elaborated that both companies' insurance policies insured the same risk and the same loss.
Regent's motion for summary judgment generically asserted that there was no material issue of fact preventing summary judgment in its favor. At the hearing on the motions, Regent argued that American Family's claims analyst conceded in the December 18, 2006, letter that both American Family's primary policy and its umbrella policy were in "first position" before either of Regent's policies. Regent argued that the May 1, 2009, fax came too late to retract this concession and that American Family was equitably estopped from seeking contribution. In the event equitable estoppel did not apply, Regent argued:
The district court granted summary judgment in favor of American Family. In its order, the court set forth Regent's defense as arguing that (1) a direct action against Regent is not allowed under Nebraska law and (2) equitable estoppel bars American Family's claim.
The court concluded that a direct action for contribution was proper. The court distinguished Royal Ind. Co. v. Aetna Cas. & Sur. Co.,
The court rejected any argument that the management agreement overrode the respective insurance policies regarding priority of payment.
The court also rejected Regent's estoppel argument. The court found that there was no evidence from which a fact finder could conclude that any American Family representative misrepresented a material fact, as opposed to expressing a mere opinion. The court said that any statements by American Family about paying for NP Dodge's defense were irrelevant, because American Family did not seek contribution on defense costs. In any event, there was no evidence that American Family's claims analyst had the authority to change the terms of the policies. Finally, the court found no evidence that Regent had changed its position or proposed course of action in reliance on any representations by American Family.
The court then concluded that American Family had paid more than its pro rata share of a joint obligation:
Accordingly, the court entered judgment in favor of American Family in the amount of $1,666,666. The court overruled Regent's motion to reconsider, alter, or amend the order. Regent appeals.
Regent assigns that the district court erred in granting summary judgment in favor of American Family and in denying summary judgment in favor of Regent.
On appeal from an equity action, an appellate court tries factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the conclusion reached by the trial court.
The interpretation of an insurance policy presents a question of law that we decide independently of the trial court.
In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment was granted and gives that party the benefit of all reasonable inferences deducible from the evidence.
An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate
Contribution is an equitable remedy given to the party who pays a debt that is concurrently owed by another party.
In the second circumstance, that of concurrent insurers, it is said that contribution is proper only where the policies insure the same entities, the same interest in the same property, and the same risk.
These basic principles of contribution among insurers are not easily applied, however. Indeed, few areas in the field of insurance law give courts and parties more difficulty than that of duplicating or overlapping insurance.
Moreover, because contribution lies in equity, there is no definitive rule applicable in every case in light of varying equitable considerations which may arise and which affect the insured and the primary and excess carriers.
American Family and Regent compound the inherent difficulty with legions of changing arguments as to whether they share a common obligation toward the guest's settlement, how to determine each parties' share of the loss, and whether
Broadly, Regent believes it should have to pay nothing toward the settlement that released Regent and its named insured, NP Dodge — which indisputably had a primary policy and an umbrella policy with Regent providing commercial general liability and bodily injury coverage. In contrast, American Family argues that its primary policy was liable for the first $1 million of the settlement with the guest, but that the second $1 million of the settlement should have been Regent's share of the obligation under Regent's primary policy and that their respective umbrella policies should have shared the last $1.5 million in future payments pro rata.
But we summarize with more particularity the evolution of the parties' theories, as each party accuses the other of raising issues for the first time on appeal, and Regent asserts estoppel based on early communications between the claims adjusters. We begin with the internal and external correspondence of the claims adjusters. We find this correspondence, for the most part, vague.
It appears, especially in later communications, that Regent relied on the management agreement to support its theory that it was not liable to contribute toward any loss. Alternatively, Regent thought it was an "excess carrier." By the time of its April 21, 2009, letter, Regent clearly explained to American Family its belief that it was not liable to contribute toward any loss until the total $6 million in coverage under both the primary and umbrella policies with American Family was exhausted.
American Family, in its early correspondence, seemed to accept that under the hold harmless provision of the management agreement, American Family would not be reimbursed for legal fees incurred by its counsel in representation of Beacon Hill and NP Dodge. Beyond that, it is unclear what American Family meant when it wrote on December 18, 2006, "I do concur with your assessment regarding American Family's primary coverage of [NP Dodge]." We disagree with Regent's assessment that, through this statement, American Family "expressly agreed with and stipulated to Regent's analysis, indicating that it would treat the American Family policies, which provided $6 million in coverage, as primary coverage."
American Family's contribution action before the district court sought this same distribution of the shared obligation on the settlement; i.e., American Family primary, Regent primary, and American Family and Regent pro rata. The complaint alleged that the American Family and Regent policies applied to "at least one of the two defendants in the personal injury case (Beacon Hill and [NP] Dodge), applied to the same risk and loss, and applied to the same potential liability and exposure." American Family alleged it had borne more than its share of the parties' common obligation.
At the hearing on the parties' cross-motions for summary judgment, Regent no
Regent alternatively argued that a lack of privity barred American Family's claim. And, alternative to that, Regent argued that both American Family policies were primary to both Regent policies. Regent's underlying theory as to why its primary policy was secondary to American Family's umbrella policy is not clear from the record.
American Family apparently took the stance that sharing either one or both the same entities jointly and severally liable to the guest rendered a common obligation under the settlement. And, as far as the record reflects, this underlying legal contention was not a point of dispute. Regent did not argue that as a matter of law, contribution is improper when only one insured is common to the two insurers. In granting summary judgment for American Family, the district court explicitly reasoned that sharing the requisite common obligation does not require that each insurer provided coverage to all the same policyholders.
Although all the relevant policies were before the district court, neither party asked the court to address whether Beacon Hill, like NP Dodge, was a coinsured under both the American Family and Regent policies for the "same risk" involved in the guest's action. And the court's reasoning would have made such determination unnecessary. Regent has never denied that NP Dodge was a coinsured under both the American Family and Regent policies for the "same risk."
Neither Regent nor American Family asked the district court to apportion the underlying fault of Beacon Hill and NP Dodge for the guest's injuries. Only as part of its estoppel argument did Regent bemoan the fact that had it known American Family was not covering the first $6 million, it would have taken more action to differentiate NP Dodge's liability from Beacon Hill. The reason why Beacon Hill believed such apportionment of fault mattered for purposes of the contribution action was not fully clear.
The record reflects no argument by Regent that the district court should consider as the parties' common obligation only one-half of the settlement amount. And Regent did not raise before the district court any issues pertaining to Neb.Rev. Stat. § 25-21,185.10 (Reissue 2008).
In this appeal, Regent continues to assert estoppel, but it no longer alleges lack of privity as a defense to American Family's contribution action. Regent instead now argues that there was no common obligation as a matter of law, because the insurers did not insure all the same insureds. Regent still does not dispute that it insured NP Dodge for the same risk as NP Dodge was insured for with American Family, but it now explicitly denies such concurrent coverage of Beacon Hill.
Regent argues that there can be no contribution based on the joint and several liability of separate insureds with separate insurers. Alternatively, if there could be contribution based on joint and several liability, Regent argues that under § 25-21,185.10, NP Dodge, and thus Regent, would be jointly and severally liable only for economic damages, but not noneconomic damages. Therefore, according to Regent, no apportionment could be proper without allocation of fault and allocation of economic versus noneconomic damages. Furthermore, Regent argues that there can be no joint and several liability if
Regent argues further that if American Family and Regent are concurrent insurers or otherwise liable in contribution because they insure a joint tort-feasor, then only that share of the total damages attributable to the fault of NP Dodge is the common obligation for which it would owe contribution. Since American Family failed to present evidence upon which the district court could have allocated the respective fault of Beacon Hill and NP Dodge, Regent argues the court should have granted summary judgment in Regent's favor. At the very least, Regent asks that we remand for an allocation of fault or that we apportion liability upon only one-half of the total settlement amount. Regent argues that the district court's order "forced Regent to pay part of Beacon Hill's share of the liability, even though Regent did not insure Beacon Hill."
In response, American Family continues to assert that the commonality of one insured — especially in the case of joint and several liability with the other insured — satisfies the common obligation element of contribution. American Family alternatively asserts that Beacon Hill is, in fact, a coinsured under all the policies at issue. American Family argues that fault is normally not the appropriate measure of apportionment of the common obligation; rather, one looks primarily to the policies to evaluate the extent of the respective insurer's obligations. American Family gives numerous reasons why it believes there is no merit to Regent's estoppel argument.
Regent argues in its reply brief that we cannot consider whether Beacon Hill was concurrently insured by both American Family and Regent, because American Family did not argue that point before the district court. We ordered supplemental briefing on the issue of whether Beacon Hill was a coinsured under all policies. This spurred an astounding number of new arguments regarding Regent's coverage of Beacon Hill.
To summarize these arguments, Regent asserts that Beacon Hill was not insured under its umbrella policy, because there was no "additional insured endorsement" in that policy. As to its primary policy, Regent argues that Beacon Hill is covered only for claims arising out of NP Dodge's work on premises NP Dodge owns, rents, leases, or occupies. Therefore, Beacon Hill was not covered for the "same risk" as its coverage with American Family. Furthermore, Regent points to the coverage limitations in the additional insured endorsement and argues that NP Dodge did not own, rent, lease, or occupy the Beacon Hill premises and that the accident did not arise out of NP Dodge's work. Regent further asserts that Beacon Hill was not covered under the Regent policy for the "same risk," because the additional insured endorsement stated that the primary policy's coverage of the additional insured was "excess." Finally, Regent argues that the professional services exclusion applies to bar all coverage of Beacon Hill for the guest's accident. American Family makes several arguments denying these claims and explaining why it believes that Beacon Hill is a coinsured for the same risk under both Regent's and American Family's primary and umbrella policies.
Regent is correct that some contribution cases under the first kind of contribution, on the basis of joint tort-feasor liability, apply subrogation principles.
Such joint tort-feasor contribution actions are rare. We note that in at least one case where contribution was based solely on the joint and several liability of separate insurers, the court apportioned the loss in the same manner as would be done between concurrent insurers, dispensing with any explicit apportionment of fault or other subrogation-type issues.
The right of equitable contribution under the second circumstance — between concurrent insurers — is not in any way based on principles of subrogation to the rights of the insured against the party legally responsible.
The inquiry between concurrent insurers is simply whether, under its policy with the insured, the nonparticipating coinsurer had a legal obligation to provide a defense or indemnity coverage for the claim or action prior to the date of the settlement.
There is therefore little question that liability for the loss among concurrent insurers should be allocated without regard to comparative fault or other subrogation-related questions such as lack of privity or the applicability of a contribution-among-joint tort-feasors statute.
The only case in Nebraska concerning a concurrent insured is State Farm Mut. Auto. Ins. Co. v. Union Ins. Co.
The parties' apparent confusion in this case is perhaps understandable. For if we were to accept Regent's contention that Beacon Hill is not insured under the respective American Family and Regent policies for the "same risk," then this is a hybrid of the two kinds of contribution: (1) an insurer of a joint tort-feasor which has paid all, or greater than its share, of a loss and (2) a single insured which is covered by concurrent or "double" insurance, and one insurer paid all, or greater than its share, of a loss.
We have not addressed a situation where some, but possibly not all the insureds,
But a handful of cases have considered this question. In the majority of those cases, at least where the insureds are also joint tort-feasors, courts have found the settlement determinative of the insureds' liability and have apportioned the contribution in accordance with set principles applicable to the policies' other insurance provisions.
Thus, in Towne Realty, Inc. v. Safeco Ins. Co. of America,
Graphic Arts Mut. Ins. Co. v. Essex Ins. Co.
In Ariz. Jt. Underwriting Plan v. Glacier, Etc.,
We agree with this line of cases that a traditional concurrent insurer contribution analysis based on the policy language may be appropriate regardless of whether all insurers cover all the same entities. And we find that under the undisputed facts presented, the equities make such a policy-based, concurrent insurer apportionment appropriate here. NP Dodge's liability for the guest's injuries was conclusively determined by the settlement, and any disputed allocation of fault within that liability is irrelevant.
In reaching this conclusion, we need not fully wade through the quagmire of arguments concerning whether Beacon Hill was, in all respects, covered for the "same risk" under both Regent's and American Family's policies. Yet, we cannot ignore that the policies before us establish as a matter of law that Beacon Hill was in some capacity also a coinsured under all the policies in question. This is properly part of our equity analysis that considers the nature of the claim, the relation of the insured to the insurers, the particulars of each policy, and any other equitable considerations.
Given Regent's own shifting theories, we have little sympathy for Regent's argument that we should take no notice of Beacon Hill's coverage under any Regent policy because it was not argued below. In any case, this issue was broadly presented by American Family's complaint for contribution and through its presentation of the policies to the district court.
Regent does not deny that, pursuant to the management agreement, Beacon Hill fell under Regent's primary policy definition of an additional insured, being "[a]ny person or organization whom you are required to add as an additional insured on this policy under a written contract or agreement...."
We find no merit to Regent's argument that Beacon Hill was not an additional insured under the umbrella policy because there was no "additional insured endorsement" in that policy. The umbrella policy stated that it covered "[a]ny person or organization who is an additional insured in the `underlying insurance.'"
We also find no merit to Regent's argument that Beacon Hill cannot be considered a coinsured because it did not tender its defense to Regent. In none of the cases cited by Regent did the insurer seeking to deny contribution have actual notice of the underlying litigation and hire independent counsel to monitor that litigation.
We reject any argument by Regent pertaining to its coverage of Beacon Hill that asks this court to relitigate the fault of the parties discharged in the settlement. And, as will be discussed further below, Regent's excess clause under the additional insured endorsement does not convert the primary coverage into umbrella coverage, and, therefore, into coverage for a different risk.
But, for purposes of this opinion, we need not analyze the arguments surrounding Regent's additional insured coverage limitation that the accident arise out of NP Dodge's work or on premises occupied by NP Dodge. And we do not decide whether the professional services exclusion applied. It is sufficient for our purposes here to note that absent a successful argument that such coverage limitation or professional services exclusion applied, Regent would have been liable under its coverage of Beacon Hill for the guest's entire loss, up to the policy limits, had Beacon Hill and NP Dodge selectively tendered their defense to Regent or had American Family gone defunct. These coverage limitations and exclusion, added by Regent to its rather complicated additional insured endorsement, are a particularly weak basis for Regent's arguments that as a matter of law there is no joint obligation, or that it is inequitably being asked to pay Beacon Hill's share of liability.
Most important to our analysis, however, is that even without Beacon Hill as an insured under Regent's policy, Regent could have been liable for the entire amount of the guest's loss up to its policy limits by virtue of its coverage of NP Dodge. NP Dodge paid significant premiums to Regent in order to cover the kind of occurrence alleged by the guest and conclusively determined by the underlying settlement, which Regent closely monitored at every stage. Because NP Dodge was undisputedly a coinsured for the same risk under all the policies, and the only other entity, Beacon Hill, was jointly and severally liable with NP Dodge, and was additionally a coinsured under all the policies for at least some risks, there is certainly no inequity in apportioning liability under a concurrent insurer analysis.
We find no merit to Regent's argument that American Family is estopped from claiming contribution. Six elements must be satisfied for the doctrine of equitable estoppel to apply: (1) conduct which amounts to a false representation or concealment of material facts or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct will be acted upon by, or influence, the other party or other persons; (3) knowledge, actual or constructive, of the real facts; (4) lack of knowledge and the means of knowledge of the truth as to the facts in question; (5) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (6) action or inaction based thereon of such a character as to change the position
Regent's estoppel claim is based entirely on the claims adjuster communications that are in the record. Even viewing this evidence in the light most favorable to Regent, we do not find any of these elements have been met. Most fundamentally, we find no clear representation by American Family's claims adjuster that American Family conceded Regent's policy would not be liable on the guest's claim until both the American Family primary and umbrella policies were exhausted. The communications between the claims adjusters seem focused on sharing the immediate defense costs, rather than the ultimate apportionment of any settlement. It was wishful thinking for Regent to interpret American Family's statement in the December 18, 2006, letter, "I do concur with your assessment regarding American Family's primary coverage of [NP Dodge]," as a concession that both American Family's primary policy and its umbrella policy would come first.
This is especially true in light of the almost incomprehensible letter by Regent, sent October 30, 2006, which the December 18 letter was responding to. And we note that the statements in Regent's October 30 letter, which induced American Family's alleged concession, were always internally viewed by Regent with skepticism and have since been abandoned.
We turn now to the policies in question to determine the proper apportionment of Regent's and American Family's common obligation as concurrent insurers. For coverage to be concurrent for purposes of contribution, it must be at the same level — primary to primary or excess to excess.
In arguing that both its policies come after the $6 million in coverage under American Family's policies, Regent is essentially arguing that the excess insurance clause of its primary policy transforms that policy into an umbrella policy. We find no merit to this argument.
A true excess insurance policy is one providing coverage conditioned upon the existence of a primary policy, which coverage does not begin until a loss exceeds a stated level.
We agree with the majority of jurisdictions that hold that umbrella policies, as the only true excess insurance policies, incur liability only after the exhaustion of all other policies, including primary policies containing excess insurance clauses.
As to NP Dodge, there are compatible pro rata other insurance clauses for the concurrent Regent primary policies. As to Beacon Hill, however, there is American Family's pro rata other insurance clause versus Regent's excess other insurance clause.
That is a unique circumstance. Since our concurrency analysis rests primarily with the concurrency of NP Dodge alone, it is perhaps most proper to apply the compatible pro rata other insurance clauses. On the other hand, American Family has always conceded that its primary policy came "first" before Regent's primary policy. This is essentially a concession to American Family's excess other insurance clause.
American Family is correct that this is purely an academic question. Regardless of which excess insurance clauses we apply, the result in this case would be the same.
Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is usually disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance.
If we were to instead apply the pro rata clauses, American Family and Regent would likewise each have to contribute $1 million. Each having the same policy limits, their pro rata shares of the total loss up to their combined policy limits would have been equal.
Thus, under either theory, we conclude that the district court's distribution of the common liability of the primary policies was correct.
There were competing excess other insurance clauses in the two umbrella policies. The interaction of two or more policies containing excess insurance clauses creates circularity and could provide a windfall to whichever insurer's policy is read first.
While in State Farm Mut. Auto. Ins. Co. v. Union Ins. Co., we apportioned the loss equally between the two insurers without regard to policy limits, the policy limits were not in the record in that case. The district court in this case had the policy limits before it and was therefore able to divide pro rata the loss that remained after exhaustion of the two primary policies. Thus, Regent, under its umbrella policy, was liable in contribution to American Family for four-ninths of the cost of payments made and to be made to the guest under American Family's umbrella policy. We find that apportionment was correct.
For all the reasons stated above, we agree with the district court's apportionment of the common obligation toward the guest's settlement. We affirm the district court's order granting summary judgment in favor of American Family.
AFFIRMED.
