NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, ET AL.
ERIE INSURANCE EXCHANGE, ET AL.
THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY Carroll A. Weimer,
All the Justices
E. POWELL, JUSTICE
declaratory judgment action, Nationwide Mutual Fire Insurance
Company and Nationwide Mutual Insurance Company (collectively
"Nationwide") requested that the Circuit Court for
Prince William County ("trial court") determine the
priority of five separate insurance policies provided by
Nationwide and Erie Insurance Exchange ("Erie").
The trial court concluded that the order of priorities and
coverages were: (1) Nationwide Business Auto Policy, $1, 000,
000; (2) Nationwide Commercial General Liability Policy
("Nationwide CGL Policy"), $1, 000, 000; (3)
Nationwide Commercial Umbrella Liability Policy
("Nationwide Umbrella Policy"), $1, 000, 000; (4)
Erie Commercial Auto Policy ("Erie Auto Policy"),
$1, 000, 000; (5) Erie Business Catastrophe Liability Policy,
$5, 000, 000. Nationwide appeals.
Coast Insulators, Inc. ("East Coast") and Rodriguez
Construction ("Rodriguez") entered into a
subcontract for construction related services. East Coast lent a vehicle to Rodriguez for
the performance of work pursuant to their subcontract. Moises
Rodriguez Manzur ("Manzur") drove East Coast's
vehicle in the course of his employment with Rodriguez. On
October 4, 2013, he struck a vehicle operated by Martin
Klaiber, who later died as a result of the collision.
Stephanie Klaiber, the Personal Representative of the Estate
of Martin Klaiber ("the Estate"), filed a wrongful
death suit against Manzur and East Coast in the Circuit Court
of Loudoun County on December 10, 2013 (the "Tort
Action"). East Coast was later nonsuited from the Tort
Action on July 24, 2014.
Coast was insured under an Erie Commercial Auto Policy
("Erie Auto Policy"). Erie also provided East Coast
with a Business Catastrophe Liability Policy containing a
Commercial Liability Umbrella Coverage Form (collectively
"Erie Umbrella Policy"). East Coast's
subcontract with Rodriguez contained an insurance provision
requiring Rodriguez to obtain primary insurance to cover
bodily injury caused by accident. Rodriguez purchased
insurance policies from Nationwide, including (1) Nationwide
Business Auto Policy ("Nationwide Auto Policy");
(2) Nationwide Commercial General Liability Policy
("Nationwide CGL Policy"); and (3) Nationwide
Commercial Umbrella Liability Policy ("Nationwide
Umbrella Policy"). The subcontract also contained an
indemnification provision that obligated Rodriguez to
indemnify East Coast against any injuries that arose from
work performed under the subcontract.
August 11, 2014, Erie and Manzur filed the present lawsuit
against Nationwide and the Estate seeking a declaration of
the priority of liability coverage between the Erie and
Nationwide policies. Nationwide thereafter filed a
counterclaim and cross-claim for declaratory judgment against
Erie, Manzur, and the Estate. Nationwide requested that the
trial court find that Erie's policies provided primary
liability coverage. Erie argued that the indemnification
agreement required Nationwide's policies to provide
primary liability coverage.
a bench trial, the trial court ruled in favor of Erie,
holding that the indemnification provision in the subcontract
between East Coast and Rodriguez controlled and
"establishe[d] East Coast Insulators' right to
indemnification from Rodriguez Construction through its
insurer Nationwide." The trial court went on to state
that the indemnification provision:
is nothing more than a contract between the parties to
predetermine the allocation of potential risk of loss and
Virginia law favors such contracts between competent parties
for a valid purpose as set forth in Farmers Insurance
Exchange v[.] Enterprise Leasing
Co[.], 281 Va. 612');">281 Va. 612, [708 S.E.2d 852 (2011)] at
page 619 . . ., which states, the general rule is that an
indemnity agreement between the insurers or a contract with
an indemnification clause may shift an entire loss to a
particular insurer, notwithstanding the existence of another
insurance clause in its policy.
the indemnification provision in the subcontract, the trial
court then determined the priority of coverage as: (1)
Nationwide Auto Policy, (2) Nationwide CGL Policy; (3)
Nationwide Umbrella Policy; (4) Erie Auto Policy; and (5)
Erie Umbrella Policy.
Standard of Review
interpret insurance policies, like other contracts, in
accordance with the parties' intentions as determined
from the words they have used in their contract. The
interpretation of policy provisions presents a question of
law that we consider de novo." Lower
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