United States District Court, E.D. Virginia, Richmond Division
HANNAH LAUCK UNITED STATES DISTRICT JUDGE.
matter comes before the Court on two motions:
(1) Defendant Federal Insurance Company's
("Federal") Motion for Summary Judgment (the
"Federal Motion for Summary Judgment"), (ECF No.
(2) Plaintiff Mutual Insurance Society of Virginia's (the
"Society") Motion for Summary Judgment (the
"Society Motion for Summary Judgment"),
(ECF No. 11).
and the Society filed Cross-Motions for Summary Judgment
pursuant to Federal Rule of Civil Procedure 56,
both Federal and the Society responded to the Cross Motions.
(ECF Nos. 13, 14). These matters are ripe for disposition.
Court dispenses with oral argument because the materials
before it adequately present the facts and legal contentions,
and argument would not aid the decisional process. The Court
exercises jurisdiction pursuant to 28 U.S.C. §
1332(a)(1). For the reasons stated below, the Court
will grant the Federal Motion for Summary Judgment and deny
the Society Motion for Summary Judgment.
Procedural and Factual Background
indemnity and contribution action arises out of a dispute
between Federal and the Society as to the proper allocation
of coverage liability between the insurers stemming from a
wrongful death settlement.
Wrongful Death Settlement
November 8, 2017, a wrongful death action styled Estate
of Graham McCormick v. J. Randolph Hooper, et al., (the
"McCormick Lawsuit") was filed in the Circuit Court
for die City of Richmond (the "Richmond Circuit
Court"). The McCormick Lawsuit sought "damages
arising from fatal injuries suffered in a boating accident
that occurred on or about August 11, 2017" and named
three defendants: J. Randolph Hooper ("Rand"), the
operator of the boat at me time of the accident, and his
parents, Gary Hooper and Lucy W. Hooper, the owners of the
boat. (Compl ¶ 7, ECF No. 1-2.)
McCormick Lawsuit implicated the coverage of three separate
insurance policies. First, GEICO Marine Insurance Company
("GEICO") issued a "marine liability policy
... with limits of $500, 000" to Gary Hooper that
covered Rand Hooper as a "person... operating an .
'insured boat' with [Gary Hooper's] direct and
prior permission." (Mem. Supp. Society Mot. Sum. J. 3,
ECF No. 12; GEICO Policy 19, ECF No. 1-2.) Second, the
Society issued a "homeowner's policy with limits of
$500, 000 ... to Rand Hooper" that provided coverage to
him as the "permissive user of another's boat."
(Mem. Supp. Society Mot. Sum. J. 3, 11). Third, Federal
issued "a group personal excess liability policy with
limits of $5, 000, 000" to Davenport & Company.
(Id.) The Federal Policy "via an endorsement,
lists Lucy W. Hooper as a person insured under the
policy." (Id.) The Federal Policy covered Rand
Hooper as a permissive user of the boat. (See
Federal Policy, Mem. Supp. Society Mot. Sum. J., ECF No.
April 23, 2018, the McCormick Lawsuit settled in exchange for
payment of four million dollars. (See
McCormick-Hooper Settlement, ECF No. 1-2.) In order to
finalize the settlement agreement, the three insurance
companies-GEICO, the Society, and Federal-agreed to
contribute certain shares of the settlement subject to a
reservation of rights "to pursue contribution,
indemnification and/or subrogation... regarding each
insurer's proportionate share of the Settlement
Sum." (Compl. ¶ 15.) Both GEICO and the Society
exhausted their coverage limits and each contributed $500,
000.00. (Id. ¶ 14.) Federal contributed the
remaining $3, 000, 000.00. (Id.)
its preserved right to pursue contribution, the Society now
contends that it "paid more than its proportionate share
of the settlement amount." (Compl. ¶ 2.)
Specifically, the Society contends that both its policy and
Federal's are indistinguishable "excess"
insurance policies which cannot be reconciled by the plain
language of their "other insurance" clauses. The
Society maintains that they should have shared liability with
Federal on a pro-rata basis, and seeks reimbursement
from Federal in the amount of $181, 818.18.
December 27, 2018, the Society filed suit in the Richmond
Circuit Court against Federal and GEICO. On January 25, 2019,
before GEICO had made an appearance in the Richmond Circuit
Court, Federal removed the case to this Court pursuant to 28
U.S.C §§ 1332, 1441, and 1446. (See Not.
Removal, ECF No. 1.)
February 19, 2019, the Society filed a Notice of Voluntary
Dismissal as to GEICO, (ECF No. 2), pursuant to Federal Rule
of Civil Procedure 41(a)(1)(A)(i). The Court dismissed GEICO,
(ECF No. 3), and allowed the case to proceed against Federal.
Following an Initial Pretrial Conference, Federal and the
Society filed the Cross-Motions for Summary Judgment, and
both Parties responded.
Standard of Review: Rule 56
judgment under Rule 56 is appropriate only when the Court,
viewing the record as a whole and in the light most favorable
to the nonmoving party, determines that there exists no
genuine issue of material fact, and that the moving party is
entitled to judgment as a matter of law. See Celotex
Corp. v. Catrett, 477 U.S. 317, 322-24 (1986);
Liberty Lobby, 477 U.S. at 248-50. "The
interpretation of an insurance policy is a question of law
that is particularly well suited for summary judgment."
Minn. Lawyers Mut. Ins. Co. v. Protostorm LLC, 197
F.Supp.3d 876, 882 (E.D. Va. 2016) (citing St. Paul Fire
& Marine Ins. Co. v. Jacobson, 826 F.Supp. 155, 157
(E.D. Va. 1993), affd, 48 F.3d 778 (4th Cir. 1995)).
fact is material if the existence or non-existence thereof
could lead a jury to different resolutions of the case."
Thomas v. FTS USA, LLC, No. 3:13cv825, 2016 WL
3653878, *4 (E.D. Va. June 30, 2016) (citing Liberty
Lobby, 477 U.S. at 248). Once a party has properly filed
evidence supporting its motion for summary judgment, the
nonmoving party may not rest upon mere allegations in the
pleadings, but instead must set forth specific facts
illustrating genuine issues for trial. Celotex
Corp., 477 U.S. at 322-24. The parties must present
these in the form of exhibits and sworn affidavits.
views the evidence and reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party.
Liberty Lobby, 477 U.S. at 255. Whether an inference
is reasonable must be considered in conjunction with
competing inferences to the contrary. Sylvia Dev. Corp.
v. Calvert Cty., 48 F.3d 810, 818 (4th Cir. 1995).
Nonetheless, the nonmoving "party is entitled 'to
have the credibility of his [or her] evidence as forecast
assumed.'" Miller v. Leathers, 913 F.2d
1085, 1087 (4th Cir. 1990) (en banc) (quoting
Charbonnages de France v. Smith, 597 F.2d 406, 414
(4th Cir. 1979)).
end, the non-moving party must do more than present a
scintilla of evidence.
Rather, the non-moving party must present sufficient evidence
such that reasonable jurors could find by a preponderance of
the evidence for the non-movant, for an apparent dispute is
not genuine within contemplation of the summary judgment rule
unless the non-movant's version is supported by
sufficient evidence to permit a reasonable jury to find the
facts in his [or her] favor.
Sylvia Dev. Corp., 48 F.3d at 818 (internal
quotations, citations, and alterations omitted). The ultimate
inquiry in examining a motion for summary judgment is whether
there is "sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party. If the
[nonmoving party's] evidence is merely colorable, or is
not significantly probative, summary judgment may be
granted." Liberty Lobby, 477 U.S. at 249-50
(internal citations omitted). Where the court is faced with
cross-motions for summary judgment, as in the instant case,
the court must review each motion separately on its own
merits. Rossignol v. Voorhaar, 316 F.3d 516, 523
(4th Cir. 2003).
Insurance Contract Interpretation Under Virginia
other contracts, the Court will interpret an insurance policy
"in accordance with the intention of the parties gleaned
from the words they have used in the document. Each phrase
and clause of an insurance contract should be considered and
construed together and seemingly conflicting provisions
harmonized when that can be reasonably done." TravCo
Ins. Co. v. Ward, 736 S.E.2d 321, 325 (Va. 2012)
(quoting Floyd v. Northern Neck Ins. Co., 427 S.E.2d
193, 196 (Va. 1993)). "It is axiomatic that when the
terms in a contract are clear and unambiguous, the contract
is construed according to its plain meaning."
Id. (quoting Barber v. VistaRMS, Inc., 634
S.E.2d 706, 712 (Va. 2006)). "Words that the parties
used are normally given their usual, ordinary, and popular
meaning. No word or clause in the contract will be treated as
meaningless if a reasonable meaning can be given to it, and
there is a presumption that the parties have not used words
needlessly." Id. (quoting City of
Chesapeake v. States Self-Insurers Risk Retention Group,
Inc., 628 S.E.2d 539, 542 (Va. 2006)).
Primary, Excess, and "Other Insurance"
often purchase several layers of insurance coverage to best
guard against risk. Primary insurance "is typically the
first layer of coverage" and generally "impose[s]
on the insurer a duty to defend, subject to the terms of the
insurance contract." 23-145 Appleman on Insurance
Law & Practice Archive § 145.1 (2nd 2011).
Excess insurance-sometimes referred to as umbrella or
catastrophic insurance-provides coverage beyond primary
insurance. A "true excess policy is triggered on the
exhaustion of the limits of the primary policy."
policyholders may purchase overlapping coverage, insurance
policies "generally contain 'other insurance'
clauses that attempt to define the insurer's
responsibility for payment when other insurance coverage is
available." Horace Mann Ins. Co. v. Gen. Star
Nat 7 Ins. Co., 514 F.3d 327, 330 (4th Cir.
2008). These "other insurance" clauses are valid
and enforceable, and may transform a primary insurance policy
into an excess insurance policy. See 15 Russ &
Segalla, Couch on Insurance § 219. As the
United States Court of Appeals for the Fourth Circuit has
[a] primary liability insurance policy that contains an
excess other-insurance clause thus effectively operates as an
excess policy if other insurance is available. That is, even
though the policy would provide primary, first-dollar
coverage for an insured loss if no other insurance policy
covered the loss, it will provide excess coverage when other
insurance is available. Primary liability policies with
excess other-insurance clauses are ... referred to as
"coincidental excess" policies.
Horace Mann, 514 F.3d at 330 (citing
Fireman's Fund Ins. Co. v. CNA Ins. Co., 862
A.2d 251, 266 (Vt. 2004)).
and application of "other insurance" clauses may
become complicated when "multiple liability policies
potentially provide coverage for a given loss and each of the
policies contains an other-insurance clause."
Id. at 331. Where two policies purport to be excess
to one another, the majority of courts, including the Supreme
Court of Virginia, have found that dissimilar "other
insurance clauses" may be reconciled. See Med.
Protective Co. v. Nat 7 Union Fire Ins. Co. of
Pittsburg, PA, 25 Fed.Appx. 145, 147-48 (4th Cir. 2002)
(interpreting the Supreme Court of Virginia's ruling in
GEICO v. Universal Underwriters Ins. Co., 350 S.E.2d
612, 615 (Va. 1986)). However, if the "other
insurance" clauses of two policies have the same effect,
then neither provides purely primary coverage and the
insurers should share contribution on a pro-rata
basis. See Aetna Cas. & Sur. Co. v. Nat'l Union
Fire Ins. Co., 353 S.E.2d 894, 897 (Va. 1987)
("when other insurance clauses of two policies are of
identical effect in that they operate mutually to reduce or
eliminate the amount of collectible insurance available,
neither provides primary coverage and... pro rata
distribution... [is] appropriate.") In other words,
"other insurance" or excess clauses that are
"alike ... are mutually repugnant." Nat'l
Union Fire of Pittsburgh, 25 Fed.Appx. at 149; see
also Horace Mann, 514 F.3d at 331 ("some courts
find conflicting other-insurance clauses to be 'mutually
repugnant' and thus unenforceable and require the
insurers to bear pro-rata shares of the total
decision to declare two policies mutually repugnant, and thus
force pro-rata distribution, should not be taken
lightly. "Excess insurance is generally available at a
lesser cost than the primary policy since the risk of loss is
less than for the primary insurer." Gabarick v.
Laurin Mar. (Am.), Inc., 649 F.3d 417, 422 (5th Cir.
2011) (alteration and quotation marks omitted).
"Permitting a primary insurer to invoke an 'other
insurance' clause vis a vis an excess policy would be
unfair because a primary insurer would be allowed to charge a
higher premium for insuring a greater risk... [but] shift the
loss to an excess carrier which charged a lower
premium." Am. Auto. Ins. Co. v. First Mercury
Ins. Co., 2017 WL 3575882, at *2, *10 (D.N.M. Mar. 31,
2017) (citing Reliance Nat7 Indem. Co. v. Gen.
Starlndem. Co., 72 Cal.App.4th 1063, 1074 (1999)). In
such a case, pro-rata distribution would alter
"the basic rules construing primary and excess
policies," defeat the bargained for expectations of the
excess insurer, and distort the insurance market.
Reliance, 72 Cal.App.4th at 1083.
The Society and Federal Policies
The Society Policy
Society Policy states that it pays $500, 000.00 "for the
'bodily injury' or the 'property damage'
which results from the maintenance, use, loading, or
unloading of a watercraft which is not owned by or rented to
an 'assured' if the loss is a result of the
activities of an 'assured.'" (Society Policy 14,
Mem. Supp. Society Mot. Sum. J., ECF No. 12-3.) However, for
all injuries arising out of the "maintenance, use,
loading, or unloading of a watercraft," the Society
Policy purports to be
... excess over other valid and collectible insurance
that applies to the loss or claim. (However, this does
not apply to insurance written specifically to provide
coverage in excess of the "limits" that apply in
this policy.) If the other insurance is also excess,
"we" pay ...