Summary
applying the test to determine the applicability of an excess “other insurance” clause in a liability insurance
Summary of this case from United Nat'l Ins. Co. v. Mundell Terminal Servs., Inc.Opinion
No. 05-03-00546-CV
Opinion issued October 28, 2004.
On Appeal from the 116th District Court, Dallas County, Texas, Trial Court Cause No. 02-06612-F.
Reversed, Rendered, and Remanded.
Before Justices MORRIS, WRIGHT, and BRIDGES.
MEMORANDUM OPINION
Hartford Casualty Insurance Company appeals the trial court's summary judgment in favor of Executive Risk Specialty Insurance Company. In two issues, Hartford argues the trial court erred in granting Executive's motion for summary judgment and denying Hartford's motion. We reverse the trial court's summary judgment in favor of Executive and remand for further proceedings.
Hartford and Executive both insured Provider Network, a company that contracted with physicians to provide services to various managed care providers. Hartford's policy is a general liability policy, and Executive's policy covers errors and omissions. One of the physicians who contracted with Provider Network sued Provider Network under various theories including defamation, breach of contract, and fraud. Only the allegations relating to defamation are covered under the Hartford policy. The Executive policy specifically excludes from coverage defamation claims, but other of the allegations are covered under the Executive policy. Executive refused to share in the cost of defending Provider Network based on the wording of the "other insurance" clauses in the Hartford and Executive policies. Executive claimed the "other insurance" clause in its policy made Hartford the primary insurer and Executive an excess insurer. Hartford sought a declaratory judgment that Executive and Hartford both had a duty to defend Provider Network as primary insurers, and Hartford was entitled to be reimbursed by Executive on a pro-rata basis. Both sides ultimately filed motions for summary judgment, and the trial court denied Hartford's motion and granted Executive's motion. This appeal followed.
In its first and second issues, Hartford argues the trial court erred in granting Executive's motion for summary judgment and denying Hartford's motion. The standard of review of a summary judgment is well established. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). When both parties move for summary judgment, each party "bears the burden of establishing that it is entitled to judgment as a matter of law. Guynes v. Galveston County, 861 S.W.2d 861, 862 (Tex. 1993). A motion for summary judgment must itself expressly present the grounds upon which it is made and must stand or fall on those grounds alone. Espalin v. Children's Med. Ctr. Of Dallas, 27 S.W.3d 675, 688 (Tex.App.-Dallas 2000, no pet.). When the summary judgment order does not state the grounds upon which it is based, the party challenging the order must show that each of the independent arguments alleged in the motion is insufficient to support the order. Jones v. Hyman, 107 S.W.3d 830, 832 (Tex.App.-Dallas 2003, no pet.); Williams v. City of Dallas, 53 S.W.3d 780, 785 (Tex.App.-Dallas 2001, no pet.). When we review cross-motions for summary judgment, we consider both motions and render the judgment the trial court should have rendered. Coastal Liquids Transp., L.P. v. Harris County Appraisal Dist., 46 S.W.3d 880, 883 (Tex. 2001).
The dispute in this case centers on the following "other insurance" clause contained in Executive's policy:
(G) Other Insurance; Other Indemnification:
(1) This Policy shall be excess of and shall not contribute with:
(a) any other existing insurance or self-insurance (whether collectible or not), unless such other insurance or self-insurance is specifically stated to be in excess of this Policy; and
(b) any indemnification to which an Insured is entitled from any entity other than another insured.
This Policy shall not be subject to the terms of any other policy of insurance or plan or program of self-insurance.
The Executive policy also provides that it "will have the right and duty to defend any Claim made against any Insured which is covered by this Policy, even if the allegations of such Claim are groundless, false or fraudulent." Executive argues the "other insurance" clause makes it an excess insurer and confirms Hartford's status as the primary insurer. Hartford argues the "other insurance" clause only applies to "other insurance" that covers the same risks as Executive's policy. Therefore, Hartford argues, the "other insurance" clause is inapplicable to the situation at hand in which Executive's policy and Hartford's policy cover completely different risks. For the reasons that follow, we agree with Hartford.
The provisions of an "other insurance" clause apply only when the "other" insurance covers the same property and interest therein against the same risk in favor of the same party. Members Ins. Co. v. English, 706 S.W.2d 779, 784 (Tex.App.-San Antonio 1986, no writ); see State Farm Fire Cas. Co. v. Griffin, 888 S.W.2d 150, 155 (Tex.App.-Houston [1st Dist.] 1994, no writ). Here, the Executive and Hartford policies covered different risks, and the "other insurance" clause in Executive's policy was therefore inapplicable. See English, 706 S.W.2d at 784; Griffin, 888 S.W.2d at 155. The Executive policy provided that it had "the right and duty to defend any Claim made against any Insured which is covered by this Policy, even if the allegations of such Claim are groundless, false or fraudulent." Thus, both Executive and Hartford have the duty to defend against the claims at issue. Where multiple insurers have a duty to provide a complete defense, neither must pay all of the defense costs because they share the duty until one has either exhausted its policy limits or is declared impaired. See Utica Nat'l Ins. Co. v. Tex. Prop. Cas. Ins. Guar. Assoc., 110 S.W.3d 450, 458 (Tex.App.-Austin 2001), rev'd on other grounds, Utica Nat'l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198 (Tex. 2004). Thus, Executive and Hartford each must bear a pro rata share of the costs of defense of the underlying suit. Accordingly, we conclude the trial court erred in granting summary judgment in favor of Executive. See Nixon, 690 S.W.2d at 548. For the same reasons, we conclude the trial court erred in failing to grant Hartford's motion for partial summary judgment. We sustain Hartford's first and second issues.
We reverse the trial court's summary judgment in favor of Executive, render judgment in favor of Hartford, and remand for the trial court to determine the amount of attorney's fees incurred by Hartford in prosecuting the underlying action.