Case Title: Fireman's Fund Insurance Co. v CNA Insurance Co.

Citation: 177 Vt. 215, 2004 VT 93, 862 A.2d 251

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2004-09-17T00:00:00Z

Document:
Fireman's Fund Insurance Co. v. CNA Insurance Co. (2003-035); 177 Vt. 215;
862 A.2d 251

2004 VT 93

[Filed 17-Sep-2004]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2004 VT 93

                                No. 2003-035

  Fireman's Fund Insurance Company	         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court

  CNA Insurance Company and 	                 March Term, 2004
  Sumitomo Marine Management (USA), Inc.

  Richard W. Norton, J.

  Robert Reis, John C. Holler and Matthew D. Anderson of Webber, Reis, Holler
    & Urso, LLP, Rutland for Plaintiff-Appellant/Cross-Appellee.

  Kaveh S. Shahi of Cleary Shahi Associates, P.C., Rutland, for
    Defendant-Appellee/ Cross-Appellant CNA Insurance Co.

  William D. Riley of Paul Frank & Collins, Burlington, and Richard H.
    Nicolaides, Jr. and Nina    Markoutsis of Bates & Carey, Chicago, Illinois,
    for Defendant-Appellee Sumitomo Marine Management, Inc.

  PRESENT:  Amestoy, C.J., (FN1) Dooley, Johnson and Skoglund, JJ., and 
            Allen, C.J. (Ret.),  Specially Assigned

        
       ¶  1.  DOOLEY, J.  Plaintiff Fireman's Fund Insurance (Fireman's)
  appeals, and defendant CNA Insurance Company (CNA) cross-appeals, from a
  Rutland Superior Court order denying in part and granting in part the
  parties' motions for summary judgment.  In the superior court, Fireman's
  brought a declaratory judgment action to determine the priority of coverage
  for three insurance policies, issued respectively by Fireman's, CNA, and
  Sumitomo Marine Management (USA), Inc. (Sumitomo).  Each of the policies
  provides some degree of coverage for injuries resulting from the automobile
  accident that is the subject of several underlying lawsuits.  The accident
  involved two passenger vehicles and a tank tractor truck owned by Pouliot
  and Corriveau, Inc. (P&C) that was pulling a milk tank "pup" trailer leased
  from Agri-Mark, Inc. (AMI).  CNA (FN2) was the primary insurer for both P&C
  and its driver, Burton Heath, with Sumitomo providing a commercial excess
  umbrella policy for these insureds.  Fireman's was AMI's primary carrier. 
  Pursuant to the declaratory judgment action, the trial court found that
  Fireman's and CNA shared primary coverage responsibility for any claims
  against P&C, Heath, and AMI and that in the event that these two policies
  were exhausted, Sumitomo had coverage responsibility for any excess
  liability against the three parties.  We affirm in part, and reverse and
  remand in part. 

       ¶  2.  This case arises out of an automobile accident that occurred
  on June 1, 1997 on Route 7 near the village of Brandon.  On that date,
  Ronald Gilligan was driving south on Route 7 with his wife, daughter and
  his daughter's friend in the car.  Gilligan attempted to pass a minivan
  driven and occupied by members of the Clodgo family.  When Gilligan pulled
  into the northbound lane to pass, he ran head-on into the oncoming P&C
  truck, driven by P&C's employee Heath.  At the time of the accident, the
  truck was hauling a trailer owned by AMI and leased by P&C pursuant to an
  oral lease between the two parties.  All four occupants of the Gilligan
  vehicle were killed, and members of the Clodgo family were injured.  

       ¶  3.  After the accident, several lawsuits were filed against P&C,
  Heath, and AMI.  The suits claimed that Heath was negligent in the
  operation of the truck and that both P&C and AMI were responsible for his
  negligence under respondeat superior.  One suit against AMI, filed by the
  estate of a passenger in the Gilligan vehicle alleged that the "pup"
  trailer was unreasonably dangerous and not suitable for the purpose for
  which it was being used.  Gilligan's insurer paid out its policy limit of
  $300,000 which the various claimants shared.  Fireman's has been defending
  AMI in these suits, but has not defended or contributed to the defense of
  Heath or P&C.  Similarly, CNA has been defending Heath and P&C, but has not
  provided a defense for AMI.  The Clodgo family settled its action against
  Heath and P&C after these lawsuits were filed. (FN3)  The settlement
  agreement provides that if CNA is able to recover any sums from Fireman's
  for contribution or reimbursement, CNA will pay the Clodgos one-third of
  the recovery up to $25,000.

       ¶  4.  In the aggregate, significant policy coverage is available
  for satisfaction of any judgments or settlements that may result from the
  claims.  Both the CNA and Fireman's policies provide  $1 million of auto
  liability coverage, and Sumitomo's commercial excess umbrella policy has a
  limit of $2 million.  Our responsibility, as was the superior court's, is
  to establish the coverage priorities among the policies before us.  
   
       ¶  5.  All parties to the declaratory judgment action moved for
  summary judgment.  Fireman's urged the court to find that it is obligated
  to provide defense and indemnification for the insureds only upon the
  exhaustion of both the CNA and Sumitomo policies.  In contrast, CNA argued
  that it shares primary coverage with Fireman's for liability for P&C and 
  Heath, and that Fireman's alone provides coverage for AMI's liability. 
  Sumitomo, in turn, asserted that CNA and Fireman's are primary for P&C's
  and Heath's liability and that Fireman's is also primary for AMI's
  liability.  According to Sumitomo, it is obligated to provide coverage only
  for P&C and Heath, and only then after both CNA's and Fireman's policies
  are exhausted.  

       ¶  6.  After considering the parties' motions for summary judgment,
  the court issued an order and made the following rulings: (1) Sumitomo's
  motion was granted "insofar as the CNA and Fireman's policies must be
  exhausted before Sumitomo must contribute to the coverage of P&C, Heath and
  AMI," but was denied "insofar as it sought to avoid responsibility for
  claims arising from Heath and AMI"; (2) CNA's motion was granted "insofar
  as Fireman's must share primary responsibility for the P&C and Heath
  claims," but was denied "insofar as it sought to escape liability for
  claims arising from Heath and AMI liability;" and (3) Fireman's motion was
  granted "insofar as CNA must share primary responsibility with Fireman's
  for claims arising from P&C's, Heath's and AMI's liability," but denied
  "insofar as it sought to avoid primary responsibility for any claims."

       ¶  7.  Following the issuance of the order, Fireman's filed an
  appeal with this Court, and CNA  cross-appealed.  Thereafter, Sumitomo
  withdrew from the appeal.  This withdrawal has little effect on this
  opinion because we still must address Fireman's arguments on the priority
  of coverage responsibilities with respect to all three carriers.  On
  appeal, Fireman's contends that it is excess over both the CNA and Sumitomo
  policies.  CNA cross-appeals, arguing that Fireman's shares primary
  coverage responsibility for P&C and Heath and that it provides no coverage
  for AMI even though AMI is a listed as an additional insured.  
   
       ¶  8.  We review the decisions on the parties' summary judgment
  motions using the same standard as the trial court.  Madden v. Omega
  Optical, 165 Vt. 306, 309,