Title: Mission Ins. Co. v. Allendale Mutual Ins. Co.

State: washington

Issuer: Washington Supreme Court

Document:

95 Wn.2d 464 (1981) 626 P.2d 505 CERTIFICATION FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON IN MISSION INSURANCE COMPANY, Plaintiff, v. ALLENDALE MUTUAL INSURANCE COMPANY, Defendant. No. 47364-1. The Supreme Court of Washington, En Banc. April 2, 1981. *465 Tewell, Thorpe & Findlay, by Duane Tewell and David A. Shaw, for plaintiff. Houghton, Cluck, Coughlin & Riley, by David Skellenger (Robert M. Wattson, of counsel), for defendant. DOLLIVER, J. The United States District Court for the Western District of Washington pursuant to RCW 2.60.020 has certified the following question to this court: Three approaches have been taken by the courts in resolving this question: (1) Policy Limit. Under this rule, the total loss is prorated on the basis of the maximum coverage limits of each policy. Buckeye Union Ins. Co. v. State Auto. Mut. Ins. Co., 49 Ohio St.2d 213, 361 N.E.2d 1052 (1977); (2) Maximum Loss. The loss is prorated based upon the maximum loss which each insurer standing alone would incur in the particular incident. Ruan Transp. Corp. v. Truck Rentals, Inc., 278 F. Supp. 692 (D. Colo. 1968); (3) Premiums Paid. The loss is prorated in proportion to the premiums paid. Insurance Co. v. Employers Liab. Assurance Corp., 163 F. Supp. 143 (S.D. Cal. 1858); see Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 147 A.2d 529, 69 A.L.R.2d 1115 (1959). Of these approaches, policy limit appears to be the older and majority rule, maximum loss is the minority but emerging rule, while premiums paid has been nearly universally discarded. In 1969, we adopted the policy limit rule. Pacific Indem. Co. v. Federated Am. Ins. Co., 76 Wn.2d 249, 456 P.2d 331 (1969) (Pacific Indem. Co. I). Accord, Greater Seattle Youth for Christ v. Colonial Ins. Co., 76 Wn.2d 253, 456 P.2d 333 (1969). The policy limit *466 rule was affirmed in Pacific Indem. Co. v. Federated Am. Ins. Co., 82 Wn.2d 412, 511 P.2d 56 (1973) (Pacific Indem. Co. II). See also Transport Indem. Co. v. Rollins Leasing Corp., 14 Wn. App. 360, 541 P.2d 1226 (1975). In Pacific Indem. Co. I, at page 252, the court did not analyze the maximum loss method but simply asserted "We find no merit in the first possibility [maximum loss]. It would not seem to achieve an equitable result unless the policy limits are somewhat similar." In adopting the policy limit rule, the court said: Pacific Indem. Co. I, at 253. No further analysis of the two rules is contained in any subsequent Washington case. As a result of this certification by the District Court, we have reexamined our position. We overrule those cases in which we approved the policy limit rule and now adopt the maximum loss rule. [1] While neither rule is perfect, we believe the maximum loss rule provides for more equitable treatment of the parties. A number of courts which have compared the two rules have written lucidly on the subject. See Ruan Transp. Corp. v. Truck Rentals, Inc., supra; Carriers Ins. Co. v. American Policyholders' Ins. Co., 404 A.2d 216 (Me. 1979); State Farm Mut. Auto. Ins. Co. v. Travelers Indem. Co., 433 F.2d 311 (10th Cir.1970); Ryder Truck Rental, Inc. v. Schapiro & Whitehouse, Inc., 259 Md. 354, 269 A.2d 826 (1970); Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., supra; Continental Cas. Co. v. Travelers Ins. Co., 84 Ill. App.2d 200, 228 N.E.2d 141 (1967); Dairyland Ins. Co. v. Drum, 193 Colo. 519, 524, 568 P.2d 459 (1977) (Carrigan, J., dissenting). The superiority of the maximum loss rule over the policy *467 limit approach has been well stated by the Supreme Judicial Court of Maine in Carriers Ins. Co. v. American Policyholders' Ins. Co., supra at pages 221-22: We concur in the analysis of the Maine court and believe the maximum loss rule to be the better rule. In response to the question from the United States District Court, we hold that under Washington law the loss should be apportioned between the two insurers under the doctrine of maximum loss as expressed in this opinion. BRACHTENBACH, C.J., and ROSELLINI, STAFFORD, UTTER, HICKS, WILLIAMS, DORE, and DIMMICK, JJ., concur.