Present: Carrico, C.J., Lacy, Keenan, Koontz, Kinser, and 

Lemons, JJ., and Compton, S.J. 

OHIO CASUALTY INSURANCE COMPANY 

v. Record No. 001914 OPINION BY JUSTICE DONALD W. LEMONS 

 June 8, 2001 

STATE FARM FIRE AND CASUALTY COMPANY 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Henry E. Hudson, Judge 

 In this appeal, we consider a coverage dispute between 

two insurance carriers, arising from the damage by fire of two 

adjacent homes under construction by the same builder. 

I. Facts and Proceedings Below 

 State Farm Fire and Casualty Company (“State Farm”) 

issued separate and nearly identical homeowner’s insurance 

policies to Jerome and Gail Kozak (“Kozaks”) and Stephen and 

Mary Kitchen (“Kitchens”). The Kozaks and the Kitchens 

separately contracted with Talton Brothers Construction 

Company, Inc. (“Talton Brothers”) for the construction of 

their respective homes on adjacent lots. Ohio Casualty 

Insurance Company (“Ohio Casualty”) issued a builder’s risk 

insurance policy to Talton Brothers, covering both dwellings 

and properties. Although construction was not complete and 

residential use permits had not been approved or issued, title 

to the properties in question passed to the respective 

homeowners prior to a fire that caused considerable damage to 

both properties. 
 The Kozaks and the Kitchens made claims against State 

Farm under their respective homeowner’s insurance policies. 

State Farm paid the Kozaks $86,081.00, and paid the Kitchens 

$572,749.76. Thereafter, State Farm brought a bill of 

complaint for declaratory judgment against Ohio Casualty 

seeking a declaration that Ohio Casualty’s policy provided 

coverage for the losses and that Ohio Casualty’s policy “is 

primary and should be paid in full.” The parties stipulated 

to the facts and upon cross-motions for summary judgment, 

submitted the case to the trial court on briefs and oral 

argument. 

 The trial court held that State Farm was entitled to 

equitable contribution from Ohio Casualty in the amount of 

one-half of the claims paid and denied State Farm’s request 

for pre-judgment interest. Ohio Casualty appeals the judgment 

of the trial court, maintaining that the trial court erred in 

ordering equitable contribution because the builder’s risk 

insurance policy and the homeowner’s insurance policies named 

different insureds. Ohio Casualty further contends that even 

if its policy afforded coverage for these losses, it only 

provided coverage excess to other insurance coverage. State 

Farm assigns cross-error and maintains that the trial court 

erred in failing to hold that Ohio Casualty’s policy was 

primary and in failing to require full reimbursement of all 

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claims paid by State Farm. Also, State Farm assigns crosserror to the trial court’s denial of pre-judgment interest. 

II. Standard of Review 

 The trial court based its findings of fact upon 

stipulated facts rather than upon an ore tenus hearing. 

Therefore, the court’s findings, although highly persuasive 

and entitled to great weight, are not binding on appeal. 

Johnson v. Insurance Co. of No. America, 232 Va. 340, 345, 350 

S.E.2d 616, 619 (1986). However, we will not reverse the 

trial court’s judgment on appeal unless it is plainly wrong or 

without evidence to support it. State Farm Mut. Auto. Ins. 

Co. v. Weisman, 247 Va. 199, 202, 441 S.E.2d 16, 18 (1994). 

See also Code § 8.01-680. 

III. Analysis 

 On appeal, State Farm premises its entitlement to 

recovery upon theories of subrogation and contribution. 

Neither theory is applicable to this case. In a subrogation 

action, the rights of a subrogated insurer can rise no higher 

than the rights of its insured. See Nationwide Mut. Ins. Co. 

v. Minnifield, 213 Va. 797, 800, 196 S.E.2d 75, 78 (1973). 

Consequently, in this case, in order to recover based upon a 

theory of subrogation, State Farm must establish that Ohio 

Casualty had an obligation to pay the Kozaks and the Kitchens 

under the builder’s risk insurance policy. The evidence does 

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not support such recovery. The Kozaks and the Kitchens were 

not named as additional insureds or loss payees under Ohio 

Casualty’s policy; consequently, they have no express 

contractual right to receive payment from Ohio Casualty. 

 In support of its argument that subrogation is proper in 

this action, State Farm cites our opinion in Federal Land Bank 

v. Joynes, 179 Va. 394, 18 S.E.2d 91 (1942), and states that 

the doctrine of subrogation “is a creature of equity which 

arises by operation of law; it is not dependent upon contract 

or privity between the parties, but rather is a creature of 

equity and is founded upon the principles of natural justice.” 

State Farm’s rough paraphrase from our opinion ignores the 

sentence that precedes the paraphrased passage, where we 

clearly stated: “Subrogation is the substitution of another 

person in the place of the creditor to whose rights he 

succeeds in relation to the debt.” Id. at 401, 18 S.E.2d at 

920. Simply stated, in this case, since the Kozaks and the 

Kitchens could not maintain a direct action against Ohio 

Casualty, under the doctrine of subrogation, neither could 

State Farm. 

Additionally, State Farm argues that it is entitled to 

equitable contribution. The right of equitable contribution 

does not arise out of an express contract or agreement between 

the parties to indemnify each other. Allstate Ins. Co. v. 

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United Servs. Auto. Ass’n, 249 Va. 9, 12, 452 S.E.2d 859, 861 

(1995). Rather, it is based upon equitable principles that 

imply a contract between the parties to contribute ratably 

toward the discharge of a common obligation. Id. We have 

previously stated: 

Thus where two or more persons are liable

to pay a claim and one or more of them 

pays the whole of it, or more than his or 

her share, the one so paying may generally 

recover from the others the ratable 

proportion of the claim that each ought to 

pay. 

Midwest Mut. Ins. Co. v. Aetna Cas. and Sur. Co., 216 Va. 926, 

929, 223 S.E.2d 901, 904 (1976)(quoting Wiley N. Jackson Co. 

v. City of Norfolk, 197 Va. 62, 66, 87 S.E.2d 781, 784 

(1955)). 

 In the context of insurance coverage, proof that the 

policies insure the same property is not sufficient to 

establish a common obligation; the policies in question must 

afford coverage for the same insureds, and the same risk. See

Minnifield, 213 Va. at 801, 196 S.E.2d at 78 (citing American 

Employers’ Ins. Co. v. Maryland Cas. Co., 218 F.2d 335, 340 

(4th Cir. 1954)). There was no common obligation in this case 

because Ohio Casualty had no obligation to pay the claims of 

the Kozaks or the Kitchens, and State Farm had no obligation 

to pay the claims of Talton Brothers. 

5
 Two cases remarkably similar to the case before us 

illustrate the concept. In Reliance Ins. Co. v. Liberty Mut. 

Fire Ins. Co., 13 F.3d 982 (6th Cir. 1994), two insurance 

carriers insured a building that was damaged by fire. 

Reliance had issued a builder’s risk insurance policy to the 

builder and Liberty Mutual had issued a builder’s risk 

insurance policy to the building’s owner. Neither policy 

named the other party as an additional insured or loss payee. 

Upon claim made by the owner, Reliance paid the loss and 

thereafter, sought contribution from Liberty Mutual. The 

Court of Appeals held that there was no right of contribution 

because a common obligation “only exists where ‘both policies 

were on the same property, on the same interest in the 

property, against the same risks, and payable to the same 

parties.” Id. at 983 (quoting Lubetsky v. Standard Fire Ins. 

Co., 187 N.W. 260 (Mich. 1922)). The court specifically noted 

that it could find “no authority for the proposition that an 

insurance contract which insures only a property owner’s 

interest insures the ‘same interest’ as a policy which only 

insures a contractor’s interest.” Id. at 984. In a later 

case, the Court of Appeals summarized its holding in Reliance

by stating: “Simply put, because each policy covered a 

different insured and neither named the other as an additional 

insured under their respective policies, contribution was not 

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a proper remedy.” State Farm Fire & Cas. Co. v. Zurich Ins. 

Co., 111 F.3d 42, 45 (6th Cir. 1997). 

 The case of Lititz Mut. Ins. Co. v. Lengacher, 248 F.2d 

850 (7th Cir. 1957), involved a dispute between an insurer 

that issued a builder’s risk insurance policy to a builder and 

an insurer that issued a fire insurance policy to the owner. 

After the property was damaged by fire, the builder sued his 

carrier for the loss. Holding that the builder’s insurer must 

pay the claim because the named insured “had the right to rely 

solely upon the policy he had purchased,” the court further 

held that the builder’s insurer had no right of contribution 

from the owner’s insurer because “the two insurance companies 

insured separate and distinct interests in the same property.” 

Id. at 853-54. 

IV. Conclusion 

 We hold that the trial court erred in ruling that “both 

carriers share a concurrent insurance obligation for the 

damage occasioned by the fire.” Consequently, it is 

unnecessary to address the remaining assignments of error and 

cross-error. Accordingly, we will reverse and vacate the 

judgment of the trial court and will enter final judgment in 

favor of Ohio Casualty. 

Reversed and final judgment. 

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