PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 17-1149

CONTINENTAL CASUALTY COMPANY,

Plaintiff - Appellee,

v.

AMERISURE INSURANCE COMPANY,

Defendant - Appellant.

No. 17-1208

CONTINENTAL CASUALTY COMPANY,

Plaintiff - Appellant,

v.

AMERISURE INSURANCE COMPANY,

Defendant - Appellee.

Appeals from the United States District Court for the Western District of North Carolina, 

at Charlotte. Graham C. Mullen, Senior District Judge. (3:14-cv-00529-GCM)

Argued: January 23, 2018 Decided: March 28, 2018
2

Before MOTZ, TRAXLER, and KEENAN, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Keenan 

wrote the opinion, in which Judge Motz and Judge Traxler joined.

ARGUED: Richard Leonard Pinto, PINTO, COATES, KYRE & BOWERS, PLLC, 

Greensboro, North Carolina, for Appellant/Cross-Appellee. Karen Ventrell, CNA 

COVERAGE LITIGATION GROUP, Washington, D.C., for Appellee/Cross-Appellant. 

ON BRIEF: Adam L. White, PINTO, COATES, KYRE & BOWERS, PLLC, 

Greensboro, North Carolina, for Appellant/Cross-Appellee. David J. Redding, Ty K. 

McTier, REDDING JONES PLLC, Charlotte, North Carolina, for Appellee/CrossAppellant.
3

BARBARA MILANO KEENAN, Circuit Judge:

In this insurance coverage dispute, we consider whether claims in an underlying 

personal injury suit against two contractors were covered under policies issued by 

Amerisure Insurance Company (Amerisure), in which the contractors were “additional 

insureds.” Contending that the claims were excluded from coverage, Amerisure refused 

to participate in the contractors’ defense, and did not contribute to a final settlement of 

the lawsuit. Thereafter, Continental Casualty Company (Continental), which had 

defended the contractors under the terms of a different policy and had paid the settlement 

amount, filed the present suit against Amerisure asserting that Amerisure had breached its 

duty to defend. Continental sought a declaratory judgment requiring Amerisure to 

reimburse Continental for the full settlement amount plus prejudgment interest and for 

the fees and costs Continental incurred in defending the underlying action. 

After the parties filed cross-motions for summary judgment, the district court 

denied Amerisure’s motion and granted Continental’s motion in part, concluding that 

Amerisure was liable to Continental for repayment of the $1.7 million settlement plus 

prejudgment interest. However, the district court denied Continental’s motion to hold 

Amerisure liable for full payment of Continental’s defense costs and fees, determining 

that Amerisure should be required to pay only half those amounts. 

Upon our review, we affirm the district court’s judgment that Amerisure 

improperly relied on a policy exclusion to avoid its duty to defend, and that Amerisure 

was liable under the terms of its policies to pay the full cost of the settlement plus prejudgment interest. However, we vacate the court’s judgment with respect to defense fees 
4

and costs, and hold that Amerisure was liable for the full amount of those fees and costs 

because Continental did not have an independent duty to defend in the underlying 

lawsuit. Accordingly, we affirm in part, and vacate in part, the district court’s judgment. 

I.

KBR Building Group, LLC (BE&K) served as the general contractor on a 

construction project to build a hospital for the Charlotte Mecklenburg Hospital Authority 

(the Hospital Authority) in Pineville, North Carolina. BE&K entered into a subcontract 

with SteelFab to supply and construct the steel infrastructure for the hospital. SteelFab, 

in turn, entered into a contract (the SteelFab-CSS subcontract) with a “second-tier” 

subcontractor, Carolina Steel and Stone, Inc. (CSS), to erect the steel structure. 

While working on this portion of the project, Dustin Miller, a CSS employee, 

tripped and fell 30 feet to the ground after his safety cable broke (the accident). Miller 

suffered serious injuries, including “paralysis from his chest down.” At the time of the 

accident, CSS held both commercial general liability (CGL) and umbrella insurance 

policies issued by Amerisure (the Amerisure policies). As required by the SteelFab-CSS 

subcontract, the Amerisure policies included SteelFab and BE&K as “additional 

insureds.” 

The Amerisure policies complied with the minimum coverage amounts required 

by the SteelFab-CSS subcontract, namely, a total of $2,000,000. The Amerisure CGL 

policy provided a limit of liability of $1,000,000 per occurrence, while the umbrella 
5

policy provided an additional $5,000,000 per occurrence.

1

 Additionally, the SteelFabCSS subcontract stated that “the insurance required of [CSS] must be primary and 

noncontributory with SteelFab’s Insurance program.” (emphasis added). 

In addition to its “additional insured” status under Amerisure’s policies, SteelFab 

held its own CGL policy issued by Continental, which policy contained an “additional 

insured” endorsement covering BE&K. BE&K also was insured under the Hospital 

Authority’s “rolling owner controlled insurance program” (ROCIP).

2

 By enrolling in the 

ROCIP, BE&K also had coverage under policies issued by a separate insurance provider. 

Although the terms of the ROCIP required participation by all tiers of contractors, 

participation was not automatic, and BE&K did not enroll either SteelFab or CSS in the 

ROCIP. Instead, as required by an additional provision of the ROCIP, these unenrolled 

subcontractors maintained their own insurance coverage as previously described. 

After the accident, Miller filed the underlying personal injury action against 

defendants BE&K and SteelFab, alleging numerous theories of negligence and breach of 

contract (the Miller action). Miller alleged, in relevant part, that BE&K and SteelFab 

failed to provide a safe work environment, failed to ensure that their subcontractors 

 1 The certificate of liability insurance that CSS issued to SteelFab indicates that 

CSS obtained umbrella liability coverage with only $1,000,000 per occurrence. Any 

discrepancy in the amount of coverage provided by the Amerisure umbrella policy, 

however, does not affect our analysis in this case. 

2 The ROCIP was defined as an insurance program in which coverage is provided

“on a construction project ‘wrap-up’ basis for contractors . . . of any tier that have been 

properly enrolled, while performing operations at the construction project sites.” 
6

followed certain safety measures, failed to properly inspect certain safety features, failed 

to control and supervise the workplace, and failed to warn subcontractors about the lack 

of safety measures. Miller did not name CSS as a defendant, but was paid workers’ 

compensation benefits based on his status as a CSS employee. 

Continental agreed to defend the Miller action subject to a full reservation of 

rights. When Continental sought Amerisure’s participation in this defense, Amerisure 

declined on the ground that any defense of Miller’s claims was subject to a “controlled 

insurance program” exclusion (the CIP exclusion) contained in the Amerisure policies. 

Amerisure contended that this exclusion precluded coverage and excused any duty to 

defend because the Hospital Authority had a ROCIP in effect on the date of Miller’s 

accident. 

Ultimately, BE&K and SteelFab reached a settlement agreement with Miller for 

$1.7 million. Continental paid the settlement amount and expended more than $660,700 

in related attorneys’ fees and costs. 

Continental filed the present action in the district court seeking a declaratory 

judgment that Amerisure breached its duty to defend the Miller action, and requiring 

Amerisure to reimburse Continental for the cost of the settlement plus the costs and fees 

incurred in defending the Miller action. The parties filed cross-motions for summary 

judgment. 

The district court denied Amerisure’s motion. The court granted Continental’s 

motion in large part, concluding that Amerisure had breached its duty to defend the 

Miller action and that, under the terms of Amerisure’s policies, Amerisure was liable to
7

reimburse Continental for the $1.7 million settlement amount. With regard to costs and 

fees, however, the district court held that “[e]quity dictates that the defense costs be 

shared equally among the two insurers,” and ordered Amerisure to reimburse Continental 

for half the associated costs and fees. The parties filed timely cross-appeals. 

II.

These appeals present three primary issues for our review: (1) whether the CIP 

exclusion in the Amerisure policies excused Amerisure from defending the Miller action; 

(2) if Amerisure breached its duty to defend, whether Amerisure was liable to reimburse 

Continental for the full $1.7 million settlement under the coverage provided in the 

Amerisure policies; and (3) if Amerisure breached its duty to defend, whether Amerisure 

was required to reimburse Continental for the full amount of the costs and fees incurred 

by Continental in defending the Miller action.3

 

Our review of these issues presents questions of law concerning the interpretation 

of insurance policy language, which questions we consider de novo. Perini/Tompkins 

Joint Venture v. Ace Am. Ins. Co., 738 F.3d 95, 101 (4th Cir. 2013) (setting forth standard 

 3 Amerisure also contends on appeal that the district court abused its discretion in 

excluding the testimony of one of Amerisure’s expert witnesses, Walter E. Brock, Jr. 

The district court ruled that Brock’s opinion was “nothing other than his interpretation of 

the CIP exclusion.” Brock also offered opinions on additional matters regarding the 

relevant policy language. We hold that the court did not abuse its discretion in 

concluding that Brock’s testimony did not aid in resolving any factual issues but 

improperly addressed issues of law. See Fed. R. Evid. 702(a); Forrest Creek Assocs. v. 

McLean Savs. & Loan Ass’n, 831 F.2d 1238, 1242 (4th Cir. 1987); Adalman v. Baker, 

Watts & Co., 807 F.2d 359, 367 (4th Cir. 1986). 
8

for reviewing district court’s award of summary judgment and decision regarding 

contract interpretation). We apply North Carolina law, because this case arose under the 

district court’s diversity jurisdiction, and the relevant insurance policies were delivered in 

North Carolina.4

 See Fortune Ins. Co. v. Owens, 526 S.E.2d 463, 466 (N.C. 2000). 

Because insurance policies are contracts, we apply familiar rules of construction to 

discern the intent of the parties. Gaston Cty. Dyeing Mach. Co. v. Northfield Ins. Co., 

524 S.E.2d 558, 563 (N.C. 2000). When the policy language is clear and unambiguous, a 

court is required to enforce the policy as written. Id. Terms defined in insurance policies 

are applied to all clauses of the insurance contract, while undefined terms are construed 

in accordance with their ordinary meaning. Harleysville Mut. Ins. Co. v. Buzz Off Insect 

Shield, LLC, 692 S.E.2d 605, 612 (N.C. 2010). When “the meaning of words or the 

effect of provisions is uncertain or capable of several reasonable interpretations, the 

doubts will be resolved . . . in favor” of coverage. Gaston Cty., 524 S.E.2d at 563 

(citation omitted). With these principles in mind, we turn to address the parties’ 

arguments.

A.

We first consider whether the district court erred in holding that Amerisure 

breached its duty to defend BE&K and SteelFab in the Miller action. According to 

Amerisure, the CIP exclusion in its CGL and umbrella policies exempted Amerisure from 

 4 Both parties and the district court agreed that North Carolina law governs this 

coverage dispute. 
9

any obligation to defend the action because the ROCIP, a controlled insurance program, 

had been implemented by the Hospital Authority. We disagree with Amerisure’s 

position.

Under North Carolina law, an insurer’s obligation to defend its insured in a lawsuit 

is established by comparing the terms of the policy with the allegations in the plaintiff’s 

complaint. St. Paul Fire & Marine Ins. Co. v. Vigilant Ins. Co., 919 F.2d 235, 239 (4th 

Cir. 1999). In reading these documents “side-by-side,” an insurer determines whether the 

events as alleged are covered or excluded under a particular policy. Id. (quoting Waste 

Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 340 S.E.2d 374, 378 (N.C. 1986)). 

“Allegations of facts that describe a hybrid of covered and excluded events or pleadings 

that disclose a mere possibility that the insured is liable . . . suffice to impose a duty to 

defend.” Waste Mgmt., 340 S.E.2d at 377 n.2. Thus, an insurer must defend its insured 

against a lawsuit unless no allegation is “even arguably covered by the policy.” Vigilant, 

919 F.2d at 240 (citation omitted). Accordingly, if any of the allegations in the Miller 

complaint arguably fell within the coverage afforded by Amerisure, it had a duty to 

defend its insured in the underlying action. 

Amerisure does not dispute that BE&K and SteelFab were insureds under the 

Amerisure policies, or that Miller’s injuries qualified as a covered occurrence within the 

applicable policy periods. Nevertheless, Amerisure contends that it was exempted from 

any duty to defend by the CIP exclusion in both Amerisure policies. 

The Amerisure policies include standard language detailing Amerisure’s duty to 

defend: “We will pay those sums that the insured becomes legally obligated to pay as 
10

damages because of ‘bodily injury’ . . . to which this insurance applies. We will have the 

right and duty to defend the insured against any ‘suit’ seeking those damages.” The CIP 

exclusion provided: 

This insurance does not apply to “bodily injury” . . . arising out of . . . 

[CSS’s] ongoing operations . . . if such operations were at any time 

included within a “controlled insurance program” for a construction project 

in which you are or were involved.5

 (emphasis added). 

Accordingly, under the Amerisure policies, the CIP exclusion applied only if two 

conditions were satisfied: (1) Miller’s injuries “arose out of” CSS’s operations,

6 and (2) 

CSS’s operations were “included” in the ROCIP. 

With respect to the first condition, we strictly construe the phrase “arising out of” 

when that phrase appears in a policy exclusion. See Southeast Airmotive Corp. v. U.S. 

Fire Ins. Co., 337 S.E.2d 167, 169 (N.C. Ct. App. 1985) (explaining that exclusions from 

liability in policies are not favored). Thus, coverage “will not be denied where there is 

more than one cause of an injury and only one of the causes is excluded.” Nationwide 

Mut. Fire Ins. Co. v. Nunn, 442 S.E.2d 340, 343 (N.C. Ct. App. 1994). Under the plain 

language of Amerisure’s CIP exclusion, only injuries arising from CSS’s operations were 

excluded. Accordingly, any injuries allegedly arising out of the operations of BE&K or 

SteelFab were not subject to the CIP exclusion.

 5 The CIP exclusions refer to “your” operations. “Your” is defined by the 

Amerisure policies as the “named insured,” or CSS only. 

6 “Operations” is not defined in the Amerisure policies.
11

At the time of Miller’s accident, he unquestionably was performing work for CSS 

while “installing metal decking.” However, Miller’s complaint alleged more than one 

potential cause of his injuries. Numerous allegations in his complaint rested on the 

failures of BE&K and SteelFab with respect to their supervisory role over CSS’s 

operations and safety procedures. Miller also alleged that BE&K and SteelFab, 

independently from CSS, failed to provide adequate safety equipment and procedures, 

causing Miller’s injuries. Regardless of the actual cause of those injuries, at the time 

Amerisure refused to defend the Miller action, the allegations presented a distinct 

possibility that Miller’s injuries arose from those other contractors’ operations. 

Because Miller’s injuries arguably “arose out of” operations other than those 

conducted exclusively by CSS, the first condition of the CIP exclusion was not satisfied. 

Therefore, we need not consider the second condition of the CIP exclusion, and conclude 

that Amerisure was not entitled under the policy language to rely on the CIP exclusion to 

avoid its duty to defend in the Miller action. Accordingly, we hold that the district court 

did not err in concluding that Amerisure breached its duty to defend against the 

underlying personal injury action. 

B.

We next address the question whether the district court erred in holding Amerisure 

liable for the full amount of the $1.7 million settlement paid by Continental. According 

to Amerisure, its coverage was capped at $1,000,000 per occurrence as provided in the 

Amerisure CGL policy. Although Amerisure had issued CSS an umbrella policy 

providing an additional $5,000,000 in coverage, Amerisure contends that the umbrella 
12

coverage was not triggered in this case. Amerisure maintains (1) that CSS did not agree 

to extend the umbrella coverage to the additional insureds, SteelFab and BE&K, or 

alternatively, (2) that Continental’s CGL policy took priority over Amerisure’s umbrella 

policy based on those policies’ “other insurance” provisions. We disagree with 

Amerisure’s position.

The Amerisure umbrella policy coverage provision stated:

We will pay on behalf of the insured the ‘ultimate net loss’ in excess of the 

‘retained limit’ because of ‘bodily injury’ . . . to which this insurance 

applies. We will have the right and duty to defend the insured against any 

‘suit’ seeking damages for such ‘bodily injury’ . . . when the ‘underlying 

insurance’ does not provide coverage or the limits of the ‘underlying 

insurance’ have been exhausted. (emphasis added).

The policy provided that any “additional insured” under the CGL policy, namely, 

SteelFab and BE&K, “automatically” were insureds under the umbrella policy. The 

umbrella policy defined “retained limit” as the amount of “underlying insurance” 

coverage appearing in the Declarations. “Underlying insurance” was defined as any 

policy “listed in the Declarations under the [s]chedule of ‘underlying insurance.’” The 

only CGL policy listed in the umbrella policy’s Declarations of underlying insurance was 

the Amerisure CGL policy, with a $1,000,000 limit. And, notably, the Continental CGL 

policy was not listed in the Declarations. 

Accordingly, under the plain language of the Amerisure umbrella policy, coverage 

was triggered when the Amerisure CGL policy limit had been exhausted. Because the 

settlement amount of the Miller action exceeded the $1,000,000 limit in the Amerisure 

CGL policy, the umbrella coverage necessarily was triggered.
13

Amerisure contends, nevertheless, that its coverage of SteelFab and BE&K as 

additional insureds was limited to the $1,000,000 CGL policy. Amerisure relies on 

language in the umbrella policy stating that “the most we will pay on behalf of the 

additional insured is the amount of insurance required by the contract, less any amounts 

payable by the underlying insurance.” However, the relevant contract, the SteelFab-CSS 

subcontract, plainly required CSS to obtain $1,000,000 in CGL coverage and an 

additional $1,000,000 in umbrella coverage. The subcontract also stated that SteelFab 

and BE&K “shall be named as additional insureds on” CSS’s CGL policy.7

 Moreover, 

SteelFab’s specifications regarding CSS’s insurance obligations plainly required that CSS 

obtain $2,000,000 in “minimum” CGL and umbrella coverage “with additional insured 

endorsement.” Thus, we conclude that the SteelFab-CSS subcontract required 

$2,000,000 in total coverage, including coverage provided to the additional insureds 

under both a CGL and an umbrella policy, and that the Amerisure policies complied with 

these requirements. 

Our conclusion that the Amerisure umbrella policy coverage was triggered is 

unaffected by the “other insurance” provisions in the Continental CGL policy and the 

Amerisure umbrella policy. The Continental CGL policy stated: 

 7 We find no merit in Amerisure’s argument that its umbrella coverage did not 

extend to SteelFab and BE&K because one of the subcontract’s provisions is silent 

regarding additional insureds with respect to umbrella coverage. We read the subcontract 

as a whole, and its provisions specifically required that the umbrella coverage obtained 

by CSS include an “additional insured” endorsement covering SteelFab and BE&K.
14

If other valid [] insurance is available to [SteelFab and BE&K] for a loss 

we cover . . . our obligations are limited as follows: [] Primary Insurance –

This insurance is primary except when . . . [t]his insurance is excess over: 

[a]ny other primary insurance available to you.” (emphasis added). 

Under this language, depending on the effect of other relevant coverage, the Continental 

CGL policy was either a “primary” policy or an “excess” policy to another primary 

policy. 

The Amerisure umbrella policy’s “other insurance” provision stated that the policy 

was “excess over . . . any other insurance whether primary [or] excess.” However, 

Amerisure did not issue its umbrella policy contingent on the existence of the Continental 

CGL policy. Instead, the umbrella policy coverage was triggered when the limit of the 

“underlying insurance” was exhausted. And, only the Amerisure CGL policy was listed 

as “underlying insurance” in the policy Declarations. See Gaston Cty, 524 S.E.2d at 

308-09 (construing similar policy language to mean that an excess policy attached 

immediately above identified underlying policies regardless of other insurance 

provision). 

Moreover, any ambiguity arising from consideration of the “other insurance” 

provisions is resolved by the terms of the SteelFab-CSS subcontract that required 

Amerisure’s policies to be “primary and non-contributory” to all other insurance 

provided to SteelFab, including the Continental CGL policy.8

 We therefore conclude that 

 8 Although Amerisure objects to any reliance on the terms of the SteelFab-CSS 

subcontract to interpret the meaning of Amerisure’s negotiated insurance policy with 

CSS, the policies issued by Amerisure plainly refer to and incorporate the terms of the 

(Continued)
15

the Amerisure umbrella policy coverage was triggered immediately upon the exhaustion 

of the Amerisure CGL policy, and that the Continental CGL policy did not take priority 

over that umbrella policy. Accordingly, the district court did not err in holding 

Amerisure liable for the full $1.7 million settlement amount.

C.

Finally, we address whether the district court erred in concluding that Amerisure 

and Continental should bear equally the fees and costs associated with defending the 

Miller action. Amerisure submits that Continental had an independent duty to defend the 

Miller action and, thus, was fully responsible for paying those fees and costs. In its 

cross-appeal, Continental argues that Amerisure solely was liable for payment of these 

amounts, because Amerisure’s CGL policy provided coverage that was “primary without 

contribution,” and Continental did not have a separate duty to defend. We agree with 

Continental’s position.

As explained above, Amerisure had a duty to defend the Miller action under the 

Amerisure CGL policy, which provided that coverage afforded to an additional insured 

shall be “primary and without contribution” from the additional insured’s own insurance. 

In consistent fashion, Continental’s CGL policy established that Amerisure’s CGL policy 

was “primary” to Continental’s “excess” CGL policy. Under Continental’s CGL policy, 

“[w]hen this insurance is excess, we will have no duty . . . to defend the insured against 

 

SteelFab-CSS contract in several respects. Thus, we find no merit in Amerisure’s 

objection. 
16

any ‘suit’ if any other insurer has a duty to defend the insured against that ‘suit.’ If no 

other insurer defends, we will undertake to do so, but we will be entitled to the insured’s 

rights against all those other insurers.” (emphasis added). Accordingly, the relevant 

policies provided that Amerisure had a duty to defend without contribution, and that 

Continental did not have a duty to defend. 

In concluding that the parties should share equally in the defense costs and fees, 

the district court erroneously relied on decisions that are distinguishable from the present 

case in one critical respect. See Ames v. Continental Cas. Co., 340 S.E.2d 479, 486 (N.C. 

Ct. App. 1986); Vigilant, 919 F.2d at 240-41. In Ames and Vigilant, the insurers who 

bore equal shares of liability each had independent duties to defend based on the nature 

of their primary coverage, which was applicable to acts occurring during different periods 

of time. Ames, 340 S.E.2d at 486; Vigilant, 919 F.2d at 240-41. In the present case, 

however, one occurrence triggered coverage under concurrent, not consecutive, insurance 

policies, which clearly allocated the insurers’ respective duties to defend. Therefore, we 

conclude that the district court erred in assigning equal responsibility to Amerisure and 

Continental for payment of the defense fees and costs incurred in defending the Miller 

action, and that Amerisure is liable for the full amount of those defense fees and costs.

III.

For these reasons, we affirm the portion of the district court’s judgment holding 

that Amerisure breached its duty to defend, and was liable under the terms of its policies 
17

for the full cost of the $1.7 million settlement plus prejudgment interest.9

 We vacate the 

portion of the district court’s judgment holding Amerisure and Continental liable in equal 

shares for the cost and fees incurred in defending the Miller action. We remand the case 

to the district court for entry of an award in Continental’s favor for the full amount of its 

fees and costs incurred in defending the Miller action. 

AFFIRMED IN PART,

VACATED IN PART,

AND REMANDED

 9 Although Amerisure seeks reversal of the district court’s award of prejudgment 

interest, Amerisure fails to provide any argument or citation for this assertion. Thus, 

Amerisure has waived any challenge to the award of prejudgment interest. See Fed. R. 

App. P. 28(a)(9)(A) (“[T]he [appellant’s] argument . . . must contain . . . appellant’s 

contentions and the reasons for them, with citations to the authorities and parts of the 

record on which the appellant relies.”).