UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NATIONWIDE MUTUAL INSURANCE

COMPANY,

Plaintiff,

v.

LAFARGE CORPORATION; LAFARGE

CANADA INCORPORATED,

Defendants-Appellants,

and

NORTHEAST CEMENT COMPANY,

INCORPORATED; CENTRAL STATES

INDEMNITY COMPANY OF OMAHA;

INTEGRITY MUTUAL INSURANCE

COMPANY; MISSION INSURANCE

No. 96-1389

COMPANY; COLUMBIA CASUALTY

COMPANY; HIGHLANDS INSURANCE

COMPANY; UNITED STATES FIRE

INSURANCE COMPANY; HARTFORD

ACCIDENT AND INDEMNITY COMPANY;

THE NORTH RIVER INSURANCE

COMPANY; INSURANCE COMPANY OF

NORTH AMERICA; INTERNATIONAL

ATLANTINS INSURANCE COMPANY;

NORTHUMBERLAND GENERAL INSURANCE

COMPANY; SIMCOE AND ERIE GENERAL

INSURANCE COMPANY,

Defendants,

v.
HARTFORD CASUALTY INSURANCE

COMPANY,

Third Party Defendant-Appellee,

and

THE TRAVELERS INDEMNITY COMPANY;

PACIFIC EMPLOYERS INSURANCE

COMPANY; WALBROOK INSURANCE

COMPANY, LIMITED; BERMUDA FIRE &

MARINE INSURANCE COMPANY, LIMITED;

JOHN RICHARD YOUELL; CERTAIN

UNDERWRITING MEMBERS OF LLOYD'S,

LONDON, subscribing Policy No.

834/59498/85 and Policy No.

834/59499/85; ZURICH INTERNATIONAL

INSURANCE COMPANY, LIMITED; CNA

REINSURANCE COMPANY OF LONDON,

LIMITED; HEDDINGTON INSURANCE

COMPANY (U.K.), LIMITED; SOVEREIGN

MARINE AND GENERAL INSURANCE

COMPANY, LIMITED; TOKIO MARINE &

FIRE INSURANCE COMPANY (U.K.),

LIMITED; TAISHO MARINE AND FIRE

INSURANCE COMPANY (U.K.), LIMITED;

ALLIANZ INTERNATIONAL INSURANCE

COMPANY, LIMITED; STOREBRAND

INSURANCE COMPANY (U.K.), LIMITED;

TUREGUM INSURANCE COMPANY;

CENTURY INDEMNITY COMPANY;

GIBRALTAR CASUALTY COMPANY; TWIN

CITY FIRE INSURANCE COMPANY;

HARBOR INSURANCE COMPANY;

 2
FIDELITY AND CASUALTY COMPANY OF

NEW YORK; NUTMEG INSURANCE

COMPANY; FIRST STATE INSURANCE

COMPANY; H. S. WEAVERS

UNDERWRITING AGENCY; STONEWALL

INSURANCE COMPANY; TEXAS PACIFIC

INDEMNITY COMPANY; EMPLOYERS

INSURANCE OF WAUSAU; AMERICAN

HOME ASSURANCE COMPANY; CHUBB

INSURANCE COMPANY OF CANADA;

ALLIANZ UNDERWRITERS INSURANCE

COMPANY; LONDON GUARANTEE AND

ACCIDENT COMPANY OF NEW YORK;

REPUBLIC INSURANCE COMPANY;

LANDMARK INSURANCE COMPANY;

AETNA CASUALTY & SURETY COMPANY;

CALIFORNIA UNION INSURANCE

COMPANY; CERTAIN UNDERWRITERS AT

LLOYD'S, LONDON; HALIFAX INSURANCE

COMPANY; SCOTTISH & YORK

INSURANCE COMPANY, LIMITED; THE

FEDERAL INSURANCE COMPANY; ST.

PAUL SURPLUS LINES INSURANCE

COMPANY; LEXINGTON INSURANCE

COMPANY; LAURENTIENNE GENERALE

COMPAGNIE D'ASSURANCE; KANSA

GENERAL INSURANCE COMPANY,

LIMITED; AETNA CASUALTY OF CANADA;

GUARDIAN INSURANCE COMPANY OF

CANADA; LA COMPAGNIE D'ASSURANCE

CONTINENTAL DU CANADA;

INTERNATIONAL INSURANCE COMPANY;

ZURICH INSURANCE COMPANY;

 3
RELIANCE INSURANCE COMPANY,

INCORPORATED; ROYAL INDEMNITY

COMPANY; BOREAL PROPERTY AND

CASUALTY INSURANCE, INCORPORATED,

formerly known as Aetna Casualty of

Canada; BOREAL ASSURANCES,

INCORPORATED, formerly known as

Laurentienne Generale Compagnie

D'Assurance,

Third Party Defendants,

CIGNA INSURANCE COMPANY OF CANADA,

Party in Interest.

NATIONWIDE MUTUAL INSURANCE

COMPANY,

Plaintiff,

v.

LAFARGE CORPORATION; LAFARGE

CANADA INCORPORATED,

Defendants-Appellees,

No. 96-1453

and

NORTHEAST CEMENT COMPANY,

INCORPORATED; CENTRAL STATES

INDEMNITY COMPANY OF OMAHA;

INTEGRITY MUTUAL INSURANCE

COMPANY; MISSION INSURANCE

COMPANY; COLUMBIA CASUALTY

COMPANY; HIGHLANDS INSURANCE

 4
COMPANY; UNITED STATES FIRE

INSURANCE COMPANY; HARTFORD

ACCIDENT AND INDEMNITY COMPANY;

THE NORTH RIVER INSURANCE

COMPANY; INSURANCE COMPANY OF

NORTH AMERICA; INTERNATIONAL

ATLANTINS INSURANCE COMPANY;

NORTHUMBERLAND GENERAL INSURANCE

COMPANY; SIMCOE AND ERIE GENERAL

INSURANCE COMPANY,

Defendants,

v.

HARTFORD CASUALTY INSURANCE

COMPANY,

Third Party Defendant-Appellant,

and

THE TRAVELERS INDEMNITY COMPANY;

PACIFIC EMPLOYERS INSURANCE

COMPANY; WALBROOK INSURANCE

COMPANY, LIMITED; BERMUDA FIRE &

MARINE INSURANCE COMPANY, LIMITED;

JOHN RICHARD YOUELL; CERTAIN

UNDERWRITING MEMBERS OF LLOYD'S,

LONDON, subscribing Policy No.

834/59498/85 and Policy No.

834/59499/85; ZURICH INTERNATIONAL

INSURANCE COMPANY, LIMITED; CNA

REINSURANCE COMPANY OF LONDON,

LIMITED; HEDDINGTON INSURANCE

 5
COMPANY (U.K.), LIMITED; SOVEREIGN

MARINE AND GENERAL INSURANCE

COMPANY, LIMITED; TOKIO MARINE &

FIRE INSURANCE COMPANY (U.K.),

LIMITED; TAISHO MARINE AND FIRE

INSURANCE COMPANY (U.K.), LIMITED;

ALLIANZ INTERNATIONAL INSURANCE

COMPANY, LIMITED; STOREBRAND

INSURANCE COMPANY (U.K.), LIMITED;

TUREGUM INSURANCE COMPANY;

CENTURY INDEMNITY COMPANY;

GIBRALTAR CASUALTY COMPANY; TWIN

CITY FIRE INSURANCE COMPANY;

HARBOR INSURANCE COMPANY; FIDELITY

AND CASUALTY COMPANY OF NEW

YORK; NUTMEG INSURANCE COMPANY;

FIRST STATE INSURANCE COMPANY; H.

S. WEAVERS UNDERWRITING AGENCY;

STONEWALL INSURANCE COMPANY;

TEXAS PACIFIC INDEMNITY COMPANY;

EMPLOYERS INSURANCE OF WAUSAU;

AMERICAN HOME ASSURANCE COMPANY;

CHUBB INSURANCE COMPANY OF

CANADA; ALLIANZ UNDERWRITERS

INSURANCE COMPANY; LONDON

GUARANTEE AND ACCIDENT COMPANY OF

NEW YORK; REPUBLIC INSURANCE

COMPANY; LANDMARK INSURANCE

COMPANY; AETNA CASUALTY & SURETY

COMPANY; CALIFORNIA UNION

 6
INSURANCE COMPANY; CERTAIN

UNDERWRITERS AT LLOYD'S, LONDON;

HALIFAX INSURANCE COMPANY;

SCOTTISH & YORK INSURANCE

COMPANY, LIMITED; THE FEDERAL

INSURANCE COMPANY; ST. PAUL

SURPLUS LINES INSURANCE COMPANY;

LEXINGTON INSURANCE COMPANY;

LAURENTIENNE GENERALE COMPAGNIE

D'ASSURANCE; KANSA GENERAL

INSURANCE COMPANY, LIMITED; AETNA

CASUALTY OF CANADA; GUARDIAN

INSURANCE COMPANY OF CANADA; LA

COMPAGNIE D'ASSURANCE CONTINENTAL

DU CANADA; INTERNATIONAL INSURANCE

COMPANY; ZURICH INSURANCE COMPANY;

RELIANCE INSURANCE COMPANY,

INCORPORATED; ROYAL INDEMNITY

COMPANY; BOREAL PROPERTY AND

CASUALTY INSURANCE, INCORPORATED,

formerly known as Aetna Casualty of

Canada; BOREAL ASSURANCES,

INCORPORATED, formerly known as

Laurentienne Generale Compagnie

D'Assurance,

Third Party Defendants,

CIGNA INSURANCE COMPANY OF CANADA,

Party in Interest.

 7
LAFARGE CORPORATION; LAFARGE

CANADA INCORPORATED,

Plaintiffs-Appellants,

No. 96-2356

v.

NATIONAL UNION FIRE INSURANCE

COMPANY, of Pittsburgh, Pennsylvania,

Defendant-Appellee.

LAFARGE CORPORATION; LAFARGE

CANADA INCORPORATED,

Plaintiffs-Appellees,

No. 96-2559

v.

NATIONAL UNION FIRE INSURANCE

COMPANY, of Pittsburgh, Pennsylvania,

Defendant-Appellant.

Appeals from the United States District Court

for the District of Maryland, at Baltimore.

Alexander Harvey II, Senior District Judge.

(CA-90-2390-H, CA-93-4173-H, CA-95-2795-H)

Argued: May 5, 1997

Decided: August 28, 1997

Before HALL, LUTTIG, and MICHAEL, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

 8
COUNSEL

ARGUED: R. Nicholas Gimbel, HOYLE, MORRIS & KERR, Philadelphia, Pennsylvania, for Appellants. Allan D. Windt, Bryn Mawr,

Pennsylvania; Paul S. Schleifman, LANE & MITTENDORF, L.L.P.,

Washington, D.C., for Appellees. ON BRIEF: Jill A. Douthett, Elizabeth W. Fox, HOYLE, MORRIS & KERR, Philadelphia, Pennsylvania, for Appellants. M. Bradley Hallwig, Gregory L. Van Gieson,

ANDERSON, COE & KING, Baltimore, Maryland; Frank P. Saponaro, Jr., LANE & MITTENDORF, L.L.P., Washington, D.C., for

Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

In this opinion we decide two related cases. They involve questions

about the obligation of insurance companies to pay defense expenses

and settlement costs incurred in a product liability action brought by

Lone Star Industries against Lafarge Corporation (Lafarge US) and

Lafarge Canada, Inc. (Lafarge Canada). We addressed the underlying

litigation in In re: Lone Star Industries, Inc. , 19 F.3d 1429, 1994 WL

118475 (4th Cir. 1994) (unpublished).

In the first case before us today (Lafarge I) , No. 96-1389(L),

Appellants-Cross Appellees Lafarge US and Lafarge Canada (sometimes collectively Lafarge) appeal from a trial and judgment awarding

them $19 million for their expenses in defending the product liability

lawsuit mentioned above. That underlying suit was triggered by problems with cement Lafarge had manufactured and sold over a sevenyear period. Lafarge US and Lafarge Canada appeal because they

claim that their recoverable expenses and damages are much higher

than $19 million and that, among other things, they are entitled to a

 9
new trial. The district court equitably apportioned the $19 million

judgment among several of Lafarge's insurance companies according

to each insurer's "time on the risk", that is, the amount of time each

company insured Lafarge. Appellee-Cross Appellant Hartford Casualty Insurance Company (Hartford) is one of those insurers, and its

share was determined to be about $2 million. Hartford cross-appeals

the judgment against it. We affirm the judgment in Lafarge I.

In the second case (Lafarge II), No. 96-2356(L), Lafarge appeals

from an order of the district court apportioning to Appellee-Cross

Appellant National Union Fire Insurance Company (National Union)

an equitable share of the $11.2 million settlement paid by Lafarge to

Lone Star to settle the underlying case after a retrial. National Union

refused to contribute to the settlement. In Lafarge II the district court

ordered National Union to pay about $1.9 million of the settlement

figure. Lafarge argues that National Union should pay more, and

National Union (in its cross-appeal) argues that it should pay much

less. We also affirm the judgment in Lafarge II .

I.

Lafarge US and its wholly owned subsidiary, Lafarge Canada, sold

cement to Lone Star Industries over a seven-year period from 1983

to 1989. The cement failed to hold up as promised. As a result, concrete railroad ties that Lone Star made with Lafarge's cement deteriorated. Lone Star initiated a lawsuit against Lafarge and obtained a

$1.2 million jury verdict. Lone Star appealed to us, and we reversed

and remanded for a new trial. On retrial, the jury awarded Lone Star

about $8 million. While the case was on appeal from the judgment on

the second verdict, Lafarge agreed to pay Lone Star $11.2 million in

settlement. National Union did not participate in the settlement,

though Lafarge's other insurers did.

Lafarge US and Lafarge Canada jointly spent $27 million to defend

the suit by Lone Star, and they sued their insurance companies for

reimbursement. Lafarge had sold cement to Lone Star for seven years.

The district court, applying a pro rata time-on-the-risk analysis,

divided the liability into twelve segments: one for each Lafarge company (Lafarge US and Lafarge Canada) for each of the seven years.

Instead of fourteen segments, seven for Lafarge US for each of seven

 10
years and seven for Lafarge Canada for each of seven years, there

were only twelve because two segments would have been attributed

to an insurance company that became insolvent. If an insurer insured

Lafarge US for two years, for example, it got two segments and twotwelfths of the liability. Hartford insured Lafarge US, but not Lafarge

Canada, for one of those seven years. Hartford was responsible for

just one of the twelve segments and thus one-twelfth of the defense

costs.

Lafarge I went to trial on the issue of how much of the defense

costs was reasonable and necessary, and the jury returned a verdict

setting the figure at $19 million. Hartford's one-twelfth share, plus

interest and less a one-twelfth share of its deductible, comes out to

about $2 million.

Lafarge appeals several issues in Lafarge I and asks for a new trial

on the reasonableness of defense costs. It argues that (1) the district

court erred in its jury instructions, (2) Hartford is equitably estopped

from contesting the reasonableness of the defense costs, (3) certain

documents pertaining to the reasonableness of the costs should have

been admitted into evidence, (4) it should have been allowed to call

a fee expert in rebuttal, and (5) it should be allowed to recover attorney's fees for this litigation. Hartford cross-appeals several issues,

arguing that (1) it is not liable because the cement was manufactured

by Lafarge Canada (not by Hartford's insured, Lafarge US), (2) even

if it is liable, it is entitled to indemnification, (3) the policy's

$250,000 deductible applies to each lot of cement delivered to Lone

Star, (4) its duty to pay defense costs was excused by Lafarge's failure to cooperate, (5) the district court's equitable apportionment fails

to take into account a share paid by a settling party, (6) the district

court erred by only applying one-twelfth of the $250,000 deductible

to Hartford's one-twelfth share of the judgment, and (7) the district

court should not have awarded prejudgment interest to Lafarge.1

_________________________________________________________________

1 As a preliminary matter, we note that Lafarge initially appealed the

district court's rulings on its common law and statutory bad faith claims.

In a motion granted by this court, Lafarge voluntarily dismissed its

appeal on the bad faith issues. Several of Lafarge's arguments challenging evidentiary rulings pertaining to the bad faith claims have also been

dropped by Lafarge.

 11
In Lafarge II, Lafarge appeals the apportionment of liability to

National Union and the denial of attorney's fees. National Union

cross-appeals the apportionment.

II.

Lafarge I

We turn first to Lafarge's appeal from the litigation with Hartford

over the reasonableness of defense costs in the Lone Star case. First,

Lafarge appeals the district court's decision not to instruct the jury

that usual and customary attorney's fees are presumed reasonable

under Texas law. We agree with the district court that the jury was

entitled to consider the reasonableness of these costs without regard

to any presumption. Accordingly, we affirm the district court on this

issue. Lafarge also argues that Hartford is equitably estopped from

contesting the reasonableness of the expenses. Lafarge points to a letter from Hartford's counsel which said Hartford would pay its share

of defense costs, subject to some "potential coverage defenses."

Lafarge argues that Hartford did not specify that it meant "reasonable" defense costs. Nothing in the letter, however, amounts to a

waiver of the reasonableness standard. We agree with the district

court that equitable estoppel did not apply and that the reasonableness

of defense costs remained an issue of fact to be decided by the jury.

Accordingly, we affirm the district court on this issue.

Lafarge next contests two evidentiary rulings. The first concerns

whether certain documentary evidence might have confused the jury.

At trial Lafarge sought to introduce certain documents demonstrating

that a bankruptcy court had approved as reasonable Lone Star's petitions to pay its steep legal fees in pursuing Lafarge in the underlying

litigation. The district court allowed Lafarge to tell the jury the total

amount of the fees incurred by Lone Star, but it did not admit the

bankruptcy court documents. Lafarge also wanted to introduce a document comparing the fees of Lone Star and Lafarge during one time

period. The work being performed by the two law firms during the

period was different, however, and this fact was not apparent from the

face of the document. It was well within the district court's discretion

to exclude these documents on the ground that they might have confused the jury. See Fed. R. Evid. 403 ("Although relevant, evidence

 12
may be excluded if its probative value is substantially outweighed by

the danger of unfair prejudice, confusion of the issues, or misleading

the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.") (emphasis added). See

also United States v. Aramony, 88 F.3d 1369, 1377 (4th Cir. 1996)

(reviewing Rule 403 evidentiary ruling under abuse of discretion standard), cert. denied, 117 S. Ct. 1842 (1997).

The second evidentiary issue concerns a rebuttal witness. The district court ruled that Lafarge could not call a new fee expert to rebut

the testimony of Hartford's fee expert, who according to Lafarge,

went (unfairly) beyond the opinions expressed in his deposition testimony. The district court determined that Lafarge, through the testimony of its initial expert and through its opportunity to cross-examine

Hartford's expert about the discrepancies in his testimony, had a fair

opportunity to present its case on the reasonableness of its defense

costs. The testimony of the rebuttal expert was likely to be cumulative

to some extent, and it may have lengthened the trial unnecessarily.

Therefore, the district court's decision not to allow Lafarge to call the

rebuttal expert was not an abuse of discretion. See Fed. R. Evid. 403.

We therefore affirm the district court on these evidentiary issues.

Lafarge's next issue concerns attorney's fees in the present litigation, Lafarge I. Because Lafarge was awarded a judgment in this case

(based on its insurance contract) for its defense costs in the Lone Star

litigation, Lafarge says it is entitled to attorney's fees for prosecuting

this case. The district court held that Texas law did not allow Lafarge

to recover such fees. The district court noted that under Texas law

attorney's fees may be recovered on a breach of contract claim, but

not if the contract is a "contract issued by an insurer that is subject

to the provisions of . . . Article 21.21" of the Texas Insurance Code.

See Tex. Civ. Prac. & Rem. § 38.006(4). Because Hartford is an "insurer that is subject to" Article 21.21, the district court held it was

exempt from the payment of attorney's fees.

Lafarge reads the statute differently to avoid the statutory exception for insurers subject to Article 21.21. Lafarge argues that the "subject to" language refers to "contract" rather than "insurer." Lafarge

then argues that the insurance contract here is not a contract "subject

to" Article 21.21. Lafarge concludes, therefore, that its insurance con-

 13
tract claim is a regular breach of contract claim for which it may

recover attorney's fees.

Lafarge's interpretation of the statute might be correct if the clause

"issued by an insurer" was set off by commas ("contract, issued by an

insurer, that is subject to [Article 21.21]") or if the clause was otherwise set apart ("contract subject to Article 21.21 that is issued by an

insurer"). It is not, and the "subject to" language more easily applies

to the noun just before it, "insurer."2 We recognize that Lafarge can

find some limited authority to support its argument. See, e.g., Barnett

v. Aetna Life Ins. Co., 723 S.W.2d 663 (Tex. 1987) (affirming award

of attorney's fees without explanation). The Texas Supreme Court,

however, has interpreted the section to mean that some insurers (not

some contracts) are within the scope of this provision and some insurers are not. See Dairyland County Mut. Ins. Co. v. Childress, 650

S.W.2d 770, 775 (Tex. 1983) ("Dairyland is a county mutual insurance company and as such is not one of the insurors[sic] exempt

from the provision[.]"); see also Bituminous Cas. Corp. v. Vacuum

Tanks, Inc., 975 F.2d 1130, 1133 (5th Cir. 1992) ("This language [in

Dairyland] implies that an insurer who falls within the provisions of

section 38.006 is exempt from the payment of attorney's fees[.]") We

believe that the "subject to" language refers to "insurer," not "contract." We therefore conclude that the district court read the statute

and relevant case law correctly, and we affirm the district court on

this issue.

Hartford also appeals several issues. Because Hartford only insured

Lafarge US, not Lafarge Canada, Hartford says that it is not responsible for defense costs. Hartford argues that Lafarge US (the distributor) was simply a conduit for any misrepresentations made by Lafarge

Canada (the manufacturer) and that Lafarge Canada is ultimately

responsible through indemnity/subrogation principles. The district

court noted that the facts in the underlying trial established a breach

of express warranty, and the jury verdict did not distinguish between

Lafarge US and Lafarge Canada. The court concluded as a matter of

law that Lafarge US participated in the breach of express warranty

_________________________________________________________________

2 This construction ("subject to" refers to "insurer"), which was adopted

by the district court, follows the statutory construction rule of the last

antecedent (a phrase should be read to modify its immediate antecedent).

 14
and was not a mere conduit for the misrepresentations by Lafarge

Canada. The court then held that Lafarge US's insurers (including

Hartford) were therefore liable along with Lafarge Canada's insurers.

On this issue, we affirm on the reasoning of the district court.

Hartford also argues that the sole cause of Lone Star's damages

was a manufacturing defect. Hartford contends that because the manufacturing was performed by Lafarge Canada, not Lafarge US, Hartford is entitled to recover from Lafarge Canada any defense costs it

might pay on behalf of Lafarge US. This argument also fails, however, in light of the jury verdict. As we noted above, we agree with

the district court that the liability rested on the jury's finding of a

breach of express warranty, not a manufacturing defect. Both Lafarge

US and Lafarge Canada participated in the breach of express warranty. Therefore, we agree with the district court that Hartford has no

right to recover from Lafarge Canada through indemnity/subrogation.

Hartford argues that a $250,000 deductible applies to each lot of

defective cement that Lafarge US delivered to Lone Star. The policy

states:

Amount and Application of Deductible

250,000 Each Occurrence and/or

Accident and/or Each Claim

After reviewing the district court's extensive opinion from the bench

on this issue, we agree with the court's interpretation of "each occurrence," its conclusion that the "occurrence" and underlying cause of

the liability was the "continuous, large-scale manufacture and sale" of

defective cement, and its holding that there was only one "occurrence" for deductible purposes. Here, we affirm on the reasoning of

the district court.

Hartford argues that its duty to pay defense costs was excused

because Lafarge US breached a duty to cooperate when it failed to

provide certain information to Hartford. The clause in the policy covering the duty to cooperate, however, was designed to help Hartford

pursue or defend claims on Lafarge's behalf. Hartford was not

defending the suit against Lone Star at the time Hartford says Lafarge

should have provided additional documentation. Indeed, Hartford was

 15
refusing to help. We believe the duty to cooperate clause was not

intended to extend to a situation where the information was requested

after parties are adversaries in litigation and the insurer has refused

to act on the insured's behalf. We therefore agree with the district

court that Lafarge did not breach a duty to cooperate, and we affirm

on this issue.

Finally, we turn to the heart of this controversy-- the district

court's apportionment of the defense costs among the various insurance companies. The jury found that $19 million of the costs were

reasonable and necessary and therefore recoverable by Lafarge US

and Lafarge Canada under the governing insurance policies. The district court took the amount of this jury verdict ($19 million), less pretender expenses, and divided by 12, which amounted to $1,590,000.

The district court applied 1/12th of a $250,000 deductible to the

1/12th share Hartford bore, and it added $550,000 in prejudgment

interest. The end result was a judgment against Hartford of about

$2,150,000.

Lafarge US and Lafarge Canada were both at fault for breaching

express warranties that they made to Lone Star, so the insurers of both

Lafarge US and Lafarge Canada were responsible for defense costs.

Because the insurers of both companies are jointly and severally liable, each one, including Hartford, was potentially responsible for the

whole $19 million jury verdict, plus interest. To avoid, among other

things, later lawsuits among insurance companies to litigate contribution questions, the district court decided that"fairness requires an

apportionment of defense costs in this case."

The first apportionment issue stems from a settlement between

Lafarge and Nationwide, another Lafarge insurer, for about $5 million. Hartford complains that it is paying more than its fair share

under joint and several liability principles because Nationwide settled

for more than the share it ultimately would have owed had it also

gone to trial. Therefore, Hartford argues, the district court should

have reduced the jury verdict by the $5 million first, and then apportioned the remainder among the remaining insurers. This would have

provided a windfall to Hartford, however. Its judgment would be

reduced only because another insurer decided to settle rather than liti-

 16
gate in court.3 Equitable apportionment is, as the name suggests, a

doctrine of equity, and the district court's decision to have Hartford

pay its fair share and deny it the windfall was not an abuse of discretion.

Hartford argues next that the district court erred when making its

apportionment calculation by giving it credit for only one-twelfth of

the $250,000 deductible. As explained above, the district court took

Hartford's one-twelfth share and subtracted one-twelfth of the deductible. This is consistent with the decision that the $19 million in

defense costs was caused by one occurrence: (1) the"occurrence" created $19 million in defense costs, (2) the $250,000 deductible applies

against that one occurrence, and (3) the total of $19 million less

$250,000 is apportioned equitably into 12 shares. The application of

the one-twelfth deductible is simply an adjustment to properly reflect

the fact that Hartford is paying one-twelfth of the defense costs that

are due. Accordingly, we affirm on the apportionment issues.

Lastly, Hartford challenges the award of prejudgment interest. We

have reviewed the district court's opinion on this issue and its conclusion that the prejudgment interest is appropriately considered part of

the joint defense costs to be equitably apportioned. We affirm on the

reasoning of the district court.4

_________________________________________________________________

3 To illustrate the point, suppose Nationwide had settled for less than

the share it would have owed based on the ultimate (total) jury verdict.

We would be surprised if Hartford would then argue that its (Hartford's)

share should be increased to account for the shortfall. The district court's

apportionment appropriately placed the risk of the settlement being too

small or too large (as compared to the ultimate verdict) on the two settling parties (Lafarge and Nationwide). This left the other insurers unaffected. This is consistent with the equitable apportionment scheme as a

whole, which is based on the principle that each insurer should pay a

share based on its time on the risk.

4 Both Lafarge and Hartford raise other issues in their briefs. We have

considered those issues and conclude that they are also without merit.

 17
III.

Lafarge II

We now turn to Lafarge II. In that case both Lafarge and National

Union challenge the district court's equitable apportionment scheme

that allocated the cost of settlement among Lafarge's insurers. The

district court determined that certain policy periods for Lafarge Canada were not covered. National Union covered Lafarge Canada (as

well as Lafarge US) in 1989-90, the last relevant policy period. The

district court found that there were six covered policy periods (5 for

Lafarge US and one for Lafarge Canada). Again applying joint and

several liability principles, the court apportioned the liability into six

segments according to each company's time on the risk. Because

National Union was responsible for two segments (1989-90 Lafarge

US and 1989-90 Lafarge Canada), it was responsible for one-third

(two-sixths) of the liability.

Lafarge argues that the liability should have been first divided 50-

50 between Lafarge Canada and Lafarge US, then divided by year. If

liability had been allocated in this manner, National Union would be

responsible for all of the liability attributable to Lafarge Canada, as

it was the only insurer of that company during the relevant periods.

Added to its one-fifth share of Lafarge US's liability, National Union

would be responsible for more than half the total.

National Union argues that the liability should have been divided

by five to reflect the five relevant years. It only insured Lafarge US

and Lafarge Canada in 1989-90, and so it would pay only one-fifth

of the total.

We have reviewed the district court's opinion, and we believe the

court properly applied the same equitable apportionment principles

mentioned in Lafarge I. Accordingly, we affirm on the reasoning of

the district court.

Lafarge also argues that under Texas law it should receive attorney's fees for prosecuting this case (Lafarge II ), reiterating the same

 18
arguments made in Lafarge I. For the reasons stated above in part II

of this opinion, we affirm the district court on this issue as well.5

IV.

The judgments of the district court in both Lafarge I and Lafarge

II are therefore affirmed.

No. 96-1389(L) is AFFIRMED.

No. 96-2356(L) is AFFIRMED.

_________________________________________________________________

5 The parties raise other issues in Lafarge II. We also conclude that

those issues are without merit.

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