## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 19 2000 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

AIR LIQUIDE AMERICA CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. CONTINENTAL CASUALTY COMPANY, an Illinois corporation; STAFFING RESOURCES OF OKLAHOMA, an Oklahoma corporation, Defendants-Third-Party Plaintiffs-Appellants,

v. CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY, a Connecticut corporation,Third-Party DefendantAppellee, and SAMUEL CANADA, Third-Party Defendant. No. 99-5022- 2 - Appeal from the United States District Court for the Northern District of Oklahoma (D.C. No. 97-CV-315-H)

Edward J. Main (James K. Secrest, II with him on th e briefs), Tulsa, Oklahoma, for Appellants. Paula E. Litt, Schopf & Weiss, Chicago, Illinois (P aula W. Render, Schopf & Weiss, and W. Kirk Turner, Newton, O’Connor, Turner& Auer, Tulsa, Oklahoma, with her on the briefs) for Appellee Air Liquide. John R. Woodard, III and Paula J. Quillin of Feldman, Franden, Woodard & Farris, Tulsa, Oklahoma, filed a brief for Appellee Third-Party Defendant Cigna Property & Casualty Insurance Company.

Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and BRISCOE , Circuit Judge.

EBEL , Circuit Judge.

This is an appeal from the district court’s grant o f summary judgment in a dispute between two businesses and their insurance companies. The dispute turns on which of two insurance policies provides primary coverage for a vehicular accident. Defendants/Third Party Plaintiffs-Appell ants Continental Casualty Company (“Continental”) and Staffing Resources of O klahoma, Inc. (“Staffing Resources”) (collectively, “Appellants”) contend th e district court erred in granting summary judgment to Plaintiff-Appellee AirLiquide America1 Staffing Resources acquired Blazer Services in 199 5. Hereinafter,

Staffing Resources and Blazer Services are referred to interchangeably. - 3 - Corporation (“Air Liquide”) and Third Party Defendants-Appellees CIGNA Property and Casualty Company (“CIGNA”) and Mr. Sam uel Canada (“Canada”) (collectively, “Appellees”). The district court ex ercised jurisdiction pursuant to 28 U.S.C. § 1332. We exercise jurisdiction pursuan t to 28 U.S.C. § 1291, and we AFFIRM in part and REVERSE in part.
BACKGROUND Air Liquide manufactures and distributes industrial gases, operating a distribution facility in Pryor, Oklahoma. Air Liqu ide employed Canada as a truck driver for the Pryor depot until December of 1991, when Canada retired. Air Liquide indicated to Canada its desire to employ hi m in a temporary capacity in the summer of 1992, but Air Liquide learned that re hiring Canada would prevent him from collecting various retirement benefits. A s a result, Air Liquide referred Canada to the employment agency of Blazer Services (the predecessor in interest to Staffing Resources) in the summer of 1992. Blaz er Services, and then Staffing Resources, 1 arranged to provide Canada to Air Liquide in excha nge for a 42.5% surcharge on Canada’s wages. This arrangement cont inued each summer from
1992 to 1996.- 4 -

On August 1, 1996, Canada was involved in a vehicul ar accident while driving an Air Liquide delivery truck, causing seri ous injuries to various individuals. The injured parties alleged Canada’s negligence caused the accident and they sought damages both from Staffing Resource s and Air Liquide as well as from Canada in separate proceedings. Staffing Resources is insured by Continental; Air L iquide is insured by CIGNA. The CIGNA policy issued to Air Liquide, how ever, is not a typical liability insurance policy. Rather, it establishes that Air Liquide’s deductible under the policy ($1M) is exactly equal to the poli cy’s limits ($1M). Thus, it is actually a form of self-insurance, under which Air Liquide is responsible for its own losses and CIGNA acts merely as a surety that A ir Liquide will be able to pay any judgment covered under the policy. Such ar rangements are known as “fronting” policies. See Rory A. Goode, Note, Self-Insurance as Insurance i n Liability Policy “Other Insurance” Provisions, 56 W ash. & Lee L. Rev. 1245, 1257 (1999). Air Liquide filed a declaratory judgment action aga inst Continental and Staffing Resources in the United States District Co urt for the Northern District of Oklahoma, seeking a determination that Continental’ s policy (with Staffing Resources) provided for a defense and primary indem nification of the underlying claims to Air Liquide

. Continental and Staffing Resources then named CIGNA2 We are aware of Oklahoma’s choice of law rule prov iding that, where

there are motor vehicle insurance cases involving conflicting state laws . . . [t]he validity, interpretation, application and eff ect of the provisions of a motor vehicle insurance contract should be det ermined in accordance with the laws of the state in which the contract was made, unless those provisions are contrary to the public policy of Oklahoma, or unless the facts demonstrate that anot her jurisdiction has the most significant relationship with the subj ect matter and the parties. Bohannon v. Allstate Ins. Co. , 820 P.2d 787, 797 (Okla. 1991). In its brief, Ai r Liquide asserts (without directing us to supporting evidence in the record) that its (continued...) - 5 - and Canada as third party defendants, seeking a dec laration that CIGNA’s policy provided a defense and primary indemnification. Ai r Liquide, Continental, and Staffing Resources all filed cross-motions for summ ary judgment. The district court concluded that Canada and Air Liquide were in sureds under the Continental policy, that Air Liquide’s self-insurance policy di d not constitute “other collectible insurance,” and that therefore the Cont inental policy offered primary coverage. The district court further held that Con tinental owed Air Liquide a defense. Continental and Staffing Resources now ap peal from this judgment.
DISCUSSION “A federal court sitting in diversity applies the s ubstantive law . . . of the forum state.” Barrett v Tallon , 30 F.3d 1296, 1300 (10th Cir. 1994). Accordingly, we look to Oklahoma law for guidance o n the interpretation of these insurance policies. 22 (...continued)

policy with CIGNA was “negotiated, placed and execu ted in Texas” and thus Texas law should apply on the duty to defend issue. (AL Aple. Br. at 46.) However, throughout the proceedings below, both the parties and the district court have argued and applied Oklahoma law in interpreting these insurance contracts. In its brief to this court, A ir Liquide suggests that it preserved the right to challenge on appeal choice o f law issues on matters not presented to the district court. (See AL Aple. Br. at 46 n.7) We doubt, however, whether any such reservation can be accomplished bya lone footnote in Air Liquide’s response to defendants’ motion for summary judgment, which reads: “The law applicable to the CNA [Continental] Auto P olicy may be Texas law, because Staffing Resources and its insurance brokerare located in Texas. However, like Oklahoma law, Texas law requires thatinsurance contracts be construed broadly in favor of coverage.” (Aplt. Ap p. 1458.) If anything, this footnote appears to amount to a concession that AirLiquide discerns no meaningful difference between Oklahoma and Texas law on this issue. Even assuming that we would allow Air Liquide to ra ise this choice of law issue on appeal, it has attempted to do so only wit h respect to the issue of a duty to defend. (See AL Aple. Br. at 46-47.) With respect to the interpretation of the word “employee” and Continental’s alleged duty to i ndemnify Air Liquide under the policy held by Staffing Resources, Air Liquide has consistently argued Oklahoma law both at the district court and on appe al. (See Aplt. App. at 1457, 1458, 1461, 1464, 1465, 1466, 1467, 1471 [Air Liqui de’s opposition to defendants’ motion for summary judgment]; AL Aple. Br. at 19, 21, 22, 23, 26, 28.) Thus, with the possible exception of the duty to defend issue, we apply Oklahoma law to the present case. See Strickland Tower Maint., Inc. v. AT&T Comm., Inc. , 128 F.3d 1422, 1426 (10th Cir. 1997) (“The distri ct court applied Oklahoma law to this case and neither party challen ges that finding on appeal. Therefore, we accept the view of the district courtthat Oklahoma law applies.”); Dr. Pepper Co. v. Adams Inv. Co. , No. 90-6078, 1991 WL 148876, at *1 (10th Cir. Aug. 5, 1991) (unpublished) (“[Although a]rgum ents can be made that Texas law does not apply to the awarding of attorney fees . . . [the appellant] . . . made a deliberate choice to rely on Texas law, and cannot now say that the district court erred in holding [the appellant] to that choice.”); cf. Southern Star Foods Inc. v. Northfield Freezing Sys., Inc. , 202 B.R. 784, 788 (Bankr. E.D. Okla. 1996) (continued...) - 6 -2 (...continued)

(effecting a waiver of an agreement’s choice of law provision where “both parties present the issues in terms of Oklahoma law”). With respect to the duty to defend issue, it is notnecessary for us to determine whether Air Liquide’s attempt to resurrec t the choice of law issue on appeal is successful. We would reach the same conc lusion under either Texas or Oklahoma law, both of which require that the clear language of the policy can negate a duty to defend. Compare National Union Fire Ins. Co. of Pittsburgh v. Merchants Fast Motor Lines, Inc. , 939 S.W.2d 139, 141 (Tex. 1997) (“An insurer’s duty to defend is determined by the alleg ations in the pleadings and the language of the insurance policy.”) with15 O.S.A. § 427 (establishing that the duty to defend accompanies a duty to indemnify “unl ess a contrary intention appears” from the policy). Although there may be i nstances in which Texas and Oklahoma law might reach conflicting results, the p resent case does not compel such a divergence. - 7 - We review the district court's grant of summary jud gment de novo, applying the same legal standard used by the distri ct court. Summary judgment is appropriate “if the pleadings, depositi ons, answers to interrogatories, and admissions on file, together w ith the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). When applying this standard , we view the evidence and draw reasonable inferences therefrom i n the light most favorable to the [opposing] party. Simms v. Oklahoma ex rel. Dep’t of Mental Health & Substance Abuse Servs. , 165 F.3d 1321, 1326 (10th Cir. 1999) (internal citations omitted).3 It is not disputed that if Canada is an insured un der the Continental

policy, then Air Liquide is also an insured under t hat policy because it is “liable for the conduct of an ‘insured.’”

4 It is not disputed that Canada is an insured underthe CIGNA policy, which classifies as insureds “[a]nyone . . . using with your [Air Liquide’s] permission a covered ‘auto’ you own, hire, or borro w.” Canada was driving a truck owned by Air Liquide with the company’s permi ssion when the accident occurred, and thus he is plainly an insured under t he CIGNA policy. Likewise, once we determine, see infra , that Canada was an employee of Staffing Resources and that the accident arose in the course of that e mployment, it is clear that Staffing Resources is also an insured under the CIGNA policy, which purports to cover “[a]nyone liable for the conduct of an ‘insur ed.’” - 8 - I. Coverage This issue presents two primary questions: (1) whether Canada was an insured under Staffing Resources’ policy with Conti nental; 3 and (2) assuming question (1) is answered in the affirmative, whethe r the Continental policy was excess to Air Liquide’s policy with CIGNA. 4

A. Is Canada an Insured Under the Continental Polic y? The Continental policy with Staffing Resources prov ides that “[a]ny employee of yours is an ‘insured’ while using a cov ered ‘auto’ you don’t own, hire or borrow in your business or your personal af fairs.” Thus, Canada was an insured under the policy if all three of the follow ing conditions obtain: (1) He was an employee of Staffing Resources at the time of th e accident; (2) he was using a “covered ‘auto’” not owned, hired, or borrowed by S taffing Resources; and (3) he- 9 -

was engaged in the business or personal affairs of Staffing Resources when the accident occurred. Appellants do not dispute that the second factor is satisfied. We answer the remaining questions in the affirmativ e. 1. Canada’s Employee Status Unfortunately, the Continental policy does not defi ne the term “employee.” As the parties’ arguments on this point demonstrate , this “policy term . . . is reasonably susceptible to more than one meaning” as applied to the circumstances of the present case. Max True Plastering v. United States Fidelity & Guaranty
Co. , 912 P.2d 861, 869 (Okla. 1996). Accordingly, we conclude that the term, as used in the Continental policy and applied to these facts, is ambiguous as a matter of law. See id. Max True Plastering requires that we construe ambiguous terms in insurance contracts to conform “with the parties ’ reasonable expectations.” Id. at 868-69. Based on our review of the Continental policy and the circumstances surrounding Canada’s relationship with Staffing Res ources and Air Liquide, and applying the reasonable expectations test, we concl ude that Canada was an employee of Staffing Resources for insurance purpos es. First, the language of the Continental policy makes no attempt to exclude from coverage certain types of employees, depending on whether Staffing Resources performed the full range of employer func tions or merely performed payroll services. Rather, it purports to include a nyemployee. Second, and quite- 10 -

significantly, Staffing Resources’ conduct indicate s that it believed it would be responsible for the actions of individuals it dispatched to drive vehicles for other companies. To this end, Staffing Resources’ intern al Drivers Policy contained the following statement: When we supply drivers to a client we expose oursel ves to automobile liability claims unless we take steps to avoid the exposure. In the event of an accident we could be sued by: any person who was injured or had property damaged, . . . or the client’s insurance companies to recover their loss from us. If the client’s own employee was driving, these act ions would not be available. All of the loss would be borne b y the client or their insurance companies. Our objective is to return to that position. Failure to follow proper procedures will result in claims being paid under our auto insurance which increases our premiu m companywide. The procedures set forth included requiring the cli ent to sign a hold-harmless agreement and requesting that the client name Staff ing Resources as an insured on the client’s insurance policy. In the present case , these procedures were not followed. Although Staffing Resources’ interpretat ion of its potential exposure to liability is not necessarily binding on Continental , it is relevant under the reasonable expectations doctrine as to whom Staffin g Resources thought the policy covered. This statement by Staffing Resourc es indicates its belief that drivers it supplied to a client could give rise to liability on the part of Staffing Resources and accordingly that such drivers would b e covered employees under the Continental policy.- 11 -

Third, the dealings between Staffing Resources and Air Liquide further indicate that Canada was a Staffing Resources emplo yee. The weekly time sheets Air Liquide submitted described Canada as a Staffin g Resources employee, and Canada was himself required to sign employment appl ications in 1992 and 1994, which stated “I understand that my Employer is Blaz er Services and not the company where I may be assigned to work.” In addit ion, Staffing Resources never indicated to Air Liquide that the circumstanc es of Canada’s hiring altered his status, and Staffing Resources held out Canada as its employee for federal and state governmental purposes. Moreover, Staffing Re sources provided Air Liquide a Certificate of Insurance representing that Staffi ng Resources had the Continental policy. Although the certificate expli citly declares that it is issued as a matter of information only and confers no rights upon the certificate holder, nor does it alter or amend the policies disclosed in th e certificate, in light of the surrounding circumstances it likely confirmed Air L iquide’s impression that Canada was Staffing Resources’ employee and coveredby Staffing Resources’ insurance policy. Appellants rely primarily on the day-to-day control Air Liquide exercised over Canada. Staffing Resources notes that Air Liq uide told Canada when to work, supervised his job performance, and that Staf fing Resources only received notice how much Canada worked for Air Liquide durin g a particular week after- 12 -

the fact. However, by the very nature of its busin ess, an employment agency has an atypical employment relationship with the indivi duals it sends to its clients. Staffing Resources (and Canada) declared time and a gain that Canada was Staffing Resources’ employee. On this record, it i s clear as a matter of law that Canada was an employee of Staffing Resources withinthe meaning of the Continental policy. 2. In the Business of Staffing Resources It is similarly clear that Canada was performing th e business of Staffing Resources when the accident occurred. Staffing Res ources paid Canada to drive a truck for its client, Air Liquide, and the accidenttook place while Canada was performing these duties. Staffing Resources was inthe business of providing employees to its clients, and, as its Drivers Polic y indicates, Staffing Resources understood that its potential liability extended to incidents that might occur while its driver was assigned to a client. Canada was th erefore acting in the business of Staffing Resources when the accident occurred. Thus, Canada was a Staffing Resources employee driv ing a covered auto in the business of Staffing Resources. Accordingly, w e hold that Canada and Air Liquide are insureds under the Continental policy.- 13 -

B. Is the Continental Policy Excess to the CIGNA Policy? Because Canada and Air Liquide (as well as Staffing Resources) are insureds under the Continental policy, and because Canada and Staffing Resources (as well as Air Liquide) are insureds und er the CIGNA policy, it is necessary to examine the policies to determine whet her each purports to provide primary or excess insurance for the accident. By i ts terms, the CIGNA policy provides primary insurance for this incident: “For any covered ‘auto’ you own, this Coverage form provides primary insurance.” Itis undisputed that Air Liquide owned the truck Canada was driving at the time of t he accident. Thus, the CIGNA policy purports to be primary. The Continental policy provides: “For any covered ‘ auto’ you don’t own, the insurance provided by this Coverage Form is exc ess over any other collectible insurance.” The issue thus presented is whether th e CIGNA policy constitutes “other collectible insurance.” Resolving this matt er requires us to consider the significance, if any, of the fact that Air Liquide’ s policy with CIGNA is a form of self-insurance. Although Oklahoma apparently has not decided whethe r self-insurance is “other collectible insurance,” we believe our decis ion in Industrial Indemnity Co. v. Continental Casualty Co. , 375 F.2d 183 (10th Cir. 1967), is controlling on this5 Industrial Indemnityrequired us to apply and predict Oklahoma state law.

See id. at 185.

6 We note that the terms “other insurance” and “othe r collectible insurance” are, for present purposes, substantially identical. See Self-Insurance Against Liability as Other Insurance Within Meaning of Liab ility Insurance Policy, 46 A.L.R.4th 707, 709 (1986) (noting that “[c]ourts do not generally distinguish (continued...) - 14 - issue. 5 Industrial Indemnityconcerned an incident arising out of two subcontractors’ work on an Oklahoma oil lease. The first subcontractor, Halliburton Oil Well Cementing Company (“Halliburto n”), was insured by Continental Casualty Company (“Continental Casualty ”); the second, Johnson Construction Company (“Johnson”), was insured by In dustrial Indemnity Company (“Industrial”). See id. at 184. While en route to the job site, a Halliburton employee was injured when attempting to disconnect a Halliburton truck from a Johnson tractor that had towed the tru ck through the mud. See id. The Halliburton employee sued Johnson, and Johnson claimed that, in addition to being an insured under its policy with Industrial, it was an insured under Halliburton’s policy with Continental Casualty. Th e court agreed that Johnson was also an insured under the Continental Casualty policy, and then addressed the question of how to allocate the loss between the tw o policies. It is apparent from the court’s reasoning that both policies contained substantially identical “other insurance” clauses p urporting to render that policy excess if there was other insurance. 6 See id. at 185. It is further apparent that6 (...continued)

among these phrases.”). - 15 - Halliburton’s policy with Continental Casualty prov ided that Halliburton would reimburse Continental Casualty for any losses. See id. Continental Casualty argued to this court that “Halliburton was a self-i nsuror by reason of its agreement to reimburse the insurance carrier for th e losses and hence there was no ‘other insurance.’” Id. We rejected this argument and affirmed the distri ct court’s proration of the loss between the policies, stating that “[t]here is no authority in Oklahoma which would dictate that a di stinction should be made between the nature of the coverage.” Id. at 186. Thus, we held that the fact that one policy was, in effect, self-insurance did not d iminish the applicability of an “other insurance” clause. We follow the reasoning of Industrial Indemnityin the present case and conclude that Air Liquide’s self-insurance is “othe r collectible insurance” within the meaning of the Continental policy. We have fou nd no authority in Oklahoma contradicting our decision in Industrial Indemnity , and we remain of the opinion that it reaches the correct result. Air Liquide’s decision to self-insure does not relieve it from primary liability simply because th e underlying accident was also covered by another insurance policy. Were we to ho ld otherwise, Air Liquide would receive the double windfall of avoiding signi ficant premium payments7Appellees’ citation of Beech Aircraft Corp. v. Uni ted States , 797 F.2d 920

(10th Cir. 1986), is misguided. Beech Aircraftheld that self-insurance was not insurance withing the meaning of a tax code provisi on allowing for deductibility of insurance premiums. See id. at 922. Thus, the issue addressed in Beech Aircraftis plainly distinguishable from the case at bar. We also note that at least two of the cases from ot her jurisdictions relied upon by the district court are plainly distinguisha ble from the present case. See St. John’s Reg’l Health Ctr. v. American Cas. Co. , 980 F.2d 1222, 1225 (8th Cir. 1992) (addressing a pooled liability fund); Physici an’s Ins. Co. of Ohio v. Grandview Hosp. & Med. Ctr. , 542 N.E.2d 706 (Ohio App. 1988) (addressing a hospital’s contractual obligation to indemnify an e mployee). Neither of these cases involved a fronting policy like the CIGNA pol icy in the present case, in which a company that is in the business of insuring against loss acts as a surety for the self-insured’s ability to satisfy a judgmen t. We also note that other jurisdictions have followed the approach of Industr ial Indemnityand the case at bar. See Self-Insurance Against Liability as Other Insuranc e Within Meaning of Liability Insurance Policy, 46 A.L.R.4th 707 (1986) § 3[a], 4[a] (collecting cases); 1 Couch on Insurance 3d § 10:6 (same). In any event, the cases relied upon by the district court are from other jurisdict ions and, hence, are not controlling, whereas Industrial Indemnityrepresents controlling Tenth Circuit authority interpreting Oklahoma law.

8 Cf. 15 Couch on Insurance 3d § 217:9 (“Any applicable deductible is relevant between the insurer and the insured only, and does not apply to proration.”) - 16 - under a standard insurance policy and avoiding prim ary liability for an accident caused by one of its vehicles. We predict that Okl ahoma would not reach such an inequitable result. 7 Thus, we conclude that Air Liquide’s CIGNA policy i s “other collectible insurance” within the meaning of the Continental po licy, notwithstanding Air Liquide’s obligation to fully reimburse CIGNA for any losses. 8 As a result, the9 In light of our conclusion the Continental policy is excess, we need not

address Appellants’ arguments that the “MCS-90" end orsement attached to the CIGNA policy automatically renders it primary. We do note, however, that the attachment of the MCS -90 endorsement supports our characterization of the CIGNA policy a s “other collectible insurance,” in that, vis-à-vis the public, the endo rsement renders the policy more like a standard risk-shifting insurance policy. - 17 - terms of the Continental policy make it excess to t he CIGNA policy. 9 Thus, we reverse the district court’s holding that the Conti nental policy was primary. II. Duty to Defend It remains for us to determine which policy or party has the responsibility for defending the insureds in the legal actions fil ed by the victims in connection with Canada’s accident. Appellants contend that CI GNA owes Staffing Resources a defense and that, if CIGNA does not ful fill this obligation, then under the CIGNA policy the duty devolves onto Air L iquide. Air Liquide, in turn, argues that it and Canada are owed a defense under the Continental policy.
A. CIGNA As we read its Deductible Endorsement, the CIGNA po licy expressly disclaims any duty to defend. The relevant provisi on reads: You have entered into an agreement with the claim s ervice organization shown in the Schedule (the “Claim Serv ice Organization ”), whereunder the Claim Service Organization shall provide investigation, administration, adjustment, and settlement services, and shall provide for the defense of all claims or “suits” arising under this policy. Accordingly, you agree with us that we10 Ward THG is actually identified as the “Claims Han dling Organization”

in the schedule which is a part of the same page of the endorsement, but it is clear that Ward THG is the designated Claim Service Organ ization.

11 We are not persuaded by Appellants’ argument that the Endorsement’s use of the word “accordingly” indicates that the du ty to defend devolves upon CIGNA if Air Liquide refuses to defend an additiona l insured. Such a reading is not supported by the unambiguous and plain meaning of the language relieving CIGNA of “any duty to defend.” - 18 - shall not have any duty to defend any such “suit,” or to pay with respect to any claim or “suit” any ALAE [Allocated Loss Adjustment Expense]. The “Claim Service Organization” is identified as “ Ward THG,” 10 which appears to be an entity separate from CIGNA. Thus, the end orsement indicates that Air Liquide has arranged with a third party to provide adjustment and defense services and that CIGNA is relieved of any duty to defend. Accordingly, CIGNA has no duty to defend any insured, including Staffi ng Resources, under the policy. 11 B. Air Liquide The CIGNA policy expressly disclaims any duty to de fend, and there is no indication in the policy that Air Liquide owes a de fense to Staffing Resources. The Deductible Endorsement reveals that Air Liquide has contracted with a third party to provide adjustment and defense services, b ut that in no way obligates Air Liquide to provide a defense to additional insureds . Simply put, the CIGNA- 19 -

policy eliminates a duty to defend, and Appellants’ attempts to locate any such duty within the policy are misguided. C. Continental The Continental policy provides that “We [Continent al] have the right and duty to defend any ‘insured’ against a ‘suit’ askin g for such damages.” As we have previously explained, both Canada and Air Liqu ide are insureds under the Continental policy. Although the Continental polic y disclaims the duty to defend a suit “to which this insurance does not apply,” th e Continental policy does apply to this incident–it is merely excess in indemnification coverage to the CIGNA policy. We therefore conclude that, by the plain t erms of its policy with Staffing Resources, Continental is obligated to defend Canad a and Air Liquide.
CONCLUSION Although we agree with the district court’s conclus ion that Canada was an employee of Staffing Resources and therefore was an insured along with Air Liquide under the Continental policy, we find that the CIGNA policy is “other collectible insurance” as contemplated by the Conti nental policy. As a result, for purposes of liability indemnification, the Continen tal policy is, by its terms, excess to the CIGNA policy, and the CIGNA policy is primary. The district court’s judgment to the contrary is therefore REVER SED. However, as the Continental policy imposes a duty on the insurer to defend all insureds, and the- 20 -

CIGNA policy contains no duty to defend, the distri ct court’s judgment imposing a duty upon Continental to defend Canada and Air Li quide is AFFIRMED. This matter is REMANDED to the district court for such f urther proceedings as may be appropriate.