Source: http://ace-insurance-litigation.com/ace-ina-litigation/case/american-states-insurance-company-v-ace-american
Timestamp: 2019-04-23 04:40:15+00:00

Document:
A. The Coverage Of The ACE Policy Is Primary.
10. Hook & Anchor had custody of and was using the vehicle involved in the accident with the express consent and permission of Chemical Weed and its principal, Darrell D. Wilson. It is also undisputed that Hook & Anchor qualified as an insured under the ACE Policy for the allegations of vicarious liability based on Jones’s negligence. Hook & Anchor is therefore an insured under both the American States and ACE policies.
11. The American States and ACE commercial auto policies contain identical “other insurance” clauses, which provide in pertinent part: For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance.
(S.D. Tex. June 22, 2010) (“When two car-insurance policies cover the same accident, Texas courts find no conflict between one policy’s excess clause and another’s pro-rata clause. Texas courts do not equitably prorate defense costs. Instead, they respect the contracts and enforce the excess clause.”). Because ACE’s insured, Chemical Weed, owned the vehicle loaned to Hook & Anchor, ACE’s coverage is primary and American States’ coverage is excess for Hook & Anchor. As the primary carrier, ACE had a duty to defend the entire suit if any of the claims in the Underlying Suit fell within ACE’s coverage. See Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 495-96 (Tex. 2008) (“The duty to defend is not negated by the inclusion of claims that are not covered; rather, it is triggered by the inclusion of claims that might be covered.”); Harken Exploration Co. v. Sphere Drake Ins., 261 F.3d 466, 474 (5th Cir. 2001); Lafarge Corp. v. Hartford Cas. Ins. Co., 61 F.3d 389, 395 (5th Cir. 1995). Because its coverage is excess, American States has no duty to defend or indemnify Hook & Anchor until the limits of the ACE policy are exhausted.
To Recover Its Costs Incurred In Defending Hook & Anchor.
12. As the excess carrier for Hook & Anchor, American States has a right of contractual and equitable subrogation against the primary carrier that should have assumed Hook & Anchor’s defense. See, e.g., American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 482 (Tex. 1992); Royal Ins. Co. of Am. v. Caliber One Indem. Co., 465 F.3d 614, 617 (5th Cir. 2006). Because ACE refused to assume the defense of Hook & Anchor, American States is also entitled to recover its attorney’s fees pursuant to Texas Civil Practice and Remedies Code section 38.001(8) as Hook & Anchor’s subrogee.
13. A claim for defense costs is a “first-party” claim for purposes of the prompt payment statute. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 20 (Tex. 2007) (“the prompt-payment statute, formerly article 21.55, and now codified as sections 542.051–.061 of the Texas Insurance Code, may be applied when an insurer wrongfully refuses to promptly pay a defense benefit owed to the insured”). A prompt payment claim combines an insurer's contractual and statutory liability into one cause of action. Harris v. Am. Prot. Ins. Co., 158 S.W.3d 614, 621 (Tex. App.–Fort Worth 2005, no pet.). Because ACE breached its contract by refusing to accept the tender of Hook & Anchor’s defense, ACE is liable to American States for the 18% penalty on the defense costs American States incurred in protecting Hook & Anchor’sinterest in the Underlying Suit.
5. Such other and further relief to which American States may be entitled whether at law or in equity."

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