Opinion ID: 2076945
Heading Depth: 2
Heading Rank: 2

Heading: Declaratory Judgment on the State Farm Policy

Text: [¶ 62] Koshy argues that the court erred in denying his motion to stay the declaratory judgment action because the issue of indemnification could be resolved only after the determination of liability. Koshy bases his argument on our general rule that a court may not decide whether an insurer has a duty to indemnify until liability has been determined in a tort claim: To secure the just, speedy and inexpensive determination of an action involving a duty to defend and a duty to indemnify and avoid a duplication of trials requires that courts proceed in the following order: the determination of a duty to defend, then the determination of liability in the underlying action, and finally the determination of the duty to indemnify. Penney v. Capitol City Transfer, Inc., 1998 ME 44, ¶ 5, 707 A.2d 387, 389. We have held that the facts must be finally determined because duty to indemnify cases involve the comparison of the policy with the facts proved at trial. Foremost Ins. Co. v. Levesque, 2007 ME 96, ¶ 13, 926 A.2d 1185, 1189. The insured's duty to indemnify ... may depend on the actual facts or legal theory behind the underlying action against the insured by the injured party. U.S. Fidelity & Guar. Co. v. Rosso, 521 A.2d 301, 303 (Me.1987). [¶ 63] We have recognized limited exceptions to the rule that a court should not decide an insurer's duty to indemnify until after the trial of the underlying tort claim. [W]hen the case is based on such issues as nonpayment of a premium, cancellation of a policy, failure to cooperate or lack of timely notice, then both obligations may be appropriately determined prior to the entering of judgment. Am. Policyholders' Ins. Co. v. Cumberland Cold Storage Co., 373 A.2d 247, 250 (Me.1977). These exceptions arise because the coverage dispute depends entirely on the relationship between the insurer and the insured, not on facts to be determined in the underlying litigation. Additional exceptions exist where the insured, the insurer, and the injured claimant stipulate to the facts material to the insurer's duty to indemnify or where the pertinent facts have been determined in other proceedings. Patrons Oxford Mut. Ins. Co. v. Garcia, 1998 ME 38, ¶ 7, 707 A.2d 384, 386 (footnotes omitted). [¶ 64] Because none of these exceptions apply in the present case, and because the issue of Koshy's State Farm coverage may be moot if the indemnification provisions of the rental agreement are determined to be unenforceable, we vacate the denial of the motion for a stay and the subsequent entry of summary judgment, and we remand for the matter to be stayed until the related litigation between Enterprise, Koshy, and Scandent, has been finally resolved.