Opinion ID: 50243
Heading Depth: 2
Heading Rank: 3

Heading: Landmark's duty to defend

Text: 44 The district court granted summary judgment in favor of Landmark on Scottsdale's claim that Landmark owed a duty to defend Shade Tree. The district court found that Scottsdale had a duty to defend Shade Tree because at least some of Knox Park's claims were not excluded by the Scottsdale policy. 45 The district court found that the Landmark policy did not confer a duty to defend because its terms limited the duty to situations where the underlying insurance is exhausted. Scottsdale challenges this finding, contending that Landmark owes Scottsdale a pro rata portion of the attorneys fees Scottsdale expended defending Shade Tree on the breach of warranty claims, since those claims were covered by the Landmark policy. The Landmark policy provides: 46 We have a duty to defend the insured [Shade Tree] against any suits to which this insurance applies: 47 (a) But which are not covered by any underlying insurance shown in the Declarations or by any other applicable primary policies that may apply; or 48 (b) If the applicable limit of underlying insurance is exhausted. 49 As noted above, the definition of underlying insurance specifically refers to the Scottsdale policy, and the parties agree that the definition refers to no other policies. 50 Scottsdale seizes on the Landmark policy's acknowledgment of a duty to defend under (a) or (b) and argues that the district court's conclusion based on (b) — no exhaustion of the underlying insurance policy's limits — ignores the possibility of a duty to defend under (a). Scottsdale contends that subsection (a) of the Landmark policy provides a duty to defend in situations, such as the one here, where the primary policy does not provide coverage for particular claims. It does not argue that subsection (b) confers a duty to defend. 51 Scottsdale's argument is flawed. At least some of the claims in the state court suit were covered by the Scottsdale policy. As such, Scottsdale had a duty to defend the entire suit. See, e.g., Enserch Corp. v. Shand Morahan & Co., 952 F.2d 1485, 1492 (5th Cir.1992) (If any allegation in the complaint is even potentially covered by the policy then the insurer has a duty to defend its insured.). Under the plain terms of subsection (a) in the Landmark policy, Landmark has no duty to defend when a suit is covered by any `underlying insurance.' Because the Scottsdale policy covers the state court suit, the Landmark policy provides that Landmark has no duty to defend Shade Tree. This is so even though, as discussed supra, the Landmark policy covers breach of warranty claims that the Scottsdale policy excludes from coverage, since the duty to defend in the Landmark policy is determined on a per suit, rather than a per claim, basis. 6