Court Opinion

ID: 9739702
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:19:48.327011+00
Date Added: 2024-06-11T07:24:13.501208
License: Public Domain

SUNDBY, J.
(concurring in part; dissenting in part). I conclude that the sole question in this case is whether Seats and Nutmeg agreed that Seats was to obtain "underlying insurance" as a condition of coverage under Nutmeg's umbrella policy. There may be a simple answer to this question; however, I cannot find one. The complaint, answer, affidavit, motions, and the parties' briefs do not answer the question. I conclude that on the record before us, it is inappropriate to grant summary judgment to either party. I therefore concur in our mandate reversing the judgment in favor of Seats, but dissent from our opinion and mandate which allows the trial court to grant judgment to Nutmeg on the present record.
There is no evidence in the record that Seats was required to obtain "underlying insurance" as a condition of coverage under Nutmeg's umbrella policy. Nutmeg agreed to provide coverage to Seats in excess of the underlying insurance policies listed in the policy's Extension Schedule, or Seats' self-insured retention of $10,000 if underlying insurance was not available. No insurance policies were listed in Endorsement No. 4, which the trial court correctly concluded was the Extension Schedule; Endorsement No. 4 listed *232required coverages and limits, but did not list the names of underlying insurance carriers or policy numbers.
The trial court gave a literal construction to Nutmeg's policy's statement of coverage and its definition of "underlying insurance." It granted summary judgment to Seats because neither the policy or Endorsement No. 4 listed any underlying insurance policies issued to Seats as required by the definition of "Underlying Insurance."1 The court therefore concluded that Nutmeg's policy was in excess of the amount of the self-insured retention of $10,000.
The majority rejects this literal interpretation because it renders Endorsement No. 4 "superfluous," "meaningless" or "useless." I agree that "[o]ther things being equal, a construction which gives reasonable meaning to every provision of a contract is preferable to one leaving part of the language useless or meaningless." Stanhope v. Brown County, 90 Wis. 2d 823, 848-49, 280 N.W.2d 711, 722 (1979). I also believe that we should not give a construction to an insurance policy which leads to an unreasonable or absurd result. Nutmeg argues, for example, that it could not reasonably be expected to extend $25,000,000 coverage to Seats for an annual premium of $18,650.2 See, e.g., Morbark Indus. v. Western Employers Ins. Co., 429 N.W.2d 213, *233216 (Mich. Ct. App. 1988). To give some meaning to Endorsement No. 4, the majority accepts Nutmeg's argument that: "A reasonable insured could only interpret Nutmeg's policy as providing excess coverage over the policies and limits of liabilities set forth in Endorsement No. 4."
However, the uncontroverted fact is that no insurance policies were ever listed in the policy's Endorsement No. 4. Nutmeg wrote the policy and, in the absence of evidence of a contrary agreement, must live with its policy language.
Nutmeg asks this court to rewrite its definition of "underlying insurance" to mean "the limits of liability listed in the Extension Schedule of Underlying Insurance Policies ... ." But Nutmeg could have written its policy to specifically declare its coverage limits without referring to other policies. Other excess or umbrella insurance carriers have avoided the construction problem presented by Nutmeg's policy by expressly stating coverage limits. See, e.g., Shapiro v. Associated Int'l Ins. Co., 899 F.2d 1116, 1121-22 (11th Cir. 1990) (company's policy provided "[t]he Company's liability shall be only for the ultimate net loss in excess of the Insured's retained limits defined as the greater of: (a) an amount equal to the limits of liability indicated beside the underlying insurance listed in the Schedule of Underlying Insurance hereof, plus applicable limits of any other underlying insurance collectible by the insured . . .") (emphasis added). See also Steve D. Thompson Trucking, Inc. v. Twin City Fire Ins. Co., 832 F.2d 309, 310 (5th Cir. 1987) (policy defined "underlying limit" to mean "the amounts of the applicable limits of liability of the underlying insurance as stated in the *234Schedule of Underlying Insurance Policies..."); Zurich Ins. Co. v. Heil Co., 815 F.2d 1122, 1124 (7th Cir. 1987) ("ultimate net loss" defined to include "the limits of liability shown for the underlying insurance (listed in Schedule A hereof); Mission Nat'l Ins. Co. v. Duke Transp. Co., 792 F.2d 550, 551 (5th Cir. 1986) (policy referred to "the limits of the underlying insurance as set out in the attached schedule . . ."); Holland v. Stanley Scrubbing Well Serv., 666 F. Supp. 898, 900 (W.D. La. 1987) ("underlying limit" defined as "the amounts of applicable limits of liability of the underlying insurance as stated in the Schedule of Underlying Policies...").
I acknowledge that there are inferences which support the conclusion that the parties intended that Nutmeg's policy was to provide coverage only in excess of the limits of liability shown in the Supplemental Schedule of Primary Insurance. First, there is the nature of excess insurance:
[E]xcess insurance may be called pure, true, straight or umbrella. "True" excess liability insurance is written on the basis and understanding that underlying insurance will be (or was already) obtained and continued. Unlike liability insurance which would otherwise be primary, and which becomes secondary only because of the presence of other insurance, true excess insurance depends upon the existence of underlying insurance and liability will not attach until the limits of the underlying primary policy have been exhausted. Thus, the true excess liability insurance company accounts for the reduced risks and charges premiums accordingly.
1 A.N. Brook et al., Business Insurance Law and Practice Guide, Umbrella and Excess Liability Insurance, *235§4.02 [2], at 4-19 (Matthew Bender 1992). Generally, excess policies apply only to specific risks whereas umbrella policies are not so limited. Id. §4.03[1], at 4-23. Nutmeg's policy is a true umbrella policy which is not limited to specific risks.
However, unless otherwise required by the excess or umbrella policy, a policyholder may elect to be self-insured up to the layer of excess insurance. Id. § 4.02 [2], at 4-20. "If the policyholder elects not to purchase a primary policy[,] but instead, maintains a self-insured retention for the same amount, then the policyholder would be obligated to provide for its own defense and to pay any settlement or judgment that falls within that retention. Under such an arrangement, the true excess insurance company has no indemnity obligation until the underlying self-insured retention is exhausted." Id.
Another fact from which an inference may be drawn is that Seats obtained primary comprehensive general liability coverage, including products liability coverage from Holland-America, in the amount of $500,000 for the same period covered by Nutmeg's policy. However, Nutmeg does not argue that Seats obtained the Holland-America coverage in response to any duty imposed upon Seats under Nutmeg's policy. Nutmeg merely notes that the Holland-America policy "corresponds precisely with the coverages and policy limits listed in Nutmeg’s Extension Schedule." No reference to the Holland-America policy, or any other policy, is found in Nutmeg's policy issued to Seats.
For these reasons, I conclude that neither party is entitled to summary judgment. I join in the court's reversal of the summary judgment in favor of Seats but I believe that the record is insufficient to grant sum*236mary judgment to Nutmeg dismissing Seats' complaint.

 The trial court also noted, and apparently relied on another very troubling aspect of this case. Although Nutmeg's policy term was for the period from December 1,1984, to December 1, 1985, Endorsement No. 4 was dated October 7, 1985, "a date several months after the occurrence giving rise to this litigation." We find no explanation in the record.

 However, this court cannot take judicial notice that an annual premium of $18,650 is so ludicrously low that no insured could reasonably expect the kind of coverage Seats claims the *233express language of the policy provided. We do not have sufficient information from which to draw this conclusion.