Court Opinion

ID: 4243445
Source: CourtListenerOpinion
Date Created: 2018-02-08 17:10:20.221041+00
Date Added: 2024-06-11T14:44:21.948247
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MARIE SAINT HILAIRE, Individually        :
and as Wife and Administratrix of the    :       K16C-12-026 JJC
Estate of Therisson Augustin, and         :      In and For Kent County
MARCEA AUGUSTIN, and EDNEST              :
AUGUSTIN,                                 :
                   Plaintiffs,            :
                                          :
                  v.                      :
                                          :
MARTHA IRENE GONZALEZ                     :
LANKFORD, and UNITED FARM                 :
FAMILY INSURANCE COMPANY,                 :
                                          :
                  Defendants.             :

                         Submitted: December 15, 2017
                           Decided February 6, 2018

                 MEMORANDUM OPINION AND ORDER
                Upon the Parties’ Claims for Declaratory Relief

Keith E. Donovan, Esquire & Reneta L. Green-Streett, Esquire, Morris James, LLP,
Dover, Delaware, Attorneys for the Plaintiff.

David C. Malatesta, Jr., Esquire, Kent & McBride, P.C., Wilmington, Delaware, &
Margaret Fonshell Ward, Esquire, Ward & Herzog, LLC, Baltimore, MD, Attorneys
for the Defendants.

Clark, J.
      This matter involves a declaratory judgment action regarding parties’ rights
under an umbrella policy. The insured, an alleged tortfeasor in an automobile
accident, did not obtain underlying primary automobile bodily injury coverage at the
level required by the umbrella policy. As a result, the umbrella insurer argues that
it has no coverage obligations. The injured parties (based on an assignment of rights
by the insureds) counter that the policy’s language provides for this contingency and
that umbrella coverage is nevertheless triggered.
      For the reasons discussed below, under Maryland law and based on
uncontroverted stipulated facts, the policy directly addresses the issue. Namely, it
provides that the injured parties, now by assignment, have up to one million dollars
of umbrella coverage available. The insurer’s obligation to indemnify its insured
and thus compensate the injured parties, however, is not triggered unless and until
the value of the injured parties’ claims are fixed by verdict or settlement to exceed
$250,000. In the event damages exceed that amount, the injured parties must absorb
the gap in coverage and are due no compensation from Farm Family for any final
damages fixed at less than $250,000.

                                   I.     Background

                                  A. Stipulated Facts

      The parties stipulated to the following facts in support of their joint request
that the Court decide this matter on the briefing. The parties also agree that
Maryland law applies. On December 30, 2014, Defendant Martha Irene Gonzalez
Lankford (hereinafter “Mrs. Lankford”) left a stop sign and entered a roadway in
Sussex County.      She pulled into the path of Plaintiff Therisson Augustin’s
(hereinafter “Mr. Augustin’s”) vehicle and the two vehicles collided. Mr. Augustin
suffered injuries and later died as a result of the collision. Presently, the parties
include his estate and those allegedly injured as a result of his death (hereinafter “the
                                           2
injured parties”) and Defendant United Farm Family Insurance Company
(hereinafter “Farm Family”).
       At the time of the collision, Farm Family provided Mrs. Lankford’s vehicle
with $100,000 per person bodily injury coverage. Also at the time of the collision,
Mrs. Lankford lived with her husband’s father, Robert Lankford (hereinafter “Mr.
Lankford”), in Delmar, Maryland. At that time, Farm Family separately insured Mr.
Lankford under a policy that provided one million dollars in umbrella coverage. The
parties stipulate that Mrs. Lankford qualified as an insured under her father-in-law’s
Farm Family umbrella policy.
       In 2015, the injured parties partially settled their claims against Mrs.
Lankford. Pursuant to the settlement, the injured parties accepted the $100,000 in
underlying policy limits.1 In exchange, they (1) released Mrs. Lankford from all
further personal liability, and (2) Mr. and Mrs. Lankford assigned all of their rights
in the Farm Family umbrella policy to the injured parties. 2
       Farm Family denied coverage under its umbrella policy because Mrs.
Lankford secured only $100,000 per person bodily injury coverage rather than the
$250,000 per person coverage required by the umbrella policy. In response, the
injured parties (pursuant to the assignment of rights), claim that although Mrs.
Lankford did not secure and exhaust the limits identified in the umbrella policy’s
declaration page, the policy provides for this contingency and coverage is triggered
nevertheless. In the alternative, the injured parties argue that the policy is ambiguous
and, under Maryland law, it should be interpreted against its drafter.

1
  Mr. Augustin’s personal State Farm policy provided $15,000 in underinsured motorist coverage
for the accident which was tendered and accepted. Neither party argues that Mr. Augustin’s State
Farm coverage is relevant to this coverage dispute.
2
  The parties did not include a copy of the assignment in the record. The stipulated facts provide
that the assignment is valid and accordingly the Court’s reasoning is based upon the premise that
it is unqualified. The release signed by the injured parties was also not included in the record.
                                                3
                    B. The Terms and Conditions of the Umbrella Policy
      The parties included a complete copy of the umbrella policy with the stipulation
of facts. The declaration page, in the only portion in all capitals, bolded and
italicized, provides:
          TO AVOID GAPS IN COVERAGE, YOU MUST MAINTAIN THE
          MINIMUM LIMTS OF LIABILITY STATED BELOW ON ALL
          PRIMARY INSURANCE POLICIES WHICH APPLY TO YOU
          (emphasis omitted).

The declaration page then lists bodily injury limits of $250,000 per person as
“primary insurance requirements.”
          Part II of the umbrella policy, discussing coverage, provides that:
          We will pay on an INSURED’S behalf DAMAGES for which an
          INSURED becomes legally responsible due to PERSONAL INJURY
          or PROPERTY DAMAGE caused by an OCCURANCE. This
          coverage applies only to DAMAGES in excess of the PRIMARY
          INSURANCE or the RETAINED LIMIT3, whichever applies.

The policy defines primary insurance as “any insurance collectible by the INSURED
which covers the INSURED’S liability for PERSONAL INJURY or PROPERTY
DAMAGE.” The definition of primary insurance does not reference the amount of
coverage necessary other than to refer to that which is “collectible.” Germanely, this
definition of primary insurance, which is used throughout the policy, does not
reference a minimum amount of underlying coverage.                       In addition, Part VII. 5.
provides that “[t]his insurance [the umbrella coverage] is excess over other
collectible insurance.”
          Next, Part IV of the policy, discussing limits of liability, provides that:
          Regardless of the number of INSUREDS, claims or injured persons, the
          maximum we pay as DAMAGES resulting from one OCCURENCE
          shall not exceed the amount stated in the declarations page, subject to
          the following:

3
    The parties agreed that the retained limit contingency does not apply in this case.
                                                   4
           1. This policy only pays after the limits of the PRIMARY
              INSURANCE and excess insurance, and any other
              PRIMARY INSURANCE and excess insurance covering
              the claim, have been paid by you or on your behalf.

           2. If the PRIMARY INSURANCE terminates or if the limits
              are less than the limits show in the declarations page,
              we pay DAMAGES we would have paid as if the
              PRIMARY INSURANCE had not been terminated or if
              its limits had not been less than the limits shown in the
              declaration page (emphasis added).

Finally, Part V of the policy, discussing primary insurance requirements, provides
that:
        This policy requires that all INSUREDS have and maintain the
        PRIMARY INSURANCE coverage at or above the limits of liability
        shown on the declarations page. … If the PRIMARY INSURANCE does
        not provide at least the limits indicated, you will be responsible for the
        loss up to the required limits. We only pay for the amount of loss
        which is:

           1. above the required PRIMARY INSURANCE limits, and
           2. above any other insurance collectible for an occurrence.
              (emphasis added)

As stated previously, the definition of “primary insurance”, which is used in the
provisions discussed above, does not include a defined amount of underlying
coverage. The definition refers only to “any insurance collectible by the insured.”
Separate from that definition inserted throughout the policy, Part V of the policy
places an independent obligation upon the insured to maintain the $250,000 per
person bodily injury coverage referenced in the declaration page.

                                            5
            II.     Applicable Standards and Maryland’s Rules of Contract
                                        Construction

       The parties jointly submitted this matter to the Court for resolution based on
stipulated facts and a complete copy of the umbrella policy. Accordingly, the Court
will consider the matter to be submitted for decision pursuant to cross-motions for
summary judgment. 4 Specifically, the parties request the Court to issue a declaration
pursuant to 10 Del. C. Ch. 65 5 regarding the coverage provided under the umbrella
policy and to what extent, if any, it must be paid pursuant to the terms and conditions
of the policy. In such matters, the Court is given the statutory power to construe
questions of “construction or validity arising under [a] contract . . . and [to provide]
a declaration of rights, status or other legal relations thereunder.” 6 Furthermore, an
“actual controversy” must exist before a Delaware court may exercise its jurisdiction
to issue a declaratory judgment.7
        In issuing a declaratory judgment regarding the parties’ rights and obligations
under the contract, the Court must interpret the contract. Under Maryland Law,
insurance policies are construed like any other contract.8 Construction of insurance
policies is governed by a few well-established principles. 9 Unless a statute,
regulation, or public policy would be violated, the first principle of construction of

4
  See Super. Ct. Civ. R. 56(h) (providing where “the parties . . . have not presented argument to
the Court that there is an issue of fact . . . the Court shall deem the motion to be the equivalent of
a stipulation for decision on the merits based on the record submitted with the motion.”).
5
  Relevant to the case at hand is 10 Del.C. § 6503’s recognition that pursuant to the declaratory
judgment Act, a “contract may be construed either before or after there has been a breach thereof.”
6
  10 Del. C. § 6502.
7
  XI Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208, 1217 (Del. 2014).
8
  Empire Fire & Marine Insurance Co. v. Liberty Mutual Insurance Co., 699 A.2d 482, 493 (Md.
Ct. Spec. App. 1997)(citing North River Ins. Co. v. Mayor & City Council of Balto., 343 Md. 34,
680 A.2d 480 (Md. 1996); Government Employees Ins. Co. v. Harvey, 278 Md. 548, 366 A.2d 13
(Md. 1976); Bond v. Pennsylvania Nat'l Mut. Cas. Ins. Co., 289 Md. 379, 424 A.2d 765 (Md.
1981)).
9
  Id. (citing Pacific Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486,
488 (Md. 1985)).
                                                  6
insurance policies in Maryland is to apply the terms of the contract.10 This principle
serves to achieve the touchstone of policy construction -- to ascertain and effectuate
the intent of the parties to the agreement.11 To divine properly the parties' intent, the
policy is viewed as a whole, without emphasis being placed on particular
provisions. 12 Whenever possible, each clause, sentence, or provision shall be given
force and effect. 13 With the exception of expressly defined terms, the language used
in the policy must be given its ordinary and usually accepted meaning.14

                                        III.   Discussion
          A. The Parties Competing Interpretations of the Umbrella Policy
       The injured parties focus on Part IV of the policy, and assert that the policy
expressly contemplates a situation where the insured maintains primary insurance of
less than the limits required by Part V. In such an event, they emphasize that Part
IV of the policy provides that Farm Family must pay limits “as if the primary
insurance … limits had not been less than the limits shown in the declaration page”.
The injured parties argue that this language requires the umbrella policy to drop
down to the lower limits, and Farm Family is liable for losses exceeding the
$100,000 paid by the primary policy. According to the injured parties, a drop down

10
   Mutual Fire, Marine & Inland Ins. Co. v. Vollmer, 508 A.2d 130, 133 (Md. 1986).
11
   Empire Fire, 699 A.2d at 493 (1997)(citing Aragona v. St. Paul Fire & Marine Ins. Co., 281
Md. 371, 375, 378 A.2d 1346, 1348-49 (Md. 1977); Schuler v. Erie Ins. Exch., 81 Md. App. 499,
568 A.2d 873, cert. denied, 319 Md. 304, 572 A.2d 183 (1990)).
12
   Id. (citing Sullins v. Allstate Ins. Co., 340 Md. 503, 667 A.2d 617 (Md. 1995); Nolt v. United
States Fidelity & Guar. Co., 329 Md. 52, 617 A.2d 578 (Md. 1993); Simkins Indus., Inc. v.
Lexington Ins. Co., 42 Md. App. 396, 401 A.2d 181, cert. denied, 285 Md. 730 (Md. Ct. Spec.
App. 1979).
13
   Id. at 494 (citing Pacific Indem, 488 A.2d 486, 488 (Md. 1985); Truck Ins. Exch. v. Marks
Rentals, Inc., 288 Md. 428, 418 A.2d 1187 (Md. 1980); Gottlieb v. American Auto. Ins. Co., 177
Md. 32, 7 A.2d 182 (Md. 1939)).
14
   Aragona, 378 A.2d at 1348 (Md. 1977)(citing U.S.F. & G. v. Nat. Pav. Co., 228 Md. 40, 178
A.2d 872 (Md. 1962); John Hancock Mut. Life Ins. Co. v. Plummer, 181 Md. 140, 28 A.2d 856
(Md. 1942); C & H Plumbing v. Employers Mut., 264 Md. 510, 287 A.2d 238 (Md. 1972); State
Farm Mutual v. Treas., 254 Md. 615, 255 A.2d 296 (Md. 1969)).
                                               7
of coverage is mandated by this provision and to not do so, would give no effect to
that provision.
      Farm Family counters that the policy does not drop down to cover the gap
between the primary and umbrella policies. In this regard, it argues that the primary
limits of $250,000 must be actually paid before the umbrella policy is triggered. For
this premise, Farm Family relies heavily on what it asserts is a general understanding
regarding obligations of excess and umbrella insurers. With regard to the policy
language, it focuses on Part V of the policy that requires the insured by reference to
the declaration page, to maintain $250,000/$500,000 in primary bodily injury
coverage. Farm Family also focuses on a provision that it argues does not permit
one to waive the recovery of a gap between the amount recovered and the required
primary coverage amount.       Namely, the policy provides that “if the primary
insurance does not provide at least the limits indicated, you will be responsible for
the loss up to the required limits”. In the context of this case, Farm Family asserts
that such language required Mrs. Lankford, or someone on her behalf, to actually
pay the $150,000 gap necessary to trigger Farm Family’s obligation under its
umbrella policy.
  B. The Policy’s provisions, when read as a whole, require Farm Family to
      provide coverage if the insured’s legal liability for damages exceeds
                                   $250,000.

      The parties generally agree that this issue is one of first impression under
Maryland law. As a threshold matter, the Court finds there to be an actual
controversy regarding this policy’s construction. Accordingly, in issuing a
declaratory judgment, the Court must decide the matter as it predicts a Maryland
Court would after applying Maryland law.
      At the outset, the Court recognizes the competing provisions in the policy that
produce the tension at issue. The only way to read these provisions together as a
whole and give effect to each of them, leads to the conclusion that Farm Family’s
                                          8
coverage obligation is conditionally triggered. The policy provides (1) the insured
had the obligation to purchase $250,000 of relevant underlying coverage, and (2) the
consequence if the insured did not purchase that amount. Namely, the consequences
of Mrs. Lankford’s failure is Farm Family’s relief from its duty to indemnify Mrs.
Lankford for damages fixed at less than $250,000. Since the policy provides that
the insured must absorb this gap, the injured parties, as assignees, must likewise
absorb this gap. This will result in a credit of $150,000 toward any damages
ultimately assessed over $100,000 in the tort action. Accordingly, Farm Family’s
obligation to indemnify its insured cannot be determined until final disposition of an
underlying action that fixes the amount of damages.
      Turning to the policy’s language, Part V’s requirement for an amount of
underlying coverage is coupled with a provision that provides the consequence for
not doing so. Namely, Part V expressly provides that if the insured does not obtain
the full amount of coverage, then Farm Family “will only pay for the amount of the
loss which is: 1. [a]bove the required primary insurance limits; and 2. [a]bove any
other insurance collectible for an occurrence.” Accordingly, the plain language of
Part V provides for the contingency at issue. When an insured does not obtain the
required amount of primary insurance, Farm Family need only indemnify the insured
for damages fixed above $250,000.
      This outcome is also consistent with Part IV of the policy. That provision
clearly provides that if the insured obtains less than the required underlying
coverage, then Farm Family must provide indemnity coverage, but only in an
amount as “if its limits had not been less than the limits shown in the declaration
page”. In the unrelated circumstance involving an underlying insurer’s insolvency,
Part IV separately, though consistently provides that if the primary insurer does not
pay the full $250,000, then Farm Family assumes the obligation to pay damages that

                                          9
“exceed the required limits of the primary insurance as shown in the declarations
page.”
         Lastly, the language in the umbrella policy’s declaration page addresses the
same contingency. Namely, it provides that to avoid “gaps” in coverage, the insured
must maintain the minimum limits of liability stated below. “Gap” is not defined in
the policy, but use of that term is consistent with other provisions in the policy. A
gap in coverage would mean coverage before (through whatever primary limits are
available) and after (through the umbrella policy), but not in between. To the extent
one of the parties, or both believe such a construction is not practical, a reading
otherwise would not give force and effect to all terms in the policy.
         The injured parties argue that Part IV requires Farm Family’s coverage
obligation to completely drop down and provide coverage for all damages in excess
of $100,000. In order to give effect to all provisions in the policy, the injured parties’
reading is also incorrect. Namely, the Court must give effect to Part V’s language
imposing the consequence that Farm Family need only provide coverage at a level
equivalent to what would be necessary if the insured obtained the full underlying
coverage. Part IV also recognizes that Farm Family need only pay damages at the
level it would have been required to if the insured fully met her obligations.
         Much of Farm Family’s argument in this case focuses on what it asserts is the
general rule regarding drop down coverage requirements. At the outset, the cases
relied upon by Farm Family are primarily cases involving excess insurance policies
as opposed to umbrella polices. There is a difference. 15 In addition, a “general rule”
and “common understanding” of what triggers an excess policy or an umbrella
policy have never been held to control over the express language of the policy.

15
   See 4 NEW APPLEMAN ON INSURANCE LAW § 24.02[3], at 24-11(Library Ed. 2017)
(explaining that an “umbrella policy differs from an excess policy in a critical aspect: an umbrella
policy typically insures against certain risks that a concurrent primary policy does not . . . An
umbrella policy is thus a “gap filler” . . . by design it provides first dollar coverage where a primary
policy or excess policy does not.”).
                                                  10
       Farm Family references no provision in its policy that provides that a failure
to obtain the listed underlying limits results in umbrella coverage not being
triggered. Nor has the Court located any such provision. Accordingly, the policy
provides that Farm Family’s indemnification obligation is triggered if and when
damages in amounts over $250,000 are assessed through its settlement with the
injured parties or by verdict. In such an event, Farm Family must receive a credit
for any settlement or judgment in the amount of $150,000. Thereafter, Farm Family
must provide up to one million dollars in coverage if warranted by the damages.16
       The Court finds another jurisdiction’s decision in Cincinnati Ins. Co. v.
Franck17 to be informative and persuasive. In Franck, the Court of Appeals of
Minnesota held that an umbrella policy provided coverage when the insured settled
for less than the primary policy limits because there was no language in that policy
that required primary insurance to be exhausted. 18 The Franck court examined
Cincinnati Insurance’s policy and recognized, as here, that there was no policy
language requiring exhaustion of a particular amount of primary insurance. 19                In
such an instance, the Franck court held that the injured party must absorb the gap
between the settlement amount and the primary policy limits identified in the
declaration page. 20 In other words, the Court found that indemnity coverage (1) was
triggered with (2) the umbrella carrier due a credit for the “gap.”
       As in Franck, this case involves injured parties and an insured partially
settling claims for less than the primary policy limits required by the umbrella policy.
This creates a gap between the primary policy and the umbrella policy. The policy

16
   By way of example, if the injured parties’ ultimate recovery were to be $250,000, Farm Family
would provide no additional indemnity coverage. If damages were to become fixed at $1,250,000
or greater, then Farm Family would be required to indemnify Mrs. Lankford with the entire
$1,000,000 policy limits.
17
   644 N.W.2d 471 (Minn. Ct. App. 2002).
18
   Id. at 473.
19
   Id.
20
   Id. at 476.
                                              11
at issue in Franck contained a provision that the “[insurer] will pay only the amount
which is more than the required basic policy limits and more than any other
collectible insurance”, which is substantially similar to Part V of the Farm Family
policy. Part V of Farm Family’s policy, in comparison, provides that “if the
PRIMARY INSURANCE does not provide at least the limits indicated, [the insured]
will be responsible for the loss up to the required limits. [Farm Family] only pays
for the amount of loss which is … above the required PRIMARY INSURANCE
limits.” Moreover, like Maryland, Minnesota law dictates that its courts must
construe insurance policies according to their terms, giving policy language its
ordinary and usual meaning to give effect to the parties’ intent as it appears from the
contract.21 Also, as in Franck, the Farm Family policy at hand contains no policy
language requiring the exhaustion of the underlying policy at a set amount in order
to trigger coverage.
       Farm Family argues that providing coverage in this instance would result in a
significant increase in premiums for umbrella policies. At the outset, Farm Family
drafted the policy and if it was its intent to provide for an exhaustion or trigger
requirement, it should have included a provision requiring it. In any event, enforcing
the provisions of this policy does not markedly change the risk for the insurer. Farm
Family is still due the benefit of the required $250,000 in underlying coverage, but
cannot avoid all obligations under its policy in the absence of language absolving it
from its coverage obligations.
       This Court also finds persuasive the public policy consideration discussed in
Franck regarding whether permitting plaintiffs to settle for less than primary policy
limits would incentivize token settlements. The Franck Court observed that it would
not, because allowing plaintiffs to voluntarily “swallow the gap” between

21
  Id. at 473 (citing Dairyland Ins. Co. v. Implement Dealers Ins. Co., 494 Minn. 236, 244-45, 199
N.W.2d 806, 811 (Minn. 1972)).
                                               12
settlements would be against their own self interests.22 This Court’s decision that
Farm Family is liable for losses exceeding $250,000 does not alter the deal they
bargained for, and would not incentivize insureds to maintain policy limits lower
than those required by umbrella policies or settle with other insurers for less than
policy limits.
       Although both parties agree that this is an issue of first impression in
Maryland, at oral argument, Farm Family argued that two Federal District Court of
Maryland cases addressed similar issues. Both are distinguishable. Neither case
addresses the policy language present in the Farm Family umbrella policy. One of
the two cases involved an excess policy as opposed to an umbrella policy.
       First, Farm Family cites Highlands Ins. Co. v. Gerber Products Co. 23 That
case evaluated an excess insurance policy as opposed to an umbrella policy. Its
general rule that “excess carriers ordinarily are not required to provide drop-down
coverage . . .”24 is not helpful in this case involving an umbrella policy. Furthermore,
Gerber is distinguishable because the policy at issue did not define the underlying
insurance requirement to include that which is “collectible.” 25 The Federal District
Court of Maryland noted that this definition of primary coverage was not present in
the Highlands policy. 26 To the contrary, the Farm Family policy defines primary
insurance as “any insurance collectible by the insured.” Accordingly, “collectible”
is the operative term in the definition of primary insurance, which is in turn plugged
into the balance of the policy without reference to the declaration page’s underlying
coverage amount requirements.

22
   Id. (citing Drake v. Ryan., 514 N.W.2d 785, 789)(Minn. 994)).
23
   702 F. Supp. 109, 112 (D. Md. 1988).
24
   Id. at 112.
25
   Id.
26
   Id. The injured parties also rely on Gerber because it references its policy’s failure to include
references to “collectible insurance” as does Farm Family’s. They argue that this alternatively
makes the policy ambiguous. Since the Court does not find the policy to be ambiguous, it declines
to address this argument.
                                                13
       Second, Farm Family cites the Maryland Federal District Court decision in
McGirt v. Royal Ins. Co. of America27 which is also distinguishable. At the outset,
that decision seemed to acknowledge a general rule that umbrella polices are more
likely to drop down and provide coverage than excess policies.28 In the case at hand,
Farm Family, rather than advocating the general rule for umbrella coverage
discussed in the case it cites, advocates the general rule for excess insurers. Its
argument also does not adequately recognize the Royal Insurance policy language
in that case. Namely, Royal involved a bankruptcy of an underlying carrier, and the
policy contained a provision that specifically addressed the bankruptcy. 29 Though
Farm Family easily could have included language in the policy providing for the
outcome it advocates, there is no language providing anything other than that
indemnity coverage is conditionally triggered in this case if there are sufficient
damages. 30
       Farm Family also cites Comerica Inc. v. Zuric American Insurance Co.31,
Trinity Homes LLC v. Ohio Casualty Co.32 , Kippers Co. v. Aetna Casualty & Surety
Co.33, and Zeig v. Massachusetts Bonding & Insurance Co.34 The Court reviewed
these cases and notes that each of them involve interpretations of polices that
specifically require actual payment of a sum certain before coverage is triggered. In
comparison, Farm Family’s duty to pay is premised upon payment of primary

27
   399 F. Supp. 2d 655 (D. Md. 2005) aff’d in part rev’d in part 207 Fed. Appx. 305 (4th Cir. 2006).
28
   See id. at 667 (recognizing that while it may be true as a general statement of common practice
in the insurance industry that umbrella polices drop down to provide coverage, it is irrelevant in
light of specific policy language that provides to the contrary).
29
   Id.
30
   For instance, had the policy included in the definition of primary insurance a phrase such as,
“and at limits no less than those required in the declaration page”, that revised definition would
have engendered a different outcome. The Court is unable to read such a provision into the
contract, however, and it must give full force and effect to all the policy’s provisions.
31
   498 F. Supp. 2d 1019, 1032 (E.D. Mich. 2007).
32
   629 F.3d 653 (7th Cir. 2010).
33
   98 F.3d 1440 (3d Cir. 1996).
34
   23 F.2d 665 (2nd Cir. 1928).
                                                14
insurance that is “collectible.” These cases do not support the conclusion that given
the language in this policy, actual payment of the coverage referenced in the
declaration page is required to trigger coverage, provided damages are fixed at over
$250,000.
      In summary, the Court does not interpret the umbrella policy to require Farm
Family to be liable for any part of the gap between policies. Mrs. Lankford may
have been personally liable for the gap before the settlement, but there are no terms
in the umbrella policy that require her to actually pay that gap before the umbrella
policy triggers. Farm Family is forced to shoulder no additional risk other than what
it bargained for and drafted into its policy.

                                    IV.    Conclusion
      For the reasons set forth above, the Court declares that, under the clear and
unambiguous terms of the umbrella policy, Farm Family is obligated to pay damages
to the injured parties in amount fixed by any verdict or settlement in an underlying
tort action that exceed $250,000. At that point, Farm Family is obligated to provide
coverage for the damages in that fixed amount, up and until the exhaustion of its one
million dollars in available coverage.
      IT IS SO ORDERED
                                                                 /s/Jeffrey J Clark
                                                                        Judge

                                           15