Court Opinion

ID: 9712924
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:03:08.686823+00
Date Added: 2024-06-11T18:23:15.312970
License: Public Domain

R.S. Smith, J. (concurring).
I agree with the result reached by the majority, and I agree in part with its reasoning. I think the majority is correct in rejecting a general doctrine of “equitable allocation” between primary and excess insurers. I also agree that, since Fireman’s chose to take over the defense in this case, it is liable under its policy for a fair portion of defense costs. Indeed, I think the facts here would support allocating to Fireman’s more than 50% of the burden, but allocations like this are not an exact science, and the majority’s 50-50 division is not unreasonable.
I differ with the majority, however, in its reliance on the existence of two “coincidental” defense policies. As the majority notes, the terms of Nationwide’s policy and Fireman’s “Business Auto Policy” render the latter “excess” with respect to the former. The relevant language in the Fireman’s Business Auto Policy—“The insurance provided by this policy is excess over any other collectible insurance, whether primary, excess, or contingent”—is on its face equally applicable to defense costs and damages. The majority seems to suggest that, as to defense costs, the Nationwide policy and the Fireman’s Business Auto Policy were both primary, but I see no valid reason for reaching that conclusion.
I believe the Fireman’s “true excess” policy, the “Excess Liability Policy,” provides a sounder basis for compelling Fireman’s to share defense costs. That policy provided nine million dollars in coverage—many times the amount provided by the other two policies. This large exposure obviously furnished the motivation for Fireman’s to assume, as it did, control of the defense of the case.
The Excess Liability Policy also gave Fireman’s the right to defend the case—at its own expense. The policy provided that Fireman’s “will have the right and opportunity, although not the obligation, to associate with the Primary Insurer in. the defense and control of any claim or Suit.” The policy also provided that “[w]ith respect to any claim or Suit of which We *459[Fireman’s] assume charge of the settlement or defense, We will pay . . . All expenses We incur.”
Fireman’s did assume charge of the defense of the Mammano case, and thus it became obligated to pay the expenses it incurred. That did not release Nationwide from its own obligation under the primary policy. Nationwide’s policy excused it from defending claims only “[a]fter the limits of this coverage have been paid,” and I agree with the majority that that never occurred.
Thus, the terms of the Fireman’s Excess Liability Policy and the terms of the Nationwide policy both rendered the insurers liable for defense costs on the facts of this case. It is only these policy clauses that, in my view, make an allocation between the two insurers appropriate.
Chief Judge Kaye and Judges G.B. Smith, Graffeo and Read concur with Judge Ciparick; Judge R.S. Smith concurs in result in a separate opinion in which Judge Rosenblatt concurs.
Order reversed, etc.