Court Opinion

ID: 9745930
Source: CourtListenerOpinion
Date Created: 2023-08-27 13:43:14.372671+00
Date Added: 2024-06-11T07:25:06.402726
License: Public Domain

JUSTICE HALL, dissenting: I respectfully dissent. I believe that the elements of equitable subrogation have been met. Where an insurer seeks reimbursement from another insurer under a theory of equitable subrogation, the insurer must establish that: (1) the defendant insurer is primarily liable to the insured under a policy of insurance; (2) the insurer is secondarily liable to the insured under an insurance policy; and (3) the insurer paid the insured under that policy, thereby extinguishing the debt of the defendant insurer. State Farm General Insurance Co. v. Stewart, 288 Ill. App. 3d 678, 686-87, 681 N.E.2d 625 (1997). Here, the first and second elements are satisfied since it is undisputed that the Home policy is excess and the coverage of the Cincinnati policy is primary as to Allied. The third and final element is satisfied since Home paid $500,000 of the $600,000 settlement, thereby extinguishing the debt owed by Cincinnati, even though Cincinnati’s policy was primary. The majority, however, maintains that pursuant to the analysis set forth in Schal Bovis, Inc. v. Casualty Insurance Co., 315 Ill. App. 3d 353, 732 N.E.2d 1179 (2000), since Home and Cincinnati were not liable to indemnify Allied for the same loss, Home is not entitled to equitable subrogation as a matter of law. I disagree. In Schal Bovis, the reviewing court discussed the endorsement limiting the additional insured’s liability in the context of a claim for equitable contribution, not equitable subrogation. The equitable subrogation and equitable contribution doctrines both pertain to the allocation of costs when there is more than one potentially responsible insurance company, but the two doctrines are based upon “entirely different” concepts. Maryland Casualty Co. v. Nationwide Mutual Insurance Co., 81 Cal. App. 4th 1082, 1088, 97 Cal. Rptr. 2d 374, 377 (2000), citing Fireman’s Fund Insurance Co. v. Maryland Casualty Co., 65 Cal. App. 4th 1279, 1293, 77 Cal. Rptr. 2d 296, 303 (1998). Equitable contribution applies to apportion a loss among insurers that cover the same risk, so that each pays its fair share and one does not profit at the expense of the others. Fireman’s Fund, 65 Cal. App. 4th at 1296, 77 Cal. Rptr. 2d at 306. Conversely, “[e] quit able subrogation allows an insurer that paid coverage or defense costs to be placed in the insured’s position to pursue a full recovery from another insurer who was primarily responsible for the loss.” Maryland Casualty Co., 81 Cal. App. 4th at 1088, 97 Cal. Rptr. 2d at 377. Where different insurers cover different risks and liabilities with respect to the same insured, they may proceed against each other for reimbursement by equitable subrogation rather than equitable contribution. Atlantic Mutual Insurance Co. v. J. Lamb, Inc., 100 Cal. App. 4th 1017, 1043-44, 123 Cal. Rptr. 2d 256, 276-77 (2002); Travelers Casualty & Surety Co. v. American Equity Insurance Co., 93 Cal. App. 4th 1142, 1151, 113 Cal. Rptr. 2d 613, 619-20 (2001). Based upon these principles, I would reverse the summary judgment entered in favor of Cincinnati on count I (equitable subrogation claim) of Home’s complaint.