Court Opinion

ID: 2724891
Source: CourtListenerOpinion
Date Created: 2014-09-08 20:42:41.250958+00
Date Added: 2024-06-11T10:03:06.210098
License: Public Domain

FOR PUBLICATION
ATTORNEYS FOR APPELLANTS:                             ATTORNEYS FOR APPELLEES:
MARK R. SMITH                                         JOSEPH M. DIETZ
Smith Fisher Maas & Howard, P.C.                      ANDREW M. SUMERFORD
Indianapolis, Indiana                                 RICK D. MEILS
Attorney for West Bend Mutual                         WILLIAM M. BERISH
Insurance Company                                     Meils Thompson Dietz & Berish
                                                      Indianapolis, Indiana
ANDREW B. JANUTOLO                                    Attorneys for MacDougall Pierce
JON C. ABERNATHY                                      Construction, Inc.
Goodin Abernathy, LLP
Indianapolis, Indiana                                 STEPHEN J. PETERS
Attorneys for K.B. Electric, LLC                      DAVID I. RUBIN
                                                      Harrison & Moberly, LLP
                                                      Indianapolis, Indiana
                                                      Attorneys     for    Amerisure       Insurance
                                                      Company
                              IN THE
                    COURT OF APPEALS OF INDIANA
                                                                Jun 10 2014, 9:18 am
WEST BEND MUTUAL INSURANCE                 )
COMPANY and K.B. ELECTRIC, LLC,            )
                                           )
     Appellants,                           )
                                           )
           vs.                             )   No. 06A01-1304-CT-162
                                           )
MACDOUGALL PIERCE                          )
CONSTRUCTION, INC., AMERISURE              )
INSURANCE COMPANY, et al.,                 )
                                           )
     Appellees. 1
                                           )
                  APPEAL FROM THE BOONE SUPERIOR COURT
                     The Honorable Matthew C. Kincaid, Judge
                          Cause No. 06D01-1101-CT-45

                                          June 10, 2014

                              OPINION – FOR PUBLICATION2
KIRSCH, Judge

       1
           Because of the number of claims of the various parties, we refer to them as appellants and
appellees in the caption with further explanation of their claims and statuses later in this opinion.
       2
          We held oral argument in this case on March 12, 2014 in the Indiana Court of Appeals
Courtroom in Indianapolis, Indiana. We commend counsel for the quality of their written and oral
advocacy.
      After he sustained serious injuries through electrocution at the site of a

construction project, James Wethington, an employee of K.B. Electric, LLC, filed a

lawsuit against various defendants seeking compensation for his injuries. West Bend

Mutual Insurance Company and K.B. Electric appeal from the trial court’s order, which

disposed of motions for summary judgment, and in which the trial court entered a

declaratory judgment in favor of Amerisure Insurance Company and against West Bend

regarding indemnification clauses and coverage under the available insurance policies.

The following restated issues are presented for our review:

      I.     Whether the trial court erred by granting summary judgment in favor
             of Amerisure and MacDougall Pierce Construction Inc., its insured,
             based upon the following determinations:

                    A. West Bend had the sole primary duty under its
                    Commercial General Liability (“CGL”) policy to
                    defend or indemnify Wal-Mart against Wethington’s
                    claims;

                    B. West Bend had the sole primary duty under its
                    CGL policy to defend or indemnify MacDougall
                    against Wethington’s claims;

                    C. West Bend’s umbrella coverage provided coverage
                    to Wal-Mart and MacDougall with respect to
                    Wethington’s claims;

                    D. West Bend’s Umbrella Policy was primary to
                    Amerisure’s CGL policy for purposes of Wethington’s
                    claims against Wal-Mart and MacDougall;

                    E. K.B. Electric had a duty under a Subcontract’s
                    indemnification provision to defend or indemnify
                    MacDougall against Wethington’s claims; and

                    F. West Bend had a duty under its CGL and umbrella
                    policies to defend or indemnify K.B. Electric against
                    MacDougall’s        third-party   complaint       for
                    indemnification.
                                            2
      II.    Whether the trial court’s determination on the duty to indemnify was
             premature;

      III.   Whether the Subcontract is an insured contract under the Contractors
             Businessowners Policy issued by West Bend to provide CGL
             coverage to K.B. Electric and the Commercial Umbrella Policy
             issued by West Bend to K.B. Electric; and

      IV.    Whether the trial court correctly determined that the anti-subrogation
             rule applies to West Bend’s claims.

      We affirm.

                      FACTS AND PROCEDURAL HISTORY

      On June 26, 2008, Wal-Mart hired MacDougall as the general contractor for the

construction of a Wal-Mart SuperCenter in Lebanon, Indiana (“the Project”).           K.B.

Electric was a subcontractor selected by MacDougall to perform electrical work at the

Project. Wethington was employed by K.B. Electric on June 10, 2009, when he was

injured at the Project site while working in the scope of his employment. Wethington

filed a complaint against various defendants seeking compensation for his injuries, which

were catastrophic.

      The Prime Contract between Wal-Mart, the owner of the property, and

MacDougall consisted of an AIA Document A201-1997 general conditions document,

and included supplementary conditions requiring MacDougall to purchase and maintain,

until full performance of the contract, “[CGL] insurance . . . with minimum limits of

$2,000,000 per occurrence, $3,000,000 general aggregate,” “Umbrella/Excess Liability

Insurance with minimum limits of $5,000,000,” and to name Wal-Mart as an “additional

insured,” on both policies on a “primary” and “noncontributing” basis.                The

Supplementary Conditions provided that MacDougall’s insurance policies could not
                                           3
exclude coverage for Wal-Mart’s independent negligence.

       MacDougall entered into a construction subcontract with K.B. Electric for

electrical work at the Project. Several of the provisions of the Subcontract are relevant to

the issues on appeal and are reproduced here. The Subcontract explicitly refers to the

Prime Contract in paragraph 23, a “flow-down” provision, as follows:

       23. GENERAL CONTRACT:
       To the extent of the work to be performed by [K.B. Electric], [K.B.
       Electric] is bound to [MacDougall] by terms of the contract documents
       between [MacDougall] and [Wal-Mart] and assumes toward [MacDougall]
       all the obligations and responsibilities which [MacDougall], by those
       documents, assumes toward [Wal-Mart] and Architect. All rights of [Wal-
       Mart] and Architect under the contract documents are preserved with
       respect to the work to be performed by [K.B. Electric]. The Subcontract
       consists of (i) this Subcontract Agreement; (ii) the Prime Contract,
       including the Agreement between [Wal-Mart] and [MacDougall] and all
       other Contract documents identified therein, including all Conditions of the
       contract (general, supplementary and special conditions), Drawings,
       Specifications, Addenda issued prior to execution of the Prime Contract
       between [Wal-Mart] and [MacDougall], and other Contract Documents
       listed in the Prime Contract; (iii) other documents identified in this
       Subcontract Agreement; and (iv) changes or modifications to the
       Subcontract issued after execution of this Agreement.
Appellants’ App. at 306.      Paragraph 29 of the Subcontract contains the following

provision:

       29. SUBCONTRACT CONTROLS:
       Where any provision of the contract documents between [Wal-Mart] and
       [MacDougall] are found to be inconsistent with any provision of this
       Subcontract, then this Subcontract shall govern.
Id. at 307.

       K.B. Electric was required under the terms of the Subcontract to obtain, at its sole

expense, and furnish to Wal-Mart and MacDougall, certificates of insurance for CGL

“with a combined Bodily Injury and Property Damage limit of not less than ONE Million

                                             4
($1,000,000.00) dollars per occurrence and in the aggregate,” and to name Wal-Mart and

MacDougall as additional insureds (“AIs”) on a primary non-contributory basis. Id. at

301. Unlike the Prime Contract, the Subcontract did not include a provision explicitly

requiring the purchase of umbrella/excess insurance coverage, and did not include a

prohibition against K.B. Electric’s insurer from excluding coverage for the independent

negligence of Wal-Mart and MacDougall.

      The Subcontract contains two indemnification provisions, which are referred to by

the parties as Paragraph 4 and Paragraph 21. Those indemnification provisions read as

follows:

      4. INSURANCE:
      INSURANCE/HOLD HARMLESS RIDER
      ....
      HOLD HARMLESS:
      To the fullest extent permitted by law, [K.B. Electric] expressly agrees to
      defend (at [K.B. Electric’s] expense and with counsel acceptable to
      [MacDougall]), Indemnify, and hold harmless [Wal-Mart], [MacDougall],
      Architect, Architect’s Consultants, Engineer, Construction Manager,
      Lender and any other parties which [MacDougall] has agreed to indemnify
      as named or referenced in the project contract documents as attached to and
      made a part of this Subcontract, their respective Officers, Directors,
      Shareholders, Employees, Agents, Successors, Affiliates and Assigns from
      and against any and all claims, suits, losses, cause of action, damages,
      liabilities, fines, penalties and expenses of any kind whatsoever, including
      without limitation arbitration or court costs and attorney’s fees, arising on
      account of or in connection with injuries to or the death of any person, or
      any and all damages to property including loss of use, from or in any
      manner connected with the work performed by or for [K.B. Electric] under
      this Subcontract, caused in whole or in part by the presence of the person or
      property or the negligent acts or omissions of [K.B. Electric] or any of its
      Employees, Agents, Representatives, Sub-Subcontractors, or suppliers or
      anyone for whose acts they may be liable, including without limitation such
      claims, damage, loss or expense caused in part by the negligent acts or
      omissions of a party indemnified hereunder. Such obligation shall not be
      construed to negate, abridge or reduce the rights or obligations of indemnity
                                           5
       which would otherwise exist as to a party or person described in the
       Paragraph. The defense and indemnification obligations under this
       Subcontract agreement shall not be restricted in any way by any limitation
       on the amount or type of damages, compensation, or benefits payable by or
       for [K.B. Electric] under workers’ compensation acts, disability benefits
       acts, or other employees of [K.B. Electric] or of any third party to whom
       [K.B. Electric] may subcontract a part or all of the work.
       ....

       21. INDEMNITY:
       A. [K.B. Electric] shall unconditionally indemnify, hold harmless, protect
       and defend [MacDougall], [Wal-Mart], Architect, and all of their agents,
       and employees from and against all claims, damages, losses, liabilities, and
       expenses, including attorneys’ fees, arising out of or resulting from the
       performance of [K.B. Electric’s] work or of other activities or services of
       any kind undertaken by [K.B. Electric], or any other actions taken on or off
       the premises, provided that any such claim, damages, loss liability, or
       expense, (i) is attributable to bodily injury, sickness, disease, or death of
       any person (including employees of [K.B. Electric], indemnities, and the
       third parties), or patent infringement or to injury to or destruction of
       tangible property and (ii) is caused in whole or in part by any negligent or
       wrongful act or omission of [K.B. Electric] or anyone directly or indirectly
       employed by it or anyone for whose acts it may be liable, or is caused by or
       arises out of the use of any products, material, or equipment furnished by
       [K.B. Electric]. [K.B. Electric] shall bear any expense, whether incurred or
       paid by [MacDougall], [Wal-Mart], or the Architect on account of their
       being charged with such liability for any such death, injury, loss or damage,
       including attorney’s fees and court costs in the defense or preparing for the
       defense against such claims or charges. This paragraph shall apply to the
       claims of [K.B. Electric] and its employees against any other subcontractor
       and to the claims of any other subcontractor or its employees against [K.B.
       Electric]. . . .
Id. at 301-06.

       Wethington’s original complaint named Wal-Mart and MacDougall as defendants

alleging that the two negligently (1) failed to supervise and take safety precautions at the

Project site to prevent Wethington from suffering electrocution, (2) failed to duly warn

Wethington of the risk of electrocution because the power was kept on while Wethington

pulled wire for an electric service box, (3) failed to shut down the power to prevent
                                             6
Wethington from suffering electrocution, and (4) chose to leave the electricity on while

Wethington worked in order to save time on completion of the Project. Wethington’s

amended complaint alleged that Wal-Mart was vicariously liable for MacDougall and

K.B. Electric’s conduct, and that Wal-Mart assumed a duty of care to Wethington, among

other allegations. As for MacDougall, the amended complaint alleged that MacDougall

had contractually assumed a non-delegable duty of care such that it was vicariously liable

for K.B. Electric’s conduct, among other allegations.

      At the time of the accident, MacDougall was the named insured under two policies

written by Amerisure.      The CGL policy included bodily injury/property damage

(“BI/PD”) coverage with limits of $1,000,000 per occurrence. The Umbrella Policy

included limits of $10,000,000 per occurrence. K.B. Electric was the named insured

under two policies written by West Bend.        The Contractors Businessowners Policy

included CGL BI/PD coverage with limits of $1,000,000 per occurrence.                 The

Commercial Umbrella Policy had coverage limits of $6,000,000 per occurrence.

      West Bend tendered a defense to Wal-Mart and MacDougall against Wethington’s

complaint and amended complaint pursuant to a reservation of rights under its insurance

policies and demanded that Amerisure participate in the defense of Wal-Mart and

MacDougall against Wethington’s claims. Because Amerisure declined to participate in

the defense efforts, MacDougall filed a third-party complaint against K.B. Electric and

West Bend, and West Bend filed a cross-claim/counterclaim/fourth-party complaint

against MacDougall, Wethington, Wal-Mart, K.B. Electric, and Amerisure. West Bend

defended K.B. Electric against MacDougall’s third-party complaint pursuant to a

reservation of rights under its insurance policies. Ultimately, Wethington settled his
                                            7
claims against Wal-Mart for $50,000.

       MacDougall, West Bend, and Amerisure filed a stipulation of facts and

authenticity of documents with the trial court, and motions for summary judgment were

filed by each. The trial court held oral argument on the parties’ motions and ultimately

issued two orders granting MacDougall’s and Amerisure’s motions, making the

following determinations: (1) West Bend had the sole primary duty under West Bend’s

CGL policy to defend/indemnify Wal-Mart against Wethington’s complaint; (2) West

Bend had the sole primary duty under West Bend’s CGL policy to defend/indemnify

MacDougall against Wethington’s complaint; (3) West Bend’s Umbrella Policy provided

coverage to Wal-Mart and MacDougall against Wethington’s complaint; (4) West Bend’s

Umbrella Policy was primary to Amerisure’s CGL policy for purposes of Wethington’s

suit against Wal-Mart and MacDougall; (5) K.B. Electric had a duty under Paragraph 4 to

defend/indemnify MacDougall against Wethington’s complaint; and (6) West Bend had a

duty under its CGL and Umbrella policies to defend/indemnify K.B. Electric against

MacDougall’s third-party complaint for indemnification. West Bend and K.B. Electric

each filed notices of appeal from the trial court’s orders, and the matters were

consolidated for purposes of appeal.

                            DISCUSSION AND DECISION

                          Summary Judgment Standard of Review

       Our standard of review in appeals from summary judgment is well settled and has

been stated as follows:

       On appeal from a grant of summary judgment, our standard of review is the
       same as that of the trial court. We stand in the shoes of the trial court and
       apply a de novo standard of review. Our review of a summary judgment
                                            8
       motion is limited to those materials designated to the trial court. Summary
       judgment is appropriate only where the designated evidence shows there
       are no genuine issues of material fact and the moving party is entitled to
       judgment as a matter of law. For summary judgment purposes, a fact is
       “material” if it bears on the ultimate resolution of relevant issues. We view
       the pleadings and designated materials in the light most favorable to the
       non-moving party. Additionally, all facts and reasonable inferences from
       those facts are construed in favor of the nonmoving party.
       A trial court’s grant of summary judgment is clothed with a presumption of
       validity, and the party who lost in the trial court has the burden of
       demonstrating that the grant of summary judgment was erroneous. Where a
       trial court enters specific findings and conclusions, they offer insight into
       the rationale for the trial court’s judgment and facilitate appellate review,
       but are not binding upon this court. We will affirm upon any theory or
       basis supported by the designated materials. When a trial court grants
       summary judgment, we carefully scrutinize that determination to ensure
       that a party was not improperly prevented from having his or her day in
       court.
       In this case, the parties filed cross-motions for summary judgment.
       However, the fact that cross-motions for summary judgment were made
       does not alter our standard of review. Instead, the reviewing court must
       consider each motion separately to determine whether the moving party is
       entitled to judgment as a matter of law.
Hammerstone v. Ind. Ins. Co., 986 N.E.2d 841, 845 (Ind. Ct. App. 2013) (internal

citations and quotations omitted).

       In particular, since the parties’ arguments involve contract interpretation, our

standard of review with respect to contracts has been stated as follows:

       In general the construction of a written contract is a question of law for the
       court, making summary judgment particularly appropriate in contract
       disputes. Because the interpretation of a contract presents a question of law
       it is reviewed de novo by this court. When a trial court has entered
       summary judgment in a contract dispute, implicitly it has determined either
       that: 1) the contract is not ambiguous or uncertain as a matter of law and
       the trial court need only apply the terms of the contract; or 2) the contract is
       ambiguous, but the ambiguity may be resolved without the aid of factual
       determinations.
Jenkins v S. Bend Cmty. Sch. Corp., 982 N.E.2d 343, 347 (Ind. Ct. App. 2013) (internal

citations omitted).
                                              9
       More particularly, with respect to insurance contracts the following applies:

       The interpretation of an insurance policy presents a question of law that is
       appropriate for summary judgment. If the language in the policy is
       unambiguous then it should be given its plain and ordinary meaning. But,
       if the language is ambiguous, the policy should be strictly construed against
       the insurer. Finally, the terms of a contract are not ambiguous merely
       because controversy exists between the parties concerning the proper
       interpretation of terms.
Wicker v. McIntosh, 938 N.E.2d 25, 28 (Ind. Ct. App. 2010) (internal citations omitted).

Here, however, we are asked to determine the responsibilities of two insurance

companies. “When, as here, however, the injured party is not the named insured, the

policy is construed from a neutral stance.” Barga v. Ind. Farmers Mut. Ins. Grp., Inc.,

687 N.E.2d 575, 578 (Ind. Ct. App. 1997) (citing Ind. Lumbermens Mut. Ins. Co. v.

Statesman Ins. Co., 260 Ind. 32, 34, 291 N.E.2d 897, 899 (1973)).

                                 Insurance Policy Language

       Both West Bend’s and Amerisure’s CGL policies contain the standard ISO CGL

BI/PD insuring agreement3 requiring the insurer to defend an insured against any “suit”

seeking damages because of “bodily injury” caused by an “occurrence,” and to indemnify

an insured against “those sums that the insured becomes legally obligated to pay as

damages because of ‘bodily injury’ . . . to which this insurance applies.” Id. at 432, 570.

“Occurrence” is defined as “an accident, including continuous or repeated exposure to

substantially the same general harmful conditions.” Id. at 445, 583.

       CGL insurance policies are designed to protect an insured against certain
       losses arising out of business operations. Most CGL policies are written on
       standardized forms developed by an association of domestic property
       insurers known as the Insurance Services Office (“ISO”). Hartford Fire

       3
        Amerisure’s CGL form provides at the bottom of each page “Copyright ISO Properties, Inc.,
2006.” Appellants’ App. at 432-48. West Bend’s CGL form provides at the bottom of each page
“Copyright ISO Properties, Inc., 2006.” Id. at 570-85.
                                               10
       Ins. Co. v. California, 509 U.S. 764, 772, 113 S. Ct. 2891, 125 L. Ed. 2d
612 (1993). “[These] policies begin with a broad grant of coverage, which
       is then limited in scope by exclusions. Exceptions to exclusions narrow the
       scope of the exclusion and, as a consequence, add back coverage.
       However, it is the initial broad grant of coverage, not the exception to the
       exclusion, that ultimately creates (or does not create) the coverage sought.”
       David Dekker, Douglas Green & Stephen Palley, The Expansion of
       Insurance Coverage for Defective Construction, 28 Constr. Law, Fall 2008,
       at 19, 20.
Sheehan Constr. Co., Inc. v. Cont’l Cas. Co., 935 N.E.2d 160, 162 (Ind. 2010) (internal

footnote omitted), opinion adhered to as modified on rehearing by Sheehan Constr. Co.,

Inc. v. Cont’l Cas. Co., 938 N.E.2d 685 (Ind. 2010).

                                  1. Amerisure’s CGL Policy4

       The Contractors General Liability Extension Endorsement defines “insured” to

include “you,” which is defined to include the “Named Insured shown in the

Declarations,” which is MacDougall. Appellants’ App. at 418, 432, 327 (citations to each

term respectively). Amerisure’s “other insurance” clause provides as follows:

       4. Other Insurance
       If other valid and collectible insurance is available to the insured for a loss
       we cover under Coverages A or B of this Coverage Part, our obligations are
       limited as follows:
       a.      Primary Insurance
               This insurance is primary except when Paragraph b. below applies.
       If this insurance is primary, our obligations are not affected unless any of
       the other insurance is also primary. Then, we will share with all that other
       insurance by the method described in Paragraph c. below.
       b.      Excess Insurance
               (1)     This insurance is excess over:
               ....

       4
           Because the trial court determined that Amerisure’s CGL policy was not implicated, we do not
set forth the provisions of Amerisure’s Umbrella policy.
                                                  11
                     (b) Any other primary insurance available to
                     you covering liability for damages arising out of
                     the premises or operations, or the products and
                     completed operations, for which you have been
                     added as an additional insured by attachment of
                     an endorsement.
              (2)     When this insurance is excess, we will have no duty under
              Coverages A or B to defend the insured against any “suit” if any
              other insurer has a duty to defend the insured against that “suit.” If
              no other insurer defends, we will undertake to do so, but we will be
              entitled to the insured’s rights against all those other insurers.
Id. at 442.

       Amerisure’s Contractor’s Blanket Additional Insured Endorsement provides as

follows:

       SECTION II-WHO IS AN INSURED is amended to include as an insured
       any person or organization, called an additional insured in this
       endorsement:
       1. Whom you are required to add as an additional insured under a written
       contract or agreement relating to your business; or
       2. Who is named as an additional insured under this policy on a certificate
       of insurance.
       However, the written contract, agreement or certificate of insurance must
       require additional insured status for a time period during the term of this
       policy and be executed prior to the “bodily injury” . . . . giving rise to a
       claim under this policy.
       ....
       The insurance provided to the additional insured is limited as follows:
       1.     That person or organization is only an additional insured with
       respect to liability arising out of:
       ....
              (b)     Your ongoing operations performed for that additional
              insured, unless the written contract or agreement or the
              certificate of insurance requires “your work” coverage (or
              working to the same effect) in which case the coverage
              provided shall extend to “your work” for that additional
              insured.

                                            12
       ....
       Any coverage provided in this endorsement is excess over any other valid
       and collectible insurance available to the additional insured whether
       primary, excess, contingent, or on any other basis unless the written
       contract, agreement or certificate requires that this insurance be primary, in
       which case this insurance will be primary without contribution from such
       other insurance available to the additional insured.
Id. at 407-08.

                                 2. West Bend’s CGL Policy

       West Bend’s CGL Policy contains an Additional Insured-Contractor’s Blanket

Endorsement which provides as follows:

       A. WHO IS AN INSURED (Section II) is amended to include as an
       additional insured any person or organization whom you are required to add
       as an additional insured on this policy under a written contract or written
       agreement.
       The written contract or agreement must be:
                 1.     Currently in effect or becoming effective during the
                 term of this policy; and
                 2.   Executed prior to the “bodily injury,” “property
                 damage,” “personal injury and advertising injury.”
       B. The insurance provided to the additional insured is limited as follows:
                 1. That person or organization is only an additional insured
                 with respect to liability arising out of:
                       a. Your premises;
                       b. “Your work” for that additional insured; or
                       c. Acts or omissions of the additional insured in
                       connection with the general supervision of “your
                       work.”
                 2. The Limits of Insurance applicable to the additional
                 insured are those specified in the written contract or written
                 agreement or in the Declarations of this policy, whichever is
                 less. These Limits of Insurance are inclusive and not in
                 addition to the Limits of Insurance shown in the Declarations.

                                              13
                 3. Except when required by written contract or written
                 agreement, the coverage provided to the additional insured by
                 this endorsement does not apply to:
                 ....
                        b. “Bodily injury” or “property damage”
                        arising out of acts or omissions of the additional
                        insured other than in connection with the
                        general supervision of “your work.”
       C. As respects the coverage provided under this endorsement, Paragraph
       4.b.  SECTION        IV-COMMERCIAL          GENERAL       LIABILITY
       CONDITIONS is amended with the addition of the following:
                 4. Other insurance
                        b. Excess insurance
                        This insurance is excess over:
                        Any other valid and collectible insurance
                        available to the additional insured whether
                        primary, excess, contingent or on any other
                        basis unless a written contract specifically
                        requires that this insurance be either primary or
                        primary and noncontributing. Where required
                        by written contract, we will consider any other
                        insurance maintained by the additional insured
                        for injury or damage covered by this
                        endorsement to be excess and noncontributing
                        with this insurance.
                        When this insurance is excess, as a condition of
                        coverage, the additional insured shall be
                        obligated to tender the defense and indemnity of
                        every claim or suit to all other insurers that may
                        provide coverage to the additional insured,
                        whether on a contingent, excess or primary
                        basis.
Id. at 559-60.

                               3. West Bend’s Umbrella Policy

       West Bend’s Umbrella Policy contains a BI/PD insuring agreement, which in

pertinent part reads as follows:

                                               14
       We will pay on behalf of the insured the “ultimate net loss” in excess of the
       “retained limit” because of “bodily injury” or “property damage” to which
       this insurance applies. We will have the right and duty to defend the
       insured against any “suit” seeking damages for such “bodily injury” or
       “property damage” when the underlying insurance does not provide
       coverage or the limits of “underlying insurance” have been exhausted . . . .
Id. at 628. The Umbrella Policy defines “insured” to include:

       3. Any additional insured under any policy of “underlying insurance” will
       automatically be an insured under this insurance.
       If coverage provided to the additional insured is required by a contract or
       agreement, the most we will pay on behalf of the additional insured is the
       amount of insurance required by the contract, less any amounts payable by
       any “underlying insurance.”
       Additional insured coverage provided by this insurance will not be broader
       than coverage provided by the “underlying insurance.”
Id. at 637.

       The Umbrella Policy defines “underlying insurance” as “any policies of insurance

listed in the Declarations under the Schedule of ‘underlying insurance.’” Id. at 644.

West Bend’s CGL policy is the only CGL policy listed in the schedule of underlying

insurance. West Bend’s Umbrella Policy contains an “other insurance” clause, which

reads as follows:

       a. This insurance is excess over, and shall not contribute with any of the
       other insurance, whether primary, excess, contingent or on any other basis.
       This condition does not apply to insurance specifically written as excess
       over this Coverage Part.
       When this insurance is excess, we will have no duty under Coverages A or
       B to defend the insured against that “suit.” If no other insurer defends, we
       will undertake to do so, but we will be entitled to the insured’s rights
       against all those other insurers.
Id. at 639.

                              4. Both West Bend Policies

       Pertinent to the issue of West Bend’s duty to defend/indemnify its insured, K.B.

                                            15
Electric, against MacDougall’s third-party complaint for indemnification, West Bend

contends that its CGL and Umbrella Policies limit application to an “insured” to include,

in part, “you” the “Named Insured shown in the Declarations,” which is K.B. Electric.

Id. at 570, 605. Both policies also contain a “contractual liability” exclusion which reads

as follows:

       2.     Exclusions
              This insurance does not apply to:
              ....
              b. Contractual Liability
              “Bodily injury” or “property damage” for which the insured is
              obligated to pay damages by reason of the assumption of liability in
              a contract or agreement. This exclusion does not apply to liability
              for damages:
              (1) That the insured would have in the absence of the contract or
              agreement; or
              (2) Assumed in a contract or agreement that is an “insured
              contract”, provided the “bodily injury” or “property damage” occurs
              subsequent to the execution of the contract or agreement. Solely for
              the purposes of liability assumed in an “insured contract,”
              reasonable attorney fees and necessary litigation expenses incurred
              by or for a party other than an insured are deemed to be damages
              because of “bodily injury” or “property damage,” provided:
              (a) Liability to such party for, or for the cost of, that party’s defense
              has also been assumed in the same “insured contract”; and
              (b) Such attorney fees and litigation expenses are for defense of that
              party against a civil or alternative dispute resolution proceeding in
              which damages to which this insurance applies are alleged.
Id. at 571, 629.

       Both West Bend policies include an “employer’s liability” exclusion that provides

the following:

       g.     Employer’s Liability

                                             16
       “Bodily injury” to:
       (1) An “employee” of the insured arising out of and in the course of:
               (a) Employment by the insured; or
               (b) Performing duties related to the conduct of the insured’s
               business; or
       (2) The spouse, child, parent, brother or sister of that “employee” as a
       consequence of Paragraph (1) above.
       This exclusion applies whether the insured may be liable as an employer or
       in any other capacity and to any obligation to share damages with or repay
       someone else who must pay damages because of the injury.
       This exclusion does not apply to liability assumed by the insured under an
       “insured contract.”
Id. at 571, 630.5

       The “insured contract” definitions that appear in West Bend’s policies, read as

follows:

       That part of any other contract or agreement pertaining to your business
       (including an indemnification of a municipality in connection with work
       performed for a municipality) under which you assume the tort liability of
       another party to pay for “bodily injury” or “property damage” to a third
       person or organization. Tort liability means a liability that would be
       imposed by law in the absence of any contract or agreement.
Id. at 582, 641.

                                         Indemnification

       MacDougall argues that the trial court correctly decided the issue of

indemnification and that the resolution of the issue was not premature. West Bend, on

the other hand, argues that the trial court’s decision was premature because Wethington’s

claims against MacDougall had not yet been resolved.                Assuming for the sake of

argument that the duty-to-indemnify issue was ripe, West Bend argues that the trial court

       5
         West Bend’s Umbrella policy has additional language at the end of the exclusion that is not
reproduced here.
                                                17
should have allocated Wethington’s claims against MacDougall between the two

insurers, with Amerisure having the sole duty to provide coverage for MacDougall

regarding Wethington’s independent negligence claims, other than negligent supervision,

and West Bend having the primary duty to provide coverage for MacDougall against the

balance of Wethington’s claims. Essentially, West Bend offers its own construction of

the Subcontract’s indemnification provisions, paragraph 4 and paragraph 21, claiming

that the contract is ambiguous because the provisions cannot be harmonized.

      Assuming that West Bend has standing to challenge the provisions of the Prime

Contract and the Subcontract, in Weaver v. American Oil Co., 261 N.E.2d 99, 102-03

(Ind. Ct. App. 1970), modified by Weaver v. American Oil Co., 262 N.E.2d 663 (Ind. Ct.

App. 1970), superseded by Weaver v. American Oil Co., 257 Ind. 458 (1971), a panel of

this court explained the distinction between exculpatory clauses and indemnity clauses.

      Exculpatory clauses and indemnity clauses are to be distinguished. An
      exculpatory clause covers the risk of harm sustained by the exculpator that
      might be caused by the exculpatee. It acts to deprive the exculpator of his
      right to recover damages for such harm. That is to say, an exculpatory
      clause acts to release the exculpatee from liability for any future acts of
      negligence by the exculpateee [sic] which might result in harm to the
      exculpator.
      On the other hand, an indemnity clause covers the risk of harm sustained by
      third persons that might be caused by either the indemnitor or the
      indemnitee and acts to effect a shift of the financial burden for the ultimate
      payment of damages from the indemnitee to the indemnitor. It will be
      observed that the clause in question is both an indemnity and exculpatory
      clause. That is, as to liability to third persons, the clause effects a change in
      the person who ultimately must pay for damage from the indemnitee
      (American Oil) to the indemnitor (Weaver) and his insurer, if any, and is in
      that respect an indemnity clause. However, the clause also deprives the
      lessee Weaver of his right to recover damages for harm suffered due to
      negligent acts of lessor American Oil and in that respect is an exculpatory
      clause. Since the rights here considered are those of the contracting parties
      and not those of a third party, we are concerned only with the exculpatory

                                             18
      aspects of the hold harmless clause, which, if enforceable, deprives Weaver
      of any right to recover for damages suffered because of negligent acts of
      American Oil.
      An indemnity clause imposes no unusual burden on an indemnitor because
      of the availability and general use of standard liability insurance policies
      which afford protection from the risk of liability to third persons. Because
      an indemnity clause covers the risk of harm sustained by third persons, if
      the indemnitor carries appropriate liability insurance, damages for the harm
      suffered due to the negligence of either the indemnitor or the indemnitee
      are paid by the indemnitor’s insurance company. Thus, in the indemnity
      situation the availability and general use of insurance renders manageable
      the indemnity risk by treating as a unit the combined risk arising from
      multiple ventures of this type.
      The burden assumed under an exculpatory clause, however, is unusual and
      considerable. Liability insurance offers no protection to an exculpator
      because such insurance only affords protection from liability to third
      persons. Because the exculpator has agreed to release the exculpatee from
      liability for any of the exculpatee’s future acts of negligence, the exculpatee
      can negligently cause the exculpator severe injury yet avoid his otherwise
      fixed legal responsibility to compensate the exculpator.
Additionally, we restate the differences between agreements to indemnify and

agreements to insure.

      Absent prohibitive legislation, no public policy prevents parties from
      contracting as they desire. Hagerman [Constr. Co. v. Long Elec. Co.], 741
N.E.2d at 392. For instance, in Indiana, a party may contract to indemnify
      another for the other’s own negligence. Id. However, this may only be
      done if the party knowingly and willingly agrees to such indemnification.
      Id. Such provisions are strictly construed and will not be held to provide
      indemnification unless it is so stated in clear and unequivocal terms. Id.
      We disfavor indemnification clauses because we are mindful that to
      obligate one party for the negligence of another is a harsh burden that a
      party would not lightly accept. Id.
      This court has followed a two-step analysis to determine whether a party
      has knowingly and willingly accepted this burden. Id. See also Exide
      [Corp. v. Millwright Riggers, Inc.], 727 N.E.2d at 480; Moore Heating &
      Plumbing, Inc. v. Huber, Hunt & Nichols, 583 N.E.2d 142, 146 (Ind. Ct.
      App. 1991). First, the indemnification clause must expressly state in clear
      and unequivocal terms that negligence is an area of application where the
      indemnitor (in this case, Starnes) has agreed to indemnify the indemnitee
      (in this case, GKN). See Hagerman, 741 N.E.2d at 392. The second step
      determines to whom the indemnification clause applies. Id. Again, in clear
                                            19
       and unequivocal terms, the clause must state that it applies to
       indemnification of the indemnitee by the indemnitor for the indemnitee’s
       own negligence.
GKN Co. v. Starnes Trucking, Inc., 798 N.E.2d 548, 552 (Ind. Ct. App. 2003).

       In contrast, an agreement to insure is an agreement to provide both parties
       with the benefits of insurance regardless of the cause of the loss (excepting
       wanton and willful acts). Indiana Erectors, Inc. v. Trustees of Indiana
       University, 686 N.E.2d 878, 880 (Ind. Ct. App. 1997), reh’g denied. An
       agreement to insure differs from an agreement to indemnify in that, with an
       agreement to insure, the risk of loss is not intended to be shifted to one of
       the parties, but is instead intended to be shifted to an insurance company.
       Id. Neither party intends to assume a potential liability because both are
       demonstrating appropriate business foresight in avoiding liability by
       allocating it to an insurer. Id. Therefore, standard rules of contract
       interpretation apply to insurance agreements, rather than the strict
       construction given to self-indemnification clauses. See, e.g., Eli Lilly &
       Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985) (“Generally, in
       Indiana, contracts for insurance are subject to the same rules of
       interpretation as are other contracts.”). Consequently, because we examine
       indemnity provisions and insurance provisions using different levels of
       scrutiny, our determination that the indemnification provisions in the
       contracts at issue are invalid does not also automatically void the insurance
       clauses.
Exide Corp. v. Millwright Riggers, Inc., 727 N.E.2d 473, 482 (Ind. Ct. App. 2000).

       Here, West Bend contends that because Paragraph 4 requires K.B. Electric to

indemnify Wal-Mart and MacDougall for their own acts of negligence, but Paragraph 21

is silent on the point, the two provisions are in conflict, are ambiguous, and that

construing the Subcontract against its drafter, MacDougall, Paragraph 21 controls.

Therefore, K.B. Electric would not be required to indemnify MacDougall for its own

negligence. Paragraph 21 of the Subcontract would not be an insured contract under

West Bend’s policy, and thus, West Bend and Amerisure would be required to divide the

responsibility for providing coverage for Wethington’s claims, with West Bend having

responsibility for vicarious liability claims only, and Amerisure having responsibility for

                                            20
acts of independent negligence.

       In Dixon v. CertainTeed Corp., 944 F. Supp. 1501 (D. Kan. 1996), the court was

asked, among other things, to interpret the indemnification provisions of a construction

contract with respect to the negligence claims of a construction worker who was injured

at a worksite in the course and scope of his employment. The construction contract

contained five indemnification clauses, two of which were pertinent to the issues on

appeal. The contractor claimed that the two indemnification clauses were in conflict

because one required the contractor to indemnify the owner for the owner’s acts of

negligence and the other provision was silent on the point. The CertainTeed court found

the indemnification provisions to be unambiguous. “Ambiguity does not arise from total

omission. It arises when application of pertinent rules of interpretation to an instrument

as a whole fails to make certain which one of two or more meanings is conveyed by the

words employed by the parties.” 944 F .Supp. at 1506 (quoting Wood v. Hatcher, 199
Kan. 238, 242, 428 P.2d 799, 803 (1967)). The court found that the “meaning conveyed

by these two unrelated sections of the contract is clear to the court—that the [contractor]

was to indemnify [the owner] for its own negligence, so long as the loss was not caused

by the sole negligence of [the owner].” Id.

       The reasoning of the CertainTeed court applies here, and we reject West Bend’s

argument that the inclusion of language in Paragraph 4 and omission of that language in

Paragraph 21 creates an ambiguity in the Subcontract such that West Bend is not

primarily responsible for providing coverage for Wethington’s claims. What is clear

from the wording of the Subcontract is that K.B. Electric was required to indemnify Wal-

Mart and MacDougall, and that West Bend, as K.B. Electric’s insurer, was required to
                                              21
provide coverage if the loss was a covered loss.

      Furthermore, MacDougall filed its third-party complaint to enforce the

indemnification provisions under Paragraph 4, not Paragraph 21. The scope of Paragraph

21 explicitly states, “This paragraph shall apply to the claims of [K.B. Electric] and its

employees against any other subcontractor and to the claims of any other subcontractor or

its employees against [K.B. Electric].”      Appellants’ App. at 306.      Wal-Mart and

MacDougall are not subcontractors subject to the conditions of that paragraph.

      We also disagree with West Bend’s contention that the trial court’s decision on the

indemnification issue was premature. West Bend argues that since K.B. Electric was not

required by the express terms of the Subcontract to obtain umbrella insurance coverage,

Amerisure’s CGL policy should come into play first, citing to Indiana’s adoption of the

horizontal exhaustion rule. See e.g., Monroe Guar. Ins. Co. v. Langreck, 816 N.E.2d 485,

493-94 (Ind. Ct. App. 2004) (“pro rata rule . . . applies only with respect to two primary

insurance policies with competing ‘other insurance’ clauses.”).

      In Wal-Mart Stores Inc. v. RLI Ins. Co., 292 F.3d 583 (8th Cir. 2002), the United

States Court of Appeals for the Eighth Circuit considered the issue of the priority of

payment where both the supplier and retailer had available primary liability insurance,

the supplier had excess insurance, and the supply contract between the two contained an

indemnification provision. While addressing the circular litigation issue recognized by

Judge Learned Hand in Maryland Casualty Co. v. Employers Mutual Liability Insurance

Co. of Wisconsin, 208 F.2d 731, 733 (2nd Cir. 1953), the Eight Circuit first examined the

“other insurance” provisions of the primary insurance policies, but then concluded that a

decision on that basis would lead to circular litigation. Instead, the court held that the
                                            22
outcome of the dispute was controlled by the indemnification agreement. 292 F.3d at

587.

       In the process of reaching that determination, the court first examined the

relationships between the parties and the validity of the promise to indemnify. Next, the

court considered the effect of making a covered insured liable to its insurers for covered

losses. The third consideration was the inevitable circular litigation that would result if

the indemnification agreements were not factored into the resolution of the insurance-

allocation issues. “A leading commentator summarizes this situation by observing that

‘an indemnity agreement between the insureds or a contract with an indemnification

clause . . . may shift an entire loss to a particular insurer notwithstanding the existence of

an ‘other insurance’ clause in its policy.” Id. at 588 (quoting Couch on Insurance,

§219:1, at 2:19-7 (3d ed. 1999)).

       The court noted case law observing that the contract between the insureds required

the insurance arrangements at issue, and stated, “[I]n a suit between two insurers with

identical and dueling ‘other insurance’ clauses, the indemnity agreement was held to be

paramount.”    Id. at 590.    “To hold otherwise would render the indemnity contract

between the insureds completely ineffectual and would obviously not be a correct result,

for it is the parties’ rights and liabilities to each other which determine the insurance

coverage; the insurance coverage does not define the parties’ rights and liabilities one to

the another [sic].” Id. (Chubb Ins. Co. of Canada v. Mid-Continent Cas. Co., 982 F.

Supp. 435, 438 (S.D. Miss. 1997)). “Whether the parties are termed ‘primary’ or ‘excess’

depends on who is required to pay first, and that is the question presented here. The

answer to this question, however, depends on the indemnity agreement because of its
                                             23
effect on the obligations of the parties.” Id. “However, because the liability of an insurer

is a question of contract stemming from its contractual obligation to cover its insured’s

liabilities, the logical first step is to determine the respective obligations of the insureds in

this case under the settlement. Once that is determined, we must decide how much of the

settlement amount to allocate to each party[] . . . . Only after completing these initial

steps do we determine the insurers’ respective obligations to cover the settlement

liability.” St. Paul Fire and Marine Ins. Co. v. Am. Intern. Specialty Lines Ins. Co., 365
F.3d 263 (4th Cir. 2004).

       Here, the trial court correctly chose to consider the parties’ rights and liabilities to

each other, which then lead to a determination on the coverage issue. West Bend’s CGL

policy should be utilized to provide coverage first. West Bend concedes that if Paragraph

4 controls, then it must provide the required coverage, because the Subcontract would be

an insured contract under West Bend’s policy. West Bend attempts to avoid payment of

Wethington’s claims by way of the Umbrella Policy by arguing that the Subcontract did

not explicitly require K.B. Electric to obtain umbrella coverage.

       West Bend argues that the trial court erred when it held that West Bend had a duty

to defend and indemnify Wal-Mart and MacDougall against Wethington’s claims

pursuant to West Bend’s Umbrella Policy. AI coverage under West Bend’s Umbrella

Policy is available only if it is required by a contract or an agreement. Because the

Subcontract did not require K.B. Electric to purchase an Umbrella Policy or name

MacDougall as an AI in the Umbrella Policy, K.B. Electric’s contractual obligation to

purchase insurance was fulfilled by purchasing the CGL policy.

       West Bend also claims that the Subcontract’s “flow-down” clause only applies to
                                               24
the scope, quality, character and manner of work to be performed by K.B. Electric, and

not to the insurance coverage obligations. West Bend asserts that since the Subcontract

required $1,000,000 in liability insurance, and West Bend’s Umbrella Policy reduces the

maximum amount that it will be liable for on behalf of an AI by the amount of the

underlying insurance, the result would leave $0 payable under West Bend’s Umbrella

Policy. West Bend contends that the trial court should have held that West Bend had no

duty to defend/indemnify Wal-Mart and MacDougall under the Umbrella Policy. We

disagree.

       K.B. Electric was required to and did obtain umbrella coverage through West

Bend. Even though the Subcontract does not explicitly state that K.B. Electric must

obtain umbrella coverage, the concept of “flow-down” required K.B. Electric to

undertake and assume toward MacDougall all of the obligations and responsibilities

MacDougall undertook with respect to Wal-Mart and the Architect. This is so because

the Subcontract expressly states that it consists not only of the Subcontract itself, but the

Prime Contract and the general, supplementary, and special conditions thereof.

       In further support of that conclusion, K.B. Electric’s conduct reflects that it

understood that the concept of “flow-down” applied not only to the scope of work, but

also to its insurance obligations. The Prime Contract required MacDougall to obtain

$5,000,000 in umbrella coverage. Although not explicitly required to do so by the terms

of the Subcontract, K.B. Electric obtained from West Bend $6,000,000 in umbrella

coverage. The umbrella coverage permitted West Bend to subtract the amount of any

underlying insurance from the umbrella coverage limits. K.B. Electric’s CGL policy had

$1,000,000 limits. Thus, K.B. Electric had $5,000,000 in available umbrella policy
                                             25
coverage, which was consistent with MacDougall’s obligations under the Prime Contract.

       We conclude that the trial court correctly granted summary judgment in favor of

Amerisure and MacDougall.        The parties’ rights and liabilities to each other were

outlined contractually by the terms of indemnification. Once that determination was

made, then the insurance coverage issues could be resolved. Thus, the trial court’s

decision on indemnification was not premature, but in fact, necessary to prevent the

hazards of circular litigation. The Subcontract explicitly referred to the Prime Contract

and other documents, incorporating their terms into the Subcontract. That K.B. Electric

obtained umbrella coverage from West Bend further evinces the understanding that K.B.

Electric was required to do just that. Therefore, the trial court’s judgment was correct in

all respects.

       Affirmed.

FRIEDLANDER, J., and BAILEY, J., concur.

                                            26