AIG Premier Insurance v. RLI Insurance
2011 U.S. Dist. LEXIS 107311
| M.D. Fla. | 2011Background
- This is a declaratory judgment action about umbrella policies covering a motor vehicle collision with underlying Geico limits of $300,000.
- The Johnsons settled the underlying bodily injury claim for $750,000; Geico paid its $300,000 limit and RLI funded $450,000 remaining with reservation of reimbursement rights.
- AIG issued a Group Personal Umbrella policy for PwC principals; RLI issued a Personal Umbrella policy for Kenneth Johnson; both policies contain excess/other insurance clauses.
- AIG seeks declaratory relief that it has no duty to contribute; RLI seeks pro rata contribution or exhaustion of the AIG policy before contribution.
- Choice-of-law disputes arise: AIG argues New York law governs the AIG policy while RLI argues Florida law governs both policies; the court addresses which law applies and how the excess clauses operate.
- The court ultimately holds that both policies are mutually repugnant and require ratable pro rata contribution under either Florida or New York law, resulting in AIG paying $375,000 and RLI $75,000 of the $450,000 settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What law governs the AIG policy execution? | AIG argues New York law governs. | RLI argues Florida law governs the AIG policy. | New York law governs the AIG policy. |
| What law governs the RLI policy execution? | AIG contends Florida law governs the RLI policy. | RLI contends Florida law governs the RLI policy. | Florida law governs the RLI policy. |
| Are the other-insurance clauses mutually repugnant under Florida or New York law? | AIG argues mutual repugnancy should apply to cancel the clauses. | RLI argues there is no distortion and ratable contribution is appropriate. | Yes; the clauses are mutually repugnant under both Florida and New York law. |
| What is the applicable method of contribution for the settlement under the two policies? | AIG asserts its excess clause makes it non-contributing until exhaustion. | RLI asserts ratable contribution or exhaustion depending on law. | Ratable contribution applies; AIG must reimburse $375,000 and RLI $75,000. |
Key Cases Cited
- Lumbermens Mut. Cas. Co. v. Allstate Ins. Co., 435 N.E.2d 953 (N.Y. 1980) (mutual repugnancy rule when other-insurance clauses exist)
- LiMauro v. State Farm Fire & Casualty Co., 492 N.Y.S.2d 534; 482 N.E.2d 13 (N.Y. 1985) (ratable contribution unless distortion of policy terms)
- Allstate Ins. Co. v. Exec. Car & Truck Leasing, Inc., 494 So.2d 487 (Fla. 1986) (Florida recognizes mutual repugnancy of excess clauses)
- Beane v. Beane, 385 So.2d 1087 (Fla. 4th DCA 1980) (illustrates Beane’s analysis of excess/umbrella interplay)