Amerisure Insurance v. National Surety Corp.
695 F.3d 632
7th Cir.2012Background
- ISF hired Central Steel to perform steel erection; Central Steel procured insurance covering ISF under Scottsdale Umbrella and CGL and ISF under Amerisure and National umbrella/CG policies.
- Colip, a Central Steel employee, was seriously injured at work and Central Steel/S ISF faced vicarious liability; Colip sued ISF and settled for $2.9 million.
- A funding agreement allocated Colip's settlement: Scottsdale paid $1,000,000 from CGL, $950,000 from Umbrella; Amerisure paid $950,000; National initially had no obligation.
- Amerisure and National sued Scottsdale and Central, seeking contribution; Scottsdale counter- and cross-claimed; the district court dismissed Central and awarded Scottsdale $50,000 from Amerisure and $900,000 from National.
- The district court held Scottsdale not obligated to the Umbrella policy; Amerisure and National appeal; this court affirms Scottsdale’s obligation under the policy exclusion.
- The core issue is whether the Scottsdale Umbrella policy’s Cross Liability Exclusion bars funding Colip’s settlement in a suit between insureds, and whether Scottsdale waived or timed its reliance on that exclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cross Liability Exclusion applies to insured-insured claims | Amerisure/National: exclusion does not apply to Colip’s suit | Scottsdale: exclusion applies and bars coverage | Yes; exclusion applies to this insured-insured claim under umbrella policy |
Key Cases Cited
- Indiana Lumbermens Mut. Ins. Co. v. Statesman Ins. Co., 291 N.E.2d 897 (Ind. 1973) (neutral stance to interpret contract terms in insurance disputes)
- Burkett v. American Fam. Ins. Grp., 737 N.E.2d 447 (Ind. Ct. App. 2000) (seek general contract intent; avoid illusory terms)
- Ryerson Inc. v. Federal Ins. Co., 676 F.3d 610 (7th Cir. 2012) (mend the hold does not require pre-suit irrevocable defenses)
- Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357 (7th Cir. 1990) (origin of mend-the-hold concept)
- Miller v. St. Paul Mercury Ins. Co., 683 F.3d 871 (7th Cir. 2012) (moral hazard and cross-liability considerations)
- National Hame & Chain Co. v. Robertson, 161 N.E.851 (Ind. Ct. App. 1928) (mend-the-hold-like considerations in contract disputes)