EMJ Corporation v. Hudson Specialty Insuran
2016 U.S. App. LEXIS 15046
| 5th Cir. | 2016Background
- Westchester insured EMJ through a commercial umbrella; Contract Steel, EMJ’s subcontractor, procured insurance for the project.
- Contract Steel installed a ladder that EMJ accepted; a building inspector was injured falling from the ladder.
- EMJ settled the inspector’s claim for $5 million; EMJ’s primary insurer paid $1 million, Westchester paid $4 million.
- EMJ and Westchester sued Hudson to recover the $4 million; district court ruled for EMJ/Westchester and then reconsidered, apportioning Hudson and Westchester share.
- Hudson challenged coverage, causation, status as an additional insured, and exhaustion of primary insurance; court applied Mississippi law.
- Westchester cross-appealed, arguing true excess status and pro rata allocation between Hudson and Westchester; court ultimately held excess policies were mutually repugnant and ordered pro rata sharing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the inspector’s fall constitutes an occurrence under Hudson’s policy. | Plaintiff (EMJ/Westchester) contends the fall was an occurrence. | Hudson argues the fall was not an occurrence because EMJ’s actions were intentional. | Yes, the fall was an occurrence under Hudson’s policy. |
| Whether EMJ’s actions caused the inspector’s fall. | EMJ’s actions (ladder acceptance) caused the fall. | Causation not proven or too remote. | There was substantial evidence tying the fall to EMJ’s ladder and actions. |
| Whether EMJ was an insured under Hudson’s policy (additional insured). | The inspector falls within EMJ’s scope as an additional insured. | The terms required a direct causal connection to Contract Steel’s operations. | There was a causal connection; EMJ was covered as an additional insured for the inspector’s injuries. |
| Whether EMJ exhausted all primary insurance before Hudson’s excess policy. | Exhaustion was established; no other primary insurance existed. | Exhaustion was not proven or necessary to trigger Hudson. | Exhaustion proven; Hudson must contribute. |
| How to priority and sharing apply when both policies are true excess and mutually repugnant. | Pro rata sharing by limits should apply. | Policies negate contribution and should be treated as true excess; exhaustion rules apply. | Mutually repugnant true excess clauses require pro rata sharing. |
Key Cases Cited
- Architex Ass’n, Inc. v. Scottsdale Ins. Co., 27 So. 3d 1148 (Miss. 2010) (occurrence analysis focuses on intended vs. expected injuries, not the targeted act)
- OmniBank v. U.S. Fid. & Guar. Co., 812 So. 2d 196 (Miss. 2002) (no coverage where insured’s intentional conduct sets in motion the injury)
- Allstate Ins. Co. v. Chicago Ins. Co., 676 So. 2d 271 (Miss. 1996) (mutually repugnant other-insurance clauses; priority framework under Mississippi law)
- Moulton v. Allstate Ins. Co., 464 So. 2d 507 (Miss. 1985) (intentional actions without injury expectation can be occurrences)
- Southern Farm Bureau Cas. Ins. Co. v. Allard, 611 So. 2d 966 (Miss. 1992) (warning shot defense as occurrence when injury not intended)
- City of Carter Lake v. Aetna Cas. & Sur. Co., 604 F.2d 1052 (8th Cir. 1979) (causation/foreseeability standards related to insurance coverage)