Great Amer Ins v. Employers Mtl Cas
18 F.4th 486
5th Cir.2021Background
- Underlying accident: Corona employee Gerald Decker, performing tire-collection work for Liberty Tire, lost control of a tractor-trailer, killing Tammy Hill and severely injuring Leslie Stalder; plaintiffs sued Decker, Corona, and Liberty Tire.
- The parties settled the underlying suits for $7,000,000; primary insurers (EMC and Liberty Mutual) paid the first ~$2,668,537.90, leaving $4,331,462.10 in dispute between umbrella insurers Great American and Employers Mutual (EMC).
- Relevant policies: EMC provided a $1M primary auto policy and a $1M EMC umbrella; Liberty Mutual provided a $2M primary auto policy; Great American provided a $30M umbrella for Liberty Tire.
- Dispute: which umbrella had priority and whether Great American could recover contribution from Employers Mutual for settlement funds it paid beyond primary limits.
- District court assumed EMC umbrella had priority but granted summary judgment to Employers Mutual, finding Great American failed to allocate covered vs. non-covered settlement amounts.
- Fifth Circuit held EMC’s umbrella had priority (Great American was the true excess insurer) but reversed summary judgment because Great American’s affidavits created a genuine factual dispute on allocation and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Priority of coverage between umbrella policies | Great American: its umbrella is excess only after other insurance; its "retained limit" makes it true excess (i.e., it pays after others are exhausted) | Employers Mutual: both umbrellas are excess and conflicting "other insurance" clauses require pro rata contribution | Court: Great American umbrella is true excess after all other insurance; EMC umbrella has priority |
| Whether Great American met allocation burden to recover from EMC | Great American: affidavits show covered claims (Corona/Decker and Liberty Tire’s vicarious liability) alone exceeded $7M, so Employers Mutual was responsible at least up to its $1M umbrella limit | Employers Mutual: Great American failed to segregate settlement into covered vs. non-covered portions, so recovery is barred | Court: Great American’s affidavits created a genuine issue of material fact on allocation; summary judgment for EMC was erroneous |
| Admissibility and sufficiency of affidavits (Anderson and Euwema) for allocation | Great American: affidavits based on personal knowledge, discovery, claims, counsel capability, and experience give reasonable basis for allocation | Employers Mutual: affidavits are conclusory and insufficient to establish allocation | Court: affidavits were not merely conclusory, met Rule 56(c)(4), and could support a factfinder’s allocation finding |
| Whether conflicting "other insurance" clauses are mutually repugnant (requiring pro rata contribution) | Great American: policy language shows its umbrella is excess to EMC and not subject to EMC’s limiting "other insurance" clause | Employers Mutual: clauses conflict and are mutually repugnant, so contribution should be pro rata | Court: clauses harmonize under plain language; not mutually repugnant; no pro rata contribution ordered |
Key Cases Cited
- Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., 907 S.W.2d 517 (Tex. 1995) (insurer-policy interpretation follows general contract rules)
- Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738 (Tex. 1998) (court must give effect to parties’ intent in policy construction)
- Tittle v. Enron Corp., 463 F.3d 410 (5th Cir. 2006) (interpret policy as a whole and harmonize provisions)
- Tex. Dep’t of Ins. v. Am. Nat’l Ins. Co., 410 S.W.3d 843 (Tex. 2012) (defines excess insurance — insurer pays after underlying limits are exhausted)
- Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692 (Tex. 2000) (excess insurer’s obligation arises after exhaustion of underlying limits)
- Fiess v. State Farm Lloyds, 392 F.3d 802 (5th Cir. 2004) (covered damages need a "reasonable basis" for allocation, not mathematical precision)
- Satterfield & Pontikes Constr., Inc. v. U.S. Fire Ins. Co., 898 F.3d 574 (5th Cir. 2018) (allocation burden rests with party seeking coverage)
- Am. Int’l Specialty Lines Ins. Co. v. Res‑Care Inc., 529 F.3d 649 (5th Cir. 2008) (types of evidence that can support allocation, e.g., discovery, correspondence, investigative reports)