Hartford Casualty Insurance Company v. American Alternative Insurance Corporation
1:14-cv-00856
E.D. Cal.Apr 22, 2015Background
- On Feb. 24, 2012 Angie Chavez (driving a 2007 Toyota Camry for Community Hospice) made a U-turn and struck and killed motorcyclist John Thatcher; wrongful-death suit followed.
- Four potentially applicable policies: Hartford — Personal Auto ($250,000) and Personal Umbrella ($1,000,000); AAIC — Commercial Auto ($1,000,000) and Commercial Umbrella ($5,000,000).
- Parties stipulated to the material facts and filed cross-motions for summary judgment seeking a declaratory judgment on priority of payment.
- Hartford sought priority order: (1) Hartford auto ($250,000); (2) AAIC auto ($1,000,000); (3) Hartford and AAIC umbrellas pro rata over $6,000,000 (Hartford 1/6, AAIC 5/6).
- AAIC argued Hartford’s auto and umbrella are effectively one policy (common policy number) and relied on GuideOne (vicarious liability allocation), or alternatively various other common-law other-insurance allocations.
- Court resolved all issues as a matter of law under California law: Hartford auto is primary under Cal. Ins. Code §11580.9(d); AAIC’s vicarious-liability/GuideOne argument inapplicable; excess policies ranked per their other-insurance clauses.
Issues
| Issue | Plaintiff's Argument (Hartford) | Defendant's Argument (AAIC) | Held |
|---|---|---|---|
| Which policy is primary under Cal. Ins. Code §11580.9(d)? | Hartford: its auto policy describes the owned vehicle and is therefore primary. | AAIC: acknowledges Hartford auto describes vehicle but urges different ordering based on other contentions. | Hartford auto is primary ($250,000). |
| Are Hartford’s auto and umbrella policies a single policy (affecting priority)? | Hartford: policies are separate (different titles, pagination, premiums, umbrella lists auto as underlying). | AAIC: common policy number shows they are one policy, so umbrella should exhaust before AAIC auto. | Policies are separate; common number insufficient to merge them. |
| Does GuideOne vicarious-liability rule change allocation (make employer-only insurer pay last)? | Hartford: GuideOne does not apply because both Chavez and Community Hospice are insureds under all policies, so vicarious rule is inapposite. | AAIC: relies on GuideOne analogy to exhaust all employee coverage before employer-only coverage. | GuideOne inapplicable; vicarious-liability rule does not alter priority here. |
| How to allocate among the three excess policies? | Hartford: AAIC auto is incidental excess and should follow Hartford auto; umbrellas are true excess and should share pro rata after underlying excesses. | AAIC: proposes ordering putting Hartford umbrella before AAIC auto or an alternative prorated split between Hartford umbrella and AAIC auto. | AAIC auto is incidental excess (pays after Hartford auto) and the two umbrellas are true excess; umbrellas share pro rata over combined $6M (Hartford 1/6, AAIC 5/6). |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard) (establishes genuine-dispute standard for Rule 56)
- Sequoia Ins. Co. v. Hartford Accident & Indem. Co., 211 Cal. App. 3d 1285 (1989) (interpreting primary vs. excess and "other insurance" rules)
- GuideOne Mut. Ins. Co. v. Utica Nat. Ins. Grp., 213 Cal. App. 4th 1494 (2013) (vicarious-responsibility allocation; employer-only insurer contributes after employee coverage exhausted)
- Olympic Ins. Co. v. Employers Surplus Lines Ins. Co., 126 Cal. App. 3d 593 (1981) (true excess policies are excess over other collectible insurance)
- Continental Ins. Co. v. Lexington Ins. Co., 55 Cal. App. 4th 637 (1997) (distinguishing primary-type policies from specific-excess policies for priority determination)