Ohio Casualty Insurance Co. v. Unigard Insurance Co.
2012 UT 1
| Utah | 2012Background
- Ohio Casualty insured Cloud Nine from June 10, 2001 to June 10, 2002; Unigard insured Cloud Nine from December 12, 2002 to December 12, 2005.
- Edizone sued Cloud Nine in federal court for injuries spanning the end of Ohio Casualty’s policy and the duration of Unigard’s policy.
- The district court allocated defense costs equally between Ohio Casualty and Unigard under the other-insurance clause and Utah law; Ohio Casualty appealed.
- The Tenth Circuit certified whether the defense costs should be allocated by the equal-shares method under the other-insurance clause or by a time-on-risk method (as in Sharon Steel) given successive policies.
- This Court held that the other-insurance clauses do not apply to successive insurers and defense costs should be apportioned by a modified time-on-risk method, including any costs attributable to periods of noncoverage.
- Cloud Nine’s uninsured gap occurred from June 10, 2002 to December 12, 2002, during which neither insurer provided coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How should defense costs be allocated between Ohio Casualty and Unigard? | Ohio Casualty urges time-on-the-risk (Sharon Steel). | Unigard advocates equal-shares via the other-insurance clause or a different structure. | Defense costs to be allocated by a modified time-on-risk method that includes uninsured periods. |
Key Cases Cited
- Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127 (Utah 1997) (time-on-the-risk method favored absent express policy language)
- Federal Insurance Co. v. Cablevision Systems Development Co., 836 F.2d 54 (2d Cir. 1987) (equal-shares approach not universally required)
- Deseret Fed. Sav. & Loan Ass’n v. U.S. Fid. & Guar. Co., 714 P.2d 1143 (Utah 1986) (duty to defend broader than indemnify)
- Benjamin v. Amica Mut. Ins. Co., 2006 UT 37, 140 P.3d 1210 (Utah 2006) (duty to defend until uncertainties resolved; liberal policy construction)
- Consol. Edison Co. of N.Y. v. Allstate Ins. Co., 98 N.Y.2d 208, 746 N.Y.S.2d 622, 774 N.E.2d 687 (N.Y. 2002) (other insurance clauses prevent multiple recoveries; concurrent coverage context)
- St. Paul Fire & Marine Ins. Co. v. Vigilant Ins. Co., 919 F.2d 235 (4th Cir. 1990) (commentary on insurer defense duties across multiple policies)
- Boston Gas Co. v. Century Indem. Co., 454 Mass. 387, 910 N.E.2d 290 (Mass. 2009) (supports view on non-overlapping coverage for other-insurance clauses)