Xl Specialty Insurance Company v. Progressive Casualty Insurance
411 F. App'x 78
9th Cir.2011Background
- XL insured Patrol’s fuel truck involved in a fatal collision while en route to refuel a helicopter.
- XL sought a declaratory judgment on coverage; Progressive and Patrol counterclaimed for XL coverage.
- The magistrate judge held XL’s policy covered the accident and there was no prejudice from late notice; Progressive’s claim resembled equitable contribution barred by selective tender.
- The district court adopted the magistrate judge’s recommendations; the Ninth Circuit affirmed.
- Montana law (Wendell) governs whether coverage arises from ownership/use; helicopter’s maintenance was a 'prime accessory' rendering XL coverage applicable.
- XL received notice four months before trial; no material prejudice shown under Montana’s no-prejudice rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does XL’s policy cover the accident under Montana law? | XL argues the injury arose from the aircraft’s use/maintenance. | Patrol/Progressive contend limited scope of coverage or non-arising-out interpretation. | Yes; XL coverage applies under Montana standard. |
| Was XL prejudiced by late notice? | XL should not be prejudiced by late notice under no-prejudice rule. | Progressive asserts prejudice from delayed notice could affect defense/settlement. | No prejudice shown; no-prejudice rule applies. |
| Whether Progressive may recover via equitable contribution from XL? | Progressive seeks contribution for same loss from XL. | XL argues no cross-insurer contribution under Montana law because no common obligation yet triggered. | Progressive’s claim barred as equitable contribution (no trigger under selective tender). |
| Whether the selective tender rule bars Progressive from contributing? | Progressive tendered the defense and thus should contribute. | There was insufficient tender to XL; Patrol’s informal contact did not trigger tender. | Yes; selective tender bars Progressive due to lack of proper tender to XL. |
Key Cases Cited
- Wendell v. State Farm Mut. Auto. Ins. Co., 974 P.2d 623 (Mont. 1999) (test for 'arising out of' coverage when insured instrument is a prime accessory)
- Georgeson v. Fidelity & Guar. Ins. Co., 48 F. Supp. 2d 1262 (D. Mont. 1998) (illustrative of coverage under 'arising out of' policy when related vehicle is involved)
- Fire Ins. Exch. v. Tibi, 51 F. Supp. 2d 1065 (D. Mont. 1995) (coverage under 'arising out of' policy when related activity discharges firearm during unloading)
- Sorenson v. Farmers Ins. Exch., 927 P.2d 1002 (Mont. 1996) (no-prejudice rule for underinsured motorist claims; prejudice required to deny)
- Lee v. Great Divide Ins. Co., 182 P.3d 41 (Mont. 2008) (no-prejudice standard in Montana insurer-notice cases)
- Augustine v. Simonson, 940 P.2d 116 (Mont. 1997) (no-prejudice considerations in Montana insurance disputes)
- Cas. Indem. Exch. Ins. Co. v. Liberty Nat’l Fire Ins. Co., 902 F. Supp. 1235 (D. Mont. 1995) (selective tender rule governing insurer contribution when defense is not properly tendered)
- Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 191 P.3d 866 (Wash. 2008) (definition of contribution in multi-insurer context)