Fireman's Fund Insurance v. Maryland Casualty Co.Fireman's Fund Insurance v. Maryland Casualty Co.
Opinion
In this case, we address the question whether the equitable doctrines of contribution and subrogation are entirely distinct and independent concepts, or instead are merely different terms for the same legal principle. Maryland Casualty Company, The Maryland Insurance Company, and Northern Insurance Company of New York (hereinafter collectively referred to as Maryland) appeal from summary judgment entered in favor of Fireman’s Fund Insurance Company (Fireman’s Fund) on the latter’s complaint for contribution and indemnification from Maryland for the costs of defending and settling an underlying lawsuit on behalf of a common insured. Maryland argues that Fireman’s Fund’s claims for indemnity and contribution are actually based on its equitable subrogation to the rights of the common insured against Maryland. Because those rights have been settled, released and dismissed with prejudice in previous litigation between Maryland and the insured, Maryland insists there are no longer any remaining rights against Maryland to which Fireman’s Fund may be subrogated. Therefore, Maryland contends, the trial court erred in granting summary judgment against it on Fireman’s Fund’s lawsuit for equitable contribution. We disagree with Maryland, and therefore affirm the judgment in favor of Fireman’s Fund. Both insurers have also appealed the trial court’s allocation of defense and indemnification costs between them. We conclude the trial court did not err in this regard, and therefore affirm the court’s equitable allocation.
I. Factual and Procedural Background
The underlying facts are not in dispute. Maryland and Fireman’s Fund issued several one-year liability insurance polices to the underlying insured, Horst Hanf and Horst Hanf Construction Corporation (Hanf) between 1975 and 1992. Coverage of Hanf under the two carriers’ policies overlapped, with Maryland’s policies in effect between 1975 and 1986, and those of Fireman’s Fund in effect between 1984 and 1992.
Hanf participated in work on a condominium construction project completed in 1975. In 1993, Hanf and others involved in the project were sued on various claims arising from alleged defects in the construction of the condominium residences, with damage alleged to have commenced in September 1979. Hanf tendered defense of the lawsuit to both Maryland and Fireman’s Fund, under their overlapping and consecutive policies
In January 1995, Hanf sued Maryland for breach of contract and of the implied covenant of good faith and fair dealing for refusing to undertake the defense of the underlying construction defect lawsuit. In September 1996, Hanf settled its lawsuit against Maryland, releasing Maryland from all claims with respect to the tender of defense and its liability policy, and dismissing the lawsuit with prejudice. In consideration for this release, Maryland paid Hanf $33,000 as partial reimbursement for fees and costs incurred, and assumed responsibility for a $50,000 promissory note executed by Hanf in favor of Fireman’s Fund as part of the settlement of the underlying construction defect lawsuit.
Fireman’s Fund elected not to intervene or join in Hanf’s suit against Maryland. Instead, it brought this separate lawsuit against Maryland in May 1995, seeking (1) a judicial determination of the issue whether Maryland had a duty to defend and indemnify Hanf; and (2) reimbursement, indemnification and contribution from Maryland of its pro rata share of the costs incurred by Fireman’s Fund in the defense and settlement of the underlying construction defect action against Hanf. Fireman’s Fund moved for summary judgment. Maryland opposed the motion on the ground that any equitable subrogation rights Fireman’s Fund may have had as against Maryland were extinguished by Hanf’s full release of Maryland from all claims arising from its refusal to defend and indemnify Hanf in the underlying action. In reply, Fireman’s Fund argued that a claim for contribution is distinct from and independent of a claim based on subrogation, and its action against Maryland was based on the former and not the latter.
The trial court agreed with Fireman’s Fund on the distinction between equitable subrogation and contribution. On this basis, it determined that Maryland was required to share in the costs of defending and settling the construction defect action against Hanf. It therefore entered summary judgment in favor of Fireman’s Fund and against Maryland in the amount of $366,506.70, or one-half of the expenses of defending and settling the underlying lawsuit plus prejudgment interest. Maryland timely filed a notice of appeal. Fireman’s Fund has cross-appealed, alleging that the trial court erred in its calculation of the two carriers’ pro rata shares of the costs of defending and settling the underlying action.
II. Equitable Contribution
The principal issue raised by Maryland’s appeal is whether one insurer’s claim against another for contribution of the costs of defending and settling a claim against the insured is based on the theory of equitable subrogation, and is therefore dependent on and limited by the underlying rights of the insured, to which both insurers may be subrogated; or whether instead an insurer possesses a direct cause of action for equitable contribution entirely independent of the rights of the insured. The parties to this appeal agree that if subrogation applies, the judgment for Fireman’s Fund should be reversed and judgment entered instead for Maryland; if not, then the judgment must be affirmed as it stands.
Maryland’s arguments are based on a misreading of dicta in the California Supreme Court’s decision in Continental Cas. Co. v. Zurich Ins. Co. (1961)
The Supreme Court held that all three liability insurance polices covered the independent contractor as an “additional insured,” the liability policy covering the trucker provided primary coverage for the injured party, and the carriers for the timber company and the independent logger were liable on a pro rata basis for the excess balance of the personal injury liability judgment against the independent contractor over and above the amount of the primary coverage. (Continental Cas. Co. v. Zurich Ins. Co., supra, 57 Cal.2d at pp. 34-35.) However, the Supreme Court held that all three insurance carriers were liable on a pro rata basis for the costs of defense. In language cited by both parties to this appeal, the Supreme Court stated: “Under general principles of equitable subrogation, as well as pursuant to the rule of prime importance—that the policy is to be liberally construed to provide coverage to the insured—it is our view that all obligated carriers who have refused to defend should be required to share in costs of the insured’s defense, whether such costs were originally paid by the insured himself or by fewer than all of the carriers. A contrary result would simply provide a premium or offer a possible windfall for the insurer who refuses to defend, and thus, by leaving the insured to his own resources, enjoys a chance that the costs of defense will be provided by some other insurer at no expense to the company which declines to carry out its contractual commitments. . . . ‘[Tjhere are . . . compelling reasons for allowing recovery when the other insurer has not entered the case at all or has refused to defend the insured against suit by the injured party. . . . [Tjhis view represents the current trend and better rule in the “volunteer” situations.’ ” (Id. at p. 37.)
Relying on the Supreme Court’s reference to the “general principles of equitable subrogation” in the above quoted language from Continental, Maryland argues in this case that contribution among insurers requires that (a) the first insurer seeking contribution be subrogated to the rights of the insured against the second insurer from which contribution is sought, and (b) the insured possess
As one California appellate court has opined, “[i]t is hard to imagine another set of legal terms with more soporific effect than indemnity, subrogation, contribution, co-obligation and joint tortfeasorship.” (Herrick Corp. v. Canadian Ins. Co. (1994)
Subrogation is defined as the substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim. By undertaking to indemnify or pay the principal debtor’s obligation to the creditor or claimant, the “subrogee” is equitably subrogated to the claimant (or “subrogor”), and succeeds to the subrogor’s rights against the obligor. (Black’s Law Dict. (6th ed. 1990) p. 1427, col. 1.) In the case of insurance, subrogation takes the form of an insurer’s right to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss which the insurer has both insured and paid. (Allstate Ins. Co. v. Loo (1996)
The essential elements of an insurer’s cause of action for equitable subrogation are as follows: (a) the insured suffered a loss for which the defendant is liable, either as the wrongdoer whose act or omission caused the loss or because the defendant is legally responsible
The right of subrogation is purely derivative. An insurer entitled to subrogation is in the same position as an assignee of the insured’s claim, and succeeds only to the rights of the insured. The subrogated insurer is said to “ ‘stand in the shoes’ ” of its insured, because it has no greater rights than the insured and is subject to the same defenses assertable against the insured. Thus, an insurer cannot acquire by subrogation anything to which the insured has no rights, and may claim no rights which the insured does not have. (Truck Ins. Exchange v. Superior Court, supra, 60 Cal.App.4th at pp. 349-350; Allstate Ins. Co. v. Loo, supra,
Equitable contribution is entirely different. It is the right to recover, not from the party primarily liable for the loss, but from a co-obligor who shares such liability with the party seeking contribution.
This right of equitable contribution belongs to each insurer individually. It is not based on any right of subrogation to the rights of the insured, and is not equivalent to “ ‘standing in the shoes’ ” of the insured. (Truck Ins. Exchange v. Superior Court, supra,
Unlike subrogation, the right to equitable contribution exists independently of the rights of the insured. It is predicated on the commonsense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss or the discharge of an obligation, the
This right of equitable contribution between coinsurers is not based on, and indeed has nothing to do with, the coinsurers’ subrogation to the rights of their insured against the party legally and primarily responsible for the loss. Whereas subrogation requires that the party to be charged be in an “equitable position . . . inferior to that of the insurer” such that justice requires the entire loss be shifted from the insurer to the party to be charged (Fireman’s Fund Ins. Co. v. Wilshire Film Ventures, Inc., supra,
The different equitable principles on which contribution and subrogation are based are reflective of different underlying public policies. The aim of equitable subrogation is to place the burden for a loss on the party ultimately liable or responsible for it and by whom it should have been discharged, and to relieve entirely the insurer or surety who indemnified the loss and who in equity was
For this reason, our adoption of Maryland’s contention that contribution is merely a subset or type of equitable subrogation would have several unintended results. As discussed, where there are multiple primary liability insurance policies covering the same risk each insurance carrier has an independent obligation to indemnify and an independent duty to defend the insured. However, once one insurer assumes its obligations to its insured for indemnification or defense costs, the insured no longer has any motivation to pursue its claim for those costs against a nonparticipating insurer. The result Maryland advocates in this case would actually encourage primary insurers covering the same risk to delay responding to an insured’s tender of defense or request for indemnification until some other carrier accepts the tender, in the hope of subsequently making a more advantageous settlement with the insured. The outcome of a given case could be made to depend on such chance factors as which insurance carrier the insured happened to tender its defense to first, or the insured’s willingness to pursue its rights against a recalcitrant insurance carrier, rather than each carrier’s actual obligation under its individual contract with the insured to provide coverage and a defense. By such fortuities, one insurance carrier could be unfairly relieved of its rightful obligations while another insurer was burdened with the entire loss and deprived of its right to contribution, in derogation of the public policies of encouraging insurers to assume their duty to defend and promptly indemnify their insureds in good faith. Such a result would, of course, also be directly contrary to the principles expressed in Continental Cas. Co. v. Zurich Ins. Co., supra,
Many appellate decisions illustrate the distinction between contribution and subrogation. (Maryland Casualty Co. v. Nationwide Ins. Co., supra, 65 Cal.App.4th at pp. 26-27; Truck Ins. Exchange v. Superior Court, supra,
American Physicians concerned the relative obligations of two insurance companies insuring the same insured, but for entirely different risks. The plaintiff in the underlying personal injury lawsuit sued her doctor and his medical group on both malpractice and premises liability causes of action. At the time of the accident, the medical group and its member physicians were insured for premises liability by one insurance carrier, and for professional liability by two other insurance carriers. The premises liability insurer’s policy expressly excluded coverage for medical malpractice claims. After the malpractice insurers refused to contribute to settlement, the premises liability insurer sued on a theory of equitable subrogation for a declaration of coverage and reimbursement of the amount it had paid in settlement of the underlying suit. The malpractice insurers demurred, arguing that subrogation was unavailable because the carriers were not coinsurers and the insured risks were not identical. The trial court, sustained the demurrer without leave to amend. (American Physicians, supra,
Properly read, American Physicians stands for the principle that where different insurance carriers cover different risks and liabilities with respect to the same insured, they may proceed against each other for reimbursement by subrogation rather than by contribution. As discussed, contribution is only available in cases where there are coinsurers who share the same level of obligation on the same risk. One insurer has no right of contribution from another insurer with respect to its payment on an obligation for which it was primarily responsible, and as to which the liability of the second insurer was only secondary. (Herrick Corp. v. Canadian Ins. Co., supra,
Another example of the differing factual contexts in which the courts apply contribution and subrogation is provided by Commercial Union Assurance Companies v. Safeway Stores, Inc. (1980)
As we indicated at the outset, Maryland’s position in this case is based on the Supreme Court’s reference to “general principles of equitable subrogation” in Continental Cas. Co. v. Zurich Ins. Co., supra,
In conclusion, we hold that California law recognizes a direct right of action for equitable contribution between coinsurers on the same risk, entirely independent of any of the requirements for bringing a cause of action based on equitable subrogation to the rights of the insured. As both parties concede, the judgment of the trial court in this case must therefore be affirmed.
III. Allocation of Defense and Indemnity Costs
Both parties have appealed from the trial court’s allocation of defense and indemnity costs. In allocating these costs between Fireman’s Fund and Maryland, the trial court utilized the “time-on-the-risk” method
A. Factual Background
The pertinent facts are not in dispute. After Maryland denied tender of the underlying construction defect lawsuit, Hanf settled the suit for $100,000, paid in full by Fireman’s Fund, with Hanf executing a promissory note in the amount of $50,000 in favor of Fireman’s Fund. Fireman’s Fund also paid Hanf’s defense costs of $515,216.83 in full. Maryland did not contribute to either the settlement or the defense of the underlying action. Hanf then sued Maryland for, among other things, the $50,000 obligation on the note. To settle Hanf’s suit against it, Maryland agreed to assume responsibility and hold Hanf harmless for the promissory note to Fireman’s Fund, and pay Hanf $33,000 as partial reimbursement of Hanf’s legal expenses in suing Maryland. However, Maryland did not concede the validity of the note or that Fireman’s Fund has any right to payment thereunder. In return, Hanf agreed to release Maryland from all claims.
Neither Fireman’s Fund nor Maryland ever disputed the trial court’s use of the time-on-the-risk method of allocation. The parties also stipulated that during the period at issue they had written an overlapping series of consecutive one-year policies for Hanf; and that, as applicable to the liability claim against Hanf for damage commencing in September 1979, Maryland’s policies were in effect between November 14, 1978, and December 18, 1986, and those of Fireman’s Fund were in effect between November 14, 1984, and November 14, 1992. Each of the policies of both insurers contains an “other insurance” clause. However, four of the policies issued by Fireman’s Fund, covering the period of November 14, 1988, through November 14, 1992, contain endorsements amending their respective “other insurance” clauses to state: “This insurance is excess over any other insurance, whether primary or excess, contingent or on any other basis: HQ ... HQ (4) That is valid and collectible insurance . . . ,”
In applying the time-on-the-risk method of allocation, the trial court determined that each insurer provided eight insurance policies covering a single continuous injury over the relevant time period from September 1979 to 1992. The trial court deemed the entire period as a single continuous loss pursuant to Montrose Chemical Corp. v. Admiral Ins. Co. (1995)
B. Fireman’s Fund Cross-appeal: Effect of “Excess Other Insurance” Clauses
“ ‘Most insurance policies contain “other insurance” clauses that attempt to limit the insurer’s liability where other insurance covers the same risk. Such clauses attempt to control the manner in which each insurer contributes to or shares a covered loss.’ [Citation.]” (Fire Ins. Exchange v. American States Ins. Co., supra,
Primary coverage provides immediate coverage upon the “occurrence” of a “loss” or the “happening” of an “event” giving rise to liability. (Croskey et al., Cal. practice Guide: Insurance Litigation 2, supra, ¶ 8:75, pp. 8-23 to 8-24.) It is defined as “insurance coverage whereby, under the terms of the policy, liability attaches immediately upon the happening of the occurrence that gives rise to liability. [Citation.]” (Olympic Ins. Co. v. Employers Surplus Lines Ins. Co. (1981)
Contractual terms of insurance coverage are honored whenever possible. The courts will therefore generally honor the language of excess “other insurance” clauses when no prejudice to the interests of the insured will ensue. However, there are many exceptions. For example, where two or more primary insurers’ policies contain excess “other insurance” clauses purporting to be excess to each other, the conflicting clauses will be ignored and the loss prorated among the insurers on the ground the insured would otherwise be deprived of protection. (Olympic Ins. Co. v. Employers Surplus Lines Ins. Co., supra,
“Excess-only” provisions often collide with “pro rata” provisions. The Supreme Court has “expressly decline[d] to formulate a definitive rule applicable in every case in light of varying equitable considerations which may arise, and which affect the insured and the primary and excess carriers, and which depend upon the particular policies of insurance, the nature of the claim made, and the relation of the insured to the insurers. [Citation.]” (Signal Companies, Inc. v. Harbor Ins. Co., supra,
These holdings are based on a variety of public policy considerations. “Excess-only” provisions in otherwise primary liability insurance policies have been analogized to so-called “escape” clauses whereby coverage purports to disappear in the presence of other insurance. Such “escape” clauses are generally disfavored as a matter of public policy. (Argonaut Ins. Co. v. Transport Indem. Co. (1972)
Here, all of the applicable one-year policies of both insurers, including the four Fireman’s Fund policies with “excess other insurance” endorsements, were purchased as general liability policies, not as “umbrella” policies expressly providing only excess insurance “secondary” to another carrier’s primary insurance. During the four-year time period from November 14, 1988, to November 14, 1992, that the four 1-year Fireman’s Fund policies at issue were in effect, the insured had no other insurance. Clearly, these policies were purchased as primary insurance, and were intended as such.
Moreover, even under the “excess other insurance” policy endorsements at issue, Fireman’s Fund was contractually obligated to undertake its insured’s defense. If under its “excess other insurance” provisions Fireman’s Fund intended ultimately to shift the burden of defense to Maryland, it could easily have attempted to do so prior to the settlement of the underlying lawsuit against Hanf. Alternatively, it could have intervened in its insured’s lawsuit against Maryland in order to impose the burden on Maryland prior to the settlement of that lawsuit. Because Fireman’s Fund did not do so, there appears to be little equitable reason now for shifting to Maryland the bulk of Fireman’s Fund’s pro rata share of the defense costs which it had previously incurred in accordance with the express provisions of its own policies. (Cf. Signal Companies, Inc. v. Harbor Ins. Co., supra, 27 Cal.3d at pp. 369-371.)
Under these circumstances, we conclude the trial court correctly made a pro rata allocation of the two insurers’ obligations for equitable contribution to the costs of indemnification and defense based on their respective total times on the risk, including that period covered by the four Fireman’s Fund policies with “excess other insurance” clauses. (Continental Cas. Co. v. Zurich Ins. Co., supra, 57 Cal.2d at pp. 35-38; Herrick Corp. v. Canadian Ins. Co., supra,
C. Maryland Appeal: Equal Allocation of Defense and Indemnity Costs
Maryland separately appeals from the trial court’s allocation of defense and indemnification costs, arguing that it was error for the trial court (a) to credit Fireman’s Fund for the full $100,000 amount paid in settlement of the underlying lawsuit against Hanf; and (b) to split the allocation evenly between the parties on a 50-50 basis. Both contentions are without merit.
Contrary to Maryland’s assertion, there is no evidence it has borne any of the costs of indemnifying its insured, much less half the $100,000 it admits Fireman’s Fund “fronted” at the time of the settlement of the underlying lawsuit against Hanf. Although Maryland may nominally have “assumed responsibility” for Hanf’s promissory note to Fireman’s Fund, it has in fact never made any payment
Maryland also asserts that it deserves a setoff in the amount of $5,500 for being on the risk only 44.5 percent of the time, rather than half. The record shows that the trial court exercised its discretion to allocate defense and indemnification costs on a 50-50 basis as a matter of equity, based on the parties’ overlapping one-year insurance policies between 1978 and 1992. The court determined that Maryland and Fireman’s Fund had each provided eight 1-year liability insurance policies to their mutual insured, Hanf, during the relevant time period. A trial court’s determination of the correct allocation to impose for purposes of contribution is a matter of distributive justice and equity, not of contractual specifics. (Signal Companies, Inc. v. Harbor Ins. Co., supra,
IV. Disposition
The judgment is affirmed. Each side shall bear its own costs on appeal.
Hanlon, P. J., and Reardon, J., concurred.
Notes
In oral argument, counsel for Maryland asserted that the central issue in this case is whether the “single action rule” against “splitting” a cause of action bars Fireman’s Fund from proceeding against Maryland for contribution, because of the failure of Fireman’s Fund to intervene in or join with Hanf in the latter’s previous lawsuit against Maryland. This issue is barely mentioned in Maryland’s briefs on appeal, which instead repeatedly emphasize that “[t]he narrow issue on [its] appeal... is whether California law permits an insurer to assert rights against an otherwise unrelated insurer beyond or in addition to the rights of their mutual policyholder,” and “the real issue here is whether one insurer’s claim against another for ‘contribution’ necessarily depends upon the vehicle of subrogation to the insured’s rights, or whether such an insurer owns a direct right of action independent of the rights of its insured.” On the basis of this premise, Maryland’s briefs insist that “[i]f subrogation applies, the judgment should be reversed and judgment entered instead for Maryland; if not, then the judgment should be affirmed.”
Maryland’s briefs are correct in insisting that the relation between contribution and subrogation is dispositive. Our decision that Fireman’s Fund had an independent cause of action against Maryland for equitable contribution, regardless of the subrogation effect of the insured’s release of Maryland in the previous lawsuit, renders the single action rule immaterial. The claim of Fireman’s Fund against Maryland for equitable contribution is entirely separate, distinct and independent from Hanf’s claim against Maryland for breach of contract and the implied covenant of good faith and fair dealing. Thus, Fireman’s Fund could not have violated the single action rule by failing to join in Hanf’s lawsuit and subsequently suing Maryland for contribution.
“Perhaps because the words describe legal relationships between multiple parties, they are vaguely reminiscent of complex mathematical equations which, after all, also describe relationships, except in numbers rather than words—and for most of us, they are about as easy to understand. Even lawyers find words like ‘indemnity’ and ‘subrogation’ ring of an obscure Martian dialect.” (Id. at p. 756.)
This right is codified in Civil Code section 1432, which states: “Except as provided in Section 877 of the Code of Civil Procedure, a party to a joint, or joint and several obligation, who satisfies more than his share of the claim against all, may require a proportionate contribution from all the parties joined with him.”
Under Code of Civil Procedure section 877, a release, dismissal or covenant not to sue or not to enforce a judgment, given in good faith to one or more of a number of joint tortfeasors, “or to one or more other co-obligors mutually subject to contribution rights,” has the effect of discharging the party to whom it was given from all liability for any contribution to any other parties. (Code Civ. Proc., § 877, subd. (b).) Insurance carriers are neither joint tortfeasors nor “co-obligors”; their obligations arise strictly out of separate contracts with their insureds. (Topa Ins. Co. v. Fireman’s Fund Ins. Companies (1995)
Insurance policies sometimes provide that a particular coverage is “excess” only, and does not apply until the policy limits of a “primary” insurance policy have been exhausted. Under such an excess policy, the excess insurer is not liable for any part of the loss, damage or defense which is covered by other primary insurance, but instead is liable for any loss or damage in excess of the coverage provided by the other primary insurance policy or policies. The doctrine of equitable contribution applies to insurers who share the same level of obligation on the same risk as to the same insured. As a general rule, there is no contribution between primary and excess carriers of the same insured absent a specific agreement to the contrary. Courts in equitable contribution cases have generally heeded primary/excess provisions in insurance contracts, as long as the rights of the policyholder are not adversely affected. (Signal Companies, Inc. v. Harbor Ins. Co., supra, 27 Cal.3d at pp. 367-368; Nabisco, Inc. v. Transport Indemnity Co. (1983)
Where there are several insurance policies covering the same risk on the same insured, the fact the insured is only entitled to recover the actual amount of its loss does not bar it from demanding full coverage from each insurer, as long as its demand is made in good faith. By the same token, the insured may obtain recovery from any one of its coinsurers for the entire loss, not in excess of the face amount of the policy and in the absence of any provision in the policies limiting liability to a proportionate share of the loss. The coinsurers would then have no further liability to the insured, but would be liable for equitable contribution to the carrier which paid the loss. (16 Couch on Insurance, supra, Contribution & Apportionment, § 62:1, pp. 433-435.)
“It has been held in California and other jurisdictions that the excess carrier may maintain an action against the primary carrier for . . . [wrongful] refusal to settle within the latter’s policy limits [citations]. This rule, however, is based on the theory of equitable subrogation: Since the insured would have been able to recover from the primary carrier for a judgment in excess of policy limits caused by the carrier’s wrongful refusal to settle, the excess carrier, who discharged the insured’s liability as a result of this tort, stands in the shoes of the insured and should be permitted to assert all claims against the primary carrier which the insured himself could have asserted [citation]. Hence, the rule does not rest upon the finding of any separate duty owed to an excess insurance carrier.” (Safeway Stores, supra, 26 Cal.3d pp. 917-918.)
It is no accident that Continental Cas. Co. v. Zurich Ins. Co., supra,
On the other hand, our research has identified several cases which do appear to confuse the concepts of equitable subrogation and contribution. (Maryland Casualty Co. v. National American Ins. Co. (1996)
As amended by the relevant endorsement, the Fireman’s Fund “other insurance” clause on its last four polices reads in pertinent part as follows:
“4. Other Insurance
“If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
“a. Primary insurance.
“This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.
“b. Excess insurance
“This insurance is excess over any of the other insurance, whether primary, excess, contingent or on any other basis:
“(4) That is valid and collectible insurance including but not limited to coverage as an additional insured under another policy against such losses as may be covered by this policy.
“When this insurance is excess, we will have no duty under Coverage A or B to defend any claim or ‘suit’ that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so, but we will be entitled to the insured’s rights against all those other insurers.
“When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:
“(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and
“(2) The total of all deductible and self-insured amounts under all that other insurance.
“We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part.”
“As we have explained . . . , apportionment among multiple insurers must be distinguished from apportionment between an insurer and its insured. When multiple policies are triggered on a single claim, the insurers’ liability is apportioned pursuant to the ‘other insurance’ clauses of the polices [citation] or under the equitable doctrine of contribution [citations]. That apportionment, however, has no bearing upon the insurers’ obligations to the policyholder. [Citation.] A pro rata allocation among insurers ‘does not reduce their respective obligations to their insured.’ [Citation.] The insurers’ contractual obligation to the policyholder is to cover the full extent of the policyholder’s liability (up to the policy limits).” (Id. at pp. 105-106, italics added.)
At oral argument, counsel for Fireman’s Fund expressly acknowledged that all of the one-year liability insurance policies it issued to Hanf were primary insurance polices, including the ones with “excess other insurance” clauses.