*2 dispute in conflict narrowed to a between GALLAGHER, Before MACK and proper interpreta- INA and Globe over the PRYOR, Judges. Associate clauses, policy, tion of two one in the INA Both the other in the Globe PRYOR, Judge: Associate designated clauses were to limit and to to the situation where the Appellant contends that where two insur- insured event also another was covered ance companies have insured the same risk company. insurance Each of the clauses question arises, coverage industry common in insurance company with the excess “other are called “other insurance” clauses. insurance” clause should not be allowed to escape primary liability when the second contains a contains a rata “other clause which states: Rather, insurance” clause. both insurance lia- shall not be [T]he companies should a pro shoulder rata share greater propor- under this for a ble and, therefore, of the liability. agree We applicable limit tion of such loss than the reverse. in the declarations liability stated Jones, nurse, employed by of lia- applicable bears to the total limit Medox, provides nursing person- Inc. which and collectible insurance bility of all valid nel for hospitals and doctors in the Wash- against such loss. ington Metropolitan Area. While Ms. Jones The INA an excess clause policy was providing nursing services at Doctors which states: Hospital, she treated Mark E. Howard. La- provided by [The] ter, Jones, Mr. Howard sued Ms. Doctors valid and shall be excess over other Hospital, injuries and Medox for which he collectible insurance. allegedly Hospital. received at Doctors clauses, case between the was settled out of court for the sum of Faced the conflict court, Liability citing Employers’ the trial $100,000. to become effec- age usually intended Fund Assurance Ltd. Firemen’s tive when other valid Group, U.S.App.D.C. [Note, gave to the insurance is available. (1958), primary F.2d 239 effect thus, In- and, was re- in Automobile Coverage ruled Concurrent $100,000. surance, the entire sponsible for 65 Col.L.Rev. (emphasis original).] *3 upon Employers’ court
The trial
relied
v.
Liability
1,
Assurance
Ltd.
Firemen’s
also note
See
;
it
Group supra
Fund Insurance
position is
claim that the
Critics
noted that
that case the conflict
protection
anachronistic
between two excess clauses. The conflict
to
were created
clauses
“other' insurance”
pro rata
excess clause and a
between an
respect
longer necessary with
is no
provide
impression
clause is a matter
first
in this
many
risks.
to
insurable
jurisdiction.
.‘other insur-
original
reason for
question,
look
To resolve this
most courts
prevent overinsu-
ance’ clauses was to.
it. The
the excess
clause
recovery
property
double
under
rance and
pro
is
rata
result
the insurer with
since
But
and fire
policy
loss
to its
up
clause bears the total
risk of
greatly diminished
there is a
the limits of
liability
limits.1 If the
exceeds
under an automobile
fraudulent claims
policy,
rata
then the excess
original
policy, this
liability insurance
essence, the
courts
pays
remainder.
is of
clauses
purpose
insurance’
of ‘other
is
have determined that
v. Unit-
importance.
[Werley
only slight
other insurance un-
not valid and collectible
Association, 498
ed Services
rationale fre-
der the
rata
1972).
112,
(Alaska
116-117
P.2d
is that
advanced for
rule
quently
also,
Insurance”
parties.
intent
gives effect
Doctrine, 47
The Lamb-Weston
Clauses:
inserted in a
[Wjhere an excess
is
that,
(1968). It seems clear
430
Ore.L.Rev.
poli-
typical
clauses
initially,
least
“other insürance”
of the insurer is that
cy
usual intent
controlling
utilized as a means
have been
cov-
only secondary
will afford
overinsu-
could evolve from
abuses which
is
‘other
erage when
loss
covered
recovery.
or
rance
double
insurance.’ On the other
jurisdictions
growing
A
number of
sion that
limits a
commonly
known
what
adopted2
of concurrent cover-
in the event
(1964); Ryder
100,
Agency,
Inc.
Cas.
257
result good public policy This court believes it is among the insurers. put not to or injured plaintiff, a de- enough fendant who is fortunate to have proponents of the Lamb-Weston rule duplicate coverages, position in a have offered several reasons for rejecting possibility there is one insurer can majority approach embracing *4 say, you, my Alphonse!” “After dear minority view: “Oh, no, you while the other after says, It does arbitrarily pick not one of the my arm They dear Gaston.” must walk it; conflicting give clauses and effect through responsibility. arm the door of deprive it does not the insured of Paul Fire v. St. [Firemen’s coverage; prejudicial giving not a & Marine Insurance 243 Or. expense windfall to one insurer at (1966).] another; encourage litigation it does not Thus, companies where the insurance delay between insurers. It does not set trigger- insured the same risk and the event tlements. On the other it does occurs, ing the insurance predict enable underwriters to the losses with the excess “other insurance” of the insurers more accurately: it does escape primary liability when clause cannot preclude the illogical use of rules devel a the second insurance oped (e. time, by g., courts first rata “other insurance” clause. The general specific primary and tort-fea- reject- mutually repugnant and must be doctrines); sor give does a basis for totally. companies ed Both insurance addition, uniformity prorat of result. liability.4 shoulder a rata share of the among the loss all insurers is a rule Reversed and remanded.' applied regardless that can be regard number of insurers involved and type
less of the of conflicts that are cre GALLAGHER, Judge, dissent- Associate ated “other insurance” clauses. ing:
Finally, simpler, the rule is more conve rests on majority opinion in this case nient, major and easier to than respec- premise that the clauses in ity [Note, rule. Conflicts Between “Oth conflict necessarily policies tive insurance er Insurance” Clauses in Automobile Lia affirma- court must therefore and that the Policies, bility 1292, 1304 20 Hastings L.J. I resolve this conflict. tively intervene to (1969) cited in Werley v. United Services disagree. Association, supra]. ac malpractice originated a This case alternatives,
Having
reviewed
sus
injuries allegedly
arising out of
by,
we conclude
rule is
that
injection administered
tained from an
approach
Jones,
nurse,
Hospital.
the better rule.
It is
Doctors
a balanced
a
Jones,
encourages
were Ms.
complicated problem
to a
an
in the action
Defendants
employer, Me-
Jones’
equitable, uniform
It is unfair
and Ms.
hospital,
result.
Auto. Ins.
note
Or.
dox, Inc.,
applicable
than the
limit of
corporation
provides
which
tem-
loss
a
applicable
to the total
porary
personnel
to local doctors
bears
medical
limit of
of all valid
hospitals. The
settled for
case was
such loss.
$100,000
against
agree-
pursuant
settlement
provided
ment
which
covered under a
Ms. Jones was also
defendants
representing
by which INA
sion Medox’s
respective
litigate
would
their
separately
in-
to pay
liabilities
contracted with
litigation
event
this
liabilities.
In the
by Me-
circumstances
curred under state
not
was
concluded March
contractors.
employees
dox’s
agreement
further that
Jones’
provided
liability in the INA
plicable limit of
insurer,
Indemnity
$1,000,000
contained
also
no prej-
full
the settlement with
amount of
“excess other insurance” clause
rights.
udice to its
provided:
policy]
adjudi-
[by
insurance afforded
The insurers’ liabilities were
any other
excess insurance over
therefore
shall.be
agreed
cated
date. Globe
insurance.
valid and collectible
paid the full amount of the settlement.
brought an
and Ms. Jones then
action
clause.)1
(Hereinafter
INA’s blanket excess
insurer,
hospital and its
Hart-
clause and INA’s blanket
Globe’s
its
ford
and Medox and
in-
conflict,
I
not in
read
excess clause are
surer,
of North Ameri-
Company
con-
provision contemplates
them. Globe’s
(INA).
granted summary
ca
The trial court
*5
collectible
other valid and
tribution from all
hospital, Hartford Insur-
judgment
to the
insurance
is not collectible
insurance.
INA,
Co.,
and
ance
Medox
and dismissed
ex-
INA’s blanket
purpose
for this
Globe,
the claim Ms. Jones and
thus
of
it will not
expressly
clause
states that
cess
ruling
should bear the entire
that Globe
any other
is covered
pay if
claim
of
settlement. Ms. Jones and
cost
(up to
and
valid
collectible
the dismissal of their
appealed
Globe have
limit).
is collectible insurance
policy
denial of
Motions
claim and the
their
for
states that it
because it
under 'INA’s clause
Judgment
against
Summary
any
(subject to
in
event
pay
will
the claim
INA.
contribution).2
applicable pro rata
any
re-
Thus,
policies
the two
applied together,
injection,
At
Jones
the time
up
being
liable for
claim
sult Globe
was the sole insured under the
up any
limit,
picking
with INA
policy
to its
$1,000,000limit of liability
had a
policy
excess.
proa
rata “other insurance”
and contained
provided:
which
interpretation
approach
of this
Critics
argued that
If the
has other insurance
of insurance contracts
insured
reasoning, and that
circularity of
policy
requires a
a loss covered
depend on which contract
will
not
under this
the decision
shall
be liable
See,
g., Oregon
e.
Automobile
of such
is read first.
policy
greater proportion
for a
unnecessary.
problem
of this
makes resolution
“excess other
INA’s
contained another
rely
Apparently
blanket
on its
INA did
that
bene-
insurance” clause
stated
trial, although
of
were
to be
excess
excess clause
fits
intended
to “the insured.”
record.
of other insurance available
as Medox or
“the insured”
defined
principals.
the trial court
certain
its
Both
of
is not valid
of what is or
The determination
great
appeal
deal
and the
devoted
be made in
should not
question of whether Ms.
of attention to the
abstract,
a considera-
must be based on
purpose
circumstances,
Jones
“the insured” for the
includ-
facts and
all the
provisions
applying
INA’s “other
poli-
additional
and terms of
the existence
excess clause
The blanket
insurance” clause.
cies.
however,
provisions,
overrides
these
policies
rata clauses for insurance
Fidelity
tory pro
Insurance Co. United States
provisions.
I
insurance”
having “other
Guaranty
only
take such action
court should
think the
1952); Werley v. United Services Automo-
irreconcilable
clearly
presented
when
Association,
(Alaska
bile
498 P.2d
perhaps,
when insurers
provisions4
Note,
(1954).
1972);
Minn.L.Rev.
liability.
all
seeking
to court
to avoid
come
problem,
majority
In
to the
response
adopts the rule,
which takes
only
circularity
arises
problem
“other
insurance”
position
that
insurer, claiming
the other
when each
nature,
regardless of their
are mu-
clauses,
first,
pay
at all.
declines
must
requiring
proration.3
tually
repugnant,
Automobile
v. Pacific
Smith
Fire-
(1965).
Or.
110, 128,
219 Or.
341 P.2d
Fire and
Co. v. St. Paul
men’s Insurance
(1959).
presents
This rule
10, 15,
Marine Insurance
243 Or.
simple
way
and no-nonsense
pealingly
(1966). This is not the case
P.2d
vagaries
with the
of insurance
deal
are de-
The fact
here.5
however,
it,
applying
the court
liability, which the
signed to limit
language,
the contractual
sweep away
objectionable,
finds
is relevant
negotiated
parties:
deprived
intent of the
of cov-
perhaps
person may
be
the covered
Thus,
rights of
keeping in mind the
Effectually,
legislating
erage.6
the court is
manda-
repugnant.
presents
But when
3. Lamb-Weston
a somewhat similar
are not held
repugnancy
situation,
involving
fact
a tort defendant whose
cannot be resolved
reference
contracts,
agent
driving
proper
case
was involved in an accident while
to the
the case is a
equitable
contending
a
panies
com-
in Lamb-Weston.
rented truck.
rule set forth
Exch.,
Liberty
were those of the tort defendant and of
Mutual Ins.
Truck Ins.
Co. v.
the lessor of the truck. The lessor’s insurance
contained an “omnibus” clause
erage
70-71
245 Or.
extending
Emphasis
cov-
and footnote omitted.
[Citations
pos-
supplied.]
to authorized lessee drivers. The
opposite
tures of the insurance
to its Lamb-We-
The court nevertheless held
case,
to those in this
the tort defendant’s
rata and excess clauses
ston view that the
containing
policy containing
were,
fact, irreconcilablyrepugnant.
the excess clause and the lessor’s
before it
rata clause. The
*6
Puckett,
of
98 Idaho
appears
grounded
5.
Sloviaczek v. Estate
Cf.
court’s decision
to be
frus-
371, 376,
(McFadden,
difficult-to-apply
565 P.2d
tration with numerous and
J.,
(case involving escape
dissenting)
generalized annoyance
claus-
rules and a
with insur-
C.
es,
infra.)
companies’ attempts
escape liability.
see note
ance
to
One commentator has asserted:
by majority or the
It is not denied
provisions
analysis
An
of the out-of-state
the “other insurance”
cases relied
upon by
parties;
agreed upon
leads one
there is no alle-
[the
court]
deceit,
although
gation
to the conclusion that
some of the
of fraud or
or
contention
language employed
supports
resulting
unequal bargaining power
therein
the deci-
in uncon-
Lamb-Weston,
scionability.
sion in
sonings applied
neither the actual rea-
holdings
circularity
repugnant.
nor both
nor the
It is true
is not
together
applies the
together,
do. Each case either
provisions
are taken
that if all
majority position
rationale of the
or reaches
compensation
preted,
ever,
If so inter-
denied.
be
entirely
with that ration-
might
a result
consistent
repugnant.
the result
How-
be
Insurance”
companies par-
ale.
Clauses:
neither of the insurance
Doctrine,
The Lamb-Weston
47 Ore.L.Rev.
ty
interpreta-
to the suit contend .that such an
given
should be
to the various
sions.
Indeed,
itself, subsequent
court
agree-
majority,
has stated its theoretical
on
cases relied
6. In several
analysis:
ment with such an
applied
rule to enable
the Lamb-Weston
court
un-
plaintiff
amounts
to recover additional
to the effect that the
There are decisions
g.,
v. Estate
See e.
Sloviaczek
containing
pro-rata
der the
clause should
Lopez,
Puckett, supra;
Travelers Ins. Co.
always
when the other
bear the whole loss
(Nev.1977); Werley
However,
Ser.
v. United
Policy
567 P.2d
an
clause.
fact,
Ass’n, compared
in Sloviaczek
Auto.
in such
when the two contracts are
essentially
cases,
Werley,
frequently
the courts were faced
the other-insurance
parties,
can
have
they
all the
“we
resolve the difficul
themselves
made them.” Grolli
Co., 82
mund v.
Fire
ty
provisions
of circular ‘other insurance’
Germania
(E&A
618, 621,
N.J.L.
83 A.
provi
totally disregarding
without
all such
1912), quoted
Mutual Automo
in Citizens
nothing repugnant
sions.
There
such
bile
Mutual Insur
Liberty
approach,
certainly
this court cannot
1969)
ance
ty” because of
underlying apparently rationale is that two
companies covering the same risk should
pay equally. have no con- other, relationship
tractual with each how-
ever, hardly protected need to be from Furthermore,
each neither con- other.
ferred a benefit on the other nor relied on
the other’s is not getting existence. Globe more anything “stuck” than it contract- FAUNTEROY, Appellant, Tijuana INA, ed for with Ms. Jones. other relationship had no direct contractual coverage with Ms. Its extended Jones. STATES, Appellee. UNITED her, benefit, employee as a kind of of the contract between and Medox. I JOHNSON, Larry Appellant, doubt the quick sweep court away language the clear of that contract STATES, Appellee. UNITED knowing without least to what extent negotiated for and intended to cre- Nos. only secondary ate for its coverage employ- Appeals. District of Columbia Court ees/contractors, extent what intention may affected *7 Argued Oct. 1978. “Questions of rates.7 contribution between April Decided coinsurers caused trouble to the much courts, has large part of which arisen
through equalize equities efforts to outside
of the contract. This trouble is lessened if are left their contracts as suggested adoption provided escape-type It has been that the identical clauses which coverage only has in fact increased the amount Lamb-Weston rule may claims, processing insurers cost of the limit of of each exceeded limit comfortably rely on their other insurance of the other. fre- now clauses, Such Russ, routinely prepare quently disfavored courts. Proposal, by investigating Double Insurance Problem —A claims. Clauses, Hastings Doc- Insurance" L.J. trine, supra at 445.