Unitеd Suppliers, Inc. (“United”) suffered a loss of $1,806,738.09 when an above-ground storage tank collapsed at its Pacific Junction, Iowa facility, spilling liquid fertilizer. Responding to insurance claims, National Surety Corporation (“National”) paid United $1,000,000, the рolicy limit under National’s inland marine policy, which covered loss to liquid fertilizer from tank leakage or collapse. Ranger Insurance Company (“Ranger”) paid United the remaining $806,738.09 of its total loss under Ranger’s blanket property pоlicy, which covered personal property including the liquid fertilizer. The spilled fertilizer had salvage value, and each insurer received its pro rata share of the salvage recovery — $163,509.17 to National and $131,905.35 to Ranger.
National then filed this action, seeking $787,737.33 in contribution from Ranger on the theory that Ranger owed 29/30 of the total loss when prorated between the two insurers on the basis of their respective policy limits. Ranger denied that claim and counterclаimed to recover the $163,509.17 salvage paid to National. Applying Iowa law, and deciding the case on the parties’ joint fact stipulation, the. district court 1 concluded that United’s loss must be prorated between the two insurers becаuse the policies contained mutually
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repugnant other-insurance clauses. The court then prorated the loss using the ratio of Ranger’s overall policy limit of $30,000,000 to National’s policy limit of $1,000,000. The result was a judgment in National’s favor of $787,737.33 and dismissal of Ranger’s counterclaim. Ranger appeals, arguing (1) the district court erred in prorating because Ranger’s policy was excess to National’s primary coverage, and (2) if proration is proper, the ratio should be based on Ranger’s $1,000 sub-limit for loss of liquid product resulting from “sudden breaking, failure or malfunction” of tanks, rather than the $30,000,000 overall policy limit. Construing the insurance policies and Iowa law
de novo,
we affirm.
See St. Paul Fire & Marine Ins. Co. v. Missouri United Sch. Ins. Council,
1. The primary issue on appeal is whether the district cоurt erred in prorating United’s total loss between the two insurance carriers. Each policy covered at least part of the loss in question. But each policy contained an other-insurance clause limiting its coverage if the loss was also covered by another policy:
Commercial Property Condition G in Ranger’s policy provided: “If there is other insurance covering the same loss or damage ... we will pay only for the amount of covered loss оr damage in excess of the amount due from that other insurance .... ”
Loss Adjustment Provision 11 in National’s policy provided: “The coverage provided by this policy shall apply only as excess insurance over any other valid and collectible insurance or coverage that applies to the covered property.”
If these conflicting clauses were construed literally, the insured might have no coverage, an obviously unacceptable answеr.
See Union Ins. Co. v. Iowa Hardware Mut Ins. Co.,
When faсed with conflicting other-insurance clauses, some States apply a closer-to-the-risk doctrine, under which the insurer whose policy was issued “for the primary purpose of insuring the particular risk” is primarily liable for payment. 15 RUSS & SEGALLA, COUCH ON INSURANCE § 219:49, at 219-63 (3d ed.1999). Undеr this standard, National’s inland marine policy, with its specific coverage for tank leakage and collapse, might be closer to the risk of United’s loss than Ranger’s blanket property policy. But the Supreme Court of Iowa has rejected this doctrine. The general rule in Iowa is that, if two policies contain mutually repugnant other-insurance clauses, the clauses are set aside and the loss prorated between the two policies based on their avаilable coverages.
Illinois Nat Ins. Co. v. Farm Bureau Mut Ins. Co.,
Ranger first argues that its blanket property policy should be treated as a true excess policy, like the umbrella policies in Vigilant and LeMars. We disagree. True excess and umbrella policies require the existence of a primary policy as a condition of coverage. Their express purpose “is to protect the insured in the еvent of a catastrophic loss in which liability exceeds the available primary coverage.” 15 COUCH § 220:32, at 220-37. By contrast, a blanket policy fully covers each item of property described in the policy. See 12 COUCH § 177.72, at 177-72. Thus, unlike a true excеss policy, which only provides coverage above a predetermined level of primary coverage, a blanket policy provides primary coverage for each item of property covered. A blanket policy’s coverage may become excess if the policy contains a valid other-insurance clause like Ranger’s Condition G and there is other primary coverage. See 15 COUCH § 219.33, at 219-36. But when both the blanket policy and the other рrimary policy contain such other-insurance clauses, as in this case, Iowa law applies the mutually repugnant rule and prorates the loss between those insurers.
Ranger attempts to avoid the mutually repugnant rule by arguing that a “рolicy insuring intent” to layer its coverage as excess to National’s may be inferred by comparing Ranger’s blanket property coverage with National’s specific coverage of losses from tank leakage. But in
Westfield,
the Supreme Court of Iowa reversed a decision based upon this type of analysis because it reflected the rejected closer-to-the-risk doctrine.
Ranger nеxt argues there is this kind of specific language in another portion of its blanket policy. Paragraph 2(k) of the Building and Personal Property Coverage Form in United’s Ranger policy provided:
Covered Property does not include ... [property that is covered under ... any other policy in which it is more specifically described, except for the excess of the amount due ... from that other insurance.
We agree that this provision seems to make Ranger’s blanket сoverage excess as to a specific type of property, unlike the above-quoted general other-insurance clauses. Because the Supreme Court of Iowa acknowledged that primary insurance “may be excess in certain, specified situations” in
LeMars,
2. The district court prorated United’s total loss on a 30:1 ratio based upon Ranger’s $30,000,000 blanket policy limit and National’s $1,000,000 policy limit. Ranger argues that, for proration purposes, its aрplicable coverage must be based upon the following sublimit, which appears in the Additional Coverage section of the Causes of Loss — Special Form part of the Ranger policy:
Tank Leakage — $1,000 Limit. When loss of liquid product from within an aboveground tank occurs and the loss is the result of a sudden breaking, failure or malfunction of the tank or any of its apparatus, we will pay up to $1,000 for loss of the liquid product.
This is a perplexing issue. We assume that the legal premise underlying Ranger’s contention is correct — the Supreme Court of Iowa would prorate based upon an
applicable
policy sublimit, rather than the overall policy limit.
See
15 COUCH § 217:9, at 217-21;
Westhoff v. American Interins. Exch.,
After the district court’s initial adverse ruling, Ranger moved to modify the judgment, urging the court to more specifically consider this sublimit issue. The parties submitted additional memoranda and argument, and -the court then denied the motion, noting “that the arguments now presented in the motion to amend are inconsistent with the positions [Ranger] maintained in its plеadings.” We agree. Ranger pleaded that it paid over $800,000 for a covered loss. It now argues that the loss was subject to a $1,000 sub-limit, in effect, that the payment to United was gratuitous.
2
“[F]actual statements in a party’s pleadings are generаlly binding on that party unless the pleading is amended.”
Knudsen v. United States,
Ranger also appealed the dismissal of its cоunterclaim to recover $163,509.17 paid to *887 National as its pro rata share of the liquid fertilizer salvage. But Ranger concedes that its counterclaim was properly dismissed if, as we have concluded, the district court was correct in prorating United’s loss between the two insurers using a 30:1 ratio. Accordingly, the judgment of the district court is affirmed.
Notes
. The HONORABLE CHARLES R. WOLLE, United States District Judge for the Southern District of Iowa.
. At oral argument, counsel asserted that Ranger paid United as an "accommodation” to Ranger's broker. Nothing in the record supports that assertion.