Opinion
I. Introduction
Plaintiff, Reliance National Indemnity Company (Reliance), appeals from summary judgment entered in favor of defendant, General Star Indemnity Company (General Star), on a complaint for indemnity and contribution.
Reliance seeks complete indemnity from General Star for moneys expended in defense and settlement of a lawsuit in federal court in Rhode Island. We affirm because we conclude the principal authority relied upon by Reliance,
Rossmoor Sanitation, Inc.
v.
Pylon, Inc.
(1975)
II. Background
A. The Parties, Policies, and the Underlying Lawsuit
This action is based upon several insurance policies issued to Don Law Company, Inc. (Don Law) and Lollapalooza Joint Venture, a joint venture of Perry Farrell doing business
The June 18, 1994, contract further required Don Law to purchase commercial general or public liability insurance naming Lollapalooza as an additional insured and with a combined single limit of $5 million aggregate per occurrence and $5 million total per event. Paragraph K provided: “1. Purchaser shall secure at its sole cost and expense, Commercial General (or so-called ‘Public’) Liability Insurance covering any claims, liabilities, or losses resulting directly or indirectly from injuries to any person (including Bodily Injury and Personal Injury) and from any Property Damage and/or Loss in an amount of a combined single limit of Five Million Dollars ($5,000,000 U.S.D.) aggregate per occurrence and Five Million Dollars ($5,000,000 U.S.D.) aggregate per event placed with an insurance company acceptable to Producer and naming Producer and its principals and their respective officers, partners, principals, employees and agents as additional insureds. Purchaser shall furnish to Producer and its representative, Robertson Taylor (North America), Inc. (per address in paragraph 6 below) a copy of said Commercial General Liability policy(s) or Umbrella policy(s), if applicable, for Producer’s prior written approval.” Paragraph 20 of the June 18, 1994, contract provided, “In the event of any inconsistency between the provisions of this contract and the provisions of any riders, addenda, exhibits or any other attachments hereto, the parties agree that the provisions most favorable to Producer and Artist shall control.” Paragraph M of the contract provided: “Except as otherwise stated herein Purchaser assumes sole responsibility for any cost, expenses, charges, claims losses, liabilities, and/or damages directly or indirectly related to the Festival.”
During the relevant time period, Reliance insured Lollapalooza with a general liability policy from January 22, 1994, to January 22, 1995. There was a limit of $1 million on the Reliance primary general liability policy. Reliance also insured Lollapalooza under an excess policy. The Reliance excess policy provided coverage once the $1 million limit on its general liability obligation was exhausted. Gulf Insurance Company (Gulf) insured Don Law under a primary policy with limits of liability of $1 million in the aggregate. Gulf named Lollapalooza as an additional insured pursuant to an endorsement and a certificate of insurance. General Star insured Don Law between May 1, 1994, and May 1, 1995, under an excess policy with limits of liability of $10 million per occurrence and aggregate. Lollapalooza was an additional insured under the General Star excess policy pursuant to the terms of section V(d). This was because Don Law was required by the June 18, 1994, written contract
Reliance’s policy provided subrogation rights as follows: “Transfer of Rights of Recovery Against Others to Us. fl¡] If the [ijnsured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The [ijnsured must do nothing after loss to impair them. At our request, the insured will bring ‘suit’ or transfer those rights to us and help us enforce them.” The other insurance clause in the Reliance primary policy provided in part: “If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: ffl] a. Primary Insurance [^j This insurance is primary except when b. below applies. If this insurance is primary our obligations are not affected unless any of the other insurance is also primary. Then, we shall share with all that other insurance by the method described in c. below. [ff¡ Excess Insurance [f] This insurance is excess over any of the other insurance, whether primary, excess, contingent or on any other basis: ['$]... [?j 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: [^j (1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and HD (2) The total of all deductible and self-insured amounts under all that other insurance, [^j 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.”
The General Star other insurance policy language was as follows: “If other valid and collectible insurance with any other insurer is available to the insured covering a loss also covered by this Policy, other than insurance that is in excess of the insurance afforded by this Policy, the insurance afforded by this Policy shall be in excess of and shall not contribute with such other insurance. Nothing here shall be construed to make this Policy subject to the terms, conditions, and limitations of other insurance, reinsurance or indemnity.” The Reliance excess policy provided in part: “6. Other Insurance [^j If there is any: a. other insurance; or . . . this coverage part shall apply as excess of and not contributing with such insurance.”
On August 3, 1994, an audience member was injured at the festival while “crowd surfing.” As a result of the injury, on May 16, 1995, plaintiffs filed a complaint for damages against a number of defendants, including Lollapalooza and Don Law, in the United States District Court in Rhode Island (the underlying action). The complaint in the underlying action alleged that a concertgoer was injured while “crowd surfing” at the August 3, 1994, event produced by Don Law and sponsored by Lollapalooza. The underlying action was settled for $2,142,858. Reliance provided a defense to Lollapalooza and contributed $1 million to the $2,142,858 settlement of the underlying action on behalf of its insured. Reliance also paid $71,429 under the excess policy. Gulf provided a defense and exhausted its policy by contribution of $1 million towards settlement on behalf of Don Law and Lollapalooza. General Star contributed $71,429.
After the underlying action settled, Reliance filed this lawsuit in which it was alleged that Lollapalooza was not obligated to pay any of the damages in the Rhode Island federal district court litigation. The first amended complaint, which is the operative pleading, named as defendants, General Star
B. The Summary Judgment Motion
Reliance and General Star brought cross-motions for summary judgment. Reliance relied primarily upon the decision of Rossmoor, supra, 13 Cal.3d at pages 628-635, a case involving an indemnification and subrogation dispute involving two primary insurers. Reliance contends it was entitled to summary judgment because its policy was in excess of the Gulf and General Star policies under the indemnification provisions of the contract between the insureds, as well as under the terms of the insurance agreements. In other words, Reliance argued, apart from language in the various insurance agreements, it was entitled to reimbursement from the two other carriers because Don Law agreed to indemnify Lollapalooza for any personal injury loss. General Star contended summary judgment should be granted in its favor under the clear and unambiguous terms of the policies, which provided that the obligations of Reliance and Gulf were primary and General Star’s duty was only in excess.
The trial court granted General Star’s summary judgment motion. The order granting the summary judgment motion concluded that there were no triable issues of material fact. The issue before the trial court was the extent of the liability that General Star agreed to assume and the degree to which its policy included or excluded certain rights and obligations. The trial court rejected Reliance’s contention that
Rossmoor, supra,
13 Cal.3d at pages 628-635 controlled. The trial court concluded that
Rossmoor
did not apply and that the plain language of the policies controlled. The trial court’s order stated: “The language of the four policies is clear and unambiguous and leads to the ineluctable conclusion that General Star issued a policy that provides coverage to Lollapalooza that applies excess to the Reliance Primary Policy and equally with the Reliance Umbrella Policy. General Star’s policy language also makes it clear that the terms and conditions of the policy cannot be altered by any other agreement, specifically, the indemnity agreement between Lollapalooza and Don Law. Lollapalooza and Don Law entered into a contract which consisted of a [two]-page contract and a rider (‘the Lollapalooza-Don Law Contract’). The contract contains an indemnity agreement between Lollapalooza and Don Law. No determination was ever made in the
Underlying Action
with regard to the respective liability of either Lollapalooza or Don Law or whether the indemnity agreement was applicable. Neither Reliance nor General Star were parties to the LollapaloozaDon Law Contract and, therefore, are not bound by that contract. Accordingly, even though the case of
Rossmoor
is cited repeatedly and extensively by Reliance, that case simply does not apply to this dispute between two carriers for Lollapalooza. There is nothing that can make any of the policies at issue subject to the contractual obligations to which these carriers were not parties, [ft In addition, as mentioned, General Star’s policy unequivocally precludes modification or alteration of its terms or conditions by any other indemnity agreement.
The trial court entered judgment in favor of General Star and against Reliance. This timely appeal followed.
III. Discussion
A. Standard of Review
Summary judgment is granted when the moving party establishes that there are no triable issues of any material fact. A summary judgment motion is directed to the issues framed by the pleadings.
(Ann M.
v.
Pacific Plaza Shopping Center
(1993)
of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.”
(Green
v.
Ralee Engineering Co.
(1998)
The issue of whether plaintiff is entitled to indemnification requires an interpretation of the insurance policies. The standard of review of an insurance policy has been described by the California Supreme Court as follows: “While insurance contracts
B. General Star’s Coverage Was Excess to Any Primary Insurers
1. The limited duties of excess carriers and various theories of shifting financial responsibility for a loss
a. Introduction
In this case, the undisputed facts established that Reliance insured Lollapalooza with a primary policy with coverage up to $1 million. Reliance also insured Lollapalooza with an excess insurance policy. Gulf insured Don Law and Lollapalooza as an additional insured under a primary policy with coverage to $1 million. General Star insured Don Law and Lollapalooza as an additional insured under an excess policy with limits of liability of $10 million per occurrence and in the aggregate. Both the Reliance and the General Star policies contained other insurance clauses. Reliance’s other insurance clause stated that it was primary. General Star’s policy stated that it was in excess of the other insurance afforded by its policy. The General Star other insurance policy language provided: “If other valid and collectible insurance with any other insurer is available to the insured covering a loss also covered by this Policy, other than insurance that is in excess of the insurance afforded by this Policy, the insurance afforded by this Policy shall be in excess of and shall not contribute with such other insurance. Nothing here shall be construed to make this Policy subject to the terms, conditions, and limitations of other insurance, reinsurance or indemnity.” Thus, under the express terms of its insurance policy, General Star’s coverage was excess.
Reliance’s primary argument is the trial court erred in granting summary judgment in favor of General Star because as a matter of law, under the June 18, 1994, contract, Don Law was to provide full indemnity to Lollapalooza and its insurer for any damages
b. The two levels of insurance
Under well-settled insurance principles, there are two levels of insurance coverage, primary and excess.
(Community Redevelopment Agency
v.
Aetna Casualty & Surety Co.
(1996)
c. The role of contractual language in a policy
The contractual terms of insurance coverage are enforced whenever possible.
{Olympic Ins. Co.
v.
Employers Surplus Lines Ins. Co., supra,
d. Other insurance clauses
It has been held that an “other insurance” clause dispute cannot arise between excess and primary carriers but only between insurers on the same level.
(Olympic Ins. Co.
v.
Employers Surplus Lines Ins. Co., supra,
126 Cal.App.3d at pp. 597-598; see also
North River Ins. Co.
v.
American Home Assurance Co., supra,
e. Subrogation and contribution
The Court of Appeal in
Fireman’s Fund Ins. Co.
v.
Maryland Casualty Co., supra,
65 Cal.App.4th at pages 1291-1292, explained the concepts and confusion surrounding the theories of subrogation and contribution at length as follows: “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.’ [Citation.] It is also difficult to think of two legal concepts that have caused more confusion and headache for both courts and litigants than have contribution and subrogation. [Citation.] Although the concepts of contribution and subrogation are both equitable in nature, they are nevertheless distinct. [Citations.] HQ 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 the subrogor’s rights against the obligor. [Citation.] 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.
[Citations.] ‘ “As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.” [Citations.]’ [Citation.] [U] . . . [H] 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. [Citations.]” (Fn. omitted, original italics.) The Court of Appeal continued: “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. In the insurance context, the right to contribution arises when several insurers are obligáted to indemnify of defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others. Where multiple insurance carriers insure the same insured and cover the same risk, each insurer has independent standing to assert a cause of action against is coinsurers for equitable contribution when it has undertaken the defense or indemnification of the common insured. Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was
equally
and
concurrently
owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk. The purpose of this rule of equity is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others. [Citations.]”
(Id.
at pp. 1293-1294, fn. omitted, original italics.) As a general rule, there is no contribution between a primary and an excess carrier.
(Id.
at p. 1294, fn. 4;
Herrick Corp.
v.
Canadian Ins. Co.
(1994)
2. Rossmoor and Its Application to the Present Case
Reliance’s claim is based upon the Supreme Court’s decision in Rossmoor, supra, 13 Cal.3d at pages 628-635. In Rossmoor, a real property owner and a sewage facility contractor entered into á contract. Under the terms of the agreement, the contractor agreed to indemnify and hold the owner harmless against all claims for damage to persons or property. (Rossmoor, supra, 13 Cal.3d at pp. 625-626.) The contractor complied with an agreement that also required it to obtain insurance for itself. The contractor was also required to name the owner in the policy as an additional insured. However, the owner also had independent coverage under a policy previously issued by its own insurer. (Ibid.) Both policies contained “other insurance” clauses. They stated that an apportionment would be made if the insured had other insurance against a loss covered by the policy. (Id. at p. 626.) The owner of real property was held liable for injury to and death of employees resulting from a cave-in of an unshored trench. Thereupon the owner and its insurer sought indemnity from the contractor and its liability insurer. (Id. at p. 627.) The contractor’s insurer cross-complained against the owner’s insurer. The cross-complaint sought apportionment of sums paid under the “other insurance” clauses of the various policies. (Ibid.)
The Supreme Court determined, based on the trial court’s findings, that the owner was, at most, passively negligent.
(Rossmoor, supra,
Here, Reliance argues that, under
Rossmoor,
it was subrogated to a right of indemnification based upon the contract between Lollapalooza and Don
Law. As noted above, reimbursement is allowed under a theory of equitable subrogation that applies to insurers that did not cover the same risks and liabilities with respect to the same insured.
(Commercial Union Assurance Companies
v.
Safeway Stores, Inc., supra,
Several points warrant emphasis in resolving this issue. First, based upon equitable principles, the duty to contribute applies to insurers that share the same level of obligation on the risk as to the same insured.
(Signal Companies, Inc.
v.
Harbor Ins. Co., supra,
27 Cal.3d at pp. 367-368;
Fireman’s Fund Ins. Co.
v.
Maryland Casualty Co., supra,
Second, contrary to Reliance’s assertion otherwise, the Supreme Court’s decision in
Rossmoor
did not establish that in all cases where a contract for indemnification exists an insurer is entitled to bring a subrogation action on the agreement. No doubt,
Rossmoor
concluded the owner’s insurer in the case before it was subrogated to the rights of its insured under the indemnification contract. However,
Rossmoor
did not purport to establish a general rule that a contractual indemnification agreement between an insured and a third party takes precedence over well-established general rules of primary and excess coverage in an action between insurers repeatedly articulated by California appellate courts. This is particularly true in this case because General Star’s policy specifically states: “Nothing herein shall be construed to make this Policy subject to the terms, conditions and limitations
Third, there is a division of decisional authority on whether an insurer is entitled to subrogation against a party who by a separate contract has agreed to assume responsibility for the same loss and is not responsible for causing the loss. The test as to whether the party has the right to maintain the action for subrogation “involves a consideration of, and must necessarily depend upon the respective equities of the parties.”
(Meyers
v.
Bank of America etc. Assn.
(1938)
In Meyers v. Bank of America etc. Assn., supra, 11 Cal.2d at pages 102-103, an insurer compensated an employer for losses resulting from an employee’s check forgery. The Supreme Court determined the insurer’s equities were not superior to those of the bank which cashed the forged checks. (Ibid.) In Patent Scaffolding Co. v. William Simpson Constr. Co., supra, 256 Cal.App.2d at page 515, three insurers brought an action for equitable subrogation in their insured’s name against a contractor which breached an agreement to obtain fire insurance. The Court of Appeal refused
to allow the action for equitable subrogation for breach of a duty to indemnify or to obtain fire insurance. Citing
Meyers
v.
Bank of America etc. Assn., supra,
Under the undisputed circumstances of this case, we cannot conclude that the equities permit recovery in this case. As noted above, Reliance’s primary contention is that
Rossmoor
supports the theory that in
all
cases an indemnification agreement allows an insurer to be subrogated to the rights of its insured, even against an insurance company providing excess coverage. It is undisputed that the parties to the indemnity agreement are not present and this is an action between primary and excess carriers as identified by their policies. The risks involved in providing primary coverage are different from those involved in issuing an excess policy. These differences are reflected in part by the premium costs. As
Rossmoor
noted in discussing the risks of two primary insurers: “It appears that both [insurers] calculated and accepted premiums with knowledge that they might be called upon to satisfy a full judgment. There is no evidence that either company knew there was or would be other insurance when they issue the policies.”
(Rossmoor, supra,
C. The Amounts Paid in Excess of the Primary Policy by the Parties *
IV. Disposition
The judgment is affirmed. Defendant, General Star Indemnity Company, shall recover its costs on appeal from plaintiff, Reliance National Indemnity Company.
Grignon, J., and Armstrong, J., concurred.
Notes
Plaintiff also contended there was insufficient evidence proffered establishing any active negligence on the part of Lollapalooza. The distinction between active and passive negligence is discussed and debated at length by the parties. Courts construe general indemnity provi
sions to provide indemnification for losses resulting from an indemnitee’s passive negligence; however, as a general rule courts have refused to allow indemnification for active negligence. (Rossmoor,
supra,
See footnote, ante, page 1063.