Court Declines To Grant ‘Super Excess’ Status for Excess Insurer

By Don R. Sampen, published, Chicago Daily Law Bulletin, February 6, 2024

The U.S. District Court for the Northern District of Illinois recently declined to confer “super excess” status on one of two insurers found to be excess and required that both contribute to the loss proportionately to limits.

The case is Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., 2024 U.S. Dist. Lexis 4386 (Jan. 9). The plaintiff insurer, Great West, was represented by Franco & Moroney LLC of Chicago. Swanson, Martin & Bell LLP of Chicago represented the other insurer, Nationwide.

In 2021, in Sycamore, Illinois, Robert Fisher was driving a tractor-trailer that collided with a car driven by Patrick Brennan. Brennan died from his injuries, and his estate brought suit against Fisher; Fisher’s employer, Deerpass Farms Services LLC (DFS), which owned the tractor; Deerpass Farms Trucking LLC-II (DFT2), the lessee of the tractor and trailer; and Conserv FS, Inc., owner of the trailer.

Great West provided automobile coverage for DFT2, the lessee. Nationwide provided coverage for Conserv. The Great West and Nationwide policies were the only two under consideration in the court’s decision.

The parties agreed that the Nationwide coverage was excess because under the terms of its policy, the trailer was connected to a motor vehicle (the tractor) not owned by Conserv at the time of the accident. A question arose, however, concerning the nature of Great West’s coverage — whether it was primary or excess.

Great West moved for summary judgment seeking a declaration that its coverage, like Nationwide’s, was excess, and Nationwide opposed the motion.

Analysis

In an opinion by Judge Matthew F. Kennelly, the court agreed with Great West after analyzing its policy step by step.

He initially addressed a policy provision, section 5b, stating that for autos “hired or borrowed” by the insured, DFT2, the policy would be primary if the insured had no indemnification from the lessor motor carrier, but excess if the lessor motor carrier did provide indemnification. An initial question arose as to whether the lessor, DFS, was a “motor carrier.” Kennelly found that it was under the policy’s definition of “motor carrier,” even if it did not qualify as a carrier under federal regulations.

He further determined that DFS, as lessor and employer of the driver, Fisher, did, in fact, provide indemnification to DFT2, the lessee, for Fisher’s negligent conduct. Hence, the Great West policy presumptively qualified as an excess policy under section 5b.

However, another subpart of the policy stated that regardless of section 5b, the Great West coverage would be primary for any liability assumed under an “insured contract.” The definition of “insured contract” was one in which the insured, DFT2, assumed the “tort liability of another to pay for bodily injury … to a third party.”

Nationwide argued that the lease agreement for the trailer between its insured, Conserv, and DFT2 was an “insured contract” because it obligated DFT2 to hold Conserv harmless for claims arising out of use of the trailer. Kennelly disagreed because, consistent with the definition of “insured contract,” DFT2 agreed only to indemnify Conserv for DFT2’s own actions, not for the tort liability of “another.”

Kennelly thus concluded that the Great West policy did, in fact, serve as excess coverage under the circumstances here.

Great West further contended, however, that its coverage was “super excess” because the relevant clause in the policy stated that the insurance would be “excess over any other collectible insurance” if all the conditions were met. The Nationwide policy excess provision, on the other hand, stated only that it was “excess” with no reference to “any other collectible insurance.”

Kennelly found Great West’s interpretation went too far and held that both policies served as excess on the same level.

He further determined that, in the absence of any primary carrier, the excess provisions in the two policies “effectively cancel each other out” and the two excess insurers would share responsibility on a pro rata basis by policy limits. Since the Great West limit was $1 million and the Nationwide limit was $2 million, he ordered that the insurers share defense and indemnification costs proportionately to these limits.

The court therefore granted Great West summary judgment.

Key Point

Language in a policy making the insurance “excess over any other collectible insurance” does not qualify the coverage as “super excess.” Hence, the insurer must share excess coverage with other excess coverage that is merely “excess” without the “any other collectible insurance” language.