Reimbursement Owed To Non-owner’s Automobile Insurer

July 13, 2021 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin, July 13, 2021

The 7th U.S. Circuit Court of Appeals recently affirmed an award of defense costs in favor of one insurer and against another under overlapping automobile liability policies, based on ownership of the vehicle involved in the accident giving rise to coverage.

The case is Continental Western Insurance Co. v. Country Mutual Insurance Co., 2021 U.S. App. Lexis 18938 (7th Cir. June 24, 2021). Continental was represented by Traub Lieberman Straus & Shrewsberry LLP of Chicago. Country Mutual was represented by Carlson Law Offices of Chicago.

Two villages in southern Illinois, Alhambra and Hamel, formed a joint venture in 1989 known as the Alhambra-Hamel Ambulance Service. The joint venture documentation provided that all property acquired by the two villages “hereunder shall be owned equally by them.”

In 2012, a service-operated ambulance collided with a semi-truck and seriously injured the driver and co-driver of the truck. As of the time of the accident, Country Mutual had in effect automobile coverage issued to the joint venture service as named insured, which expressly listed the ambulance as a covered auto.

Continental also had in effect automobile coverage issued to Hamel Fire, as the named insured, which listed several covered autos but not the ambulance.

Both insurance policies covered accidents involving “covered autos” owned by the named insured, and also certain accidents where insured persons were driving non-owned vehicles. The “other insurance” clauses for both policies, however, provided primary insurance for the named insured’s owned vehicles, but only excess coverage over other available insurance for non-owned vehicles.

The accident resulted in three lawsuits that included Hamel Fire as a defendant. Continental defended Hamel Fire in each suit, but only after tendering to Country Mutual. Country Mutual ignored each tender. The three cases eventually settled, with Continental paying about $240,000 for Hamel Fire’s defense costs.

It then brought this lawsuit against Country Mutual seeking reimbursement for defense costs. No dispute existed that both the Country Mutual and Continental policies provided coverage for the accident involving the service-operated ambulance. The question came down to which policy was excess and, thus, ownership of the ambulance.

The district court initially found for Continental and turned to the issue of the amount of costs to be reimbursed. After briefing and oral argument, Country Mutual asked for an evidentiary hearing and requested to submit an affidavit of one of its witnesses. The district court denied both requests, the latter because of an untimely submission.

The court then entered summary judgment in favor of Continental for about $250,000, which included $10,000 in prejudgment interest. Country Mutual took this appeal.


In an opinion by Judge Joel M. Flaum, the 7th Circuit affirmed. He observed that both insurers’ policies reflected the view that the parties intended the ambulance service — Country Mutual’s insured — not Hamel Fire, as the ambulance owner. The Country Mutual policy, in fact, listed the ambulance on its policy as being “owned” by the service, and Country Mutual submitted no evidence contradicting that designation.

In addition, the bill of sale for the purchase of the vehicle in 2009 showed the ambulance service as purchaser. The service, not Hamel Fire, was shown as owner on the certificate of title. And the traffic crash report stated the service was owner.

Flaum acknowledged the 1989 joint venture documentation reflecting that all property would be owned by the two villages, rather than the service. Whatever the parties’ original intent had been, however, Flaum said, it was overridden by the overwhelming evidence in 2012, at the time of the collision, that the service joint venture owned the vehicle.

The Continental policy, by contrast, did not list the ambulance as having been owned by Hamel Fire, Continental’s named insured.

Country Mutual complained that the district court had unfairly placed the burden on Country Mutual to prove that Hamel Fire owned the ambulance. Flaum observed under Illinois law, however, that the certificate of title creates a presumption of ownership, so the burden properly was placed on Country Mutual to disprove the service as the owner.

Hence, because the ambulance was non-owned by Continental’s insured — Hamel Fire — Continental’s coverage became excess, and Country Mutual had the obligation to defend and to reimburse the defense costs.

Flaum also upheld the amount of the fee award. He said the affidavit Country Mutual sought to introduce was properly rejected as being untimely, and found no abuse of discretion in the district court’s declination of an evidentiary hearing. He found the amount of fees supported by, among other things, their presumptive reasonableness based on Continental initially having paid the fees. He also looked to the experience of the attorneys, the benefit to the client, the complexity of the litigation and other factors to support his finding of reasonableness.

The 7th Circuit therefore affirmed the fee award in favor of Continental.

Key Points

  • Ownership of a vehicle for purposes of automobile liability insurance coverage is decided as of the time of the accident for which coverage is sought.
  • Non-ownership of a vehicle may trigger an excess “other insurance” clause in an automobile liability policy is presumptively established by a certificate of title.
  • Payment of defense costs by a party seeking reimbursement establishes their presumptive reasonableness.
  • Chicago

    Illinois 60603

    10 South LaSalle Street

    Chicago, Illinois 60603

    T: 312.855.1010 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: Dennis D. Fitzpatrick

  • New York

    New York 10005

    28 Liberty Street 39th Floor

    New York, New York 10005

    T: 212.805.3900 TF: 800.826.3505 F: 212.805.3939 Office Managing Partner: Carl M. Perri

  • Mission Viejo

    California 92691

    27285 Las Ramblas

    Suite 200

    Mission Viejo, California 92691

    T: 949.260.3100 TF: 800.826.3505 F: 949.260.3190 Office Managing Partner: Ian R. Feldman

  • Florham Park

    New Jersey 07932

    100 Campus Drive

    Florham Park, New Jersey 07932

    T: 973.410.4130 TF: 800.826.3505 F: 973.410.4169 Office Managing Partner: Carl M. Perri

  • Michigan City

    Indiana 46360

    200 Commerce Square

    Michigan City, Indiana 46360

    T: 219.262.6106 TF: 800.826.3505 F: 312.606.7777 Office Managing Partners: Paige M. Neel, Kimbley A. Kearney

  • Milwaukee

    Wisconsin 53202

    250 E. Wisconsin Avenue

    Suite 1800

    Milwaukee, Wisconsin 53202

    T: 414.279.5525 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: James M. Weck

  • Stamford

    Connecticut 06902

    68 Southfield Avenue

    2 Stamford Landing Suite 100

    Stamford, Connecticut 06902

    T: 203.921.0303 TF: 800.826.3505 F: 212.805.3939 Office Managing Partner: Matthew J. Van Dusen

  • Tampa

    Florida 33609

    4830 West Kennedy Boulevard, One Urban Center

    Suite 600

    Tampa, Florida 33609

    T: 813.509.2578 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: Dennis D. Fitzpatrick Co-Managing Partner: Kelly M. Vogt

  • San Francisco

    California 94111

    100 Pine Street

    Suite 1250

    San Francisco, California 94111

    T: 415.287.2744 TF: 800.826.3505 F: 949.260.3190 Office Managing Partner: Ian R. Feldman

  • Houston

    Texas 77019

    2929 Allen Parkway

    American General Center, Suite 200

    Houston, Texas 77019

    T: 346.229.4612 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: Ramy P. Elmasri

  • Dallas

    Texas 75201

    325 N. Saint Paul Street

    Suite 3100

    Dallas, Texas 75201

    T: 469.942.8635 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: Ramy P. Elmasri

  • Boca Raton

    Florida 33434

    7777 Glades Road

    Suite 405

    Boca Raton, Florida 33434

    T: 561.765.5305 TF: 800.826.3505 F: 312.606.7777 Office Managing Partner: Dennis D. Fitzpatrick Co-Managing Partner: Kelly M. Vogt