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Great Divide Insurance Co. v. Lexington Insurance Co.

Supreme Judicial Court of Massachusetts, Suffolk

November 1, 2017

GREAT DIVIDE INSURANCE COMPANY
v.
LEXINGTON INSURANCE COMPANY.

          Heard: March 6, 2017.

         Motor Vehicle, Insurance. Insurance, Motor vehicle insurance, Excess liability insurance.

         Certification of a question of law to the Supreme Judicial Court by the United States District Court for the District of Massachusetts.

          Adam R. Doherty (Thomas M. Elcock also present) for the plaintiff.

          Kimberly A. Hartman, of Illinois, for the defendant.

          Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.[1]

          GAZIANO, J.

         In this case we answer a certified question from the United States District Court for the District of Massachusetts concerning the priority of coverage of two automobile insurance policies that both covered a single motor vehicle accident. The accident occurred when an employee of a refuse company, driving a garbage truck owned by another company, struck and killed a bicyclist. The policies were issued respectively by the plaintiff and defendant insurers to the employer of the driver and the company that owned the truck.[2]A portion of the loss was covered by a primary insurance policy from a third insurance company, not a party here. The two policies at issue were triggered, according to the language in each policy, after the exhaustion of the primary policy. Although the relevant language of the policies differs, each policy states that it provides "excess" coverage[3] (in the circumstances here) and each policy also contains an "other insurance" clause.[4] As the Federal District Court judge noted in his certification order, the circumstances here involve a question of first impression, because one of the two policies is a "hybrid" policy that provides primary coverage for an incident where its insured is driving a vehicle owned by the insured, and excess coverage for an accident where its insured is the driver but is driving a vehicle owned by someone else. The other policy is a "true . . . umbrella" policy that provides only excess coverage where other coverage has been exhausted. For the reasons that follow, we conclude that both excess policies cover the accident equally, after exhaustion of the underlying primary policy, to the extent of their respective policy limits.

         1. Background and procedural history.

         The undisputed facts are drawn from the decision of the Federal District Court judge certifying the question to this court, supplemented by additional facts set forth in the parties' cross-motions for summary judgment. On April 3, 2014, an employee of EZ Disposal Service, Inc. (EZ), was driving a garbage truck assertedly leased by Capitol Waste Services, Inc. (Capitol), and owned by Atlantic Refuse Leasing Equipment, LLC (Atlantic), when he struck and killed a bicyclist. The bicyclist's wife and brother thereafter brought a wrongful death action in the Superior Court against EZ, Capitol, and Atlantic.

         The loss at issue was covered by three insurance policies. The first policy, not at issue here, was issued by Commerce Insurance Company (Commerce) and provided Capitol with primary insurance, up to a limit of $1 million. The second policy, issued by Lexington Insurance Company (Lexington), provided Capitol with excess insurance, and contained a limit of $10 million. The third policy, issued by Great Divide Insurance Company (Great Divide), provided EZ with primary insurance for a number of different risks, including accidents involving automobiles owned by EZ, up to a limit of $1 million. Great Divide's policy also contained an "Other Insurance" clause, which stated, "For any covered 'auto' you don't own, the insurance provided by this coverage form is excess over any other collectible insurance."

         Commerce defended all the insureds in the underlying tort action. In October, 2015, Great Divide filed a complaint against Lexington in the Superior Court, seeking a declaration that its policy and Lexington's policy were both excess policies covering the same level of loss. Lexington removed the case to the United States District Court for the District of Massachusetts on diversity grounds. In a decision on the parties' cross motions for summary judgment, the Federal District Court judge certified the question at issue to this court.

         The parties agree that the policy issued by Capitol's primary insurer, Commerce, provides the primary coverage for the first layer of the loss. They also agree that both the Lexington policy and the Great Divide policy cover the loss beyond the Commerce limits as excess policies. The dispute centers on whether the primary policy issued by Great Divide, which contains an "other insurance" clause, must be exhausted before Lexington's "true excess" policy is ...


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