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Scottsdale Insurance Company v. National Union Fire Insurance Company of Pittsburgh1/30/2002
me position as American. Scottsdale still has no duty to defend until every other umbrella policy has been exhausted.
At first glance, one might think our holding allows Scottsdale to enjoy a windfall based on a fortuitous variation in the wording of its policy. From an insurer's standpoint, however, the existence of other insurance is always a windfall. Moreover, the wording of Scottsdale's policies was not merely fortuitous; it was manifestly intended to bring about the very result we reach. Other insurance companies are free to adopt the same wording - and probably will. After the dust settles, we will not see many more cases like this, in which only one policy incorporates an "other insurance" clause into its duty-to-defend provision. In most cases, every applicable policy will have such a provision. The issue then will be how to reconcile them. Although we need not resolve that issue today, it seems most likely that each insurer will have to contribute to the defense.
We conclude that the provision of Scottsdale's policies which requires it to defend if, and only if, "no other insurance affording a defense or indemnity against such a suit is available" is enforceable. Under this provision, Scottsdale cannot have any duty to defend until appellants' duty to defend and their duty to indemnify have both terminated. Thus, as Scottsdale was seeking a declaration that it had no duty to contribute to appellants' costs of defending Davey, the trial court properly granted summary judgment in favor of Scottsdale.
Scottsdale also purported to be seeking a declaration that it had no duty whatsoever to defend Davey. The only issue in actual controversy, however, was whether Scottsdale had a duty to contribute to appellants' costs of defending Davey. Davey is not a party. Thus, it would be inappropriate to issue a declaration more broadly specifying Scottsdale's duties vis à vis Davey. (See Simmons v. California Institute of Technology (1949) 34 Cal.2d 264, 276-277.) Admittedly, our holding that Scottsdale has no present duty to defend is based, in part, on our conclusion that, once the policy limits of all other applicable policies have been exhausted, Scottsdale will have a duty to defend. The extent to which this intermediate step in our reasoning is binding on Scottsdale and/or appellants, however, we leave for another day.
V. DISPOSITION
The judgment is affirmed. Scottsdale shall recover costs on appeal against appellants.
We concur:
RAMIREZ, P.J.
HOLLENHORST, J.
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