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Travelers Indemnity Co. v. Howard Electric Co.2/10/1994
Defendants, Howard Electric Company, and various of its officers, related companies, and joint ventures (Howard), appeal the judgment of the trial court entered in favor of plaintiff, Travelers Indemnity Company (Travelers), and in favor of defendant, Shaffer/Edson Electric Supply Co. (Shaffer), on its cross-claim for indemnity against Howard. We reverse and remand for a new trial.
This action arose from a dispute concerning retrospective insurance premiums assessed by Travelers for coverage provided to Howard and Shaffer under their automobile liability, general liability, and workers' compensation policies.
Under a retrospective insurance plan, premiums are based upon an insured's loss experience under the policies to which the plan applies. Thus, the actual annual premium is calculated after covered losses occurring during the completed year are known. Furthermore, because an insured under the plan is required to pay an estimated premium during the course of the coverage year, an adjustment is made at year's end based upon actual loss experience. Consequently, an insured may then be assessed an additional premium amount or, in case of overpayment, issued a refund.
Here, the major portion of the retrospective premium assessments sought by Travelers relates to one occurrence, a traffic accident in which a child was injured in a fall from a vehicle owned by Shaffer. At the time of this accident, Shaffer was one of the companies which comprised the Howard organization and was a named insured on the policies issued by Travelers to Howard.
In the subsequent personal injury action on behalf of the child, Travelers defended its insureds, settling the claim in an amount equal to the primary policy coverage limit of $300,000. Thereafter, Howard and Shaffer refused to pay retrospective premiums that were in excess of a $50,000 loss limitation included in their coverage. At issue, principally, are the inclusion by Travelers in the premium calculation of expenses incurred in defending the personal injury claim and the extent to which the loss limitation applies.
I.
As a threshold matter, we reject plaintiff's contention that the stipulated confession of personal liability by named insureds Jack Howard and Robert Kohnen precludes their right to appeal the judgment of the trial court.
The named insured companies and individuals that comprise the Howard organization, among them Jack Howard and Robert Kohnen, have not denied liability for payment of retrospective insurance premiums. Rather, it is the calculation of the premiums that is at issue here, and the stipulation relied upon by Travelers does not support a Conclusion that these individuals have waived their right to appeal what they contend is a calculation, and resultant award, based upon error.
II.
Howard first asserts that the trial court misapplied the parol evidence rule in refusing to allow the admission of certain evidence to support the contention of Howard that the contract was ambiguous and did not comprise an integrated agreement between the parties. We agree.
The trial court's order does not reflect an explicit determination that the insurance agreement between the parties is unambiguous or is integrated as the final and complete expression of the agreement. See Restatement (Second) of Contracts ยง 209 (1979). However, implicit in its refusal to admit parol evidence during trial and in its analysis of the contract as interpreted by Travelers is a finding by the trial court that the terms of the contract were not ambiguous. Nevertheless, the interpretation of insurance documents, as any other written contract, is a matter of l
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