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TIG Insurance Co. v. North American Van Lines8/26/2005
Before Justices FitzGerald, Richter, and Lang-Miers
This is an insurance coverage dispute. TIG Insurance Company, an excess insurer, appeals the denial of its motion for summary judgment and the granting of summary judgment in favor of its insured, North American Van Lines, Inc. and North American Van Lines of Texas, Inc. (collectively, NAVL). The issue on appeal is whether the limits of the underlying insurance policies were exhausted, triggering indemnification by the TIG policy, and, if so, the amount of that indemnification. We modify the trial court's judgment and remand for recalculation of prejudgment interest.
Background
NAVL became a defendant in a personal injury lawsuit entitled Emmons v. North American Van Lines. That suit resulted in a judgment against NAVL in the amount of $8,947,273.60 in actual damages plus prejudgment and postjudgment interest for a total judgment of $15,174,289. NAVL had three layers of insurance coverage which it argues provided coverage for the Emmons judgment.
A. Self-Funded Retention/USF&G Policy
NAVL contracted with United States Fidelity and Guaranty Specialty Insurance Company (USF&G) to provide a primary Texas trucker's liability policy with a $5,000,000 limit of liability. The policy contained an "Automobile Self-Funded Retention" endorsement (SFR), pursuant to which NAVL was responsible for funding the $5,000,000 liability limit. The policy also contained a provision whereby USF&G would indemnify a portion of "claim expenses," defined to include defense costs, prejudgment and postjudgment interest, attorney's fees, and court costs, when NAVL's legal liability for an accident exceeded the $5,000,000 policy limit.
B. The Royal Policy
NAVL contracted with Royal Indemnity Company to provide commercial umbrella liability coverage of $5,000,000 per occurrence with a $5,000,000 aggregate limit in excess of the amount recoverable under the primary underlying insurance, identified in the Royal policy as the USF&G policy. The Royal policy provided coverage for the "ultimate net loss" in excess of the $5,000,000 USF&G policy. "Ultimate net loss" is defined in the main Royal policy and also in an endorsement to that policy. Although the parties disagree about which definition controls, they do not dispute that under either definition, prejudgment and postjudgment interest are included as part of "ultimate net loss."
C. The TIG Policy
NAVL also contracted with TIG to provide a "second layer" excess umbrella liability policy with $25,000,000 coverage per occurrence and a $25,000,000 aggregate limit in excess of Royal's umbrella policy and the primary policy. TIG's policy provided that its coverage is triggered when the "ultimate net loss" exceeded the underlying insurance, in this case $10,000,000. The policy defined "ultimate net loss" as "the amount of the principal sum, award or verdict actually paid or payable in cash in the settlement or satisfaction of claims for which the insured is liable . . . after making proper deduction for all recoveries and salvages."
Proceedings Below
Under its SFR in the USF&G policy, NAVL paid $5,000,000 of the actual damages awarded in the Emmons judgment, and Royal tendered its $5,000,000 policy limits, leaving over $5,000,000 of the total judgment unpaid by insurance. NAVL sought indemnification from its TIG policy for the remainder of the judgment amount.
TIG filed this lawsuit seeking a declaration that it has no duty to indemnify NAVL under its excess policy for any portion of the Emmons judgment. TIG argued its definition of "ultimate net loss" mea
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