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Century Surety Co. v. Continental Casualty Co.6/24/2005
y another. Crime Fighters Patrol v. Hiles, Ky., 740 S.W.2d 936, 938 (1986). Intercargo Insurance Co. v. B. W. Farrell, Inc., Ky. App., 89 S.W.3d 422, 426 (2002), defined a contract of indemnity as, "an obligation or duty requiring a promisor to make good any loss or damage which another has incurred while acting at the request or for the benefit of the promisor." The Court went on to say that an indemnity contract creates a direct, primary liability between the promisor and the promisee. Id.
However, there can be no indemnity without liability. ARA Services, Inc.,v. Pineville Community Hospital, Ky. App., 2 S.W.3d 104, 106 (1999).
In Fosson v. Ashland Oil & Refining Co., Ky., 309 S.W.2d 176 (1957), Kentucky's highest court was asked to decide whether an indemnification clause in a construction contract operated to indemnify the indemnitee's own negligence. The Court concluded that parties to such a contract could so agree where it is not improbable that a party would undertake to indemnify the other. However, the Court further said that if there is a doubt as to the meaning of the indemnity clause, the construction should be in opposition to the contention that the contract was meant to indemnify the indemnitee's own negligence. Id. at 178.
The construction contract involved in Fosson v. Ashland Oil & Refining Co., 309 S.W.2d 176 (1957), also contained a provision requiring that the contractor, the indemnitor, obtain liability insurance satisfactory to the owner, the indemnitee. The Fosson court held that the broad language contained in the contract, and the fact that the parties had agreed that the indemnitor would carry general liability insurance subject to the satisfaction of the indemnitee manifested an the intent that the contract was intended to apply to liability arising from the acts or omissions of the indemnitee.
In the case at bar, Robinson's and the Mall executed a License agreement that contained an explicit indemnification clause not unlike the clause involved in Fosson supra. Moreover, the License Agreement required that Robinson's obtain general commercial liability insurance naming the Mall as an additional insured. Thus, it is apparent that the parties to the License Agreement intended that Robinson's, the indemnitor, would be obligated to indemnify the Mall, the indemnitee, even for liability resulting from the acts or omissions of the Mall, including attorney's fees and costs. Therefore, Continental Casualty Co. is entitled to reimbursement from Century Surety Co. for the sums paid, including fees and costs, on behalf of the Mall.
II. Other Insurance Clause
Even if the indemnity clause contained in the License Agreement did not entitle Continental Casualty to reimbursement for sums paid on behalf of its insured it is entitled to reimbursement pursuant to the express provisions of the insurance policies. Century Surety's policy states that its policy is excess over any other primary insurance unless the other insurance is issued to the named insured and is written explicitly to apply in excess of Century's coverage.
Continental Casualty's policy provides that it is primary insurance unless there exists other valid collectible primary insurance that includes the insured as an additional insured. In such a situation, Continental's policy provides that it shall be designate as excess insurance.
When these two insurance clauses are read in conjunction they establish Century Surety's policy as the primary insurance. The Mall is an additional named insured on Century's policy, and Continental's policy applies as excess insurance in such a situation. Therefore, the Court further concludes tha
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