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Federal Insurance Co. v. Gulf Insurance Co.3/8/2005
Defendant, Gulf Insurance Company (Gulf), appeals from the trial court's entry of summary judgment in favor of plaintiff, Federal Insurance Company (Federal), on Federal's claim for equitable contribution to the $2,900,000 that Federal paid on behalf of its insured under the excess coverage of its commercial umbrella policy to settle a personal injury action arising out of the death of Federal's insured's employee while working on a job for Gulf's insured pursuant to a contract between the insureds. We reverse and remand. Federal's insured had agreed to indemnify Gulf's insured for all losses and liabilities arising out of the work under the contract unless Gulf's insured was solely at fault, and Federal's insured purchased insurance from Federal to cover its contractual obligations. Because Federal's insured was required to indemnify Gulf's insured, Federal was not entitled to equitable contribution from Gulf.
FACTUAL AND PROCEDURAL BACKGROUND
Federal's motion for summary judgment was based on following stipulated facts. On January 20, 1998, S.C. Sachs Company, Inc., (Sachs), as contractor, and Aqualon Company (Aqualon), a division of Hercules, Inc. (Hercules), entered into a contract (the contract) for Sachs to perform electrical work at the Aqualon facility. The contract between Sachs and Aqualon contained an indemnification provision, by which Sachs agreed to hold Aqualon and Hercules harmless for all liability for personal injury or death sustained by Sachs' employees, as follows:
3.2 INDEMNITY.
(a) Contractor agrees to defend, indemnify and save Aqualon... [and Hercules] harmless from and against all liability, loss or expense... because of personal injury (including death at any time resulting therefrom) or loss of or damage to property... sustained by any person or persons... arising out of, resulting from, or in consequence of the performance of the work under this Contract... but excluding Claims caused by the sole act or omission (whether negligent or otherwise) of Indemnit es.
The contract required Sachs to procure and maintain a comprehensive general liability policy with a minimum bodily injury limit of $500,000 per occurrence and an umbrella liability policy with a minimum coverage of $2,000,000 per occurrence. The contract required both policies to include Aqualon and Hercules as additional insureds on any claims arising out of or resulting from work performed under the contract. Sachs obtained a comprehensive general liability policy through Fireman's Fund, with a per occurrence general liability limit of $1,000,000. In addition, Sachs obtained a commercial umbrella liability policy through Federal, with excess follow form liability insurance that provided $50,000,000 in coverage above the Fireman's Fund policy. The Federal policy contains an "other insurance" provision, which provided:
Other Insurance
If other insurance applies to claims covered by this policy, the insurance under this policy is excess and we will not make any payments until the other insurance has been exhausted by payment of claims. This insurance is not subject to the terms or conditions of any other insurance.
Aqualon obtained a commercial excess occurrence policy from Gulf, which had a $12,000,000 limit above a $2,000,000 self-insured retention. The Gulf policy's "other insurance" clause provided:
J. Other insurance
If other insurance applies to claims covered by this policy, the insurance under this policy is excess of such other insurance and we will NOT make any payments until the other insurance has been used up. This condition shall not apply, however, if the other insurance is
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