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Federal Insurance Co. v. Gulf Insurance Co.3/8/2005
ured, Aqualon, in an "insured contract," and the liability was covered solely by the Federal policy. We agree.
A. General Rule -- Equitable Contribution
The trial court's award of equitable contribution to Federal was based on its application of a general rule governing "other insurance" clauses. Under this rule, if neither concurrent policy has an "other insurance" ; provision, both insurers are required to prorate in proportion to the amount of insurance provided by their respective policies. Arditi v. Massachusetts Bonding & Insurance Co., 315 S.W.2d 736, 743 (Mo. 1958). When both policies contain similar "other insurance" clauses, the clauses are treated as mutually repugnant and are disregarded. Id. In this situation, the losses are prorated as though neither policy had an "other insurance" clause. Id. Arditi applies to concurrent primary policies, but this rule also applies to concurrent excess policies. Crown Center v. Occidental Fire & Cas. Co., 716 S.W.2d 348, 355 (Mo.App. 1986); see also Planet Ins. Co. v. Ertz, 920 S.W.2d 591, 595 (Mo.App. 1996). This rule requires the insurers to prorate the loss in proportion to the amount of coverage by their respective policies and allows the insurer paying more than its share of the claim to recover the excess paid from the other insurer.
B. Exception -- Indemnity Agreements
However, an exception to this general rule has developed in situations in which "the policy of the insurer seeking to invoke the 'other insurance' clauses also covers another insured who is liable to indemnify the insured in the policy of the other insurer." American Indem. Lloyds v. Travelers Property, 335 F.3d 429, 436 (5th Cir. 2003) (predicting Texas law). "In a variety of commercial relationships, such as lessor-lessee and contractor-subcontractor, the contracts between the parties contain indemnification agreements in which one agrees to hold the other harmless for its own acts of negligence or that of its employees. Such contractual arrangements can nullify a right to contribution." 15 L EE R. RUSS & THOMAS F. SEGULLA, COUCH ON INSURANCE 3 D Section 218:19, p. 218-25 (1999). Thus, "an indemnity agreement between the insureds, or a contract with an indemnification clause, such as is commonly found in the construction industry, may shift an entire loss to a particular insurer notwithstanding the existence of an other insurance clause in its policy." Id. at section 219.1, p. 219-7 citing J. Walters Const., Inc. v. Gilman Paper Co., 620 So.2d 219 (Fla. App. 1 Dist. 1993) (applying Georgia law).
" ost, if not all, jurisdictions to have faced the question of whether an indemnification agreement could relieve particular insurers of an obligation to pay, without resort to a separate action to enforce the indemnification agreement, have answered in the affirmative." St. Paul Fire Ins v. Am Intern Spec Lines, 365 F.3d 263, 272 (4th Cir. 2004) (predicting Virginia law). These cases give "controlling effect to the indemnity obligation of one insured to the other insured over 'other insurance' or similar clauses in the policies of the insurers, particularly where one of the policies covers the indemnity obligation." American Indem., 335 F.3d at 436. See also Wal-Mart Stores, Inc. v. RLI Ins. Co., 292 F.3d 583, 587 (8th Cir. 2000) (predicting Arkansas law); Rossmoor Sanitation, Inc. v. Pylon, Inc., 13 Cal.3d 622, 119 Cal. Rptr. 449, 532 P.2d 97 (Cal. 1975); Hartford Cas. Ins. Co. v. Mt. Hawley Ins. Co., 123 Cal. App. 4th 278, 20 Cal. Rptr. 3d 128 (Cal. Ct. App. 2004); J. Walters, 620 So.2d at 221; Chubb Ins. Co. of Canada v. Mid-Continent Cas. Co., 982 F.Supp 435, 438 (S.D. Miss. 1997).
The rationale for this exceptio
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