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Federal Insurance Co. v. Gulf Insurance Co.3/8/2005
eement and Full and General Release to release Sachs from any causes of action for indemnity, and therefore the indemnification agreement no longer controls the allocation of insured liability. This argument has no merit. Federal and Gulf explicitly agreed that the settlement agreement would not constitute a waiver of their rights and defenses against each other:
It is the intention of Federal Insurance Companies and Gulf Insurance Group, with respect to any such claims, causes of action, or action against each other, to preserve all rights and/or defenses available under their respective insurance policies as of the time of the execution of this Agreement, and nothing contained herein should be construed as a waiver of any such rights and/or defenses as against each other.
Gulf preserved its defense to equitable contribution on the basis of the indemnity agreement by this language. See St. Paul, 365 F.3d at 274 n 6.
2. Insurance Policy Covering Settlement
The next consideration is whether the excess carrier had provided the indemnitor with a policy that covered the settlement. Wal-Mart, 292 F.3d at 587. Federal does not dispute that its policy covered the settlement; rather, it claims that Gulf's policy also covers it.
3. Intentions and Relationship of Parties and Prejudice to Insurers
A third consideration is whether the indemnity agreement reflects the intentions of and relationship between the parties and does not unfairly prejudice the insurers. Wal-Mart, 292 F.3d at 587; St. Paul, 365 F.3d at 271. Aqualon and Sachs contracted to assign to Sachs and its insurers the risks of bodily injury that was not solely the result of an act or omission by Aqualon, including death, arising out of the contracted work. Aqualon required Sachs to obtain a minimum of $2,500,000 in contractual liability coverage. Aqualon elected not to insure the first $2,000,000 in loss beneath the Gulf policy. Aqualon's substantial retained limit beneath the Gulf policy is consistent with the parties' intention that Sachs obtain an excess policy with a $2,000,000 liability limit in addition to a primary policy and the expectation that Sachs, and its insurers, would indemnify Aqualon for the bodily injury or death of a Sachs employee while on Aqualon's premises in the performance of the contracted work. The Fireman's and Federal policies satisfied the insurance requirements for contractual liability.
Conclusion
Sachs' obligation to indemnify Aqualon requires Sachs' insurers to cover the entire settlement amount. The trial court erred as a matter of law in allowing Sachs' insurer, Federal, to obtain equitable contribution from Aqualon's insurer, Gulf. Point one is granted.
The summary judgment entered by the trial court is reversed and the case is remanded.
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