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Allied Mutual Insurance Co. v. City of Lincoln4/8/2005
NATURE OF CASE
Allied Mutual Insurance Company (Allied), an insurer for the City of Lincoln, filed a declaratory judgment action to construe and determine the validity of insurance contracts written by Allied and Genesis Insurance Company (Genesis) as insurers for the city. The city filed a cross-petition in the action and sought declaratory judgment that the Allied policy and the public entity policy issued by Genesis extended coverage for the city's liability. The claims against the city were based upon an automobile accident that occurred in March 1998, wherein Sarah Cockson was injured and Laura Cockson was killed when the car in which they were passengers collided with another automobile driven by Jeffrey Ireland. At the time of the accident, the automobile operated by Ireland was being pursued by an officer with the Lincoln Police Department. All parties moved for summary judgment. The district court entered summary judgment in favor of Genesis and denied summary judgment for Allied and the city. Allied appeals, and the city cross-appeals.
BACKGROUND
In 1999, Sarah Cockson, in her individual capacity, and Robert Cockson, as personal representative of the estate of Laura Cockson, filed a claim against the city under Neb. Rev. Stat. ยง 13-911 (Reissue 1997) of the Political Subdivisions Tort Claims Act, alleging that the accident was proximately caused by the actions of the police officer during the vehicular pursuit.
In 2000, a settlement agreement was reached between the city and the Cocksons. The city then demanded that Allied and Genesis indemnify it pursuant to the insurance policies issued by each insurer to the city. Allied had issued the city a business automobile policy for September 1, 1997, through September 1, 1998, and Genesis had issued the city a public entity policy for that same time period. Genesis denied that its policy provided coverage for the city's liability. Genesis claimed that its policy provided automobile hazard coverage only for those losses emanating out of the StarTran public transportation system. Allied did not concede that its policy provided coverage, but loaned the city $306,682 to use as a partial payment to satisfy the settlement. The receipt for Allied's loan provides that the city will repay amounts loaned by Allied in the event that a court finds that the Allied policy did not provide coverage for the injuries sustained by the Cocksons as a result of the accident.
Allied's policy provides, in relevant part:
SECTION II - LIABILITY COVERAGE
A. COVERAGE
We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto".
B. EXCLUSIONS
This insurance does not apply to any of the following:
1. EXPECTED OR INTENDED INJURY
"Bodily injury" or "property damage" expected or intended from the standpoint of the "insured".
Endorsement No. 11 of the Genesis policy contains the following limitation: "Coverage provided by this policy within the automobile hazard, including no-fault (personal injury protection), uninsured motorists and underinsured motorists coverages, is limited to only those autos owned, operated, used, maintained or repaired, including loading or unloading, by StarTran."
All parties filed motions for summary judgment. On May 30, 2002, the district court sustained Genesis' motion, but denied Allied's motion. The district court did not address the city's motion at that time. In its order, the district court
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