Opinion
Case No. 09-CV-500-GKF-TLW.
May 20, 2010
OPINION AND ORDER
This matter comes before the court on the Motion for Summary Judgment [Doc. No. 11] by defendant Peerless Insurance Company ("Peerless") and the Cross-Motion for Summary Judgment [Doc. No. 13] by plaintiff Lexington Insurance Company ("Lexington"). For the reasons set forth below, Peerless's motion is granted and Lexington's motion is denied.
The m aterial facts of this c ase are undisputed. The Geary Nursing Hom e, the Geary Community Clinic, and the Geary Storage Buildingwhich the parties agree are owned and operated by the Cheyenne and Arapaho Tribes of Oklahoma, sustained significant storm damage as a result of a storm that occurred on August 19, 2007. At the time of the loss, the damaged buildings were covered by two separate insurance policies, one issued by Le xington and one by Peerless. The Tribes' covered loss is $1,292,153.74, an amount within the policy limits of either policy.
The parties have stipulated that both issued insurance policies that c overed the property damage sustained by the insured. [Doc. No. 12, Stipul ation of Facts, ¶ 4-7]. In pertinent part, Lexington's "other insurance" clause provides:
This Policy shall not attach or become insurance upon any property which at the time of loss is more specifically described and covered under any other policy formuntil the liability of such other insurance has first been exhausted and shall then cover only the excess value of such property over and above the amount payable under such other insurance, whether collectible or not.
[Doc. No. 12, Stipulation of Facts, ¶ 8]
Defendant Peerless' policy provides a similar "other insurance" clause:
If there is other insurance covering the same loss or damage, . . . we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not. But we will not pay mo re than the applicable Lim it of Insurance.
[Doc. No. 12, Stipulation of Facts, ¶ 9]
Plaintiff Lexington urges application of the "Guiding Principles for Overlapping Insurance Coverage," which reflects insurance industry standards for apportioning payment where concurrent insurance coverage exists. Lexington alleges that under the Guiding Principles analysis, defendant Peerless' insurance policy provides m ore specific coverage than does Lexington's policy and is therefore primary and should be exhausted before Lexington is made to pay. Conversely, defendant Peerless, which is not a signatory to the Guiding Principles, asserts that Oklahoma law dictates that the "other insurance" clauses cancel each other out and the insurers are to share coverage on a pro rata basis.
Because this case arises under the federal c ourt's diversity jurisdiction, Oklahom a law governs the parties' coverage dispute. See TMJ Implants, Inc. v. Aetna, Inc., 498 F.3d 1175, 1181 (10th Cir. 2007). Under Oklahoma law, "an insurance policy is to be treated as a contract and will be enforced according to its terms." Equity Mutual Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 747 P.2d 947, 953 (Okla. 1987). The "whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the others." Dodson v. St. Paul Ins. Co., 812 P.2d 372, 377 n. 11 (Okla. 1991) (quoting Okla. Stat. tit. 15 § 157). Accordingly, when determining a policy's scope, courts interpret the policy as a whole. See id.
Here, both policies contain "other insurance" clauses, the language of which purport to make each policy excess to the other. Equity Mutual, 747 P.2d at 954 (defining excess coverage as that insurance coverage "provided when, under the terms of the policy, the insurer is liable for a loss only after any prim ary coverage-other insurance-has been exhausted"); see American Cas. Co. of Reading PA v. Health Care Indem., Inc., 520 F.3d 1131, 1136 (10th Cir. 2008) (noting that "[a] policy need not use the word excess to be an excess policy").
Under Oklahom a law, when two policies each provide excess coverage, the "ot her insurance" clauses are to be "disregarded, with the loss shared by the insurers on a pro rata basis." Equity Mutual, 747 P.2d at 954; see American Cas. Co. of Reading PA, 520 F.3d at 1136 (finding two other-insurance clauses to each provide excess coverage and holding that apportionment on a pro rata basis is appropriate in Oklahom a). Absent concurring provisions for apportionm ent, the apportionment is to be determined "according to the ratio each respective policy limit bears to the cumulative limit of all concurrent policies." Equity Mutual, 747 P.2d at 954. Nowhere in Equity Mutual does the Oklahom a Supreme Court suggest that its analysis shoul d be limited to liability policies.
Furthermore, this Court rejects Lexington's argument that the Peerless policy, because it covers only the four dam ages buildings as opposed to the forty tribal buildings covered by the Lexington policy, is a "specific" policy that must be entirely exhausted before the Lexington policy can be called upon for a contribution. First, Lexington offers no authority for the proposition that Oklahoma has adopted this approach for resolving such disputes. Second, the Peerless policy is itself a "blanket" policy, as it utilizes that term to extend the lim it of insurance to each of the buildings covered. Whether a particular policy is "blanket" has nothing to do with the number of buildings covered. Third and finally, the Tenth Circuit at least implicitly rejected the "blanket" vs. "specific" argument
Because the instant acti on does not involve a genuine dispute as to any m aterial fact and cannot be m eaningfully distinguished from either Equity Mutual or American Casualty Co. of Reading PA, plaintiff Lexington's Cross-Motion for Summary Judgment [Doc. No. 13] is denied, and defendant Peerless' Motion for Summary Judgment [Doc. No 11] is hereby granted.
IT IS SO ORDERED.