"secondary" coverage, one would expect its premium to be significantly lower to reflect its lower risk.
Third, this is not a case, such as in Keene, where an insured is litigating coverage issues against multiple insurers. This case is in the very different posture of litigation of coverage issues between insurers. In such a case, there is no contract, or other agreement, between the parties to this litigation that the Court may turn to as a primary source. Instead the Court must examine the parties' rights and liabilities in light of their contracts with a mutual third party (their insured). Viewed in this light it is inequitable and somewhat arbitrary to bind Continental to an ambiguous clause in a contract between its insured, Dr. Love, and his previous insurer.
Fourth -- and most important -- the existence of the "other insurance" language of the Glacier policy does not negate the "other insurance" provisions of the Continental policy.
As Glacier correctly points out, the Continental policy provides that "the insurance afforded by this policy is primary insurance. . . ." However, the policies at issue are consecutive and not concurrent, and as previously noted, both policies may be considered "primary" within their coverage period. The Continental policy goes on to provide that "when both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, the company shall . . . be liable [as set forth below]." The contract then sets forth two formulas; "contribution by limits" is applicable when, as in the present case, the "other insurance does not provide for contribution by equal shares. . . ." Giving effect to the language of the Glacier policy would require this Court to ignore the Continental policy's contrary provision on the allocation of other insurance. Where, as here, the terms of the two policies are repugnant, it is not appropriate to merely give effect to one policy or the other. See infra pages 131-132. Instead the Court must read out the repugnant clauses and decide the case on the basis of the remaining language and the applicable law.
Thus, for the reasons above, as well as this Court's belief in the limited scope of the Keene opinion, the Court will deny Glacier's motion for summary judgment predicated on the argument that the entire loss must be allocated to Continental according to the terms of Glacier's "other insurance" clause.
The denial of Glacier's motion still leaves the issue of allocation open. As noted above, the two policies are in conflict on this issue and the "injury" or "loss" is incapable of accurate apportionment between the relevant time periods. In sum, this case is factually distinguishable from the usual multiple coverage case
and there is no obvious method for dividing the "loss."
The Court is not completely without guidance, however. For example, the Oregon Supreme Court considered the problem of apportionment where one of two automobile liability policies contained an "excess insurance" provision and the other policy contained a "pro rata" distribution provision. Lamb-Weston, Inc. v. Oregon Automobile Ins. Co., 219 Ore. 110, 341 P.2d 110 (1959). Recognizing the repugnancy of the two clauses, the Court examined the various rules of law and interpretation adopted by the courts in reconciling such conflicting language. The court declined to adopt any of the various rules and held that in such a situation the insurers should share the loss proportionately. The court reasoned that such repugnant clauses could not in fact be reconciled and rather than attempting to do so, both clauses should be rejected. See also Cosmopolitan Mutual Ins. Co. v. Continental Casualty Co., 28 N.J. 554, 147 A.2d 529 (1959) (when "excess insurance" provisions are mutually repugnant, they become "inoperative" and "each company is obligated to share in the cost of the settlement and expenses." 3 R. Long, The Law of Liability Insurance § 22.08 (1981) (discussing Lamb-Weston and citing other cases).
Other courts have adopted a variety of "artificial and forced rules" for determining the liability of multiple insurers. See id. Some courts shift the liability to the insurer of the primary tortfeasor; other courts fix liability on the insurer whose contract is deemed the "most specific" or the insurer who was first in time of issuance.
This Court does not believe that any of these formulas reach the central issue involved -- the language and intent of the parties. See Woodrich Construction Co. v. Indemnity Insurance Co., 252 Minn. 86, 89 N.W.2d 412 (1959) ("the decision must rest upon a construction of the language employed by the respective insurers and not upon . . . any other arbitrary rule or circumstance"). Obviously, the two policies are drafted without reference to each other and, in many circumstances, the underwriter will not have been able to anticipate the conflict. In such a case, speaking of the particular "intent" of the insurer is meaningless, and the language of the repugnant other insurance clauses should be rejected as a basis for decision.
Although the present case may be distinguished from many of the "other insurance" cases discussed above, in that those cases deal with two policies that clearly cover a single loss, whereas the present case involves a loss "divided" between two policies, the Court finds the holdings in those cases instructive. It is generally held that when the conflicting clauses are ignored, as they must be, the Court should -- in the absence of other grounds for distinguishing the policies -- evenly prorate the loss between the two insurers. See United States Fidelity & Guaranty Co. v. Liberty Mutual Ins. Co., 327 F. Supp. 462 (M.D. Pa. 1971) (loss prorated based upon maximum limits of each policy where provisions of policies mutually repugnant); Cosmopolitan Mutual; Lamb-Weston, supra.
This outcome is further supported by local precedent providing for equal distribution of the loss where the time of the loss cannot be established with sufficient precision to place it within one of the two coverage periods. Transamerica Insurance Co. v. Diplomat Parking Corp., 282 A.2d 564 (D.C. 1971). The court in Transamerica noted that the liability rule adopted in that case closely paralleled the liability of joint tortfeasors. Id. at 566 (citing Summers v. Tice, 33 Cal.2d 80, 199 P.2d 1 (1948); Ybarra v. Spangard, 25 Cal.2d 486, 154 P.2d 687 (1944); Restatement (Second) of Torts § 433B (1965)). This analogy is appropriate in the present action as well. The parties in this case, through their contracts of insurance, assumed liability for the acts of their insured within the relevant coverage periods. In this case, the negligent acts of the insured in the Glacier coverage period together with the negligent acts of the insured in the Continental coverage period jointly resulted in indivisible injuries to Mr. Cephas. Because the insurers "assume" liability for the actions in the two different time periods, their position is analogous to two persons whose separate acts resulted in an indivisible injury to Mr. Cephas. If the two insurers were tried as defendants in a tort action arising from such an injury their liability would be joint. In the present case, the insurers' liability, based on their contractual obligations, should also be joint. Absent a more accurate means of apportioning this joint liability, the parties must make equal contributions towards the total damage award.
Because the Court is aware that the parties have already made equal contributions to the settlement, no further distribution is necessary. The proper allocation of liability is the status quo. An appropriate Order will issue in accordance with the terms of this opinion.
In accordance with the Memorandum Opinion issued this 19th day of March, 1985, it is hereby
1) Plaintiff's Motion for Summary Judgment is denied;
2) Defendant's Motion for Summary Judgment is denied;
3) The above-captioned case shall be, and is, dismissed.