8th Circuit orders insurance payment in wrongful death suit

An insurance policy that provides coverage “excess over any other collectible insurance” must pay before a second policy that provides coverage “excess of all underlying insurance,” a panel of the 8th U.S. Circuit Court of Appeals ruled on July 2, reversing an order for the policies to split payment under Missouri’s mutual-repugnancy doctrine.

Michael Swanson killed a motorcyclist while driving his parents’ Toyota Camry. When a wrongful death lawsuit settled against him, his personal automobile liability policy paid all the way up to its coverage limits.

However, a $2 million settlement balance remained.

The motorcyclist’s estate had alleged that Swanson was on the job when the accident occurred, so two other policies then came into play, both issued to Edward Jones Trust Company, Swanson’s employer.

One was a commercial automobile policy provided by Hartford Fire Insurance Company, with coverage that “is excess over any other collectible insurance.”

The second was purchased through Chubb Custom Insurance Company, which provided coverage “for covered damages in excess of all underlying insurance.”

Hartford filed a declaratory judgment action, asserting that the dueling excess clauses were irreconcilable, which under Missouri law constituted mutual repugnancy. The district court agreed, granting summary judgment to Hartford and ordering the two insurers to share the $2 million payment.

Chubb appealed, arguing that it was required to pay only after every other insurer had exhausted its coverage, leaving Hartford on the hook for the entire $2 million.

In an opinion authored by Judge David R. Stras and joined by Judges L. Steven Grasz and Jonathan A. Kobes, the court reversed.

Giving effect to both policies, the court said the language was clear who should pay first.

“Hartford’s policy is ‘excess over any other collectible insurance,’” the court wrote. “Collectible, in this context, means ‘capable of being collected.’ Recall that, in addition to the Hartford and Chubb policies, Swanson had a personal automobile policy, which was primary. It covered the accident and paid to its limit, which triggered Hartford’s duty to pay according to its excess clause. No one disputes that it was ‘collectible.’

“The opposite was true of Chubb. As the provider of a true excess policy, its duty to pay depended on whether ‘covered damages’ remained ‘in excess of all underlying insurance.’ That is, it was ‘excess over any other insurance,’ collectible or not. Hartford’s policy, although excess in some circumstances, qualifies as ‘any other insurance.’”

Reading the provisions together, the plain language established the ordering of the policies, the court said: Swanson’s personal automobile-liability insurer pays first, followed by Hartford, then Chubb.

“Third in line, the Chubb policy would come into play only if the others did not fully cover the settlement,” the court added.

The word “collectible” was the differentiator between the case and prior precedent, the court explained.

Hartford relied upon Farm Bureau Town & Country Ins. Co. of Mo. v. Am. Alt. Ins. Corp., a 2011 Missouri Court of Appeals decision involving a volunteer firefighter who caused an on-the-job traffic accident while driving his own car. Three policies potentially provided coverage, with two insurers battling over payment like Hartford and Chubb.

There, the court found the excess clauses “comparable” without a clear order of priority.

“In this case, however, distinguishing between Hartford and Chubb is possible by giving ‘effect … to the plain terms of the agreement[s],’” the court said. “Hartford’s policy is excess over ‘other collectible insurance,’ which includes Swanson’s personal automobile-liability policy. Chubb’s policy, by contrast, is ‘excess of all underlying insurance’ — that is, everything else. Comparing the two, it becomes clear that there is no circularity problem in deciding that Hartford, with its differing language, comes next.”

The court vacated the district court’s judgment and remanded with instructions to grant Chubb’s motion for judgment on the pleadings.

Neither Stephen M. Klepper of Kramon & Graham in Baltimore, Md., who represented Hartford, nor Kansas City attorney Kevin D. Brooks of Baker Sterchi Cowden & Rice, who represented Chubb, responded to a request for comment on the case.

The case is Hartford Fire Insurance Company v. Chubb Custom Insurance Company, No. 24-1159.