Progressive Paloverde Insurance Company v. Hartford Fire Insurance Company
Docket: 03-1195
Court: Court of Appeals for the Fourth Circuit; January 23, 2004; Federal Appellate Court
Progressive Paloverde Insurance Company (Progressive) filed a lawsuit against Hartford Fire Insurance Company (Hartford) seeking a declaratory judgment that Hartford was the primary insurer for injuries sustained by Timothy Freeman on July 14, 1998. The incident involved Freeman, who was insured by Progressive, and occurred after he hit a curb, prompting him to call for assistance from American Towing, whose tow truck was insured by Hartford. After changing Freeman's tire, the tow truck driver, Leslie Davis, was involved in a hit-and-run accident that injured both him and Freeman. Freeman subsequently settled with Progressive, which paid him $100,000 for his injuries and $10,000 for releasing any bad faith claims against them. As part of the settlement, Freeman assigned any additional claims to Progressive.
In January 2002, Progressive sued Hartford in federal court, asserting that Hartford should be responsible for the primary coverage of Freeman's injuries and sought reimbursement for the payments made to Freeman. The district court dismissed Progressive's claim at summary judgment, concluding that Progressive was the primary insurer. The appeals court reversed this decision, determining that Hartford's policy provided primary coverage for Freeman's injuries, while Progressive's policy was only for excess coverage. The case was reversed and remanded for further proceedings.
Both Progressive and Hartford have appealed a judgment regarding uninsured motorist coverage for Freeman's injuries. Progressive contends that the district court incorrectly determined its policy provided primary coverage while neglecting to assess whether Hartford's policy also offered primary coverage. Conversely, Hartford disputes the district court's finding that its policy covers Freeman at all.
Initially, the court addressed Hartford's claim. It upheld the district court's conclusion that Freeman was covered under Hartford's uninsured motorist provisions, interpreting the policy's language as clear and unambiguous. The policy states it will pay compensatory damages to an 'insured', defined as the named insured or anyone 'occupying' a covered vehicle. The district court determined Freeman was "upon" and thus "occupying" the tow truck during the accident. Hartford did not contest this finding but argued that its policy should be interpreted under West Virginia case law to substitute "occupying" with "using," which would eliminate coverage for Freeman. The court rejected this argument, affirming that Hartford's policy, as written, provides adequate coverage aligned with state law and does not contravene statutory minimums.
Having established that Freeman is covered by the Hartford policy, and recognizing that Freeman's injuries are also covered by the Progressive policy, the court then examined the priority of coverage. It determined that Hartford, not Progressive, is the primary insurer based on the clear language of both policies. The court found that Progressive's 'Other Insurance' clause states it will only contribute its share if other applicable coverage exists, indicating that it provides excess coverage over any other uninsured or underinsured motorist coverage, except in specific circumstances involving the policyholder or relatives occupying a covered vehicle. Thus, the court concluded that the district court erred in finding Progressive’s policy as primary over Hartford's regarding Freeman's injuries.
The Progressive policy defines "occupying" as "in, on, entering, or exiting." The policy provides excess coverage unless Freeman's injuries occurred while he was in these states related to his vehicle. The district court found Freeman did not fit this definition since he was leaning against a tow truck across the street at the time of the accident. However, the court erred by misinterpreting the policy, mistakenly equating "occupying" with "using," based on the Adkins case. Adkins clarified that "occupying" does not become void in favor of "using" unless the policy language contradicts statutory requirements, which is not applicable here as West Virginia law does not dictate how coverage is allocated between carriers.
Consequently, Progressive's policy is enforceable as written, confirming it provides only excess coverage for Freeman's accident. In contrast, Hartford's policy is determined to be primary. The Hartford policy states that for owned vehicles, it provides primary insurance, while it offers excess coverage for vehicles not owned by the insured. The term "you" in Hartford's policy refers to American Towing, the named insured, which owns the tow truck involved. Therefore, Hartford's policy must provide primary coverage for injuries sustained by individuals like Freeman while occupying the tow truck, regardless of Freeman's ownership status.
The district court erred by assigning all liability to Progressive without assessing Hartford's potential primary coverage. If both policies were found to provide primary coverage, liability would need to be prorated between the two insurers per their respective "Other Insurance" clauses. The judgment of the district court is reversed, and the case is remanded with instructions for Hartford to reimburse Progressive $100,000 for Freeman's injuries.
