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Guideone Mutual Insurance Company v. Utica National Insurance Group et al

February 28, 2013

GUIDEONE MUTUAL INSURANCE COMPANY, PLAINTIFF AND RESPONDENT,
v.
UTICA NATIONAL INSURANCE GROUP ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of San Diego County, Timothy M. Casserly, Judge. (Super. Ct. No. 37-2009-00062166- CU-IC-NC)

The opinion of the court was delivered by: Nares, J.

CERTIFIED FOR PUBLICATION

Reversed.

This equitable contribution action involves three insurers, GuideOne Mutual Insurance Company (GuideOne), whose insurance policy covered an employee who negligently caused injuries to another person while driving his car in connection with business for his employer, and Utica National Insurance Group and Graphics Art Mutual Insurance Company (collectively Utica), whose policies only covered the driver's employer, who was only vicariously liable for the actions of its employee. GuideOne and Utica settled the underlying action, exhausting GuideOne's primary and umbrella policies. GuideOne thereafter sought and obtained, by summary judgment, contribution in the amount of $600,000 from Utica's umbrella policy, representing an alleged overpayment by GuideOne based upon its pro rata share of coverage. Utica appeals, asserting that because its umbrella policy covered a party only vicariously liable, it should not share pro rata with GuideOne's umbrella policy that covered the tortfeasor employee.

We conclude the court erred in awarding GuideOne equitable contribution in the amount of $600,000 from Utica's umbrella policy, which represented GuideOne's pro rata share of coverage under its own umbrella policy. This is so because an employer is only vicariously liable for the actions of the tortfeasor employee, and therefore all of the insurance policies covering the tortfeasor employee, primary and excess, must be exhausted before the umbrella policy of an insurer that covered only the employer must make a contribution.

INTRODUCTION

While working as a pastor for Crosswinds Community Church (Crosswinds) and Christian Evangelical Assemblies (CEA), and while driving his own car, Gary West struck and severely injured Robert Jester, who was riding his motorcycle. Jester and his wife subsequently sued West, Crosswinds and CEA for personal injuries (Jester action).

The Jester action settled for $4.5 million. West's personal auto insurer, State Farm, paid its $100,000 policy limits. Crosswinds's insurer, plaintiff and respondent GuideOne, paid its $1 million policy limits on a commercial general auto liability policy. GuideOne also paid its $1 million policy limits on a commercial liability umbrella policy. CEA's insurers, Utica, paid its $1 million policy limits on a commercial auto liability policy and $1.4 million out of its $5 million policy limits on a commercial liability umbrella policy.

GuideOne subsequently initiated this equitable contribution action against Utica to collect alleged overpayments it made in the Jester action. GuideOne thereafter brought a motion for summary judgment, which the court granted, finding GuideOne's contribution to the Jester settlement exceeded its proportionate share of coverage by $600,000. The trial court determined the priority of coverage for the $4.5 million Jester action settlement amongst the five policies was (1) State Farm's $100,000 policy; (2) GuideOne's $1 million primary policy and Utica's $1 million primary policy; and (3) $400,000 from GuideOne's $1 million umbrella policy and $2 million from Utica's $5 million umbrella policy, representing the ratio as to the respective coverage held by GuideOne and Utica under those umbrella policies. The court thereafter entered a $600,000 judgment in favor of GuideOne, plus prejudgment interest.

On appeal, Utica asserts the court erred by (1) finding that Utica's umbrella policy covering a party only vicariously liable (CEA) shared pro rata with GuideOne's umbrella policy covering the primary tortfeasor (West), and (2) awarding prejudgment interest from the filing of the lawsuit because GuideOne's damages were not fixed until the court entered judgment in its favor.

As we shall explain in more detail, post, we conclude that the court erred in entering a judgment for $600,000 in favor of GuideOne and that judgment must be reversed. Accordingly, the award of prejudgment interest to GuideOne on that $600,000 judgment must also be reversed.

FACTUAL AND PROCEDURAL BACKGROUND

A. Background

CEA is a religious organization that trains, licenses and ordains ministers, promotes mission activities, and establishes and oversees churches. Crosswinds is one of the churches operating under CEA's oversight and control. Gary West was employed by CEA as Crosswind's pastor.

B. The Accident

On April 8, 2007, West and his wife were taking another couple out to lunch in connection with Crosswinds's and CEA's business. West was driving his 2002 Hyundai Elantra. While making a left turn into a restaurant parking lot, West collided with Jester, who was riding his motorcycle, resulting in catastrophic injuries to Jester.

C. The Jester Action

In May 2007 Jester and his wife Susan sued CEA, Crosswinds and West for personal injuries. Jester alleged that West owned and was driving the Hyundai involved in the accident. Jester further alleged that West was a minister ordained by CEA and was an ...


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