“Other Insurance” Clause and Responsibility for Post-Judgment Interest
In General Cas. Co. of Wisconsin Inc. v. Philadelphia Indemnity Ins. Co., General Casualty Company of Wisconsin (“General Casualty”) filed a declaratory judgment action against Philadelphia Indemnity Insurance Company (“Philadelphia Indemnity”), seeking reimbursement for damages that General Casualty paid on behalf of their mutual insured, Carmichael Leasing Company. Carmichael leases various commercial trucks to Open Kitchens, Inc. General Casualty issued a $1 million commercial automobile liability policy to Open Kitchens. Philadelphia Indemnity issued a $1 million commercial automobile liability policy to Carmichael. Both policies contained identical “Other Insurance” clauses, providing: “For any covered ‘auto’ you own, this Coverage Form provides primary insurance. For any covered ‘auto’ you don’t own, the insurance provided by this Coverage Form is in excess over any other collectible insurance.” Both policies also contained identical supplementary payment provisions providing that, in addition to the policy limit, the insurer would pay all interest on the full amount of any judgment that accrues after entry of the judgment in any suit against the insured we defend. The General Casualty policy also contained an endorsement providing that vehicles that Open Kitchens leased from Carmichael would be considered a “covered” auto that Open Kitchens owned. In addition, General Casualty’s policy in favor of Open Kitchens included Carmichael as an additional insured.
Emma Taylor filed a survival and wrongful death complaint against Carmichael. The complaint alleged that while the decedent was working as a loader at Open Kitchens, he was struck and fatally injured by a truck that was owned by Carmichael. Carmichael tendered its defense to General Casualty and indicated in its tender that it elected to trigger General Casualty’s coverage “to the exclusion of any other applicable policies that may provide liability coverage.” General Casualty accepted the tender without a reservation of rights and reimbursed Philadelphia Indemnity for its prior defense costs. The wrongful death lawsuit proceeded to trial, and the jury’s verdict awarded the underlying plaintiff $1.5 million.
At the conclusion of the direct appeal of the wrongful death lawsuit, the amount due totaled $1,906,487.13, consisting of the original $1.5 million jury award and $406,487.13 in post-judgment interest. General Casualty wrote to Philadelphia Indemnity, suggesting that General Casualty would pay $1 million (its policy limit) and Philadelphia Indemnity would pay the remaining amount. Philadelphia Indemnity, however, paid $500,000, and General Casualty paid the remaining $1,406,487.13 of the jury award. General Casualty notified Philadelphia Indemnity that it was reserving its right to seek reimbursement from Philadelphia Indemnity and that if General Casualty prevailed “in the declaratory action,” it would also seek post-judgment interest.
The issues before the court were: (1) whether General Casualty provided excess coverage to Carmichael, (2) whether General Casualty could seek reimbursement, (3) whether General Casualty waived arguments that its policy was excess and (4) whether Philadelphia indemnity is responsible for post-judgment interest. With regard to the first issue of whether General Casualty provided excess coverage to Carmichael, Philadelphia Indemnity argues that General Casualty is a primary, not excess insurer. The court determines that this contention is without merits. Philadelphia Indemnity never raised this argument before the trial court. Since this argument was never presented to the trial court, it is forfeited.
In regard to the second issue before the court of whether General Casualty could seek reimbursement, the court examined various cases concerning the targeted tender doctrine and “other insurance” clauses. The court noted that the common and determinative elements shared by these cases is that, in each, the insurance issue- that held by the insured and provided by his multiple insurance- originated from primary policies. The court, therefore, concludes that, since “all the insurers stood in the same position with respect to the potential duty of defense and indemnification owed to the insured,” the rule to derive from these cases is that where the concurrent multiple policies held are primary policies, the targeted tender rule prevails over any other insurance clause and allows the insured to select which insurer will defend and indemnify him. It is clear that Carmichael’s targeted tender to General Casualty did not render General Casualty’s “other insurance” clause in which coverage was primary for the vehicles that Open Kitchens “owned” and excess for other vehicles. There was no evidence provided that the vehicle which struck and killed Taylor was listed on the schedule. As such, General Casualty was an excess insurer in this case, and Philadelphia Indemnity was the primary insurer. Carmichael’s targeted tender to its excess insurer (General Casualty) did not prevail over the excess insurer’s (General Casualty’s) “other insurance” clause.
The third issue before the court was whether General Casualty waived arguments that its policy was excess. The question is not whether General Casualty knew the contents of its own policy, but rather when Carmichael tendered the defense of the underlining litigation, whether a targeted tender trumped General Casualty’s “other insurance” provision was not a known right that General Casualty relinquished.
The last issue before the court was whether Philadelphia Indemnity is responsible for the post-judgment interest. Philadelphia Indemnity argues that if the court finds that General Casualty provided excess coverage, the court should reduce the judgment against Philadelphia Indemnity by the amount of the post-judgment interest that accrued while General Casualty was defending Carmichael. The court rejects this argument on the basis that Philadelphia Indemnity did not cite to any authority in support of its argument. The court determined that Philadelphia Indemnity is responsible for the payment of all post-judgment interest.
The court held the insured’s targeted tender of its defense to one of its insurers did not prevail over the “other insurance” clause in the insurer’s policy, because the insurer provided only excess insurance. In addition, the insurer did not waive any claim for reimbursement by its conduct. Finally, the insurer is entitled to reimbursement for its payment of post-judgment interest.
General Cas. Co. of Wisconsin Inc. v. Philadelphia Indemnity Ins. Co. 2013 WL 3379142 (Ill.App. 1 Dist.). (This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(3)(1)).
