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Hocker v. New Hampshire Ins. Co.

Hocker v. New Hampshire Ins. Co.

United States Court of Appeals for the Tenth Circuit

January 7, 1991, Filed

No. 89-8059

Opinion

 [*1478]  McKAY, Circuit Judge

This diversity action is an appeal by defendant First State Insurance Company, the excess insurance carrier for plaintiffs Robert Hocker and Wayne Cummins, from an order dismissing First State's crossclaim against defendant New Hampshire Insurance Company, plaintiffs' primary insurer. First State appeals the district court's interpretation of its contractual obligation to drop down and defend the plaintiffs, the court's ruling that First State's "unclean hands" bars its equitable subrogation  [**2]  crossclaim, and the court's refusal to recognize a direct cause of action against New Hampshire independent of equitable principles.

Plaintiffs Robert Hocker and Wayne Cummins were employees of the John E. Burns Drilling Company. Mr. Hocker worked as a tool pusher and Mr. Cummins worked as a drilling superintendent on a drilling rig in Wyoming in February 1980. On February 27, 1980, Larry Julian, a roughneck employed with Burns Drilling, was injured when a chain on the drilling rig broke and struck him in the face.

At the time of the accident, Burns Drilling and its employees were insured by New Hampshire Insurance Company under a general liability policy that provided primary coverage in the amount of $ 500,000.00. Burns Drilling and its employees were also insured under an umbrella liability policy issued by First State Insurance Company for up to $ 10,000,000.00.

Four years after the accident Mr. Julian filed Julian v. Energy Reserves Group, Inc., Civil No. 56620, in Wyoming State District Court. The complaint alleged that defendants Robert Hocker, Wayne Cummins and John Burns, president and general manager of Burns Drilling, had caused his injuries through their negligence.

 [**3]  Burns Drilling had been discharged in bankruptcy at the time Mr. Julian filed suit. John Burns forwarded the complaint to John Burk, the attorney representing Burns Drilling in bankruptcy proceedings, and assured Messrs. Hocker and Cummins that a defense would be provided for them. Unfortunately, as the ensuing events unfolded, no defense was ever provided.

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922 F.2d 1476 *; 1991 U.S. App. LEXIS 111 **

ROBERT ROSS HOCKER and WAYLON CUMMINS, Plaintiffs, v. NEW HAMPSHIRE INSURANCE COMPANY, a New Hampshire corporation, Defendant/Cross-Claim Defendant/Appellee, v. FIRST STATE INSURANCE COMPANY, a Massachusetts corporation, Defendant/Cross-Claim Plaintiff/Appellant, AMERICAN INTERNATIONAL ADJUSTMENT COMPANY, a Delaware corporation, Defendant

Prior History:  [**1]  Appeal from the United States District Court for the District of Wyoming; D.C. No. C87-239-B; D.C. Judge Clarence A. Brimmer, Jr.

Disposition: Affirmed.

CORE TERMS

insured, drop, district court, coverage, excess carrier, excess insurer, bad faith, settlement, obligated, Drilling, equitable subrogation, duty to defend, primary insurer, occurrences, wrongfully, carrier's, contractual obligation, direct cause, circumstances, crossclaim, primary carrier, refuse to defend, breached, contractual duty, good faith, contractual, investigate, underlying insurance, equitable principle, refuse to recognize

Civil Procedure, Appeals, Standards of Review, De Novo Review, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Judicial Review, General Overview, Entire Contract, Contracts Law, Defenses, Ambiguities & Mistakes, Ambiguous Terms, Construction Against Insurers, Excess Insurance, Obligations, Duty to Defend, Types of Insurance, Liability & Performance Standards, Good Faith & Fair Dealing, Business & Corporate Compliance, Industry Practices, Unfair Business Practices, Claims Investigations & Practices, Transportation Law, Carrier Duties & Liabilities, Damages, Bad Faith & Extracontractual Liability, Subrogation, Voluntary Payments, Settlements, Refusals to Defend, Equity, Maxims, Clean Hands Principle, Remedies, Equitable Relief, Unclean Hands, Defenses, Demurrers & Objections, Affirmative Defenses, Torts, Elements, Duty, Foreseeability of Harm