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Nautilus Ins. Co. v. Lexington Ins. Co.

Nautilus Ins. Co. v. Lexington Ins. Co.

Supreme Court of Hawai'i

February 13, 2014, Decided; February 13, 2014, Filed

SCCQ-12-0000977

Opinion

 [**636]  [*285]   OPINION OF THE COURT BY ACOBA, J.

The United States Court of Appeals for the Ninth Circuit (Ninth Circuit) certified the following questions of law to this court:

1. Whether an insurer may look to another insurer's policy in order to disclaim the duty to defend, where the complaint in the underlying lawsuit alleges facts within coverage.

2. Whether an "other insurance" clause that purports to release an otherwise primary insurer of the duty to defend if the insurer becomes excess as to liability is enforceable.

3. Whether the irreconcilability of "other insurance" provisions in otherwise primary insurance policies should be determined before or after the operation of the "other insurance" provisions is determined.

4. Whether, and when, an excess insurer, or an otherwise primary insurer who becomes an excess insurer by operation of an "other insurance" clause, has a duty to defend.

VP & PK (ML) LLC (VP & PK) is the owner and developer of a tract of land in  [***2] the Maui Lani Project District. VP & PK purchased a Commercial General Liability insurance policy 1 for its work on the Maui Lani site from Defendant-Appellee Lexington Insurance Company (Lexington). The policy's Occurrence Form included the following "Other Insurance" provision:

4. Other Insurance

If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Policy, our obligations are limited as follows:

a. Primary Insurance

This insurance is primary except when b. Excess Insurance, below, applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. Method of Sharing, below.

b. Excess Insurance

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132 Haw. 283 *; 321 P.3d 634 **; 2014 Haw. LEXIS 59 ***; 2014 WL 560805

NAUTILUS INSURANCE COMPANY, Plaintiff-Appellant, vs. LEXINGTON INSURANCE COMPANY, DOE DEFENDANTS 1-10, Defendants-Appellees.

Prior History:  [***1] ORIGINAL PROCEEDING.

Nautilus Ins. Co. v. Lexington Ins. Co., 2010 U.S. Dist. LEXIS 120883 (D. Haw., Nov. 15, 2010)Goo v. Tavares, 2009 Haw. App. LEXIS 394 (Haw. Ct. App., June 18, 2009)

CORE TERMS

insurer, duty to defend, coverage, primary insurer, policies, additional insured, disclaiming, excess insurer, provisions, clauses, primary insurance, endorsement, becomes, insurance policy, irreconcilability, Mutual, underlying lawsuit, defense costs, carriers, primary coverage, allegations, insurance company, limits, circumstances, purporting, quotation, courts, marks, certified question, duty to indemnify

Insurance Law, Business Insurance, Commercial General Liability Insurance, General Overview, Civil Procedure, Appeals, Appellate Jurisdiction, Certified Questions, Duty to Defend, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Indemnification, Types of Insurance, Excess Insurance, Exclusions, Obligations, Remedies, Declaratory Judgments, Claim, Contract & Practice Issues, Reservation of Rights, Coverage, Coinsurance, Contribution, Plain Language