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Amerisure Insurance Company v. National Surety Corporation

August 17, 2012

AMERISURE INSURANCE COMPANY, PLAINTIFF-COUNTER-DEFENDANT-APPELLANT,
v.
NATIONAL SURETY CORPORATION, DEFENDANT-CROSS-CLAIMANT-APPELLANT,
v.
SCOTTSDALE INSURANCE COMPANY, DEFENDANT-CROSS-CLAIMANT-APPELLEE.



Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:09-cv-00866-WTL-DKL--William T. Lawrence, Judge.

The opinion of the court was delivered by: Wood, Circuit Judge.

ARGUED JANUARY 18, 2012

Before BAUER, MANION, and WOOD, Circuit Judges.

This litigation arises out of a dispute over insurance coverage for work-related injuries sustained by the employee of a subcontractor. Indiana Steel Fabricating (ISF) submitted and won a bid to perform the steel fabrication work for a project. ISF then engaged Central Steel Erectors as a subcontractor. In the course of that work, Brian Colip, a Central Steel employee, fell from a roof and injured himself. He filed suit against ISF under a theory of vicarious liability and settled his claims for $2.9 million. Now ISF's insurers, Amerisure Insurance Company (Amerisure) and National Surety Corporation (National), and Central

Steel's insurer, Scottsdale Insurance Company (Scottsdale), are quarreling over which of them is responsible for bearing the cost of that settlement. The district court ruled that each one was liable for a share: Amerisure for $1 million, Scottsdale for $1 million, and National for $900,000. For the reasons that follow, we affirm.

I

In November 2005, Mark Swanson Associates, Inc., hired ISF to complete steel fabrication work for a con- struction project in Indiana. In October 2006, ISF hired Central Steel to perform the necessary steel erection work. As part of that arrangement, ISF and Central Steel signed a subcontract in which Central Steel explicitly agreed to procure adequate insurance and to "defend, indemnify and hold harmless [ISF] . . . from and against all claims, actions, judgments, damages, losses and expenses" related to the agreement.

In order to fulfill its obligations, Central Steel pur- chased two insurance policies from Scottsdale. The first was a $1 million commercial general liability policy (the

Scottsdale CGL policy), and the second was a $2 million umbrella insurance policy (the Scottsdale Umbrella policy). ISF also carried general and umbrella coverage.

It had purchased $1 million in commercial general liability coverage from Amerisure and $7 million in umbrella coverage from National.

In November 2006, one month after ISF hired Central Steel, Brian Colip (one of Central Steel's employees)

was seriously injured at work when he fell 30 feet through a hole in the roof of a building. Colip filed suit against ISF, arguing that ISF owed him a non-delegable duty of care and was therefore vicariously liable for his injuries. Colip eventually settled that suit for $2.9 million, and the three insurance companies paid the settlement amount according to the terms of a funding agreement. That agreement provided that Scottsdale would pay $1 million out of the Scottsdale CGL policy and $950,000 out of the Scottsdale Umbrella policy, while Amerisure would pay the remaining $950,000. Initially, National had no obligation to contribute. The agreement explicitly reserved the rights of the parties to seek reimbursement or contribution from each other. Amerisure took ad- vantage of that provision and filed suit against Scottsdale and Central in the United States District Court for the Southern District of Indiana. Scottsdale responded with counter- and cross-claims against Amerisure and Na- tional. The district court dismissed Central from the litigation and granted summary judgment in favor of Scottsdale, ruling that it had no obligation to pay under its umbrella policy. It thus awarded Scottsdale $50,000 from Amerisure (thereby exhausting Amerisure's $1 million policy) and the remaining $900,000 from National. Amerisure and National now appeal.

II

The primary issue on appeal relates to Scottsdale's obligation to contribute to Colip's settlement under the Scottsdale Umbrella policy. Scottsdale argues that the Umbrella policy contains an explicit exclusion that exempts it from paying; Amerisure and National counter that Scottsdale is ...


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