OLD REPUBLIC INSURANCE COMPANY, Plaintiff, Appellant, Cross-Appellee,
STRATFORD INSURANCE COMPANY, Defendant, Appellee, Cross-Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE Hon. Landya McCafferty, U.S. District Judge
Daniel W. Gerber, with whom Jonathan L. Schwartz, Goldberg Segalla LLP, Naomi L. Getman, Andrew R. Schulman, and Getman, Schulthess & Steere, P.A. were on brief, for appellant, cross-appellee.
Laurence J. Rabinovich, with whom Hiscock & Barclay LLP, Richard C. Nelson, and Nelson Kinder & Mosseau PC were on brief, for appellee, cross-appellant.
Before Lynch, Chief Judge, Howard and Barron, Circuit Judges.
LYNCH, Chief Judge.
This appeal arises out of a dispute between two insurers as to their respective duties to defend and indemnify a tractor-trailer involved in an auto collision causing serious injuries. The owner of the tractor, Ryder Truck Rentals ("Ryder"), obtained primary insurance for the tractor through Old Republic Insurance Company ("Old Republic"). The operator of the tractor, DAM Express ("DAM"), obtained separate insurance through Stratford Insurance Company ("Stratford"). Old Republic brought this suit to determine Stratford's insurance obligations.
The first question is whether the Stratford Policy is co-primary with the coverage provided by Old Republic for the tractor leased from Ryder. The answer hinges on the intent of the contracting parties, and, more specifically, on which sources a court may consult to determine that intent under New Hampshire law. We conclude that the district court committed no legal error in considering the Stratford Policy as a whole and turning to objective extrinsic evidence to resolve inconsistencies found therein. We affirm the district court's conclusion that DAM and Stratford never intended the Stratford Policy to provide primary coverage to the tractor otherwise covered by Old Republic.
We must then determine Stratford's corresponding duty to defend as an excess insurer of the tractor. The answer is far from clear under New Hampshire law. The district court interpreted a New Hampshire case from 1991 as establishing a rule whereby an insurer's duty to defend is the same regardless of whether its designation is as primary or excess. After a close analysis of New Hampshire precedent, we conclude that the best course of action is to certify this question of New Hampshire law to the New Hampshire Supreme Court.
I. Factual Background
On April 7, 2010, a tractor-trailer crashed into Daniel and Karla Bendor's vehicle in Connecticut, causing bodily injury. The tractor was owned by Ryder, who had leased it to DAM in order to transport a trailer owned by Coca-Cola. The driver, Antoine Girginoff, was employed by DAM.
DAM is a for-hire motor company which operates out of Manchester, New Hampshire. As described by the office manager, DAM's work "falls into two categories." "One category is small package delivery such as consumer goods which is conducted in vans and small trucks owned by D.A.M." When business is particularly busy, DAM rents an extra van of a similar type, for approximately $5, 000 per year. "The second category [is] transportation of larger shipments in tractor-trailers." DAM leases these tractors from Ryder for approximately $240, 000 per year.
DAM and Ryder's lease agreement specified that Ryder was responsible for obtaining liability insurance for the tractor. The lease agreement reads:
A. Liability Insurance. The party designated on Schedule A (the "Insuring Party") agrees to furnish and maintain, at its sole cost, a policy of automobile liability insurance with limits specified on each Schedule A for death, bodily injury and property damage, covering both you and Ryder as insureds for the ownership, maintenance, use, and operation of each Vehicle ("Liability Insurance"). . . . The Liability Insurance must provide that its coverage is primary and not additional or excess coverage over insurance otherwise available to either party . . . . The Insuring Party agrees to designate the other party as an additional insured on the Liability Insurance . . . .
On the form titled "Schedule A, " the Insuring Party is identified as Ryder alone. DAM agreed that "Ryder shall have the sole right to conduct accident investigations and administer claims handling and settlements and [DAM] shall adhere to and accept Ryder's conclusions and decisions."
Ryder obtained liability insurance from Old Republic, under which Old Republic agreed to "pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto'" and to "defend any 'suit' asking for these damages." "Insureds" included Ryder "for any covered 'auto'" and "[a]ny person or organization for whom [Ryder] is obligated by written agreement to provide liability insurance . . . ." Covered "autos" included "any 'auto, '" the definition of which included "'[t]railers' with a load capacity of 2000 pounds or less designed primarily for travel on public roads." For a coverage limit of $1, 000, 000, Ryder paid a premium of $459, 961.
In a section titled "Other Insurance, " Old Republic specified: "For any covered 'auto' you own, this Coverage Form provides primary insurance." "However, while a covered 'auto' which is a 'trailer' is connected to another vehicle, the Liability Coverage this Coverage Form provides for the 'trailer' is: . . . [p]rimary while it is connected to a covered 'auto' you own."
DAM separately obtained insurance from Stratford. Stratford agreed to "pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto, '" and to "defend any 'insured' against a 'suit' asking for such damages." The Stratford Policy specified three categories of vehicles as covered "autos:" (1) "specifically described 'autos, '" (2) "hired 'autos, '" and (3) "nonowned 'autos.'" For a maximum coverage of $1, 000, 000, DAM paid a premium of $4, 808.
"Specifically described 'autos'" are defined as "[o]nly those 'autos' described in Item Three of the Declarations for which a premium charge is shown (and for Liability Coverage any 'trailers' [DAM doesn't] own while attached to any power unit described in Item Three)." Item Three lists two Chevy Express vans and "any non-owned trailer while attached to a covered auto." "Hired 'autos'" are defined as "[o]nly those 'autos' [DAM] lease[s], hire[s], rent[s] or borrow[s]." In Item Four, DAM estimated the cost of hire of these autos to be $5, 000 per year. The $5, 000 per year estimate yielded a liability premium of $400. "Nonowned 'autos'" are defined as "[o]nly those 'autos' [DAM] do[es] not own, lease, hire, rent or borrow that are used in connection with [DAM's] business."
In the "Other Insurance" section, the Stratford Policy specifies that it provides primary coverage for autos that fall into one of these three categories of covered autos. It reads:
This Coverage Form's Liability Coverage is primary for any covered "auto" while hired or borrowed by [DAM] and used exclusively in [DAM's] business as a "trucker" and pursuant to operating rights granted to [DAM] by a public authority. This Coverage Form's Liability Coverage is excess over any other collectible insurance for any covered "auto" while hired or borrowed from [DAM] by another "trucker." However, while a covered "auto" which is a "trailer" is connected to a power unit, this Coverage Form's Liability Coverage is:
(1) On the same basis, primary or excess, as for the power unit if the power unit is a covered "auto".
(2) Excess if the power unit is not a covered "auto".
The Bendors sued Ryder, DAM, and Girginoff in federal court in Connecticut on December 3, 2010, for damages in connection with the April 7, 2010, accident. As required by its policy with Ryder, Old Republic immediately began providing a defense. In March 2011, Old Republic asked Stratford to participate in the defense of its insureds.
In August 2011, after learning about the underlying lawsuit, Stratford proposed a general change endorsement to its policy with DAM that was retroactively "effective on the inception date of the policy." That endorsement specified: "For a covered 'auto' leased or rented to [DAM] by [Ryder] or any related entity, LIABILITY COVERAGE is excess over any other collectible insurance." Stratford and DAM executed the agreement on November 29, 2011.
By letter dated December 1, 2011, Stratford informed Old Republic that it had no obligation to share in the cost of defending or indemnifying its insureds against the underlying lawsuit. Stratford's Senior Litigation Specialist, Sandra McFarlane, wrote that the "endorsement reflects [DAM]'s understanding that [it] had opted to purchase primary insurance for [its] Ryder vehicles through Ryder." McFarlane stated that "[a]ny coverage provided to either DAM or Mr. Girginoff by Stratford is excess to the coverage provided by Ryder and/or Old Republic." For this reason, McFarlane took the position that "Stratford is not . . . obligated to, and will not, share in the cost of defending or indemnifying [their] mutual insureds at this time."
II. Present Litigation
Old Republic filed suit against Stratford on June 1, 2012, in state court in New Hampshire. Old Republic sought a declaratory judgment pursuant to New Hampshire Revised Statute § 491:22 et seq. that Old Republic and Stratford have co-primary obligations to defend and indemnify DAM, Girginoff, and Coca-Cola, with accompanying claims for equitable reformation, unjust enrichment, and waiver and estoppel. Stratford removed the case to the United States District Court for the District of New Hampshire, and counterclaimed for a declaratory judgment that Old Republic provides primary coverage, and Stratford provides excess coverage, for the liability of DAM, Girginoff, and Coca-Cola.
The district court granted in part and denied in part both parties' motions for summary judgment. Old Republic Ins. Co. v. Stratford Ins. Co., No. 12-cv-256-LM, 2014 WL 309390, at *1 (D.N.H. Jan. 27, 2014). The district court concluded that, as to the tractor, "the Stratford policy, as initially issued, did not require Stratford to provide primary coverage for any losses that may ensue in the underlying action." Id. at *5. Nevertheless, "because Stratford concedes that its policy provides excess coverage, " the district court held that Stratford "is obligated to share equally in the costs of defending its insureds ...