THE STATE OF SOUTH CAROLINA
In The Supreme Court
South Carolina Farm Bureau Mutual Insurance Company, Petitioner,
v.
S.E.C.U.R.E. Underwriters Risk Retention Group, Ralph W. Garrison, Mary Garrison, Garrison Pest Control, Inc., Jack C. Purvis, Susan Purvis, and Jordan Purvis, a minor under the age of fourteen (14) years, Defendants,
of whom S.E.C.U.R.E. Underwriters Risk Retention Group is Respondent.
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal From Florence County
James E. Brogdon, Jr., Circuit Court
Judge
Opinion No. 25602
Heard February 5, 2003 - Filed March
10, 2003
REVERSED
Louis D. Nettles, of Nettles, McBride, Hoffmeyer, P.A., of Florence, for petitioner.
Carlton Bruce Bagby, of Columbia, for respondent.
JUSTICE BURNETT: This is a declaratory judgment action concerning the priority of coverage for concurrent insurance policies issued by two insurance companies. The Court of Appeals held Petitioner South Carolina Farm Bureau Mutual Insurance Companys (Farm Bureaus) policy was primary and Respondent S.E.C.U.R.E. Underwriters Risk Retention Groups (SECUREs) insurance was excess. South Carolina Farm Bureau Mutual Ins. Co. v. S.E.C.U.R.E. Underwriters Risk Retention Group, 347 S.C. 333, 554 S.E.2d 870 (Ct. App. 2001). We reverse.
FACTS
Farm Bureau issued a homeowners liability policy to Ralph and Mary Garrison. SECURE issued a commercial general liability policy to the Garrisons pest control business. The Garrisons pet dog bit a child while on the premises of the pest control business. Both insurance companies denied coverage and asserted, if there was coverage, their coverage was secondary.
The Court of Appeals held both policies covered the occurrence. In addition, it applied the total policy insuring intent rule to conclude Farm Bureaus policy provided primary coverage while SECUREs coverage was excess. Id. We granted a writ of certiorari to review the application of the total policy insuring intent rule. [1]
ISSUE
Did the Court of Appeals properly apply the total policy insuring intent rule to determine Farm Bureaus policy was primary and SECUREs was excess?
DISCUSSION
Farm Bureau contends the Court of Appeals misapplied the total policy insuring intent rule established in South Carolina Ins. Co. v. Fidelity and Guar. Ins. Underwriters, Inc., 327 S.C. 207, 489 S.E.2d 200 (1997) (Fidelity), to conclude its policy provided primary coverage while SECUREs provided secondary coverage for the occurrence. Farm Bureau asserts because the policies other insurance clauses provide Farm Bureaus coverage is excess while SECUREs is primary, the Court of Appeals erred by holding otherwise. We agree.
Farm Bureaus other insurance clause provides:
Other Insurance-Coverage E - Personal Liability.
This insurance is excess over other valid and collectible insurance except insurance written specifically to cover as excess over the limits of liability that apply in this policy.SECUREs other insurance clause provides:
If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
a. Primary Insurance
This insurance is primary except when b. 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. below.
b. Excess Insurance
This insurance is excess over any of the other insurance, whether primary, excess, contingent or any other basis:
(1) That is Fire, Extended Coverage, Builders Risk, Installation Risk or similar coverage for your work;
(2) That is Fire Insurance for premises rented to you; or
(3) If the loss arises out of the maintenance or use of aircraft, autos, or watercraft to the extent not subject to Exclusion g. of Coverage A (Section I).
When this insurance is excess, we will have no duty under Coverage A or B to defend any claim or suit that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so, but we will be entitled to the insureds rights against all those other insurers.
When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:
(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and
(2) The total of all deductible and self-insured amounts under all that other insurance.
We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations and Coverage Part.
c. Method of Sharing
If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurers share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.
(Underline added).
In Fidelity, id., the Court was presented with the situation where two concurrent policies contained competing excess other insurance clauses (i.e., the language of both policies declared they were excess to other available coverage). The Court agreed that, in many cases, excess other insurance clauses should cancel each other out, because two policies with such clauses cannot both be treated as excess policies, but held the total policy insuring intent should always remain the central issue in apportioning liabilities among multiple insurers. Id. S.C. at 215, S.E.2d at 204 (italic in original). Accordingly, the Court held other insurance clauses constitute only one factor among many others to consider in determining how to apportion liability.
In conclusion, the Court held:
We find that in determining whether a loss covered by multiple insurers should be prorated, or whether one policy should be treated as an excess policy, courts in South Carolina should consider the total policy insuring intent based on all the language of the insurance policies at issue. If two policies both contain excess clauses, but otherwise appear to provide for primary coverage, the excess clauses should be disregarded, and the concurrently covered loss prorated according to the policy limits of the respective policies.
Id. S.C. at 219, S.E.2d at 206 (underline added).
The Court of Appeals erred by applying the total policy insuring intent rule in this case. According to Fidelity, the total policy insuring intent rule applies when a court is required to determine liability among insurers when there are competing insurance clauses. [2]
Under the plain language of SECUREs other insurance clause, its insurance is primary. Under the plain language of Farm Bureaus other insurance clause, its insurance is excess. Because these two provisions are not mutually repugnant, it was unnecessary to apply the total policy insuring intent rule to allocate priority between the two carriers. [3] Accordingly, the Court of Appeals erred in applying the total policy insuring intent rule to hold Farm Bureaus policy was primary while SECUREs policy was secondary.
REVERSED.
TOAL, C.J., MOORE, PLEICONES, JJ., and Acting Justice J. Ernest Kinard, Jr., concur.
[1] Although it argued in its brief that the two insurance policies did not provide concurrent coverage, SECURE did not petition the Court for a writ of certiorari on this issue. Accordingly, the Court of Appeals decision that the polices provided concurrent coverage is the law of the case. State v. Barroso, 328 S.C. 268, 493 S.E.2d 854 (1997) (where party fails to challenge holding by Court of Appeals, ruling is law of the case).
[2] The underlying facts, language of the opinion, and State Farm Fire & Cas. Co. v. LiMauro, 482 N.E.2d 13 (N.Y. 1985), discussed at length in the decision, support this conclusion. In LiMauro, the New York Court of Appeals was required to determine the priority of three automobile insurance policies. As noted in Fidelity, [o]ne of the policies indisputably provided primary coverage, so the New York court only had to resolve whether the amount of the loss exceeding the limits of the primary policy should be prorated between the other two insurers, . . . . Fidelity, S.C. at 216, S.E.2d at 204.
[3] In essence, the Court of Appeals applied the total policy insuring intent rule first to determine Farm Bureaus policy was primary, in spite of policy language to the contrary, and, consequently, in conflict with the primary nature of SECUREs policy. It again applied the total policy insuring intent rule to conclude Farm Bureaus policy was primary because it contained a clause specifically providing coverage for animal liability.