Amerisure Mutual Insurance Company v. QBE Insurance Corporation et al

Filing 43

MEMORANDUM OPINION. Signed by Judge Inge P Johnson on 9/5/12. (ASL)

FILED
2012 Sep-05 PM 03:39
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
AMERISURE MUTUAL INSURANCE
COMPANY,
Plaintiff,
vs.

CASE NO. CV-11-J-1751-NE

QBE INSURANCE CORPORATION,
and ZURICH AMERICAN INSURANCE
COMPANY,
Defendants.
MEMORANDUM OPINION
Pending before the court are cross-motions for summary judgment, evidence,
and memoranda of law.1 QBE filed a response in opposition to Amerisure’s motion
(doc. 28); Amerisure filed a response in opposition to both defendants’ motions (doc.
29); and Zurich filed a response to Amerisure’s motion (doc. 33). Thereafter,
Amerisure filed a reply to the defendants’ opposition (doc. 36), Zurich filed a reply
to Amerisure’s response (doc. 37), Amerisure filed an additional reply to defendants’
oppositions (doc. 38) and QBE filed a reply to Amerisure’s opposition (doc. 39).
Also pending is a motion by Amerisure to order disclosure of the Amerisure-Bunge

1

These include the motion and memorandum of Zurich American Insurance Company
(“Zurich”) (doc. 20), evidentiary material by Zurich (doc. 21), the motion, memorandum and
evidence of plaintiff Amerisure Mutual Insurance Company (“Amerisure”) (doc. 22), and the
motion, memorandum and evidence of defendant QBE Insurance Corporation (“QBE”) (doc. 23).

settlement agreement (doc. 31) which was entered in the underlying state court
litigation.
Having considered the cross-motions of the parties, the evidence submitted,
and the relevant law, the court finds as follows:
I. Factual Background
The plaintiff filed this diversity action seeking contribution from the
defendants based on sums it paid defending an action in state court. Complaint, ¶¶
13-15. The underlying action2 arose from an injury sustained by Kim Dodson while
working for Insulation & Refactories Services, Inc. (“IRS”). In turn, IRS was a
contractor to Bunge North America (“Bunge”) and Dodson was injured at Bunge’s
plant in Decatur, Alabama. Id., ¶ 7. Non-parties Hubbard & Drake General/
Mechanical Contractors, Inc. (“H&D”), and Contractor Service & Fabrication, Inc.
(“CS&F”) were also named in the state court action. Complaint, ¶ 8.
Plaintiff Amerisure provided a policy of insurance to IRS, on which Bunge was
an additional insured, at the time of Dodson’s injury. Affidavit of Kevin Swan, ¶ 2
(doc. 22-9). CS&F had a policy of insurance with defendant QBE, on which Bunge
appeared as an additional insured.3 Complaint, ¶ 11. Similarly, H&D was insured via

2

The state court complaint appears in the record as Zurich ex. C (doc. 21-2).

3

Defendant QBE disputes this allegation, asserting Bunge was never named as an
additional insured on QBE’s policy issued to CS&F. See defendant QBE’s motion for summary
2

a policy from defendant Zurich, on which Bunge was again named as an additional
insured. Zurich ex. B. (doc. 21-1). Neither Zurich nor QBE contributed to the sums
Amerisure provided on behalf of Bunge as part of defending or in settlement of the
state court action.4 Complaint, ¶ 16. Plaintiff Amerisure now seeks contribution from
defendants Zurich and QBE for the settlement and defense costs of the state court
action as they related to Amerisure’s providing the same on behalf of Bunge. The
undisputed facts are as follows:
H&D performed work for Bunge on a contractual basis. See Amerisure ex. 1
(doc. 22-1). Pursuant to that contract, H&D was required to maintain insurance for
bodily injury, death and property damage, and was required to name Bunge as an
additional insured on such a policy. Id., at ZURICH 0659. Additionally, H&D
agreed to
save and hold [Bunge] .... harmless from and against all liability, claims
and demands on account of personal injuries, including death or
property loss or damage to others (including but not limited to the
Contractor and his employees) arising out of or in any manner connected
with the performance of this Agreement, whether such injury, loss or
damage shall be caused by the negligence of the Contractor, his

judgment (doc. 23), ¶ 30. For purposes of this motion, the court finds that the intent of the
parties was to include Bunge as an also insured on CS&F’s policy with QBE. For reasons
explained herein, whether or not this intent was properly reflected in the policy issued by QBE is
not determinative of the outcome of the pending motions.
4

Amerisure provided a defense and settlement funds on behalf of Bunge in the state court
action based on an indemnity agreement between IRS and Bunge, further explained herein.
3

subcontractor, or any other party for whom the Contractor is responsible.
Id., at ZURICH 0660. The same clause also required H&D to defend all actions
arising from the same. Id.
Bunge also had a Construction Agreement with CS&F, specifically for
purposes of replacing the conveyor system at issue in the underlying action.
Amerisure ex. 8 (doc. 22-10). As with the H&D contract, the CS&F agreement had
a clause which required CS&F to maintain insurance which named Bunge as an
additional insured, and an indemnification and hold harmless clause in favor of
Bunge. Id., at QBE - 0115-0116.
The parties to this action agree that Dodson was injured on September 5, 2007,
when a lanyard on his safety harness became entangled on the drive shaft of the
conveyor belt system around which Dodson was installing insulation. Dodson was
employed by IRS, which had contracted with Bunge to install insulation on the
conveyor system in question. Depo. of Kim Dodson, at 35, 42 (doc. 21-2). The guard
on the drive shaft had been removed, allowing the lanyard to become ensnared.
Eugene Moore, the plant manager at the Bunge facility, noted that the lanyard could
have become entangled in the drive shaft whether or not the guard was in place, but
a guard may have reduced the chance of it happening. Depo. of Eugene Moore, at 19,
218 (doc. 21-1); 115 (doc. 23-1).

4

The parties further agree CS&F installed the conveyor, and H&D aligned the
coupling from the motor of the conveyor to its drive shaft after the installation.
Moore depo. at 15 (doc. 23-1); 194-195 (doc. 21-1). Both CS&F and H&D had
completed their contract work prior to the time IRS and hence Dodson began the
installation of insulation. Undisputed evidence supports that Bunge was notified that
the guard was missing prior to the date of Dodson’s accident. Moore believes CS&F
was responsible for installation of the guard as part of its contractual obligations
when it was hired to replace the conveyor, reusing the pre-existing drive. Moore
depo. at 15-16 (doc. 23-1). He agrees the guard was not in place at the time that
H&D began its work, after CS&F had finished. Moore depo. at 195 (doc. 21-1); see
also depo. of Doug Fromhold,5 at 29 (doc. 21-2); depo. of Raymond Gandlin, at 15-16
(doc. 23-2). According to Fromhold CS&F – and not H&D – was responsible for
replacing the guard. Fromhold depo. at 109, 119 (doc. 21-2). According to CS&F,
no guard was in place when it first began the replacement work nor was fabrication
of a guard within CS&F’s scope of work. Depo. of Gary Lafavor, Jr., at 37-38, 46
(doc. 23-1). CS&F completed all work for Bunge by August 16, 2007, and left the
facility on that date. See QBE exs. E and F.

5

Fromhold was a maintenance manager for Bunge. See Zurich motion (doc. 20) at 8-9.
5

The underlying state court action was ultimately settled. The plaintiff now
seeks repayment of some of the funds it spent defending and indemnifying Bunge on
behalf of IRS. The parties do not dispute that this case is governed by Alabama law
and hinges exclusively on contract interpretation.
The QBE Policy
The insurance policy issued by QBE to CS&F reads as follows in relevant part:
ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS –
AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION
AGREEMENT WITH YOU
This endorsement modifies insurance provided under the following
COMMERCIAL GENERAL LIABILITY COVERAGE PART
A. Section II – Who is An Insured is amended to include as an additional insured
any person or organization for whom you are performing operations when you and
such person or organization have agreed in writing in a contract or agreement that
such person or organization be added as an additional insured on your policy. Such
person or organization is an additional insured only with respect to liability for
“bodily injury”, “property damage” or “personal and advertising injury” caused, in
whole or in part, by:
1.
Your acts or omissions; or
2.
The acts or omissions of those acting on your behalf;
In the performance of your ongoing operations for the additional insured.
A person’s or organization’s status as an additional insured under this endorsement
ends when your operations for that additional insured are completed.

Plaintiff ex. 10 (doc. 22-13).
QBE provided a defense to its own insured, CS&F, in the underlying state
court case under a reservation of rights. See QBE’s motion for summary judgment,
at 6. However, QBE denied Bunge’s claim for indemnity. Id., at 7. In the underlying

6

state court litigation, CS&F filed a cross-claim against Bunge, asserting that it had a
right to indemnity from Bunge and that Bunge had no right to indemnity from CS&F.
QBE’s motion for summary judgment, at 7. Bunge made a similar cross-claim against
CS&F. Id; see also QBE ex. J.
The Zurich Policy
The insurance policy issued by Zurich to H&D reads as follows in relevant
part:
Additional Insured – Automatic - Owners, Lessees Or Contractors -Broad Form
THIS ENDORSEMENT CHANGES THE POLICY.
CAREFULLY.

PLEASE READ IT

This endorsement modifies insurance provided under the:
Commercial General Liability Coverage Part
A. WHO IS AN INSURED (Section II) is amended to include as an insured any
person or organization whom you are required to add as an additional insured on this
policy under a written contract or written agreement.
B. The insurance provided to additional insureds applies only to “bodily injury”,
“property damage” or “personal and advertising injury” covered under Section I,
Coverage A, BODILY INJURY AND PROPERTY DAMAGE LIABILITY and
Coverage B, PERSONAL AND ADVERTISING INJURY LIABILITY, but only
if:
1. The “bodily injury” and “property damage” results from your
negligence; and
2. The “bodily injury”, “property damage” or “personal and
advertising injury” results directly from:
a. Your ongoing operations; or
b. “Your work” completed as included in the
“products-completed operations hazard,” performed
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for the additional insured, which is the subject of the
written contract or written agreement.
....
D. The insurance provided to the additional insured person or organization does not
apply to:
1. “Bodily injury”, “property damage” or “personal and advertising
injury” that results solely from negligence of the additional insured;
or
....
E. The additional insured must see to it that:
1. We are notified as soon as practicable of an “occurrence” or
offense that may result in a claim;
2. We receive written notice of a claim or “suit” as soon as
practicable; and
3. A request for defense and indemnity of the claim or “suit” will
promptly be brought against any policy issued by another insurer
under which the additional insured also has rights as an insured or
additional insured.

Plaintiff ex. 2 (doc. 22-2), at 17 of 44.
II. STANDARD OF REVIEW
A moving party is entitled to summary judgment if there is no genuine issue of
material fact, leaving final judgment to be decided as a matter of law. See Federal
Rule of Civil Procedure 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587, 106 S.Ct. 1348, 1355-56 (1986). An issue is material if it is a legal
element of the claim under the applicable substantive law which might affect the
outcome of the case. It is genuine if the record taken as a whole could lead a rational

8

trier of fact to find for the nonmoving party. Allen v. Tyson Foods, Inc., 121 F.3d
642, 646 (11th Cir.1997).
The facts, and any reasonable inferences therefrom, are to be viewed in the
light most favorable to the non-moving party, with any doubt resolved in the
nonmovant’s favor. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158, 90 S.Ct.
1598, 1609 (1970). Once met by the moving party, however, the burden shifts to the
non-moving party to come forward with evidence to establish each element essential
to that party's case sufficient to sustain a jury verdict. See Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986); Earley v. Champion Int’l Corp., 907
F.2d 1077, 1080 (11th Cir.1990).
A party opposing a properly submitted motion for summary judgment may not
rest upon mere allegations or denials of his pleadings, but must set forth specific facts
showing that there is a genuine issue for trial. Eberhardt v. Waters, 901 F.2d 1578,
1580 (11th Cir.1990). In addition, the non-moving party’s evidence on rebuttal must
be significantly probative and not based on mere assertion or be merely colorable.
See Rule 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct.
2505, 2511 (1986). Speculation does not create a genuine issue of fact. Cordoba v.
Dillard’s, Inc., 419 F.3d 1169, 1181 (11th Cir.2005).

9

III. LEGAL ANALYSIS
Because this case was submitted to the court on cross-motions for summary
judgment, and the underlying facts of this case are not in dispute, the court finds that
this case may be wholly resolved by ruling on the pending motions.
The dispute before this court is whether, pursuant to Bunge’s status as an
additional insured on the QBE and Zurich policies issued to CS&F and H&D
respectively, Amerisure has a right to contribution from QBE and Zurich for funds
paid on behalf of Bunge in settlement of the state court action. The parties do not
dispute that plaintiff provided a defense and indemnity to Bunge as an additional
insured on the policy of insurance Amerisure provided to IRS. According to
Amerisure, Bunge also sought a defense and indemnity from Zurich and QBE, neither
of which provided the same. See plaintiff exs. 6(a), 6(b), 12. Amerisure paid
$547,020.99 as defense costs on behalf of Bunge, and another $350,000.00 towards
settlement of the state court action against Bunge. Plaintiff ex. 7.
A. Duty to Defend
Plaintiff Amerisure asserts that because the state court action stated claims for
negligence against Bunge, H &D and CS&F, the duty to defend arose. To determine
an insurer’s duty to defend its insured, a court looks to the language of the insurance
policy and the allegations in the complaint filed against the insured. Thorn v.

10

American States Ins. Co., 266 F.Supp.2d 1346, 1349 (M.D.Ala. 2002) (“An insurer’s
duty to defend its insured is determined by the language of the insurance policy and
by the allegations in the complaint filed against the insured.”); Alfa Mutual Ins. Co.
v. Morrison, 613 So.2d 381, 382 (Ala.1993) (“The insurance company’s duty to
defend its insured is determined by the language of the insurance policy and by the
allegations in the complaint giving rise to the suit against the insured.”) “If the
allegations of the injured party’s complaint show an accident or occurrence which
comes within the coverage of the policy, the insurer is obligated to defend regardless
of the ultimate liability of the insured.” Chandler v. Alabama Mun. Ins. Co., 585
So.2d 1365, 1367 (Ala.1991). However, an insurer does not have a duty to defend
or indemnify when the complaint shows either the non-existence of coverage or the
applicability of a policy exclusion. See Alfa Specialty Ins. Co. v. Jennings, 906 So.2d
195 (Ala.Civ.App.2005).
The state court complaint alleges that defendant Bunge “knew or should have
known that the motor shaft was not properly covered...” and that defendants
“negligently operated, designed, constructed, installed, maintained and controlled E-1
conveyor drive motor ...” State court complaint, submitted as Amerisure ex. 5, at ¶¶
9-10. It also alleges that H&D and CS&F “constructed, repaired, maintained, and/or
inspected the E-1 conveyor drive motor ... prior to September 5, 2007,” that these

11

defendants “knew or should have known that the motor shaft was not properly
covered...” and that Dodson’s injuries “were proximately caused or contributed to by
the negligence of these Defendants...” Id., at ¶¶ 22-24.
Amerisure asserts these allegations were sufficient as a matter of law to raise
the duty to defend by defendants QBE and Zurich both on behalf of their own
insureds and also on behalf of Bunge as an additional insured under the policies.
Zurich counters that it had no duty to provide contribution because its insured, H&D,
had no responsibility or duty concerning the guard in question.6
Under Alabama law, the allegations of the complaint, not ultimate liability,
control. See e.g. Chandler, 585 So.2d at 1367; Gunnin v. State Farm and Cas. Co.,
508 F.Supp.2d 998, 1002 (M.D.Ala.2007) (“If the allegations of the injured party’s
complaint show an accident or occurrence which comes within the coverage of the
policy, the insurer is obligated to defend regardless of the ultimate liability of the
insured.”) (citation omitted). The state court complaint squarely alleged H&D was
negligent, triggering Zurich’s duty to defend H&D. Because the allegation of
negligence related to the time H&D performed work in the Bunge facility, and
because Bunge was also named in the state court action, the duty to defend Bunge as

6

Zurich also argues that even if there is a duty to defend, Amerisure has not established
that the defense costs incurred were reasonable or necessary. Zurich opposition (doc. 33), at 3.
The court finds that issue separate and distinct from the question of whether the duty to defend
arose.
12

an additional insured was triggered. Whether or not there was liability for “bodily
injury,” as argued by Zurich, presents a separate question of coverage. See Zurich
memorandum, at 13.
Similarly, defendant QBE asserts that it had no liability for the negligence of
Bunge, and that Bunge’s negligence was solely responsible for Dodson’s injuries.
However, as stated above, the duty to defend is determined the allegations of the
complaint, not the determination of liability. When CS&F was named as a defendant
by Dodson in the state court action, QBE’s duty to defend CS&F was triggered.
Because the alleged negligence necessarily had to occur during the time CS&F was
performing contractual work at the Bunge facility, QBE’s duty to defend Bunge as
an additional insured was triggered as well. Such a finding is solely a matter of
contract law.
However, having determined that the duty to defend existed, the court is of the
opinion that such determination does not resolve the matter as all the parties to this
action, on behalf of their respective insureds, entered releases in settlement of the
state court action. The court addresses the effect of those releases on the duty to
defend below. Similarly, the court considers Zurich and QBE’s other defenses to
Amerisure’s claims of contribution for defense costs herein.

13

2. Duty to Indemnify
The duty to indemnify does not rise out of the existence of a duty to defend.
See e.g., Allstate Indem. Co. v. Lewis, 985 F.Supp. 1341, 1349 (M.D.Ala.1997)
(“Although the existence of a duty to defend may be established by the allegations in
the injured party's complaint, the insurer’s liability to the insured is ultimately
established by what is developed at trial.”). “Although the bare allegations of the
complaint may trigger an insurer’s duty to defend its insureds, ‘[t]he duty to pay ...
must be analyzed separately.’” Porterfield v. Audubon Indem. Co., 856 So.2d 789,
792 (Ala.2002) (quoting United States Fid. & Guar. Co. v. Armstrong, 479 So.2d
1164, 1167 (Ala.1985)). “The insured’s conduct rather than the allegedly injured
person’s allegations determine whether the insurer has a duty to indemnify.” Tanner
v. State Farm Fire & Cas. Co., 874 So.2d 1058, 1066 (Ala.2003) (quoting City
Realty, Inc. v. Continental Cas. Co., 623 So.2d 1039, 1047 (Ala.1993)).
Amerisure argues that because both H&D and CS&F signed contracts to secure
the work in question with Bunge, and because the contracts included indemnity
agreements in favor of Bunge, the duty to indemnify was established. Amerisure
motion (doc. 22), at 15. Amerisure further asserts that the court must look to the
language of the contract, rather than the findings of liability or lack thereof by the
state court.

14

Thus, the court first looks to the contracts between Bunge and H&D, and
Bunge and CS&F before considering the language of the CGL policies. See e.g.,
Pacific Life Insurance Co. Ltd. v. Liberty Mut. Insurance Co., 2005 WL 1801602, *7
(M.D.Ala.2005) (quoting Chubb Ins. Co. of Canada v. Mid-Continent Cas. Co., 982
F.Supp. 435, 438 (S.D.Miss.1997) (finding the indemnity agreement controls
irrespective of insurance clauses because “[a] contrary conclusion ‘would render the
indemnity contract between the insureds completely ineffectual and would obviously
not be a correct result, for it is the parties’ rights and liabilities to each other which
determine the insurance coverage; the insurance coverage does not define the parties’
rights and liabilities one to the other.’”).
Clearly, if the contract language does not require indemnity, then the court
need not consider whether the CGL policies provide coverage for that obligation. As
previously stated, the Bunge/H&D contract required H&D to
save and hold [Bunge] .... harmless from and against all liability, claims
and demands on account of personal injuries, including death or
property loss or damage to others (including but not limited to the
Contractor and his employees) arising out of or in any manner connected
with the performance of this Agreement, whether such injury, loss or
damage shall be caused by the negligence of the Contractor, his
subcontractor, or any other party for whom the Contractor is responsible.
Amerisure ex. 1 (doc. 22-1), at ZURICH 0660. Similarly, the Bunge/CS&F contract
stated that

15

The Contractor shall save and hold [Bunge] ... safe and harmless, from
and against all liability and demands on account of personal injuries ...
arising out of or in any manner connected with the performance of this
Agreement, whether such injury, loss or damage shall be caused by the
negligence of the Contractor, his subcontractor, or any other party for
whom the Contractor is responsible....
Amerisure ex. 8, at QBE - 0116.
Both the agreements and the policies of insurance in question limit coverage
to Bunge as an additional insured to liability resulting from the negligence of the
contractor, specifically H&D in the Zurich policy and CS&F in the QBE policy. In
other words, as a condition of obtaining the contracts with Bunge, both CS&F and
H&D signed agreement with Bunge which required CS&F and H&D to indemnify
Bunge and to name Bunge as an additional insured on their respective insurance
policies, but only for the contractor’s own negligence. The clear intent of those
agreements was to protect Bunge from liability for negligence by CS&F and H&D.
Bunge’s own negligence is not covered in either the agreements or the additional
insured clauses of the relevant contracts of insurance. The court finds that nothing
in the policies of insurance in question could extend coverage to Bunge as an
additional insured for Bunge’s own negligence. See e.g., American and Foreign Ins.
Co. v. Tee Jays Mfg. Co., 699 So.2d 1226 (Ala.1997) (“interpretation of an insurance
policy is a question of law for the court to decide.”); American Resources Ins. Co. v.
H & H Stephens Const., Inc., 939 So.2d 868, 873 (Ala.2006) (“a court cannot
16

consider the language in the policy in isolation, but must consider the policy as a
whole”) (citations omitted).
As stated above, Amerisure argues that the court must look to the language of
the contract, rather than the findings of liability or lack thereof by the state court.
However, such mistates the law in Alabama.7 Having determined that the indemnity
agreements and additional insured clauses of the insurance contracts limit liability for
coverage for Bunge to H&D and CS&F’s own negligence, the issue becomes whether
the state court ever determined Dodson’s claims against Bunge arose out of the
negligence of the two contractors. It did not. Prior to a determination of whose
negligence caused Dodson’s injuries, the parties in the underlying action entered
settlement agreements, resolving the entire case. Hence, the court examines the
settlement agreements entered in the state court action.
H&D was released from the underlying action by Dodson, although the sum
paid in exchange for the release has not been provided to this court. See Zurich ex.
J (doc. 21-2). Regardless of the sum involved, the Pro Tanto Release reflects that
7

See e.g., Pharmacists Mut. Ins. Co. v. Godbee Medical Distributors, Inc., 733 F.Supp.2d
1281, 1286 (M.D.Ala.,2010)
In other words, “the duty to indemnify is not ripe for adjudication until the insured
is in fact held liable in the underlying suit.” Nationwide Insurance v. Zavalis, 52
F.3d 689, 693 (7th Cir.1995); see also Lime Tree Village Community Club Ass'n,
Inc., 980 F.2d at 1407 (“While our conclusion is that the duty to defend was upon
State Farm, we express no opinion as to whether or not the plaintiffs in the
underlying cases are entitled to recover or whether or not, if there be recoveries,
State Farm is required to indemnify.”).
17

H&D contributed a sum of money towards the settlement of the state court action and
that the Release and payment “satisfies any claim made against the Releasee from
allegations involving independent negligence of Hubbard & Drake....” Id., at 2.
Similarly, CS&F was released from the state court action for the sum of $200,000.00,
with no admission of fault or other wrongdoing. QBE ex. K (doc. 23-2).
As stated previously, the contractual duties to indemnify Bunge was specific
to the negligence of the contractors. They did not provide blanket protection to
Bunge, as Amerisure seems to argue, for Bunge’s own negligence. Rather, only if
Dodson’s “personal injuries ... [arose] out of or [were] in any manner connected with
the performance of th[e] Agreement, whether such injury, loss or damage [was]
caused by the negligence of the Contractor, his subcontractor, or any other party for
whom the Contractor is responsible....” can there be liability for indemnification from
the contractors to Bunge. See Amerisure ex. 1, at ZURICH 0660; Amerisure ex. 8,
at QBE - 0116. Thus, Amerisure must prove more than that it paid settlement sums
on behalf of Bunge to be entitled to contribution by Zurich or QBE. Rather, it must
prove it settled claims against Bunge which arose from H&D’s and/or CS&F’s own
negligence.8
8

Amerisure argues that Zurich and QBE waived their rights to challenge the sum
Amerisure paid to Dodson to settle Dodson’s claims against Bunge. Amerisure motion for
summary judgment (doc. 22), at 14. However, the case it relies on for this proposition, Twin City
Fire Ins. Co. v. Amerisure Ins. Co., 2008 WL 2678434, 4 (S.D.Ala.2008), also recognizes that
“in Star Electrical Contractors, Inc. v. Stone Building Co., 863 So.2d 1071 (Ala.2003) ... the
18

Not surprisingly, there is substantial finger pointing among the parties to this
action as to who is responsible for Dodson’s injuries. While the parties agree that
Bunge knew the guard was missing from the conveyor system after CS&F completed
its work and left Bunge’s premises, and after H&D completed its work and left
Bunge’s premises, they dispute who, between CS&F and Bunge, was responsible for
leaving the guard off of the motor. The settlement agreements are of no assistance
in this regard, as they all disclaim any admission of any liability for any of Dodson’s
injuries.
Amerisure’s claim against Zurich as the insurer of H&D is the easier of the
claims to resolve. None of the parties claim that H&D was negligent in any manner
or that H&D had any responsibility to ensure that the guard was in place. In other
words, there is no “liability, claims and demands on account of personal injuries
....arising out of or in any manner connected with the performance of this Agreement
[of which the injury, loss or damage [was] caused by the negligence of the Contractor,
his subcontractor, or any other party for whom the Contractor is responsible.”
Amerisure ex. 1 (doc. 22-1), at ZURICH 0660. Because the parties seemingly agree
that there was no triggering event causing liability arising out of H&D’s performance
Court clarified that precluding an indemnitor from ‘contesting its own liability under the
indemnification agreement’ due to its failure to defend or participate in settlement discussions ‘is
not the law of indemnity.’ Id. at 1078.” Twin City Fire Ins. Co., 2008 WL 2678434 at 4. Rather,
“[w]aiver is the intentional relinquishment of a known right.” Id., (quoting Edwards v. Allied
Home Mortgage Capital Corp.), 962 So.2d 194, 208 (Ala.2007).
19

of the agreement, there is no basis for Amerisure to require indemnification from
H&D through Zurich. See e.g., Craig Const. Co., Inc. v. Hendrix, 568 So.2d 752, 756
(Ala.1990) (quoting Industrial Tile, Inc. v. Stewart, 388 So.2d 171, 176 (Ala.1980))
(“[I]ndemnification for one’s own negligence is available only where ‘the parties
knowingly, evenhandedly, and for valid consideration intelligently enter into an
agreement whereby one party agrees to indemnify the other, including indemnity
against the indemnitee’s own wrongs, if expressed in clear and unequivocal
language.’”). As the Court in Craig noted, “[w]hen one seeks indemnification from
another for damages that were caused by his own negligence, strict construction of
the indemnity agreement against the contractor is particularly appropriate.” Id., at
757.
Having considered the foregoing, the court is of the opinion that Amerisure’s
motion for summary judgment, as it relates to H&D, is due to be denied on the issue
of indemnity, and that Zurich’s motion for summary judgment, on the issue of
indemnity, is due to be granted. The court shall so rule by separate Order. Because
the court finds Zurich has no obligation as to contribution to settlement costs, the
court does not reach Zurich’s other arguments on this subject.
The same issue with regard to CS&F, and hence QBE, has more twists and
turns. Defendant QBE first argues that Bunge was not an additional insured at the

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time of Dodson’s injury, because CS&F had finished its operations, thus ending
Bunge’s status as an additional insured. QBE’s opposition (doc. 28), at 2. Under the
terms of the policy, coverage extended to an additional insured is subject to an
exclusion which states
This insurance does not apply to:
....
2. “Bodily injury” ... occurring after:
a. All work, including materials, parts or equipment furnished in
connection with such work, on the project (other than service,
maintenance or repairs) to be performed by or on behalf of the
additional insured(s) at the location of covered operations has been
completed; or
b. That portion of “your work” out of which the injury or damage
arises has been put to its intended use by any person or organization
other than another contractor or subcontractor engaged in performing
operations for a principal as part of the same project.

Plaintiff ex. 9A (doc. 22-12, at p. 14 of 54). The only means by which the court can
give meaning to the relevant sections of the QBE policy is to find that any coverage
extended to Bunge as an additional insured ended when Bunge put the conveyor
system to its intended use and CS&F completed its work. See State Farm Fire &
Cas. Co. v. Slade, 747 So.2d 293, 309 (Ala.1999) (when a court construes an
insurance policy, “the terms of an insurance policy should be given a rational and
practical construction”). Having undertaken this analysis, the court finds that,
regardless of whether the QBE policy provided coverage for “completed operations”
is not essential to resolution of the pending motion.

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Rather, the issue before the court can be completely resolved by the parties’
actions in state court. In the underlying case, Bunge and CS&F filed cross-claims
against each other, specifically on the coverage Amerisure now asserts against QBE.9
See QBE motion for summary judgment, at 7; QBE’s opposition, at 5-6. The joint
stipulation states that CS&F and Bunge “hereby stipulate to the dismissal, with
prejudice, of the Cross-Claim for Indemnification and Complaint for Declaratory
Judgment filed by CS&F against Bunge ... and the Counter-Claim filed by Bunge
against CS&F....” QBE ex. L (doc. 23-2).
Clearly, Bunge dismissed its claim for indemnification against CS&F.
Amerisure, acting on that very claim, seeks contribution from QBE on behalf of
CS&F based on that same indemnification agreement. Amerisure, as the insurer for
IRS, acted on behalf of Bunge in the underlying suit, based on IRS’s indemnification
agreement with Bunge. Standing in Bunge’s shoes for such purposes, and Bunge
having settled its claims for indemnification with CS&F, there is nothing left for
Amerisure to collect. Most tellingly, the Settlement Agreement and Mutual Release
states in relevant part, that
...Bunge shall by this Agreement fully and finally release .... CS&F from
any and all claims, subrogation claims ... whether known or unknown to
the parties, whether foreseen or unforeseen ... and whether or not
9

The court notes CS&F contributed to the settlement of the underlying case, settling
Dodson’s claim against it for the sum of $200,000.00. QBE Exhibit K, (doc. 23-2).
22

asserted in the Action for any incidents which may have existed prior to,
or contemporaneously with the execution of this Agreement that arise
or could have arisen out of ... the claims in the Action, including but not
limited to any past, present or future obligations, known or unknown, for
the defense of liability, indemnity, or reimbursement of costs, expenses,
losses, or damages arising out of the claims asserted in the Action...
.....
CS&F further represents and warrants that it has obtained, or will
obtain, a release of any and all rights, including subrogation rights, that
QBE Insurance Corporation may have against Bunge in connection with
the Action and the claims released by CS&F. Similarly, Bunge
represents and warrants that it has obtained or will obtain a release of
any and all rights, including subrogation rights, that ACE American
Insurance Company and Amerisure Insurance Company may have
against CS&F in connection with the Action and the claims released by
Bunge herein.
QBE ex. K (doc. 23-2, at 40 of 57). If Amerisure wished to have retained its claim
for contribution based on the indemnity agreement against CS&F, it should not have
released this very claim while acting on behalf of Bunge. Clearly, without a valid
claim for indemnity against CS&F, there can be no valid claim for the same against
CS&F’s insurer.10 See e.g., Allstate Ins. Co. v. Amerisure Ins. Companies, 603 So.2d
961, 965 (Ala.1992)(“The point is that Amerisure, in settling with Demo, did not
preserve its right to proceed against Allstate either by giving Allstate notice of such

10

See also Federal Ins. Co. v. Travelers Cas. and Sur. Co., 843 So.2d 140, 144
(Ala.2002). Although that case was in the context of subrogation rather than indemnification, the
principle that a claim must exist against an insured before an insurer can have liability is present
in both. Hence, the Alabama Supreme Court recognized that “[i]t is well-settled that an insurer
that, through subrogation, “stands in, the shoes” of its insured may assert only claims that would
be validly asserted by the insured.” Id., (citations omitted).
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an intent or by postponing the settlement until after this Court had ruled in its appeal
from Allstate’s declaratory judgment.”).
Even if the court found that Amerisure somehow preserved its right to
contribution in spite of the underlying settlement agreement, yet another problem
exists for plaintiff:
It has been the law in Alabama for over 150 years that where one party,
with full knowledge of all the facts, voluntarily pays money to satisfy
the colorable legal demand of another, no action will lie to recover such
a voluntary payment, in the absence of fraud, duress, or extortion.
Weaver, supra; H.A. Edwards Ins. Agency v. Jones, 242 Ala. 624, 7
So.2d 567 (1942); National Bank of Boaz v. Marshall County, 229 Ala.
369, 157 So. 444 (1934); Town Council of Cahaba v. Burnett, 34 Ala.
400 (1859); Jones v. Watkins, 1 Stew. 81 (Ala.1827); Clifton, supra;
Thornton v. Singer Sewing Mach. Co., 34 Ala.App. 162, 37 So.2d 239
(1948). A “voluntary payment” has been defined as “a payment made by
a person of his own motion, without compulsion; a payment made
without a mistake of fact or fraud, duress, coercion, or extortion, on a
demand which is not enforceable against the payor.” 70 C.J.S. Payment
§ 100 (1987).
Mount Airy Ins. Co v. Doe Law Firm, 668 So.2d 534, 537-538 (Ala.1995). Although
the factual background in that case was not the same as here, the court finds the
reasoning helpful. Once Amerisure settled Dodson’s claim against Bunge, Amerisure
had no right to seek recoupment of this voluntary payment. The Alabama Supreme
Court noted that to preserve a right to reimbursement, “the insurer must first obtain
either a written agreement with its insured that it does not waive such a right by
making the payment, or obtain a court order granting the insurer the authority to

24

participate in the settlement without waiving any right to reimbursement.” Id., at 538.
See also Home Insurance Com. v. Hartford Fire Insurance Co., 379 F.Supp.2d 1282,
1290 n. 8 (M.D.Ala.2005); Allstate Ins. Co. v. Amerisure Ins. Companies, 603
So.2d 961, 966 (Ala.1992) (“Because Sherrill could not recover from Allstate any
payments that he might make voluntarily, neither can Amerisure.”).
Because the court finds the release dispositive of the issues before it, the court
does not reach the other arguments of QBE as to why it owes no indemnification to
Amerisure.
The court further finds that state court settlement agreement resolved the issue
of whether QBE owes Amerisure contribution for defense costs in the underlying
state court case. At the time that agreement was reached, Amerisure had to be aware
of both its defense costs, and the fact that QBE had not contributed to the same. Yet
Amerisure, acting through Bunge, entered an agreement for CS&F to be dismissed
without retaining any right to recoup defense costs. Having done so, Amerisure
cannot receive reimbursement from QBE for these costs now, for the same reasons
explained above.
Therefore, the court shall grant defendant QBE’s motion for summary
judgment against Amerisure, and deny Amerisure’s motion for summary judgment
against QBE, by separate Order.

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3. Claim for Defense Cost Contribution by Amerisure against Zurich:
The sole remaining possibility for recovery in this action is on Amerisure’s
claim for contribution from Zurich for costs incurred in defending the state court
action. Zurich asserts that Bunge’s failure to make a demand for coverage as an
additional insured under the policy until six months after the accident acts as a bar to
Zurich’s obligation to have provided a defense. Zurich motion (doc. 20) at 18-19.
Zurich’s first notification of the accident was on March 3, 2008, because Dodson’s
counsel filed pre-suit discovery. Bunge did not inform Zurich it was making a claim
for coverage as an additional insured on the Zurich policy until August 27, 2008.
Zurich motion (doc. 20) at 19. Although Zurich styles this as a six month or longer
delay in notification, the court finds it was the filing of the state court action on May
20, 2008, which triggered any indemnification obligation, rather than the date of the
injury. See plaintiff exhibit 5 (state court complaint). Thus, Zurich was notified by
Bunge of the claim for coverage within three months. The court finds this argument
of Zurich’s without merit.
Zurich next argues that plaintiff Amerisure has not shown that the $457,000.00
it seeks to recover in defense costs was reasonable or necessary. Zurich opposition
(doc. 33) at 3-4. As pointed out by Zurich, Amerisure has provided no invoices,
evidence or testimony regarding the basis for the defense costs. Id. The sole

26

evidence in support of this claim is the affidavit of Kevin Swan. Plaintiff exhibit 7.
That affidavit states that Amerisure provided a defense to Bunge pursuant to its status
as an additional insured under the Amerisure policy and that Amerisure incurred
$457,020.99 in defense fees. Id., ¶¶ 2-3. Mr. Swan does not state whereby he came
by knowledge of these facts, or whom he might be to have such knowledge. Also
absent is any evidence that Amerisure actually paid such fees.
Even more troubling to the court is the lack of any evidence that but for the
allegations of H&D’s negligence in the underlying state court action these fees would
not have been incurred. Clearly, Zurich was present in the state court defending its
insured, H&D. Amerisure provides no argument, let alone evidence, that it did not
incur these fees in the defense of Bunge alone. Under the indemnification agreement,
and as explained above, any duty for H&D to indemnify Bunge could arise solely
from H&D’s own negligence. As such, Zurich, as H&D’s insurer, could have no duty
to provide a defense to Bunge for Bunge’s negligence.
“A contractual obligation to indemnify is distinct from a contractual obligation
to procure insurance. Under an agreement to indemnify, the promisor assumes
liability for all injuries and damages upon the occurrence of a contingency. In
contrast, an agreement to obtain insurance involves the promisor’s agreement to
obtain or purchase insurance coverage, regardless of whether [a] contingency

27

occurs....” See e.g., Doster Constr.Co., Inc. v. Marathon Elec. Contractors, Inc., 32
So3d 1277, 1284 (Ala.2009) (quoting Goodyear Tire & Rubber Co. v. J.M. Tull
Metals Co., 629 So.2d 633, 639 (Ala.1993)). Clearly, H&D met its obligation to
name Bunge as an additional insured on its CGL policy. However, that policy only
insured for the contingencies set out in the indemnity agreement, namely, that H&D
would indemnify Bunge for damages claimed from H&D’s negligence.11 That
contingency has not occurred, because H&D was dismissed from the underlying
action with no admission of negligence. Even had H&D not been so dismissed,
Amerisure has failed to produce any evidence that the costs it incurred were for the
defense of anything other than Bunge for Bunge’s own negligence.12 Because such
costs are not within the scope of the Zurich policy, the plaintiff has failed to establish

11

Specifically, the policy stated:

D. The insurance provided to the additional insured person or organization does
not apply to:
1. “Bodily injury”, “property damage” or “personal and
advertising injury” that results solely from negligence of the
additional insured....
12

Such a finding is in line with cases such as Jack Smith Enterprises v. Northside Packing
Co., 569 So.2d 745, 746 (Ala.Civ.App.1990), which held indemnification, “including attorney
fees, is allowed where one is defending claims predicated solely upon another defendant's
negligence; however, where one is defending for his own benefit, an award of attorney fees will
not be allowed.”

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any genuine issue of material fact which remains for trial on the issue of contribution
for defense costs. The court shall enter an order accordingly on this claim.
IV. Conclusion
Having considered the arguments of the parties, the facts of this case and the
relevant law, the court finds no genuine issues of material fact remain. Defendant
QBE is entitled to judgment in its favor and against the plaintiff as a matter of law on
Amerisure’s claims against QBE. Defendant Zurich is entitled to judgment in its
favor and against the plaintiff as a matter of law on Amerisure’s claim for
contribution for settlement costs. Zurich also is entitled to judgment in its favor and
against defendant Amerisure as a matter of law on Amerisure’s claim for contribution
for defense costs. The court shall so Order.
DONE and ORDERED this the 5th day of September, 2012.

INGE PRYTZ JOHNSON
U.S. DISTRICT JUDGE

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