Hillerich & Bradsby Co. v. ACE American Insurance Company
Filing
75
ORDER denying 54 Motion for Summary Judgment; granting 58 Motion for Summary Judgment. The Court will later issue a detailed opinion addressing these motions. Signed by Judge Donald W. Molloy on 3/7/2013. (dle)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
HELENA DIVISION
HILLERICH & BRADSBY CO.,
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Plaintiff,
vs.
ACE AMERICAN INSURANCE
COMPANY,
Defendant.
CV 11-75-H-DWM
ORDER
Hillerich & Bradsby Company (“H&B”) and ACE American Insurance
Company both move for summary judgment. The Court held a hearing on the
motions on March 6, 2013. The Court will later issue a detailed opinion on the
motions, but the Court is prepared to now announce its decision. ACE’s motion
for summary judgment is granted, and H&B’s motion is denied.
The Court grants ACE’s motion for two reasons. First, ACE satisfied the
requirements of section IV.II.2.h (“Paragraph h”) of the Endorsement.1 ACE
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Paragraph h reads:
When the insured’s liability is reasonably expected to exceed the “Self
Insured Retention” stated in the Declarations, we may request the
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recommended a “settlement” to H&B that would have been acceptable to the
Patches, but H&B refused to consent to that recommendation. The agreement to
pay the $850,000 judgment would have been a binding contract. See Carlson v. St.
Farm Mut. Auto. Ins. co., 76 F. Supp. 2d 1069 (D. Mont. 1999); Kluver v. PPL
Mont. LLC, ___ P.3d ___, 2012 WL 6740152 at *7 (Mont. 2012). In particular,
had ACE and H&B paid the $850,000 judgment to the Patches, that payment
would have been supported by adequate consideration. The Patches would have
received payment of the judgment without the risk of that judgment being vacated
on appeal. And H&B and ACE would have been relieved of the obligation to pay
post-judgment interest, among other benefits provided by the release.
insured to tender the remaining limits of the “Self Insured Retention” in
order to complete the settlement of any such claim or “suit”. The insured
will not unreasonably withhold its consent to our request to tender
remaining limits of the “Self Insured Retention”. Upon notification of
the action taken, the insured shall promptly reimburse us for such part
of the “Self Insured Retention” that has been paid by us. If we
recommend a settlement which is acceptable to a claimant, which
exceeds the “Self Insured Retention,” and is within the Limit of
Liability, and the insured refuses to consent to such settlement offer,
then our liability shall not exceed the amount for which the claim could
have been settled if our recommendation had been accepted, exclusive
of the “Self Insured Retention” to effect settlement of any claim or
“suit” nor shall we have any obligation to pay any “ALAE” incurred in
excess of the “ALAE Self Insured Retention” after the time we
requested you tender the remaining limits.
(Endorsement, doc. 7-1 at 47.)
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Since ACE satisfied the requirements of Paragraph h, it had no “obligation
to pay any ‘ALAE’ incurred in excess of the ‘ALAE Self Insured Retention’ after
the time [it] requested [H&B to] tender the remaining limits.” (Endorsement, doc
7-1 at 47).
H&B’s reading of the “unreasonably withhold its consent” provision in
Paragraph h is not reasonable. The plain language of that provision means only
that H&B cannot unreasonably withhold its consent to tender the self-insured
retention if ACE requests that tender. It does not mean that H&B can force ACE to
continue paying ALAE as long as H&B is reasonably withholding consent to a
settlement.
Second, ACE satisfied the post-judgment interest provision in Section I of
the Endorsement.2 The paragraph containing this provision is not an “assumption
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The paragraph containing that provision reads:
No other obligation or liability to pay sums or perform acts or services
is covered unless explicitly provided for under Allocated Loss
Adjustment Expenses – Coverages A and B below, but we shall have the
right and opportunity to assume from the insured the defense and control
of any claim or “suit”, including any appeal from a judgment seeking
payment of damages covered under this policy that we believe are likely
to exceed the “Self Insured Retention.” In such event, we and the
insured shall cooperate fully. We shall pay interest only on that amount
of any judgment we pay that accrues after entry of the judgment and
before we have paid, offered to pay, or deposited in court that part of the
judgment that is within the applicable limit of insurance shown in the
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of the defense clause.” If anything, it is a catch-all provision tacked onto the end
of Section I. True, it discusses what happens if ACE assumes the defense, but it
discusses other matters, too. The first half of the first sentence, for example,
applies regardless of whether ACE has assumed the defense. The same is true with
the last two sentences.
ACE did not have to pay post-judgment interest after November 17, 2009,
because it “offered to pay . . . that part of the judgment that is within the applicable
limit of insurance shown in the Declarations.” ACE did not have to pay the entire
$850,000 judgment, including H&B’s $250,000 self-insured retention, because the
“applicable limit of insurance” is the amount of money that ACE will pay in
excess of the self-insured retention. Section III.2 of the Endorsement reads: “The
LIMITS OF INSURANCE as shown in the Declarations shall apply in excess of
the ‘Self Insured Retention’ shown in the Declarations. You agree to assume
payment of the ‘Self Insured Retention.’” (Endorsement, doc. 7-1 at 44.)
Here, the “part of the judgment that is within the applicable limits of
insurance” is $600,000—i.e., $850,000 minus the $250,000 self-insured retention.
Declarations. But the amount we will pay for damages and Allocated
Loss Adjustment Expenses that are in excess of the “Self Insured
Retention” is limited as described in Section III – Limits of Insurance.
(Endorsement, doc. 7-1 at 42).
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ACE offered to pay that amount, so it was relieved from paying further postjudgment interest after it made that offer.3
For these reasons, which will be explained in more detail in an opinion to
follow, ACE’s motion for summary judgment is granted, and H&B’s motion for
summary judgment is denied.
IT IS ORDERED that ACE American Insurance Company’s motion for
summary judgment (doc. 58) is GRANTED. Hillerich & Bradsby Company’s
motion for summary judgment (doc. 54) is DENIED. The Court will later issue a
detailed opinion addressing these motions.
IT IS FURTHER ORDERED that, no later than March 21, 2013, the parties
shall show cause why H&B’s remaining claims should not be dismissed without
prejudice, in light of this order. The parties shall also show cause why H&B’s
motion to strike (doc. 61), as well as ACE’s oral motion to extend the motions
deadlines, should not be dismissed as moot.
DATED this 7th day of March 2013.
Contrary to H&B’s suggestion, the Endorsement does not require ACE to
have extended that offer to the Patches. The provision only requires ACE to have
made an offer to pay the applicable portion of the judgment, which it did.
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