Progressive Paloverde v. Chubb Indem Ins Co

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PROGRESSIVE PALOVERDE INSURANCE 
COMPANY,
Plaintiff-Appellant,
v.  No. 03-1195
HARTFORD FIRE INSURANCE COMPANY,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Joseph Robert Goodwin, District Judge.
(CA-02-52-2)
Argued: October 31, 2003
Decided: January 23, 2004
Before LUTTIG and SHEDD, Circuit Judges, and
MICHAEL, Senior United States District Judge for the
Western District of Virginia, sitting by designation.
Reversed and remanded by published opinion. Judge Luttig wrote the
opinion, in which Judge Shedd and Senior Judge Michael joined.
COUNSEL
ARGUED: Robert Carter Elkins, CAMPBELL, WOODS, BAGLEY,
EMERSON, MCNEER & HERNDON, P.L.L.C., Huntington, West
Virginia, for Appellant. Sarah Jane Anderson, DICKIE, MCCAMEY
& CHILCOTE, Wheeling, West Virginia, for Appellee. ON BRIEF:
2 PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS.
Laura L. Gray, CAMPBELL, WOODS, BAGLEY, EMERSON,
MCNEER & HERNDON, P.L.L.C., Huntington, West Virginia, for
Appellant.
OPINION
LUTTIG, Circuit Judge:
Progressive Paloverde Insurance Company ("Progressive") brought
suit against Hartford Fire Insurance Company ("Hartford"), seeking a
declaratory judgment that Hartford was the primary insurer for inju-
ries sustained by Timothy Freeman on July 14, 1998. The district
court dismissed Progressive’s claim at summary judgment, finding
that Progressive, not Hartford, was the primary insurer for Freeman’s
injuries. Because we hold that Hartford’s policy provided primary
coverage and that Progressive’s policy was only for excess coverage
in this circumstance, we reverse.
I.
The parties do not dispute the facts giving rise to the litigation. On
July 14, 1998, Timothy Freeman, an insured of Progressive, hit a curb
as he drove out of the parking lot of Thomas Memorial Hospital in
South Charleston, West Virginia, flattening the right front tire of his
car. Freeman called the American Automobile Association (AAA) for
help, and AAA communicated his request to American Towing, a
local towing company. American Towing, in turn, sent employee Les-
lie Davis in a tow truck to assist Freeman. The tow truck was insured
by Hartford.
After changing Freeman’s tire, Davis moved the tow truck across
the street to a gravel parking lot where Freeman could more comfort-
ably complete the various forms relating to the accident. Freeman fol-
lowed on foot, leaving his car behind him on the other side of the
road. Freeman and Davis then stood facing the tow truck’s left side,
with their backs to the road, while Freeman used the truck’s bed as
a writing surface. As Freeman was signing the necessary paperwork,
both he and Davis were hit from behind by an unidentified motorist,
who, immediately thereafter, drove away.
PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS. 3
Freeman filed suit in West Virginia state court against the unidenti-
fied driver for the injuries he sustained as a result of the hit-and-run
accident. As required by West Virginia law, Progressive appeared on
the unidentified motorist’s behalf and ultimately settled Freeman’s
claim by paying him $100,000 in compensation for his injuries and
an additional $10,000 for the release of any claims of bad faith that
Freeman may have had against Progressive. Freeman also agreed, as
part of the settlement, to assign to Progressive any additional claims
that he may have had for coverage under any other insurance policy.
Shortly thereafter, on January 22, 2002, Progressive filed suit
against Hartford in federal district court. In its suit, Progressive asked
the court to find that Hartford, not Progressive, was the primary
insurer for Freeman’s injuries from the July 14, 1998 accident, and to
order Hartford to reimburse Progressive for the amount it paid to
Freeman for his injuries. The district court dismissed Progressive’s
claim at summary judgment, reasoning that, although Freeman was
covered by the uninsured motorist provisions of both the Progressive
and Hartford insurance polices, Hartford was not obligated to reim-
burse Progressive because Progressive’s policy provided primary cov-
erage to Freeman.
Both Progressive and Hartford appeal from this judgment. Progres-
sive argues that the district court erred in holding that its policy pro-
vided primary uninsured motorist coverage for Freeman’s injuries and
in failing to consider whether Hartford’s policy also provided primary
coverage. Hartford argues that the district court erred in finding that
Hartford’s policy covered Freeman at all.
II.
We address first Hartford’s argument that the district court erred in
holding that Freeman was covered by the uninsured motorist provi-
sions of the Hartford policy. Based on the plain and unambiguous lan-
guage of the Hartford policy, we disagree with Hartford that the
district court erred. Accordingly, we affirm the district court’s holding
in this respect.
The Hartford policy reads, in relevant part, as follows:
4 PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS.
We will pay all sums the "insured" is legally entitled to
recover as compensatory damages from the owner or driver
of an "uninsured" or "underinsured motor vehicle." The
damages must result from "bodily injury" sustained by the
"insured," or "property damages" caused by an "accident."
J.A. 113. Under the policy, the term, "insured," includes the named
insured on the policy, as well as, "anyone else ‘occupying’ a covered
‘auto,’" J.A. 114; the term, "occupying," "means in, upon, getting in,
on, out or off," J.A. 115. The district court held that Freeman was an
"insured" under the Hartford policy because, at the time of the acci-
dent, he was "upon" — and, therefore, "occupying" — the tow truck.
On appeal, Hartford does not dispute that the district court was cor-
rect in finding that its policy, as written, covers Freeman. Rather, it
contends that, under the West Virginia Supreme Court’s decision in
Adkins v. Meador, 494 S.E.2d 915 (W. Va. 1997), its policy may not
be read as it was written, and that the term "occupying" must be
replaced with the term "using," in order to bring the policy into com-
pliance with the statutory requirements of West Virginia law. So con-
strued, Hartford argues, its policy would not cover Freeman.
We reject this argument because the Hartford policy, as applied to
the injury sustained by Freeman, provides coverage consistent with
the requirements of state law and, therefore, need not be construed
against the plain meaning of its terms as was required in Adkins. That
is, in contrast to Adkins, in which the insurance policy at issue denied
coverage to an individual who would have been covered had the pol-
icy included the minimum level of coverage required by statute, the
Hartford policy provided coverage to Freeman on its own terms.
Therefore, with regard to Freeman, the policy did not provide cover-
age that was "more restrictive" than the minimum level of coverage
required by West Virginia Code section 33-6-31(c). In such situa-
tions, "[w]here provisions of an insurance policy are plain and unam-
biguous and where such provisions are not contrary to a statute,
regulation or public policy, the provisions will be applied and not
construed." Deel v. Sweeney, 383 S.E.2d 92, 94 (W. Va. 1987).
Because we have no cause to interpret the plain and unambiguous
meaning of the policy’s terms to mean anything other than what they
PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS. 5
say, the holding of the district court that the Hartford policy covers
the injuries sustained by Freeman on July 14, 1998 was correct.
III.
Having decided that Freeman was covered by the Hartford policy,
and it being undisputed that Freeman’s injuries were covered by the
Progressive policy, we turn next to the question of the priority of cov-
erage provided by the two policies. Based on the plain language of
both policies, we hold that Hartford, not Progressive, was the primary
insurer.
A.
Considering first the priority of coverage under the Progressive
policy, we conclude that the district court erred in finding that that
policy provides primary coverage over Freeman’s injuries.
The "Other Insurance" clause in the Progressive policy provides as
follows:
If there is other applicable uninsured or underinsured motor-
ist coverage, we will pay only our share of the damages. Our
share is the proportion that our Limit of Liability bears to
the total of all available coverage limits. Any insurance we
provide shall be excess over any other uninsured or underin-
sured motorist coverage, except for bodily injury to the [pol-
icyholder] or a relative when "occupying" a covered
vehicle.
J.A. 21 (emphases added). "Occupying" is defined in the Progressive
policy as "in, on, entering, or exiting." Thus, the Progressive policy
provides "excess" coverage, unless Freeman sustained his injuries
while "in, on, entering, or exiting" his car. The district court found,
and we agree, that, "under Progressive’s literal definition of the term
‘occupying,’" Freeman does not fall within the terms of this excep-
tion. J.A. 21. At the time of the accident, Freeman was across the
street, leaning against the tow truck, not "in, on, entering, or exiting"
his vehicle.
6 PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS.
The district court did not, however, apply the terms of the policy
as it was written. Rather, it mistakenly invoked Adkins and read the
term "occupying" in the "Other Insurance" clause to mean "using."
This was error. As recounted above, Adkins did not hold that the term
"occupying" is always void in favor of the term "using" when it
appears in an uninsured motorist policy, see J.A. 21; rather, that case
held that, "[w]hen the language of an insurance policy is contrary to
statute and therefore void, the policy should be construed to contain
the coverage required by West Virginia law." Adkins, 494 S.E.2d at
920. Because section 33-6-31 does not address in any way the alloca-
tion of coverage between carriers, the use of the term "occupying" in
the "Other Insurance" provision in Progressive’s policy does not con-
flict with any requirement of West Virginia law. Therefore, Progres-
sive was free to "incorporate such terms, conditions and exclusions
. . . as may be consistent with the premium charged," Deel, 383
S.E.2d at 94, and the courts must enforce the policy as written.
As discussed above, when the plain language of the "Other Insur-
ance" clause of the Progressive policy is applied to this case, it is
clear that the policy provides only excess coverage for Freeman’s
accident. The district court erred in holding otherwise.
B.
Turning finally to the question of whether Hartford’s coverage with
respect to Freeman’s injuries was primary or excess only, we hold
that that coverage was indeed primary.1
The "Other Insurance" provision of the Hartford policy provides,
in relevant part, as follows:
1
As a threshold matter, the district court erred by apportioning all lia-
bility to Progressive without even considering whether the Hartford pol-
icy provided primary coverage over Freeman’s accident. After all, even
accepting the district court’s conclusion that the Progressive policy pro-
vides primary coverage for Freeman’s injuries, if the court had also con-
cluded that the Hartford policy provided primary coverage, then the court
would have been bound to pro-rate liability for Freeman’s injuries
between the two companies, in accordance with the "Other Insurance"
clauses in both policies. J.A. 74 (Progressive); J.A. 109-10 (Hartford).
PROGRESSIVE PALOVERDE INS. v. HARTFORD FIRE INS. 7
For any covered "auto" you own, this Coverage Form pro-
vides primary insurance. For any covered "auto" you don’t
own, the insurance provided by this Coverage is excess over
any other collectible insurance.
J.A. 109. Hartford contends that its policy does not provide primary
coverage to Freeman because Freeman did not own the tow truck.
This sleight of hand is easily dismissed. It bears reminding that the
Hartford policy is a policy agreement between Hartford and American
Towing. "You," as it is used in the policy, refers not to Freeman, as
Hartford would have us believe but, rather, to American Towing, the
named insured in the policy. See J.A. 102 (stating that, "the words
‘you’ and ‘your’ refer to the Named Insured in the Declarations").
Thus, because American Towing owns the tow truck, the Hartford
policy provides primary insurance for the tow truck, which includes
coverage for injuries sustained by persons like Freeman who, as we
previously determined, are injured while occupying that tow truck.
That Freeman is not the owner of the tow truck is simply irrelevant
to the question of whether the Hartford policy provides primary cov-
erage in this case.
We hold therefore that Hartford contracted to provide primary cov-
erage over Freeman’s injuries, consistent with West Virginia’s bright
line rule "‘that insurance follows the automobile, rather than the
driver.’" See Allstate Insurance Co. v. State Automobile Mutual
Insurance Co., 364 S.E.2d 30, 33 (W. Va. 1987).
IV.
For the reasons stated, the judgment of the district court is reversed
and the case is remanded with instructions to enter an order compel-
ling Hartford to reimburse Progressive for the $100,000 that Progres-
sive paid to Freeman for his injuries.
REVERSED AND REMANDED.