Interstate Fire & Casualty Co. v. Washington Hospital Center Corp.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 10, 2014 Decided July 18, 2014
No. 13-7024
INTERSTATE FIRE & CASUALTY COMPANY,
APPELLEE
v.
WASHINGTON HOSPITAL CENTER CORPORATION, DOING
BUSINESS AS WASHINGTON HOSPITAL CENTER,
APPELLEE
GREENSPRING FINANCIAL INSURANCE LIMITED,
APPELLANT
MEDSTAR HEALTH, INC.,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:10-cv-01193)
Linda S. Woolf argued the cause for appellant. With her on
the briefs was Joseph B. Wolf.
Paulette S. Sarp argued the cause for appellee Interstate
Fire and Casualty Company. With her on the brief was David
Huggins.
2
Before: GRIFFITH, KAVANAUGH and SRINIVASAN, Circuit
Judges.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: In 2003, Greenspring Financial
Insurance Limited, Inc., issued an insurance policy providing
coverage to employees of Washington Hospital Center for
claims arising out of medical incidents within the scope of their
employment. The central question in this case is whether a
nurse hired by a staffing agency and assigned to work at the
hospital on a temporary basis was a covered “employee” under
the policy. The district court concluded that the nurse qualified
as an employee of Washington Hospital for purposes of the
Greenspring policy. The court therefore ordered Greenspring to
pay the cost of defending and settling medical malpractice
claims against the nurse. We agree with the district court’s
construction of the Greenspring policy, and we see no grounds
for excusing Greenspring from its obligations under the
insurance contract.
I.
In February 2002, Washington Hospital Center and
Progressive Nursing Staffers, Inc., entered into a staffing
agreement under which Progressive agreed to provide registered
nurses to the hospital for long-term and per-diem assignments.
Washington Hospital retained the right to terminate the
assignment of any Progressive nurse who failed to meet the
hospital’s reasonable expectations or failed to follow the
hospital’s patient care policies. Washington Hospital and
Progressive also agreed that each would indemnify the other for
“any and all claims and expenses arising out of or resulting from
the . . . negligent acts . . . of its employees or agents.”
3
Washington Hospital is a wholly owned subsidiary of
MedStar Health, Inc., which owns and operates several other
medical facilities in Maryland and the District of Columbia.
Greenspring Financial Insurance Limited, Inc., is also a wholly
owned subsidiary of MedStar and is MedStar’s “captive
insurer.” See Clougherty Packing Co. v. Comm’r, 811 F.2d
1297, 1298 n.1 (9th Cir. 1987) (a captive insurer is “a
corporation organized for the purpose of insuring the liabilities
of its owner”). In August 2003, Greenspring issued a general
liability policy to MedStar under which Greenspring must
indemnify the “Insured” for damages of up to $5 million per
incident resulting from covered medical incidents. The policy
defines “Insured” to include “all past, present, or future full-time
or part-time Employees” of MedStar, including employees of
MedStar subsidiaries such as Washington Hospital. The
Greenspring policy also includes an “other insurance”
clause—i.e., a clause apportioning liability in the event multiple
insurance policies cover the same risk. The clause states that
“[t]he insurance afforded by this policy is primary insurance”
except when otherwise specified.
Another insurer, Interstate Fire and Casualty Co., issued a
professional liability policy covering Progressive and its current
and former employees for claims made between November 2006
and November 2007, with a cap of $1 million per incident. The
policy includes an “other insurance” clause which states that,
“[i]f there is other valid insurance (whether primary, excess,
contingent or self-insurance) which may apply against a loss or
claim covered by this policy, the insurance provided hereunder
shall be deemed excess insurance over and above the applicable
limit of all other insurance or self-insurance.” Interstate Fire
simultaneously issued an excess commercial liability policy to
Progressive which covers Progressive and its current and former
employees for up to $4 million per incident. The policy also
4
applies “as excess of and not contributory with” any primary or
other insurance.
Chichio Hand, a registered nurse, was hired by Progressive
in 1999 and later assigned to work at Washington Hospital. In
April 2004, Nurse Hand was one of several medical
professionals at Washington Hospital involved in the treatment
of Radianne Banks. Ms. Banks, who had been admitted to
Washington Hospital while pregnant with her first child,
underwent a caesarean section and could not move her legs
afterward. In March 2007, she sued Washington Hospital and
two of its doctors in D.C. Superior Court for negligence,
alleging that she became completely wheelchair-bound as a
result of injuries she sustained at the hospital. In June 2008,
Washington Hospital filed a third-party complaint in the Banks
action seeking indemnification and contribution from Nurse
Hand and Progressive. Nurse Hand and Progressive then filed
a fourth-party complaint against Washington Hospital and one
of its doctors, likewise seeking indemnification and
contribution.
In August 2009, Ms. Banks, Washington Hospital, Nurse
Hand, Progressive, and Interstate Fire entered into a settlement
agreement resolving their respective claims. Washington
Hospital agreed to pay Ms. Banks and her attorneys $1.05
million, while Interstate Fire agreed to pay $3.055 million,
consisting of a $1.455 million payment to Ms. Banks and her
attorneys as well as the purchase of two annuities for Ms. Banks
at a combined cost of $1.6 million. Significantly, Interstate Fire
“expressly reserv[ed] the right to rely on the ‘other insurance’
clauses incorporated into its policies to seek reallocation of the
settlement as may be warranted.”
In July 2010, Interstate Fire followed through on its
reservation. It sued Washington Hospital, MedStar, and
5
Greenspring in federal district court, alleging that the defendants
owed a duty under the Greenspring general liability policy to
provide primary insurance coverage for Nurse Hand. Interstate
Fire asserted that it “stands in the shoes” of Nurse Hand and
Progressive for purposes of the litigation, and it sought damages
equal to all legal fees and costs it had paid on behalf of Nurse
Hand and Progressive. The complaint invoked the district
court’s diversity jurisdiction. 28 U.S.C. § 1332.
The parties filed cross motions for summary judgment, and
the district court issued an initial decision in March 2012. See
Interstate Fire & Cas. Co. v. Wash. Hosp. Ctr. Corp., 853 F.
Supp. 2d 49 (D.D.C. 2012) (Interstate Fire I). The court held
that Nurse Hand is an “employee” of Washington Hospital for
purposes of the Greenspring policy, and that Nurse Hand thus
qualifies as a person insured under that policy. Next, the court
rejected the defendants’ argument that the staffing agreement
between Washington Hospital and Progressive requires
Progressive’s insurer, Interstate Fire, to indemnify Washington
Hospital for any liability arising out of the actions of
Progressive’s nurses. The court held that Washington Hospital
had waived its right to indemnification when it released its
claims against Progressive and Interstate Fire in the settlement
of the Banks litigation. The court then examined the “other
insurance” clauses in the various insurance policies and
determined that Greenspring’s coverage of Nurse Hand is
primary. The court therefore granted partial summary judgment
to Interstate Fire with regard to Greenspring’s liability. In a
subsequent decision, the court ruled that Interstate Fire was
entitled to recover $3.055 million from Greenspring for
payments under the settlement agreement and $153,248.72 for
attorneys’ fees and costs, along with pre-judgment and post-
judgment interest. See Interstate Fire & Cas. Co. v. Wash.
Hosp. Ctr. Corp., 917 F. Supp. 2d 87 (D.D.C. 2013) (Interstate
Fire II). Greenspring appeals.
6
II.
We review the district court’s grant of summary judgment
de novo. See United States v. Regenerative Scis., LLC, 741 F.3d
1314, 1318 (D.C. Cir. 2014). The parties agree that the District
of Columbia’s substantive law applies, and we follow the
decisions of the District of Columbia Court of Appeals with
respect to local law. See Burke v. Air Serv Int’l, Inc., 685 F.3d
1102, 1105, 1107 n.4 (D.C. Cir. 2012). Until February 1, 1971,
judgments of the District of Columbia courts were subject to
review by this court, and D.C. Circuit decisions from before that
date are binding as to local law. See Hemphill v. Wash. Metro.
Area Transit Auth., 982 F.2d 572, 574 & n.1 (D.C. Cir. 1993);
M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C. 1971). When local
law is “silent,” the common law of Maryland is “‘especially
persuasive authority,’” as Maryland law is historically “‘the
source of the District’s common law.’” TMG II v. United States,
1 F.3d 36, 41 (D.C. Cir. 1993) (quoting Napoleon v. Heard, 455
A.2d 901, 903 (D.C. 1983)).
A.
The principal issue in this case is whether Nurse Hand, who
was hired by a staffing agency (Progressive) and assigned to
work at Washington Hospital, qualifies as an “employee” of the
hospital. If so, Nurse Hand is an insured under the Greenspring
policy, implicating Greenspring’s primary coverage. It is
undisputed that Nurse Hand is also an employee of Progressive.
But “[g]enerally, a person may be the employee of two
employers” as long as “‘the service to one does not involve
abandonment of the service to the other.’” Zinn v. McKune, 143
F.3d 1353, 1361 (10th Cir. 1998) (quoting Restatement (2d) of
Agency § 226 (1958)); see Lovelace v. Anderson, 785 A.2d 726,
741 (Md. 2001). The fact that only Progressive paid a salary to
Nurse Hand does not preclude a finding that she is an employee
7
of both Progressive and the hospital. See Beegle v. Rest. Mgmt.,
Inc., 679 A.2d 480, 485 (D.C. 1996) (issue of “who paid [the
worker]’s salary” is “not an adequate basis upon which to
determine the relationships of the parties,” and trial court erred
in treating payment of salary as “decisive factor” in determining
whether employment relationship exists).
Because an insurance policy is a contract, we construe it
according to contract law principles. Stevens v. United Gen.
Title Ins. Co., 801 A.2d 61, 66 (D.C. 2002). “‘Extrinsic
evidence of the parties’ subjective intent may be resorted to only
if the document is ambiguous.’” Sears v. Catholic Archdiocese
of Wash., 5 A.3d 653, 661 n.15 (D.C. 2010) (quoting 1010
Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199,
205 (D.C. 1984)). “‘In determining whether a contract is
ambiguous, we examine the document on its face, giving the
language used its plain meaning,’ unless, in context, it is evident
that the terms used have a technical or specialized meaning.”
Beck v. Cont’l Cas. Co. (In re May), 936 A.2d 747, 751 (D.C.
2007) (citation omitted) (quoting Tillery v. Dist. of Columbia
Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)). We
deal here with an insurance contract, and the “first step” in the
construction of an insurance contract is “to determine what a
reasonable person in the position of the parties would have
thought the disputed language meant.” Travelers Indem. Co. v.
United Food & Commercial Workers Int’l Union, 770 A.2d 978,
986 (D.C. 2001) (internal quotation marks omitted). In
conducting that inquiry, District of Columbia courts routinely
consult dictionary definitions of disputed terms. See, e.g.,
Hartford Fin. Servs. Grp. v. Hand, 30 A.3d 180, 187 n.13 (D.C.
2011) (consulting Black’s Law Dictionary); Chase v. State Farm
Fire & Cas. Co., 780 A.2d 1123, 1128 n.2 (D.C. 2001)
(Webster’s International Dictionary); In re Estate of Corriea,
719 A.2d 1234, 1242-43 (D.C. 1998) (Webster’s Ninth New
Collegiate, Black’s Law, and American Heritage Dictionary).
8
The disputed term in this case is the word “employee” in the
Greenspring policy. The American Heritage Dictionary defines
“employee” as a “person who works for another in return for
financial or other compensation.” The American Heritage
Dictionary of the English Language (5th ed. online 2014).
Webster’s defines “employee” as “one employed by another
usually in a position below the executive level and usually for
wages.” Webster’s Third New International Dictionary,
Unabridged (online ed. 2014). Those definitions do not
squarely address whether an individual hired by a staffing
agency and assigned to work for another firm is an “employee”
of the latter.
The definition of “employee” in Black’s Law Dictionary
speaks to the question more directly. Black’s Law defines
“employee” as a “person who works in the service of another
person (the employer) under an express or implied contract of
hire, under which the employer has the right to control the
details of work performance.” Black’s Law Dictionary 602 (9th
ed. 2009). Beneath the definition of “employee” and in indented
text, Black’s Law also includes a definition for “borrowed
employee”: an “employee whose services are, with the
employee’s consent, lent to another employer who temporarily
assumes control over the employee’s work.” Id. Greenspring
acknowledges that the staffing agreement gave Washington
Hospital the right to control the details of Nurse Hand’s work
performance. Greenspring also acknowledges that Nurse Hand
was in fact under the hospital’s control at the time of the conduct
causing Ms. Banks’s injuries. According to the Black’s Law
definition, then, Nurse Hand qualifies as an “employee” of
Washington Hospital—and, more specifically, a “borrowed
employee” of the hospital.
9
We acknowledge that legal dictionaries such as Black’s Law
sometimes supply specialized definitions. But we have found
Black’s Law definitions to be helpful in construing insurance
policies under District of Columbia law. E.g., Essex Ins. Co. v.
Doe, 511 F.3d 198, 200 (D.C. Cir. 2008). And District of
Columbia courts routinely rely on Black’s Law definitions in the
insurance context. See Hand, 30 A.3d at 187 n.13; Estate of
Corriea, 719 A.2d at 1242; Riggs v. Aetna Ins. Co., 454 A.2d
818, 821 (D.C. 1983); McIntosh v. Aetna Life Ins. Co., 268 A.2d
518, 520 (D.C. 1970). We follow that course here.
Greenspring, for its part, argues that the definition of
“employee” in its policy includes only “full-time” and “part-
time” employees rather than “all” employees. Appellant’s Br.
18 (emphasis omitted). In Greenspring’s view, some workers
qualify as “employees” but are neither “full-time” nor “part-
time.” But the adjective “full-time” is defined as “employed for
or working the amount of time considered customary or
standard,” while “part-time” is defined as “employed for or
working less than the amount of time considered customary or
standard.” Webster’s Third New International Dictionary,
supra; see also American Heritage Dictionary, supra (defining
“full-time” as “[e]mployed for or involving a standard number
of hours of working time” and “part-time” as “[f]or or during
less than the customary or standard time”). It would seem, then,
that all employees fall into either the “full-time” or “part-time”
category (except perhaps for a category of employees who work
more than the standard amount of time, and Greenspring does
not argue that Nurse Hand falls into such a category). In any
event, there is no reason to suppose that the expansive language
in the Greenspring policy (“all past, present, or future full-time
or part-time Employees”) was intended to limit the scope of the
term “employee.” If anything, the policy’s definition of
“employee” yields the opposite effect.
10
Greenspring instead urges us to construe the terms “full-
time” and “part-time” in light of the definitions used by federal
agencies for statistical purposes. See, e.g., U.S. Dep’t of Labor,
Bureau of Labor Statistics, Labor Force Statistics from the
Current Population Survey: Labor Force Characteristics,
http://bls.gov/cps/lfcharacteristics.htm (last updated Apr. 25,
2014) (“full time” employment is “35 hours or more per week”;
“part time” employment is “1 to 34 hours per week”). It is far
from clear how the Bureau of Labor Statistics definitions—even
if applicable—would advance Greenspring’s cause. If Nurse
Hand worked 35 hours or more per week, she would be a “full-
time” employee; if she worked one to 34 hours per week, she
would be a “part-time” employee. In either event, she would be
an “employee.” Greenspring, at any rate, cites no case in which
a District of Columbia court has used a Bureau of Labor
Statistics website to construe a term in an insurance policy,
much less any insurance case in which a court adhered to a
Bureau definition to the exclusion of Black’s Law Dictionary,
Webster’s, and American Heritage.
Greenspring also cites decisions from other jurisdictions
construing insurance policies with definitions of “employee”
that refer to “leased workers” and “temporary workers,” terms
that do not appear in the Greenspring policy. The policies cited
by Greenspring all state that the term “employee” includes a
“leased worker” but not a “temporary worker.” See, e.g.,
Wellington Specialty Ins. Co. v. Kendall Crane Serv., 434 F.
App’x 794, 795-96 (11th Cir. 2011) (per curiam) (quoting policy
language); Key Constr., Inc. v. Colony Ins. Co., No. 3-10-CV-
0297-BD, 2011 U.S. Dist. LEXIS 75486, at *2-3 (N.D. Tex. July
13, 2011) (same). A “leased worker” is defined by those
policies as “a person leased to you by a labor leasing firm under
an agreement between you and the labor leasing firm to perform
duties related to the conduct of your business.” Wellington
Specialty Ins., 434 F. App’x at 796. A “temporary worker” is
11
defined as “a person who is furnished to you to substitute for a
permanent ‘employee’ on leave or to meet seasonal or short-
term workload conditions.” Key Constr., 2011 U.S. Dist. LEXIS
75486, at *3. Greenspring contends that a nurse from a staffing
agency would be referred to in the insurance context as a “leased
worker” or a “temporary worker,” and that the absence of those
terms from the Greenspring policy means that the policy does
not intend to cover someone like Nurse Hand.
In construing insurance policies, however, District of
Columbia courts are primarily concerned with “‘the meaning
which common speech imports,’” not the meaning that other
insurers’ would ascribe to the same term. Travelers Indem., 770
A.2d at 986 (quoting Estate of Corriea, 719 A.2d at 1239). In
any event, the definition of “employee” set forth in those other
policies hardly impugns the conclusion that Nurse Hand
qualifies as an “employee” under the Greenspring policy. To
the contrary, the language of those policies suggests that the
term “employee” is generally understood to include “leased
workers,” and Nurse Hand appears to fit in the category of
leased workers according to the description of that term in those
policies. See Wellington Specialty Ins., 434 F. App’x at 796.
And even if Nurse Hand were a “temporary worker,” the
language of the other policies could be read to indicate that the
term “employee” would ordinarily encompass temporary
workers unless the policy expressly excludes them. As a result,
the fact that the Greenspring policy contains no mention of
“leased workers” or “temporary workers” in its definition of
“employee” affords no basis for concluding that the policy
excludes Nurse Hand from that term.
B.
In understanding the meaning of “employee” in the
Greenspring policy, the district court found it “helpful” to
12
consider the test used by District of Columbia courts when
assessing whether a person is an “employee” for vicarious
liability purposes. Interstate Fire I, 853 F. Supp. 2d at 57. As
a “general rule,” an entity is vicariously liable for the torts of an
employee but not for those of an independent contractor. See
W.M. Schlosser Co. v. Md. Drywall Co., 673 A.2d 647, 651
(D.C. 1996). In determining whether a person is an employee
or an independent contractor, District of Columbia courts
consider multiple specified factors. See Schecter v. Merchs.
Home Delivery, Inc., 892 A.2d 415, 422-23 (D.C. 2006);
Moorehead v. District of Columbia, 747 A.2d 138, 143 (D.C.
2000); Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000).
“‘While no single factor is controlling, the decisive test is
whether the employer has the right to control and direct the
servant in the performance of his work and the manner in which
the work is to be done.’” Schecter, 892 A.2d at 423 (alteration
and emphasis omitted) (quoting Beegle, 679 A.2d at 485). The
district court determined that Nurse Hand is an “employee” of
Washington Hospital under that framework because the hospital
had the right to control her conduct and to terminate her
assignment at any time, and because her care for Ms. Banks was
“clearly part of the [hospital’s] regular business.” Interstate
Fire I, 853 F. Supp. 2d at 57-58. Greenspring does not dispute
the district court’s application of the common law test, but
instead contends that the court erred by invoking that test in the
first place.
District of Columbia and Maryland courts, however, have
indicated that the “‘known principles of the common law’” can
inform the interpretation of insurance policies. Unkelsbee v.
Homestead Fire Ins. Co., 41 A.2d 168, 170-72 (D.C. 1945)
(quoting Waters v. Merchs.’ Louisville Ins. Co., 36 U.S. (11
Pet.) 213, 223 (1837)); see also Stiegler v. Eureka Life Ins. Co.,
127 A. 397, 402 (Md. 1925) (common law supplies default rule
where terms of insurance policy and statutes are silent). Courts
13
in other jurisdictions likewise look to common law principles
when construing the terms of insurance contracts—at least when
the contracts themselves do not expressly displace common law
default rules. See Crawford v. Lumbermen’s Mut. Cas. Co., 220
A.2d 480, 483 (Vt. 1966) (in answering the “perplexing
question” of whether worker is “employee” under insurance
policy, “the common law decisions on the relationship of master
and servant afford a safe guide”); see also Collin v. Am. Empire
Ins. Co., 26 Cal. Rptr. 2d 391, 403 (Cal. Ct. App. 1994); Quiring
v. GEICO Gen. Ins. Co., 953 N.E.2d 119, 129 (Ind. Ct. App.
2011); Detweiler v. J.C. Penney Cas. Ins. Co., 751 P.2d 282,
284 (Wash. 1988). Accordingly, we believe that the district
court appropriately considered common law principles of
vicarious liability in construing the term “employee” in the
Greenspring policy. And we agree with the district court that
the common law test supports concluding that Nurse Hand
qualifies as an “employee” of Washington Hospital.
C.
Greenspring argues that, instead of looking to dictionary
definitions and common law principles to understand the
meaning of the term “employee” in the Greenspring policy, the
court should rely on an affidavit in the record from Larry Smith,
the president of Greenspring and the vice president of risk
management for Washington Hospital’s parent company,
MedStar. According to Smith’s affidavit, Greenspring and
MedStar both understood that the Greenspring policy would
“apply to employees who had been hired by MedStar” and its
subsidiaries “but not to temporary workers such as agency
nurses.” Smith Decl. ¶ 3, ECF No. 35-2.
As we have explained, however, District of Columbia courts
apply unambiguous provisions of insurance policies without
resort to extrinsic evidence of the parties’ subjective intent. The
14
Smith affidavit, coming eight years after the Greenspring policy
was written and more than one year after Interstate Fire filed
suit, cannot outweigh the various considerations establishing
that Nurse Hand qualifies as an “employee” of Washington
Hospital under the Greenspring policy. See Sears, 5 A.3d at 661
n.15 (statement made in the course of litigation, “not
contemporaneous with . . . or reflected in any of the documents”
that constitute the parties’ agreement, “cannot serve to render
ambiguous contract terms that are otherwise unambiguous”).
And even assuming that the policy is ambiguous and that the
Smith affidavit affords some indication of an intent to exclude
agency nurses from coverage, any such indication would be
offset by the general rule that “‘ambiguities in an insurance
contract should be construed against the insurer who drafted the
contract . . . where other factors are not decisive.’” Beck, 936
A.2d at 751 n.4 (quoting Cameron v. USAA Prop. & Cas. Ins.
Co., 733 A.2d 965, 968 (D.C. 1999)); see Estate of Corriea, 719
A.2d at 1243; Meade v. Prudential Ins. Co., 477 A.2d 726, 728
(D.C. 1984). In the District of Columbia, that canon applies
even when—as here—the insurer who drafted the contract is
engaged in litigation against another insurance company. See
Imperial Ins., Inc. v. Emp’rs’ Liab. Assurance Corp., 442 F.2d
1197, 1199-1200 (D.C. Cir. 1970) (binding with respect to local
law). Greenspring argues against invoking the canon on the
ground that neither Nurse Hand nor Interstate Fire purchased the
policy from Greenspring. But District of Columbia courts
construe ambiguities in an insurance policy against the insurer
even when the claimant is a third-party beneficiary rather than
the purchaser of the policy. See, e.g., Price v. Doe, 638 A.2d
1147, 1149, 1152 (D.C. 1994); Nationwide Mut. Ins. Co. v.
Schilansky, 176 A.2d 786, 786-88 (D.C. 1961). The Smith
affidavit is certainly not a “decisive” factor in favor of
Greenspring’s preferred construction, cf. Beck, 936 A.2d at 751
n.4, and thus does not alter our conclusion that Nurse Hand is an
15
“employee” of Washington Hospital under the Greenspring
policy.
III.
While Greenspring’s primary position is that Nurse Hand is
not an “employee” of Washington Hospital, Greenspring also
asks us to reverse the district court’s decision even if we hold
that Nurse Hand is an employee covered under its policy.
Greenspring puts forward three arguments in support of its
alternative position, which we consider in turn.
A.
Greenspring first asks us to follow the Eighth Circuit’s
holding in Wal-Mart Stores, Inc. v. RLI Insurance Co., 292 F.3d
583 (8th Cir. 2002), as well as cases from other jurisdictions that
adhere to the Wal-Mart Stores decision. See, e.g., St. Paul Fire
& Marine Ins. Co. v. Am. Int’l Specialty Lines Ins. Co., 365 F.3d
263, 272 (4th Cir. 2004); Am. Indem. Lloyds v. Travelers Prop.
& Cas. Ins. Co., 335 F.3d 429, 436 (5th Cir. 2003). In Wal-Mart
Stores, RLI Insurance Company sought to recover $10 million
it had paid to settle a product liability lawsuit related to a
halogen lamp supplied by Cheyenne Industries and sold by Wal-
Mart at one of its retail stores. The district court concluded that
Wal-Mart’s insurer, National Union, bore primary liability for
the settlement costs and that the RLI insurance policy purchased
by Cheyenne provided only excess coverage. The district court
therefore held that RLI was entitled to recover the $10 million
it had paid to settle the halogen lamp lawsuit. See Wal-Mart
Stores, 292 F.3d at 585-87.
The Eighth Circuit reversed. It held that the vendor
agreement between Cheyenne and Wal-Mart obligated
Cheyenne to indemnify Wal-Mart for claims resulting from any
16
alleged defect in the lamps, and it found that the indemnification
provisions in the vendor agreement “squarely applie[d]” to the
case. Id. at 587-88. If National Union paid the $10 million to
settle the product liability claim, then “it would step into Wal-
Mart’s shoes and bring a subrogation action against Cheyenne
asserting Wal-Mart’s contractual right to indemnification.” Id.
at 594. RLI, as Cheyenne’s insurer, would then be obligated to
cover Cheyenne for National Union’s $10 million
indemnification claim, and “the parties would be back in the
situation they were in before th[e] action was brought.” Id. “To
prevent such wasteful litigation and to give effect to the
indemnification agreement between the parties,” the Eighth
Circuit held “that RLI cannot recover against National Union.”
Id.; accord St. Paul Fire, 365 F.3d at 276-77; Am. Indem.
Lloyds, 335 F.3d at 444.
Greenspring argues that this case is closely analogous to
Wal-Mart Stores. Just as Cheyenne agreed to indemnify Wal-
Mart for claims arising from the sale of Cheyenne lamps,
Progressive agreed to indemnify Washington Hospital for claims
arising out of the negligent acts of Progressive’s nurses.
Greenspring says that if it reimburses Interstate Fire for the cost
of defending and settling the Banks litigation, it will then step
into the shoes of Washington Hospital and assert Washington
Hospital’s contractual right to indemnification from Progressive.
And Interstate Fire, as Progressive’s insurer, will still bear the
ultimate loss.
We need not decide whether District of Columbia courts
would follow Wal-Mart Stores, because that decision would not
alter the outcome of this case in any event. First, there is no
suggestion in Wal-Mart Stores that Wal-Mart had waived its
contractual right to indemnification from Cheyenne. Here, by
contrast, Washington Hospital released any contractual right to
indemnification as part of the Banks settlement. The language
17
of the release is unequivocal: it states that Washington Hospital
“completely releases and forever discharges” Nurse Hand,
Progressive, and Interstate Fire of “all claims, demands, causes
of action, obligations, liens, damages, losses, costs, attorneys’
fees and expenses of every kind and nature whatsoever” that
Washington Hospital “may now have or may hereafter
have . . . by reason of any matter, cause or thing arising out of,
or in any manner connected with,” the Banks litigation.
Greenspring never explains how Washington Hospital’s
contractual indemnification claim could survive such an
unambiguous release.
Second, while National Union would have stepped into
Wal-Mart’s shoes if it paid $10 million on Wal-Mart’s behalf to
settle the product liability lawsuit, Greenspring would not step
into Washington Hospital’s shoes if it paid $3.055 million on
Nurse Hand’s behalf to settle the Banks action. Greenspring
instead would step into Nurse Hand’s shoes with respect to the
$3.055 million payment, and Nurse Hand would have no
indemnity claim against Progressive: an employer “held
vicariously liable for the tort of an employee” generally has “a
right of indemnity from the employee,” not the other way
around. Dobbs’ Law of Torts § 425 (2d ed. updated 2014)
(West); see also District of Columbia v. Wash. Hosp. Ctr., 722
A.2d 332, 340 n.9 (D.C. 1998). Thus, even if Washington
Hospital had not waived its indemnification claim, Greenspring
would have no entitlement to assert the hospital’s
indemnification claim while standing in the shoes of Nurse
Hand. Unlike in Wal-Mart Stores, then, a ruling in favor of
Interstate Fire would not result in a “circuity of action.” Wal-
Mart Stores, 292 F.3d at 594.
18
B.
Greenspring next argues that contribution is an equitable
remedy and that the district court erred by failing to take
equitable considerations into account. The district court did not
err. While contribution is “governed by equitable principles,”
a contribution action is still “subject to any express or implied
agreements between or among the parties sharing the liability.”
Green Leaves Rest., Inc. v. 617 H Street Assocs., 974 A.2d 222,
238 (D.C. 2009) (footnote omitted). Consequently, “‘[w]here
the parties have a contract governing an aspect of the relation
between themselves, a court will not displace the terms of that
contract and impose some other equitable duties not chosen by
the parties.’” Id. (alteration omitted) (quoting Emerine v.
Yancey, 680 A.2d 1380, 1384 (D.C. 1996)). Here, Washington
Hospital and Interstate Fire were parties to a settlement
agreement broadly governing “any matter . . . connected with”
the Banks litigation. They agreed to release each other from all
claims, demands, and obligations with one exception: Interstate
Fire reserved the right to seek reallocation of the settlement
based on the language of the insurance policies. The district
court had no discretion to displace the terms of that agreement
and impose an equitable duty upon Interstate Fire to pay more
than the insurance policies provided.
C.
Finally, Greenspring argues that some portion of the $3.055
million paid by Interstate Fire to settle the Banks litigation went
to resolve Washington Hospital’s contractual indemnity claim
against Progressive. Even if it must reimburse Interstate Fire for
Nurse Hand’s share of the settlement, Greenspring contends, it
has no obligation to reimburse Interstate Fire for Progressive’s
share. We are unpersuaded.
19
In its third-party complaint in the Banks litigation,
Washington Hospital alleged that Progressive, as Nurse Hand’s
employer, was vicariously liable for Nurse Hand’s negligence
under the doctrine of respondeat superior. But Washington
Hospital asserted no independent negligence claims against
Progressive (such as for negligent hiring or negligent
supervision). As noted above, an employer who is vicariously
liable for an employee’s torts may recover from the employee
the amount paid to discharge the liability plus reasonable legal
expenses. Thus, even if Progressive were vicariously liable to
Washington Hospital for Nurse Hand’s negligence, and even if
some portion of Interstate Fire’s $3.055 million payment went
to discharge Progressive’s liability, Interstate Fire—standing in
the shoes of Progressive—would be entitled to recover that
amount from Nurse Hand. And Greenspring, as Nurse Hand’s
primary insurer, would be obligated to reimburse Interstate Fire
for any amount that Interstate Fire had paid on account of
Progressive’s vicarious liability.
* * * * *
Because we conclude that Interstate Fire is entitled to
reimbursement from Greenspring for the amounts paid to defend
and settle the Banks action, we affirm the judgment of the
district court.
So ordered.