This dispute arose from a fatal side-impact collision in Illinois involving a tractor-trailer driven by Robert D. Fisher and a passenger vehicle driven by Patrick J. Brennan, who died in the crash. The tractor was owned by Deerpass Farms and leased to Deerpass Trucking, while the trailer was owned by Conserv FS, Inc. Great West Casualty insured the tractor, and Nationwide Agribusiness insured the trailer. Both insurers agreed their policies covered the accident, but they filed a declaratory judgment action to determine which policy paid first. The district court found that both policies provided excess coverage, requiring the insurers to split defense and liability costs proportionally to their respective limits. Nationwide appealed, arguing Great West's policy should be primary, while Great West cross-appealed, arguing its policy was 'excess over' Nationwide's, making it secondary.
The Seventh Circuit applied Illinois contract law to interpret the 'Other Insurance' provisions in both policies. First, the court addressed whether Great West's coverage was primary or excess. Nationwide argued that paragraph 5.b of Great West's policy, which governs hired or borrowed autos, did not apply because the tractor was leased, not hired. The court rejected this, noting that the paragraph's reference to 'lessor' and 'lessee' clearly contemplated a lease relationship. Consequently, paragraph 5.b(2) applied, rendering Great West's coverage excess because the lease required the lessor to hold the lessee harmless. Next, the court considered whether paragraph 5.g made Great West's coverage primary by triggering an 'insured contract' clause. The court found that the Interchange Agreement between the motor carriers was not an 'insured contract' because it explicitly carved out liability for Conserv's own negligence. Under Illinois law, an 'insured contract' must clearly assume the tort liability of another, and the carveout language prevented this. Finally, the court addressed Great West's claim that its policy was 'super excess' due to the phrase 'excess over any other collectible insurance.' The court dismissed this as rhetorical redundancy, noting that recognizing a 'super excess' tier would create logical inconsistencies in the policy and that Illinois law does not support such a tier. The court concluded that both policies are excess and must pay proportionally.
The decision establishes that when two commercial motor carrier policies both provide excess coverage, they share payment responsibility proportionally to their limits. It clarifies that standard 'excess over any other collectible insurance' language does not create a secondary excess tier. Insurers and motor carriers must now ensure indemnity agreements explicitly assume the indemnitee's own negligence to trigger primary coverage under 'insured contract' clauses. The case is remanded for the district court to enforce the pro-rata payment split.
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