Gilbert, Kelly, Crowley & Jennett Wins Arbitration Defense Award

December, 2008
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Case #:
AAA Arbitration

Venue:
Los Angeles
Justice John Zebrowski (Ret.)

Responsible Attorney(s):
Jeff Burt
Gilbert, Kelly, Crowley & Jennett LLP

Facts:

Insurance Coverage Contribution Action — Insurers 1 and 2 were seeking $938,191 in contribution from Insurer No. 3  (for 79% of the $1,187,584 they actually paid to defend and settle the underlying claim, based on a TimeOnRisk allocation).
 
Insurer No. 3’s sole defense was that its "Excess Other Insurance" clause transformed its policy (written on primary paper) into a contingent excess/reservoir/backstop policy such that Insurers 1 and 2 owed the entire defense and indemnity.  Our client, Insurer No. 3, had good underwriting evidence (including the attorney who helped draft the policy) that the insured itself intended the policy to be excess.  However, such parol evidence can only be considered under certain circumstances.

The case law on Excess OI  clauses was fully against our client.  All the published cases hold that, as a matter of public policy, insurers cannot transform primary policies into excess coverage by simply inserting Excess OI clauses.

In a very carefully reasoned 10-page Award, Justice (ret.) John Zebrowski analyzed the case law and our client’s policy.  He found that, although the policy was not well drafted, that fact actually this supported his decision to consider the parol evidence of the Underwriting intent. 

Result:
Defense Award for our client.

Pretrial Demands/Offers:
Demand=$938,191
Offer= $0