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Owners Insurance Co. v. State Auto Property & Casualty Co.

United States District Court, W.D. Kentucky

October 8, 2013

OWNERS INSURANCE COMPANY, PLAINTIFF
v.
STATE AUTO PROPERTY AND CASUALTY COMPANY, DEFENDANT

Decided Date: October 7, 2013.

For Owners Insurance Company, Plaintiff: James M. West, LEAD ATTORNEY, Martin & West, PLLC, Edgewood, KY.

For State Auto Insurance Company, properly named as State Auto Property and Casualty Company, also known as State Automobile Property and Casualty Insurance Company, Defendant: Ashley S. Lant, John R. Martin, Jr., LEAD ATTORNEYS, Landrum & Shouse, LLP, Louisville, KY.

OPINION

Page 709

MEMORANDUM OPINION AND ORDER

John G. Heyburn II, United States District Judge.

In this declaratory action between two insurers, Plaintiff, Owners Insurance Company (" Owners Insurance" ), has moved for summary judgment claiming reimbursement from Defendant, State Auto Property and Casualty Company (" State Auto" ) for a pro rata share of one-half of the $259,000 settlement paid in the underlying non-motor vehicular personal injury action. State Auto contends that Owners Insurance's policy is primary and thus State Auto has no duty to reimburse.

This dispute requires the Court to reconcile two decisions of Kentucky's highest court: Ohio Casualty Insurance Co. v. State Farm Mutual Automobile Insurance Co., 511 S.W.2d 671 (Ky. 1974) and Kentucky Farm Bureau Mutual Insurance Co. v. Shelter Mutual Insurance Co., 326 S.W.3d 803 (Ky. 2010). The dispute concerns the proper application of the so-called " mutual repugnancy" rule which requires a pro-rata sharing of insurance liability among certain insurers. After carefully considering all the arguments and the issues and for the reasons that follow, the Court predicts that Kentucky's highest courts would apply the mutual repugnancy rule in our circumstances.

I.

The stipulated facts are as follows. The underlying claim arose on June 16, 2007, when a pontoon boat being driven by Matt Higgins and/or his daughter, Kellie, collided with Jeremy Wood's boat. Wood was seriously injured and filed a civil suit in state court, naming both Matt Higgins and his father David Higgins, the pontoon's owner, among the plaintiffs. Wood's personal injury action settled for $300,000. The Higgins defendants' insurer, Owners Insurance, paid $259,000, while the rest of the co-defendants contributed $41,000 collectively. Owners Insurance now seeks a pro rata share reimbursement from State Auto, Matt Higgins' insurer.

Two pertinent insurance policies were effective on the date of the accident. Owners Insurance issued a policy for David Higgins, owner of the pontoon driven by Matt and/or Kellie, that provided $500,000 in liability coverage and specifically listed the pontoon involved in the accident in the schedule of covered items. State Farm had issued a homeowners policy to Matt Higgins that also covered up to $500,000

Page 710

for personal liability and included watercraft liability.

Both parties have stipulated the " sole issue" for the Court to determine is the priority of coverage for the agreed total loss amount of $259,000. [1] Thus, for purposes of this Order, the Court presumes both policies encompassed the risk involved in the underlying ...


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