Hartford Fire Insurance v. Spartan Realty International, Inc.

—Hartford Fire Insurance Company issued a business liability policy of insurance to Spartan Realty International, Inc., excluding non-owned auto/hired car coverage. A Spartan employee driving a rented car collided with another automobile, seriously injuring Gary R. Yeakel and Francis J. Pavese, who sued Spartan and David Sanders, its sole shareholder. After the complaint was filed, Spartan exercised an option available under the policy and Hartford issued an endorsement to the policy insuring against liability arising out of the use of nonowned or hired automobiles. Hartford defended Spartan and Sanders with a reservation of rights. Sanders also tendered his defense to Royal Insurance Company, his individual carrier, who accepted with a reservation of rights. Two years later, Hartford realized the policy excluded coverage at the time of the accident, so advised Spartan and filed an action in declaratory relief naming Spartan, Sanders and Royal as defendants. The court adjudicated Hartford’s conduct did not waive the exclusion of coverage and Hartford was not estopped from asserting noncoverage. Spartan and Sanders appealed. Royal appealed separately. We consolidate the…