AMHS Insurance v. Mutual Insurance

Opinion by Judge SNEED; Dissent by Judge GRABER

Appellant AmHS Insurance Company, Risk Retention Group (“RRG”) and Appel-lee Mutual Insurance Company of Arizona (“MICA”) provided professional liability insurance to Dr. Wesley Romberger (“Dr. Romberger”). ' Following a jury trial, Dr. Romberger was found negligent in his care and treatment of Christina Beery. RRG defended Dr. Romberger and satisfied the $7,897,543.18 judgment against him. The parties dispute how much MICA should contribute to the payment of this judgment.

RRG appeals the district court’s determination that it failed to state either a direct or subrogated bad-faith claim against MICA. Both parties appeal the district court’s decision on summary judgment ordering MICA to pay RRG an equitable contribution in the amount of $445,013.83. RRG also appeals the district court’s order establishing that prejudgment interest did not begin to accrue until September 19,1997.

We address each order of the district court in turn. We affirm the dismissal of both the direct and subrogated claims. We reverse the district court’s calculation of MICA’s contribution and remand for further proceedings. We affirm the district court’s…

dissenting:

I respectfully dissent because I disagree with majority’s conclusion that the first *1104 and second layers of the RRG policy are co-primary with the MICA policy. As the majority recognizes, the question before us is whether the MICA policy — a primary policy with an “other insurance” clause— must be exhausted before liability attaches under the RRG policy — an excess policy— when the specific primary policy underlying the RRG policy already has been exhausted. Maj. op. at 1096. Because the general rule is that all primary insurance policies must be exhausted before an excess insurance policy provides coverage, and because this case does not require the application of a different rule, I conclude that MICA must contribute its share before the RRG policy becomes applicable.

As the majority recognizes, the MICA policy is a primary policy with an “other insurance” clause. Maj. op. at 1095. The majority also acknowledges that the RRG policy provides excess coverage. Maj. op. at 1099 n.3. Nevertheless, the majority concludes that, after the exhaustion of the Samaritan policy, the first two layers of the RRG policy should be treated as co-primary with the MICA policy. Maj.…