General Accident Insurance v. Resolution Trust Corp.

MEMORANDUM

We have jurisdiction under 28 U.S.C. § 1291 , and we affirm in part and reverse in part.

A. The Federal Deposit Insurance Corporation’s (FDIC) Appeal (No. 99-56610)

The conflicting “excess insurance” clauses in First National Insurance Company of America’s (“First National”) and General Accident Insurance Company of America’s (“General”) policies did not limit First National’s liability to the FDIC. Under California law, conflicting “excess insurance” clauses cancel each other out, and the insurers are forced to prorate the loss between them. 2 However, two recent California Court of Appeal decisions indicate that the rule of proration between insurers only governs the rights of an insurer, which has undertaken the defense or indemnification of the common insured, to seek contribution from a co-insurer 3 and does not limit the insurer’s liability to its insured.

Applying California law, we find that First National was hable to the FDIC for *725 the full amount of its policy limit, which was $1 million. Therefore, the district court erred in concluding that First National’s $1 million payment to the FDIC exceeded its liability under the policy, and its judgment…