When, during Limitation of Vessel Owner's Liability Act, 46 U.S.C.S. § 30501 et seq., proceeding, boat renter's primary insurer became insolvent, trial court wrongly agreed with guaranty association that leisure boat service's insurer became liable as
In re: ARAMARK LEISURE SERVICES, as owner of a certain 1997 19' Mirage Runabout for exoneration from or limitation of liability, Plaintiff, v. CHARLES F. KENDRICK, Claimant/Third Party Plaintiff - Appellee, v. ALBANY INSURANCE COMPANY, Third Party Defendant - Appellant, TRACI A. SEVY, Claimant - Amicus Curiae.
UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT
2008 U.S. App. LEXIS 8638
April 21, 2008, Filed
PROCEDURAL POSTURE: Third party defendant insurer appealed from the U.S. District Court for the District of Utah, which held that it had to provide primary coverage to third party plaintiff renter. The renter, in plaintiff leisure boat service's special proceeding under the Limitation of Vessel Owner's Liability Act, 46 U.S.C.S. § 30501 et seq., filed a claim against the service and third party defendant insurer; subsequently, his primary insurer became insolvent. OVERVIEW: The renter was involved in a boating accident. The service filed the proceeding, as part of which the renter waged claims against it and its insurer. The insurer argued that the renter's personal liability insurance provided primary coverage and that, pursuant to an escape clause, the insurer was not liable. While the litigation was ongoing, the primary insurer became insolvent, and the Utah Property and Casualty Insurance Guaranty Association (UPCIGA) became potentially responsible. The UPCIGA stated that, under the exhaustion provision in Utah Code Ann. § 31A-28-213(1)(A), the insurer was required to provide primary coverage. The federal district court agreed; the federal court of appeals reversed. The insurer's policy contained a valid escape clause. The existence of the primary policy on the accident date triggered the clause, and, at that point, the renter no longer had a claim against the insurer that he could exhaust. The insurer, therefore, was not required to provide primary coverage to the renter. Rather, the UPCIGA was primarily responsible under Utah Code Ann. § 31A-28-207(1)(f)(ii), and it could not, as a primary insurer, prevail against the insurer's escape clause. OUTCOME: The court of appeals reversed and remanded.
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