927 F2d 608 Aetna Casualty Surety Company v. Lexington Insurance Company

927 F.2d 608

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

The AETNA CASUALTY & SURETY COMPANY,
Plaintiff-Appellee/Cross-Appellant,
v.
LEXINGTON INSURANCE COMPANY, Defendant-Appellant/Cross-Appellee.

Nos. 89-16275, 89-16437.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 12, 1991.
Decided March 4, 1991.

Appeal from the United States District Court for the Northern District of California, No. CV-89-00622-TEH; Thelton E. Henderson, District Judge, Presiding.

N.D.Cal.

AFFIRMED.

Before SCHROEDER, CANBY and NOONAN, Circuit Judges.

1

MEMORANDUM*

2

These are cross appeals from the district court's grant of summary judgment in favor of The Aetna Casualty & Surety Company ("Aetna") in Aetna's declaratory relief action to apportion liability in an underlying personal injury action. Aetna is the insurer of Tri-Cities Children's Center ("Tri-Cities"), which was listed as an additional insured on an insurance policy written for its lessee, Agency for Infant Development ("AID"), by Lexington Insurance Company. Tri-Cities' coverage under the Lexington policy extended to any liabilities resulting from AID's operations on the land it had leased from Tri-Cities.

3

The accident that gave rise to the claim at issue happened when Janet Walker, a board member of AID, tripped over some pieces of wood in the Tri-Cities parking lot. That wood had been left there because, after Tri-Cities had repaired the roofs of some of its own buildings using gravel, a Tri-Cities employee decided to use the leftover gravel to repair an access road leading to the portion of the property leased by AID. That employee had used the wooden boards as part of the operation of filling in the holes with the gravel. At the time of the accident, the repair of the road was not yet complete, but had been underway for two days.

4

The district court held that, because Ms. Walker had come to the AID property to attend a board meeting, and because the wood over which she tripped was on the property as a result of a repair operation undertaken to benefit AID, her injury was related to the operations of AID in a way that would bring it within the provisions of the Lexington Insurance Policy. It then ruled that the liability should be shared equally by Aetna and Lexington. Lexington appeals the ruling that the accident is covered by its policy. Aetna cross-appeals, arguing that it should be liable for less than 50% of the coverage.

5

The proper disposition of this case turns on the scope of the term "operations" as that term is used in the insurance contract. Lexington argues that, because the road repair operation was undertaken by Tri-Cities and neither requested nor approved by AID, the repair could not have constituted a part of AID's operations. Aetna counters that, because the repair of AID's badly worn gravel road would clearly constitute a benefit to AID, that repair was related to the operations of AID within the meaning of the insurance policy.

6

Under California law, uncertainties or ambiguities in an insurance policy are resolved against the insurer who drafts the policy. See James B. Lansing Sound, Inc. v. National Union Fire Insurance Company, 801 F.2d 1560, 1564 (9th Cir.1986). The phrase at issue here, specifying that coverage would be provided for any liability of Tri-Cities that "regards the operations of" AID, is easily amenable to a construction under which Tri-Cities' admittedly voluntary repair of the AID road would be covered. We find that the accident was sufficiently connected to AID's operations to come within this clause of the insurance policy.

7

We cannot agree, however, with Aetna's argument in its cross-appeal that Lexington actually provided primary coverage, and Aetna's coverage, on these facts, is excess. Tri-City's exposure is not merely derivative from AID's activities; its own employee was negligent. Under California law, when two insurers cover the same risk, defense and indemnity costs must be shared between them pro rata in proportion to the respective coverage afforded by them to the insured. CNA Casualty of California v. Seaboard Surety Company, 176 Cal.App.3d 598, 620 (1986). The Aetna and the Lexington policies contain identical policy limits. Therefore, the two insurance companies should bear equally any costs of settlement and defense in the action brought by Ms. Walker.

8

AFFIRMED.

*

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3