Liberty Mutual Insurance Co. v. Travelers Indemnity Co

Facts

Braedon agreed to take care of some property for the First Church of Christ. As part of the contract, each agreed to take out liability insurance and to name the other as an additional insured. First Church carried out its end of the bargain, obtaining a policy with Liberty Mutual that was in full compliance with the property management contract. Braedon did not. The policy it obtained with Travelers fell short of its contractual obligation. The limits were lower, the clause naming First Church as an additional insured limited its rights to liability arising out of the operations of Braedon and the policy declared the insurance to be excess over any other valid and collectible insurance available to Braedon. Braedon sent a certificate that revealed the lower policy limits but not the clause declaring coverage to be excess only. On January 1992, Thomas sued First Church, Braedon’s subcontractor, and Braedon alleging a back injury when she fell backward after opening a broken door handle. Thomas wanted $1,000,000 in damages just within the occurrence limit of each policy. Liberty defended First Church but not Braedon and Travelers provided Braedon with a defense. First Church and Liberty Mutual(P) then filed this action against Braedon and Travelers (D) seeking a declaration that P was entitled to a defense, liability coverage and indemnity or that Liberty was not obligated to provide a defense for D and that P was entitled to reimbursement and compensation for expenses incurred with the Thomas lawsuit. D filed opposite counterclaims. The parties filed motions for summary judgment. P got their judgment because the court reasoned that Braedon’s breach of the agreement deprived it of its rights as an additional insured under P’s policy and as such the excess insurance clause in its policy was ineffective. D appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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