On Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civil No. 85-57.
This case involves the construction of an "other insurance" clause in an insurance policy providing coverage to a car dealership that leased a car to a customer while his car was being fixed. The customer struck and killed a pedestrian while driving this rented car. The question presented is whether the clause in the car dealership's insurance policy was an "escape" clause, to which Pennsylvania gives no effect, or was a valid "excess" clause, as found by the district court.
Facts and Procedural History
William Loving left his car with Ramsey-Sturman Ford, Inc. (Ramsey) for repairs; he rented from Ramsey a substitute car. The rental car was owned by Ford Rent-a-Car Systems and leased to Ramsey. Loving struck and killed a pedestrian, Eric Nelson, while driving this rental car. Nelson's estate filed a wrongful death action in state court against Loving, claiming $3,325 in funeral expenses, and compensatory and punitive damages in excess of $20,000.
Liberty Mutual Insurance Companies (Liberty), which provided a policy with a $100,000 limit to Ford Rent-a-Car Systems, admitted to being the primary insurer and agreed to pay up to the policy limit of $100,000. Liberty's excess policy, unlike its primary policy, did not cover drivers of rental vehicles.
Automobile Underwriters, Inc., the appellant here, provided Loving's personal automobile policy coverage. The liability limit of its policy was $35,000. The policy contained a provision which stated:
If there is any other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectible insurance.
Ramsey was covered by a primary policy issued by Fireman's Fund Insurance Companies (Fireman's Fund) which had a limit of $1,000,000. ...