The Fifth Circuit vacated and remanded the district court's conclusion that the insurer was not obligated to defend or indemnify an additional insured after sued by a person allegedly injured in the insured's casino when falling off a stool. See Barden Mississippi Gaming LLC v. Great Northern Ins. Co., No. 08-60521, 2009 U.S. App. LEXIS 15861 (5th Cir. July 16, 2009).
Before the accident, Barden, the additional insured, had sued the manufacturer of the stools. The matter settled when the manufacturer agreed to repair 100 of the 800 stools. As to the remaining 700 stools, the manufacturer agreed to name Barden as an additional insured in its liability policies. The settlement incorporated a Certificate of Insurance, which named Barden as an additional insured, but only with respect to its liability for bodily injury caused by the sole negligence of the manufacturer.
In June 2004, Barden and the manufacturer were sued for personal injuries allegedly caused when the plaintiff fell from one of the stools. Barden requested the manufacturer's insurer, Great Northern, to defend and indemnify. Great Northern refused coverage.
Barden sued Great Northern. The district court granted summary judgment to Great Northern, finding no genuine issue of material fact existed as to whether Great Northern had met its obligations to Barden.
The Fifth Circuit agreed the policy unambiguously limited the duty to defend and indemnify to claims involving the "sole negligence " of the manufacturer based on the language of the settlement agreement and the Certificate of Insurance. The district court's determination that the undisputed facts showed that the manufacturer was not solely negligent in the Baier case was premature, however. Until the underlying case was resolved, the court would not know whether the manufacturer was solely negligent. The need for a defense arose long before the precise allocation of liability could be determined at trial. The manufacturer could be found 100% negligent, meaning the policy arguably covered the claim as alleged in the underlying complaint. Therefore, the duty to defend attached.
The duty to indemnify could only attach once the manufacturer was ultimately found 100% negligent. Therefore, no determination could be made on the duty to indemnify until the conclusion of the Baier case.
