
    CHICAGO INSURANCE COMPANY, et al., Appellants/Cross Appellees, v. LUMBERMEN’S MUTUAL CASUALTY COMPANY, Appellee/Cross Appellant, and Virginia Mazzara and Joseph Mazzara, Appellees.
    No. 85-702.
    District Court of Appeal of Florida, Fourth District.
    Feb. 11, 1987.
    Rehearing Denied March 31, 1987.
    
      Frank R. Gramling, of Fertig and Graml-ing, Fort Lauderdale, for appellants/cross appellees.
    Richard A. Sherman and Rosemary Wilder of Law Offices of Richard A. Sherman, Fort Lauderdale, for appellee/cross appellant.
   DELL, Judge.

Appellee Virginia Mazzara suffered personal injuries while riding as a passenger in a vehicle operated by Ernesto Garcia. Garcia’s carrier, Allstate Insurance Company (Allstate), paid $10,000 to the Mazzaras. The Mazzaras had primary underinsured motorist coverage up to $10,000 with appel-lee, Lumbermen’s Mutual Casualty Company (Lumbermen’s), and excess underin-sured motorist coverage from $10,000 to $100,000 with appellant, Chicago Insurance Company (Chicago). A dispute arose between the Mazzaras and Chicago concerning the uninsured motorist coverage, and Mazzaras filed suit. Chicago answered, cross-claimed against Lumbermen’s seeking declaratory relief, and claimed entitlement to a setoff for the $10,000 paid to the Mazzaras by Allstate. Lumbermen’s moved for judgment on the pleadings based on the statute of limitations. The trial court denied Lumbermen’s motion, entered a final judgment entitling Lumbermen’s to the $10,000 setoff, and determined that Chicago had $90,000 in uninsured motorist benefits available to the Mazzaras. We affirm.

Simply stated, appellant asks us to decide that an excess underinsured motorist carrier, rather than the primary underin-sured motorist carrier, should receive the credit or setoff for recoveries by the insured from a tortfeasor’s insurance coverage. Appellant argues that an insurance policy is a contract whose terms should be strictly construed, and that a strict construction of the policy language would entitle it to a setoff for the amount paid by Allstate to the Mazzaras. This argument would provide a simple solution except for the presence of competing insurance provisions that equally support the respective position of each of the carriers involved in this appeal. Chicago’s policy provides:

“Loss” means the sums paid as damages in settlement of a claim or in satisfaction of a judgment for which the insured is legally liable, after making deductions for all recoveries, salvages and other insurances (whether recoverable or not) other than the underlying insurance and excess insurance purchased specifically to be in excess of this policy.

Lumbermen’s primary policy provides:

Limits of Liability
(b) Any amount payable under the terms of this Part because of bodily injury sustained in an accident by a person who is an insured under this Part shall be reduced by
(1) all sums paid on account of such bodily injury by or on behalf of (i) the owner or operator of the uninsured automobile and (ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under Coverage A....

The Lumbermen’s policy also provides:

With respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under Part IV shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.

Appellant relies on Chicago Insurance Company v. Dominguez, 420 So.2d 882 (Fla. 2d DCA 1982), to argue that an excess liability insurer’s uninsured motorist coverage does not come into play until the entire amount provided by the primary insurer has been exhausted. We have no disagreement with the reasoning or the result reached in Dominguez. However, the Dominguez case involved three insurance policies providing uninsured motorist coverage. Travelers afforded $100,000 underin-sured motorist coverage under a policy issued to the Dominguez’ professional association, and Pennsylvania National was found to have $100,000 uninsured motorist coverage covering the Dominguez’ individual automobile. Chicago’s excess uninsured motorist coverage was determined to be $1,000,000. The district court concluded that the umbrella coverage of Chicago would not come into play until the $200,000 primary coverage afforded by Pennsylvania and Travelers had been exhausted. The Dominguez case does not address the question of the entitlement of the respective carriers to a setoff for monies paid by a tortfeasor’s insurance carrier.

We are not persuaded by appellant’s argument based on a theory of equitable subrogation or the cases which it cites in support of this argument. Nor do we believe that the trial court erred when it rejected appellant’s expert testimony that usage and custom in the insurance industry required a determination that the excess carrier should receive the benefits of the set-off. Rather we believe the trial court had to look to the insuring agreements for the answer to this very perplexing question.

Chicago expressly agreed in its policy “to indemnify the insured for the amount of loss which is in excess of the applicable limits of liability of the underlying insurance inserted in column II of item 4 in the declarations.... ” The amount inserted in column II is $10,000. As we pointed out earlier in this opinion, the competing provisions of the Chicago policy and the Lumbermen’s policy result from the definition of loss as defined in the Chicago policy. Chicago argues that in addition to the $10,-000 underlying limit, it should also receive credit for the $10,000 paid by Allstate. In order to reach this result, we would have to ignore the Lumbermen's policy entirely. We are not inclined to do so. The Lumbermen’s policy afforded $10,000 underlying coverage as required by the Chicago policy. The existence of coverage under the Allstate (third party liability carrier) policy with limits equal to the primary carrier’s uninsured motorist limits coincidentally satisfied the primary carrier’s obligation to its insured, and also met the underlying limit requirement of the Chicago policy. Had the limits of the third-party carrier been greater than Lumbermen’s uninsured motorist coverage limits, Chicago would have received the benefit of the payment made by the third-party carrier in excess of Lumbermen’s coverage.

Although we agree with the district court’s observation in Dominguez that the actuarial soundness of umbrella coverage depends upon the fact that it is designed only to come into play after the exhaustion of certain underlying insurance coverage, we do not think that the result we reach here conflicts with that conclusion. The umbrella carrier takes the underlying coverage as it is provided in the primary carrier’s policy. If the primary policy provides for a setoff for the amount paid by the tortfeasor’s carrier, the umbrella carrier should not be permitted to cry “foul” and seek to modify the primary carrier’s policy by the terms of its policy which is labeled “excess liability indemnity.”

In view of the result reached here, we need not discuss Lumbermen’s cross appeal of the order denying its motion for judgment on the pleadings. Accordingly the judgment of the trial court is affirmed.

LETTS, J., concurs.

GLICKSTEIN, J„ dissents with opinion.

GLICKSTEIN, Judge,

dissenting.

I would reverse and remand with direction to prorate the $10,000 between the two insurers.

Georgia Farm Bureau Mutual Insurance Company v. State Farm Mutual Automobile Insurance Company, 255 Ga. 166, 336 S.E.2d 237 (1985), gives no explanation or reasons of any sort why that court reversed what I now conclude to be a logical, reasonable decision by the trial and intermediate appellate courts, the latter decision being reported with the same style as the foregoing at 173 Ga.App. 844, 328 S.E.2d 737 (1985). Judge Pope wrote there:

The statute, OCGA § 33-7-11, provides no guidance for resolution of the issue in this case. Likewise, our research has disclosed no case law which is controlling. However, we find the analysis of Presiding Judge Hall in Southern Home Ins. Co. v. Willoughby, 124 Ga.App. 162, 182 S.E.2d 910 (1971), to be helpful in resolving the issue. In that case this court held: “Where two or more automobile liability insurance policies afford basic coverage, but each contains a clause attempting to either escape from or become merely excess coverage if there is other available insurance, the complete and literal intent of each cannot be given effect. However, the general intent not to be liable for the entire loss is achieved by pro-rating liability as provided by the respective policies.” Id. Presiding Judge Hall noted: “Pro-rating has been criticized as an easy way out which ignores the contractual intent of the parties. Naturally, seeking and then enforcing the intention of the parties, regardless of technical rules of construction, is a cardinal rule. [OCGA § 13-2-3.] But which parties and which intentions must we effect? We surely cannot decide on a case to case basis, depending upon what seem to be the equities among the people involved in the collision. Just as a contract must be read as whole, two or more applicable contracts must be read together in order to arrive at a ‘true interpretation.’ [OCGA § 13-2-2.]” Id. at 166, 182 S.E.2d 910.
While the intent of the policies here clearly is that Farm Bureau shall provide primary uninsured motorist coverage up to $10,000 and State Farm excess coverage of $10,000, neither policy addresses the circumstance of the set-off allowed by OCGA § 33-7-11. Pro-rating the set-off in this case gives at least partial effect to the intent of both insurers, rather than to give complete effect to the intention of one insurer while completely disregarding the intention of the other. That is, pro-rating the set-off between the insurers in this case gives effect to the common intent that State Farm’s excess coverage shall be triggered only to the extent that Farm Bureau’s primary coverage is insufficient to cover plaintiffs loss. “This result is not only equitable, but preferable to some rule which is logically acceptable only when considered in a vacuum.” Id. at 166, 182 S.E.2d 910.

Id. at 847, 328 S.E.2d at 739-740.

Appleman and Couch, both recognized authors in the field of insurance, speak to the specific point of “mutual repugnancy.” Both policies here seek to reduce their respective liability because of recovery from or liability of third parties, which I view as the mutual repugnancy. The majority’s decision in this case picks one insurer at the expense of the other without a viable reason, to me, for picking one or the other.

In 8A Appleman, Insurance Law & Practice, Section 4909 at 399, 403-404 (1981), the author says:

One of the popular approaches to prorating is to say that where one has conflicting excess clauses, they are mutually “repugnant” — in other words, they cannot be excess to each other, since they are identical. It is a sort of “After you Alphonse; no you, Gaston” act which the courts refuse to countenance. This well could be the case where two policies were issued to the same insured even though one contained an excess clause, or where overlapping policies contained no excess provision or both did.

(Footnotes omitted.)

Couch, in his Cyclopedia of Insurance Law, section 62:80 at 551 (1984), says:

Where two or more policies provide coverage for the particular event and all the policies in question contain excess insurance clauses, it is generally held that such clauses are mutually repugnant and must be disregarded, rendering each insurer liable for a prorata share of the judgment or settlement.

(Footnote omitted.)

While not directly on point, see the recent decision of the supreme court in Allstate Insurance Company v. Executive Car and Truck Leasing, Inc., 494 So.2d 487, 489 (Fla.1986), which said:

We must now decide the order of coverage between Commercial and Allstate. Commercial is not entitled to indemnity because it insures the actively negligent party. Policy language will control in those situations in which the right to indemnity does not lie. [Metropolitan Property and Life Insurance Co. v. Chicago Insurance Co.,] 479 So.2d [114] at 116 [ (Fla.1985) ]. The Allstate policy and both Commercial policies contain an “other insurance” clause which states that its policy will be excess over other collectible insurance. The “other insurance” clauses in the respective policies cancel each other out, which results in our apportioning the policies on a pro-rata basis determined by the policy limits in relation to the loss. Motor Vehicle Casualty Co. v. Atlantic National Insurance Co., 374 F.2d 601 (5th Cir.1967); Quinlan Rental and Leasing, Inc. v. Linnel, 484 So.2d 630 (Fla. 2d DCA 1986). However, the Commercial umbrella policy only takes effect after the Allstate and primary Commercial policy are exhausted because “umbrella coverages ... are regarded as true excess over and above any type of primary coverage, excess provisions arising in regular policies in any manner, or escape clauses.” Appleman, Insurance Law and Practice § 4909.85 (1981).

It was interesting to this writer to read the testimony of the expert witness who said that in his experience, to avoid arbitration, he had prorated between companies.

The trial court’s final judgment does not explain its reasons for finding in favor of the insurer, which the majority has also favored by its decision. It expressed its concern, during the trial, with Lumbermen’s lack of knowledge of the excess coverage and with its attendant expectations.  