EMJ Corp. v. Hudson Specialty Ins., No. 15-60254 (5th Cir. 2016)
Westchester was a commercial umbrella insurer for EMJ, a general contractor building a J.C. Penney store.
During that project, EMJ subcontracted with Contract Steel for steel erection services.
Contract Steel purchased a commercial umbrella policy from Hudson Insurance.
After a building inspector examining Contract Steel's work fell off a ladder and suffered severe spinal injury, the inspector filed suit against a group of defendants, including EMJ.
EMJ settled for five million dollars and EMJ’s primary liability insurer covered one million dollars.
Westchester covered the remaining four million dollars.
EMJ and Westchester filed suit against Hudson in the federal district court seeking reimbursement for the four million dollar settlement.
The district court ultimately determined that the four million dollars should be apportioned between Hudson and Westchester based on their policy limits.
This led the district court to determine that Hudson was responsible for paying Westchester only $667,000 in damages.
The district court denied Westchester’s motion to reconsider. Both parties appealed.
The court rejected Hudson's four arguments challenging coverage by its policy and concluded that Hudson was required to indemnify EMJ, at least in part, for the legal settlement from the inspector’s fall; the court rejected Hudson's two evidentiary challenges; and the district court correctly followed Mississippi law and ordered Hudson to pay Westchester 1/6th of the cost of the legal settlement. Accordingly, the court affirmed the judgment.