                        NOT RECOMMENDED FOR PUBLICATION
                                File Name: 20a0236n.06

                                         Case No. 19-3635

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

                                                                                        FILED
                                                                                   Apr 30, 2020
COMMERCE & INDUSTRY INSURANCE                          )                      DEBORAH S. HUNT, Clerk
COMPANY,                                               )
                                                       )
       Plaintiff-Appellant,
                                                       )         ON APPEAL FROM THE
                                                       )         UNITED STATES DISTRICT
v.
                                                       )         COURT FOR THE SOUTHERN
                                                       )         DISTRICT OF OHIO
CENTURY SURETY COMPANY,
                                                       )
       Defendant-Appellee.                             )
                                                                                     OPINION

BEFORE: MOORE, McKEAGUE, and READLER, Circuit Judges.

       McKEAGUE, Circuit Judge. An ATV accident on the Alaska Peninsula over ten years

ago spawned this insurance dispute; today, a federal court based in Ohio resolves it with the help

of Pennsylvania law. What takes us all over the map are dueling policies issued to contractors at

the accident site by jurisdictionally diverse insurers—the plaintiff, Commerce & Industry, and the

defendant, Century Surety. Commerce argues that its insurance coverage took a backseat to

Century’s, so Century must pay for all the legal defense costs associated with the ATV accident.

Century responds that the district court got it right in splitting costs between the two of them. The

district court got it mostly right, but not all right. We accordingly AFFIRM in part, VACATE in

part, and REMAND.
Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


                                                I.

                                               A.

       Weston Solutions was a contractor working on a decontamination project in the remote

town of Port Heiden, Alaska. It subcontracted for transportation services with Aniakchak, a local

company presumably named after the nearby ancient volcano, Mount Aniakchak. In remote

Alaska, though, “transportation services” is a euphemism for ATV rides, which have their risks.

So Weston and Aniakchak agreed in their subcontract that Aniakchak would “indemnify, defend

and hold harmless” Weston and its employees in the event of an accident resulting from

Aniakchak’s work. Aniakchak further agreed that it would maintain a commercial general liability

insurance policy (a “CGL” policy) that named Weston as an “additional insured,” covering Weston

for such an accident. Weston already had its own CGL policy issued by Commerce; Aniakchak’s

CGL policy was issued by Century, and Weston was named as an additional insured through an

“endorsement” to the policy (an amendment, basically) after the subcontract was executed.

       What does that all mean? It means that in the event of an accident involving Aniakchak,

Weston was doubly insured—through the policy Commerce directly issued it, and through the

additional insured provision in the policy Century issued Aniakchak.

       That’s how these subcontracts normally work, by the way.            A contractor hires a

subcontractor to perform some work. Pursuant to the subcontract, the subcontractor maintains a

CGL policy that, in addition to covering the subcontractor, covers the contractor as an additional

insured. The idea is that if a third party gets hurt because of the subcontractor’s work, and that

third party sues the contractor, the subcontractor’s insurer will take care of everything. But

contractors already have CGL policies of their own which cover them in the event of such an

accident. So to avoid overlapping coverage, a contractor’s insurer will include a provision in its



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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


policy saying that if the contractor is covered as an additional insured in a subcontractor’s policy,

the contractor’s policy is “excess.” This is called an “other insurance” provision. Usually, it

operates such that the contractor will first rely on its coverage as an additional insured (the

contractor’s “other insurance”), then turn to its own insurer. See, e.g., First Mercury Ins. Co. v.

Cincinnati Ins. Co., 882 F.3d 1289, 1301–04 (10th Cir. 2018); Wright-Ryan Constr., Inc. v. AIG

Ins. Co. of Canada, 647 F.3d 411, 414–17 (1st Cir. 2011).

       That’s what the subcontract between Weston and Aniakchak contemplated.                   The

subcontract mandates that Weston’s additional insured coverage through Aniakchak’s insurance

be “primary” to Weston’s own CGL coverage. Accordingly, Aniakchak’s policy with Century

contains a standard additional insured provision for Weston: Century covers Weston as an

additional insured “but only with respect to ‘bodily injury,’ ‘property damage,’ or ‘personal and

advertising injury’ caused, in whole or in part, by” Aniakchak or those working on its behalf “in

the performance of [its] ongoing operations for [Weston.]” Century Policy, R. 37-6, PageID 1454.

And sure enough, the Century policy provides that its coverage is “primary and non-contributory”

with respect to its additional insureds. Id. These provisions operate seamlessly with Weston’s

CGL policy with Commerce: Commerce’s coverage is excess when other insurance is available to

Weston as an additional insured. Commerce Policy, R. 37-13, PageID 1510.

       Simple enough (for insurers, at least). There’s just one problem. Century’s policy also

includes an other-insurance provision, but it’s broader. It says that if an “insured” under the

Century policy has any other insurance available to it, then Century’s coverage is excess—even if

the other insurance is itself excess. Century Policy, R. 37-6, PageID 1436. We’ll see how that

complicates things later on.




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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


                                                 B.

           With that groundwork, we turn to the accident. Just before the project in Port Heiden

finished, an Aniakchak ATV crashed en route from a Weston barbecue, injuring the passenger, an

engineer named Kathryn Daniel. Daniel sued three parties in Alaska state court for her injuries:

Weston, Aniakchak, and Konan Lind, the ATV driver. In her first complaint, filed in 2011, she

alleged that (1) Weston itself was negligent, (2) Aniakchak was negligent and vicariously liable

for Lind’s negligence as Lind’s employer, and (3) Lind was negligent. Two years later, in 2013,

Daniel filed a second, amended complaint. In the second complaint, she added allegations that

Lind was also employed by Weston, and that Weston was vicariously liable for Lind’s negligence.

           The litigation in Alaska has since resolved. Its outcome is irrelevant here because the

insurers are fighting over who has to pay defense costs—an obligation that arises from an insurer’s

broad contractual “duty to defend” its insureds in litigation. The parties agree that their policies

provide a duty to defend only when their coverage is primary. And generally, an insurer’s duty to

defend kicks in when a complaint alleges there was an injury that potentially falls within the scope

of the defendant’s insurance coverage.

           You might see where things are headed now. Weston might have been doubly covered—

through normal CGL insurance with Commerce, and as an additional insured in Century’s policy.

If so, which coverage was primary (that is, which insurer had to pay Weston’s defense costs)?

What about Lind—was there an issue of primacy there, too? And did it matter when Daniel alleged

Lind was a Weston employee? Commerce sued Century for a declaratory judgment to figure this

all out.

           With respect to Weston’s defense, Commerce argued that Weston was possibly covered as

an additional insured under Century’s policy because Daniel’s injuries were allegedly caused “in



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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


part” by Aniakchak.     And additional insured coverage is “primary and non-contributory,”

according to the Century policy. Thus, Commerce said, its coverage was excess per its own other-

insurance provision, vitiating its duty to defend Weston. Century responded that even if that’s so,

the broad other-insurance provision in Century’s policy also deems Century’s coverage excess,

because other insurance was available to Weston through Commerce. And if both policies are

excess, they conflict, making both insurers responsible for defense costs.

       As for Lind’s defense, Commerce reiterated its Weston-based arguments: Lind was an

additional insured, so Century’s coverage was primary. Commerce alternatively argued that if its

own coverage was primary, then it couldn’t be responsible for defense costs incurred by Lind

before he was alleged to be Weston’s employee. Commerce’s policy only covered Weston and its

employees, not Aniakchak employees. For its part, Century countered that only Weston is an

additional insured under its policy, not Weston employees. On top of that, Commerce’s other-

insurance provision applies only when Weston is additionally insured, not Lind. And, according

to Century, Commerce was obligated to pay all defense costs once Commerce’s policy became

primary, even costs incurred before that point.

       The district court held in Century’s favor on both points. See Commerce & Indus. Ins. Co.

v. Century Sur. Co., 313 F. Supp. 3d 877 (S.D. Ohio 2018). Century’s policy, governed by Alaska

law, and Commerce’s policy, governed by Pennsylvania law, conflicted with respect to Weston’s

defense. Both policies claimed they were excess. So both insurers had to pay. Id. at 883–84. As

for Lind, while both policies provided primary coverage, Commerce’s other-insurance provision

was inapplicable. Commerce alone thus had to pay for Lind’s defense. Moreover, as the primary

insurer, Commerce was in for a penny, in for a pound—all defense costs, even those incurred

before Daniel alleged Weston employed Lind, were Commerce’s responsibility. Id. at 884–85.



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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


                                                 II.

       Commerce appeals, and both sides renew their arguments from below. We review the

district court’s grant of summary judgment de novo. K.V.G. Props., Inc. v. Westfield Ins. Co., 900

F.3d 818, 821 (6th Cir. 2018).

                                                 A.

       We deal with Weston first. To start, we don’t doubt that given Daniel’s allegations, Weston

potentially qualified as an additional insured, engendering Century’s duty to defend under that

provision. Under Alaska law, which applies to the Century policy, the duty to defend arises where

“a complaint states a cause of action within, or potentially within, the policy coverage.” Afcan v.

Mut. Fire, Marine & Inland Ins. Co., 595 P.2d 638, 645 (Alaska 1979). Here, the additional

insured provision—specifically its coverage of Weston for injury “caused, in whole or in part, by”

Aniakchak—“plainly extends coverage beyond underlying lawsuits in which a plaintiff expressly

raises claims against [Aniakchak], requiring only that [Aniakchak’s] acts or omissions have some

causal relationship to the injury.” First Mercury Ins. Co., 882 F.3d at 1302. Thus, even though

Daniel initially alleged Weston was itself negligent rather than vicariously liable, her allegations

against Aniakchak meant Aniakchak could be a cause in part of her injuries, triggering potential

coverage for Weston. See id.; Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 673–76 (3d Cir.

2016); see also Pro Con, Inc. v. Interstate Fire & Cas. Co., 794 F. Supp. 2d 242, 256–57 (D. Me.

2011) (“[B]y including the language ‘in whole or in part’ in its [additional insured provision], [the

insurer] specifically intended coverage for additional insureds to extend to occurrences attributable

in part to acts or omissions by both the named insured and the additional insured.”). And because

Daniel’s complaint triggered the additional insured provision, in a normal case, Commerce’s




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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


coverage of Weston would be excess to Century’s: Commerce’s policy is excess over additional

insured coverage available to Weston. Commerce Policy, R. 37-13, PageID 1510.

       But this is not a normal case. The Century policy includes a broad other-insurance

provision: coverage is excess to any other insurance “the insured” has, even if that other insurance

is excess. Century Policy, R. 37-6, PageID 1436. And “the insured” means not just Aniakchak

(defined in the policy as “you” or the “named insured”) but anyone insured under the policy,

including additional insureds like Weston. Id., PageID 1404. In other words, even if Weston is

covered as an additional insured under the Century policy—thus deeming Weston’s normally

primary CGL coverage with Commerce excess—the Century policy’s coverage is also excess.

This is strange because one would expect to see a qualifying clause in Century’s policy keeping

its additional insured coverage primary, to honor the subcontract between Weston and Aniakchak.

See, e.g., Westfield Ins. Co. v. Weaver Cooke Constr., LLC, 383 F. Supp. 3d 566, 579 (E.D.N.C.

2019) (“This coverage shall be excess with respect to [an additional insured]; any other insurance

[an additional insured] has shall be primary with respect to this insurance, unless this coverage is

required to be primary and not contributory in the contract [between the additional insured and the

named insured].”). But that clause, or one like it, is absent here.

       This doesn’t read the phrase “primary and non-contributory” out of Century’s additional

insured provision, as Commerce suggests. We must give effect to every provision of an insurance

policy when possible. Stordahl v. Gov’t Emps. Ins. Co., 564 P.2d 63, 66 n.7 (Alaska 1977). And

here, in order to give effect to both the additional insured provision and the other-insurance

provision, the additional insured provision must provide primary and non-contributory coverage

except when the other-insurance provision applies. That’s how it works with Century’s coverage

of Aniakchak, too: coverage is primary, unless the other-insurance provision applies.



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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


       Granted, the phrase “primary and non-contributory” assumes that additional insureds will

have excess coverage lurking elsewhere. And they typically do. So the way the other-insurance

provision is written, it will nearly always apply to an additional insured. But not always. If for

some reason an additional insured has no other coverage, or its other coverage isn’t “valid” or

“collectible,” the other-insurance provision won’t apply. Century Policy, R. 37-6, PageID 1436.

Moreover, we know that Century intended the other-insurance provision to apply to additional

insureds because the provision applies to “the insured,” rather than simply “you” or the “named

insured.” Nowhere are additional insureds carved out—even though the named insured is, under

certain circumstances. Id. And again, noticeably absent from the policy is standard qualifying

language deeming an additional insured’s coverage excess unless a subcontract requires it to be

primary and non-contributory. We can’t read an “additional insured exception” into Century’s

other-insurance provision where there is none.

       Nor can the terms of the subcontract between Weston and Aniakchak change what the

Century policy says. We recognize that the other-insurance provision of the Century policy

seemingly means that the policy didn’t comply with Aniakchak’s obligations under its subcontract

with Weston. That’s an issue between Aniakchak and Weston, however, and not relevant to this

dispute between Commerce and Century.

       Century’s other-insurance provision was therefore triggered in addition to Commerce’s.

Both policies, however, can’t be excess. That would leave Weston without any primary coverage

and, in turn, no defense. So the law provides that if other-insurance provisions conflict, both

insurers are on the hook for defense costs. Am. Cas. Co. of Reading v. PHICO Ins. Co., 702 A.2d

1050, 1056 (Pa. 1997); Werley v. United Servs. Auto. Ass’n, 498 P.2d 112, 117–19 (Alaska 1972).




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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


We thus agree with the district court’s bottom-line conclusion that Commerce and Century are

each responsible for Weston’s defense.

                                                  B.

        We also agree with the district court that Commerce’s coverage of Lind was primary to

Century’s. Once Daniel alleged Lind was an employee of Weston and Aniakchak, all agree there

was a potential for coverage for Lind under each policy’s normal CGL coverage. The only

question is whether both policies’ other-insurance provisions were triggered, too, creating a

conflict.

        They weren’t. Commerce’s other-insurance provision says that its coverage is excess over

“[a]ny other primary insurance available to you covering liability for damages arising out of the

. . . operations . . . for which you have been added as an additional insured . . . .” Commerce Policy,

R. 37-13, PageID 1510 (emphasis added). “You” means only the “named insured”—Weston. Id.,

PageID 1501. It does not mean anyone who is an “insured” under Commerce’s policy, a category

which includes Weston’s employees. Id., PageID 1501, 1508. Thus, even if Lind potentially

qualified as an additional insured under the Century policy, that would be other insurance available

to him, not to Weston, which fails to trigger Commerce’s other-insurance provision. Compare this

with Century’s policy. Its other-insurance provision more broadly applies whenever “the insured”

has any other insurance coverage. Century Policy, R. 37-6, PageID 1436. “The insured” includes

Aniakchak employees like Lind. Id., PageID 1404, 1412. Century’s other-insurance provision

was thus triggered, but not Commerce’s, rendering Century’s coverage excess and Commerce’s

primary.

        The district court therefore correctly held that, once Lind was alleged to be a Weston

employee, Commerce’s coverage was primary and Commerce alone had a duty to defend.



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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


                                                 C.

       Our agreement with the district court ends there, though. The district court concluded that

because Commerce’s coverage was primary and Century’s excess, Commerce was responsible for

all of Lind’s defense costs—even those that arose before Daniel alleged Lind was a Weston

employee.

       We see it differently. Under Pennsylvania law, which governs Commerce’s policy, “[a]n

insurer is obligated to defend its insured if the factual allegations of the complaint on its face

encompass an injury that is actually or potentially within the scope of the policy.” Am. & Foreign

Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526, 541 (Pa. 2010). Put another way, “[a]s long as a

complaint alleges an injury which may be within the scope of the policy, the insurer must defend

its insured until the claim is confined to a recovery the policy does not cover.” State Farm Fire &

Cas. Co. v. DeCoster, 67 A.3d 40, 46 (Pa. Super. Ct. 2013) (quotation and emphasis omitted).

       Here, no duty to defend could have existed on Commerce’s part until Lind was arguably

its insured. And that wasn’t the case until Daniel’s second complaint alleged Weston employed

Lind. The first complaint, in comparison, stated that Lind was Aniakchak’s employee. Nor were

there any factual allegations in the first complaint suggesting Weston employed Lind. The

allegations that Century points to—that Weston hosted the barbecue from which Lind drove

Daniel, and that Lind failed to comply with the “transportation safety plan” Aniakchak and Weston

adopted—don’t come close to suggesting Weston had the control over Lind necessary to create an

employer–employee relationship. See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730,

751–52 (1989); Powell v. Tanner, 59 P.3d 246, 249 (Alaska 2002). The fact that Daniel filed a

second complaint illustrates that point. If the first complaint actually stated Weston’s control over




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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


Lind, she wouldn’t have needed to file a second complaint alleging Weston “retained control over

[Lind’s] work, and directed his work during the contract.”

       Accordingly, from the beginning of Daniel’s suit in 2011 up to the filing of her second

complaint in 2013, her claim was “confined to a recovery” that Commerce’s policy didn’t cover

with respect to Lind; any injury caused by Lind was definitively outside the scope of the policy.

Jerry’s Sport Ctr., Inc., 2 A.3d at 542; DeCoster, 67 A.3d at 46 (quotation and emphasis omitted).

No potential coverage, no duty to defend, and no responsibility for defense costs—at least until

the filing of the second complaint. See Seaboard Indus., Inc. v. Monaco, 392 A.2d 738, 744 (Pa.

Super. Ct. 1978); cf. Allan D. Windt, Insurance Claims and Disputes, § 4.44 (6th ed.) (noting that,

in the context of pre-tender defense costs, most courts hold that “an insurer is not liable for [such]

costs” in part because “until the policy coverage is triggered, defense costs are not covered”).

       True, it seems that Weston and Commerce were tipped off to the possibility of Lind’s

employment with Weston earlier. Lind’s counsel tendered defense on Commerce and Weston in

2012, mentioning the issue. There was also summary-judgment briefing in Daniel’s case just

before the filing of her second complaint arguing Weston employed Lind. But “[t]he question of

whether a claim against an insured is potentially covered is answered by comparing the four

corners of the insurance contract to the four corners of the complaint.” Jerry’s Sport Ctr., Inc., 2

A.3d at 541. This evidence breaches all eight corners. And the one published Pennsylvania case

that says a court can look outside the complaint in circumstances like this—Heffernan & Co. v.

Hartford Ins. Co., 614 A.2d 295, 298 (Pa. Super. Ct. 1992)—is a “misfit” that we cannot follow.

Lupu v. Loan City, LLC, 903 F.3d 382, 391–92 (3d Cir. 2018). Commerce’s duty to defend

therefore couldn’t have arisen until Daniel filed her second complaint.




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Case No. 19-3635, Commerce & Indus. Ins. Co. v. Century Sur. Co.


       Determining precisely when Commerce’s duty to defend Lind arose, though, is best left

for the district court to resolve on remand. As Century notes, it may raise “a whole new set of

tender issues.” Appellee Br. at 36. Regardless, when splitting the bill, Century must be left with

the costs it incurred for Lind’s defense before Commerce’s duty to defend arose; for costs after

that point, Commerce pays.

                                               III.

       For these reasons, we AFFIRM the judgment with respect to Weston’s defense costs. We

VACATE the judgment with respect to Lind’s defense costs, and REMAND for further

proceedings.




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