Westchester Surplus Lines Ins. Co. v. Keller Transport, Inc.
Annotate this CaseKeller Transport, Inc. leased a tanker truck from Wagner Enterprises, LLC to transport gasoline. The truck’s trailer overturned and spilled 6,380 gallons of gasoline, which flooded several homeowners’ properties. Keller and Wagner were both insured under a commercial transportation policy. Westchester Surplus Lines Insurance Company insured both Keller and Wagner under an excess liability policy. Homeowners initiated suit against Keller and Wagner. Westchester undertook defense of the suit on behalf of Kohler and Wagner pursuant to a reservation of rights and defended Keller and Wagner until the limit of its excess coverage had allegedly been exhausted. Westchester sought a declaration that the limit under its excess policy was $4 million in total and that the limit had been exhausted. As relevant to this appeal, the district court granted summary judgment against Westchester. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) did not err by determining that Westchester’s policy was ambiguous and that it provided an additional $4 million in coverage under the “general aggregate” limit; but (2) erred by holding that Westchester breached its duty to defend the insureds under its policy.
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