State Farm Fire & Casualty Co. v. Liberty Insurance Underwriters, Inc. (613 F. Supp. 2d 945, 2009)

OPINION and ORDER

PAUL L. MALONEY, Chief Judge.

Granting in Part and Denying in Part the Plaintiffs Motion for Summary Judgment; Denying the Defendant’s Motion for Summary Judgment; Directing the Parties to File a Notice Advising the Court How they Wish to Proceed

OVERVIEW

Henry Bouma (“Bouma”) founded Lumbermen’s, Inc. (“Lumbermen’s”) about 50 years ago and at the time relevant to this case, he was CEO and Chairman of the Board. On a Saturday in September 2005, Bouma was driving a vehicle jointly leased to him and Lumbermen’s when he accidentally struck and seriously injured a pedestrian. The pedestrian settled her claims for $9 million. Bouma’s own automobile liability insurer paid its $1 million policy limit without reservation of any rights, and it is not a party to this action.

That left $8 million to be paid. The plaintiff, State Farm Fire and Casualty Company (“State Farm”), paid $3 million, its limit under the personal liability umbrella policy issued to Bouma. The defendant, Liberty Insurance Underwriters, Inc. (“Liberty”), paid the remaining $5 million, under a $10 million commercial liability umbrella policy that it issued to Lumbermen’s. Both State Farm and Liberty reserved their right to seek a declaration in federal court that a different allocation of liability might be appropriate.

State Farm concedes that Bouma was the named insured under its personal-liability policy and that it is liable for some portion of the settlement.

The dispute is over whether defendant Liberty is also liable, under a commercial umbrella liability policy that it issued to Bouma’s employer, Lumbermen’s. State Farm seeks a declaration that Liberty’s policy provides coverage, and that the two insurers must pay pro rata in proportion to their respective policy limits. Liberty seeks a declaration that Bouma was not an insured under its policy.

Alternately, Liberty contends that even if Bouma was an insured under its policy, State Farm’s policy is merely a pro rata policy, while Liberty’s is a true “excess” policy, such that Liberty was not obligated to pay anything until State Farm paid its $3 million policy limit.

There are two issues regarding defendant Liberty’s liability for contributing to the settlement. First, under Michigan law, was the driver of the vehicle, Bouma, an insured based on his conduct at the time of the accident? The parties agree that this depends on whether he was acting, in the language of Liberty’s policy, within his duties for his employer, Lumbermen’s (the policyholder). Bouma’s deposition testimony tends to support the conclusion that he was acting within the scope of his (self-appointed) duties as CEO and Chairman of the Board of Lumbermen’s, but that conclusion is not ineluctable.

Liberty counters with roughly equally sound reasoning and evidence that Bouma should not be considered to have acted within the scope of his duties during the Ann Arbor trip. For example, there was conflicting evidence as to whether Bouma would have used the Lumbermen’s company credit card to pay for dinner if the party had made it safely to the game. Bouma claims that he would have charged dinner to the company, see Bouma Dep at 87. But if Morehouse is to be believed, the couples’ past pattern and practice did not lead to a solid inference that Bouma/Lumbermen’s would have paid for dinner: Morehouse explained that when the two couples got together, sometimes More-house paid for dinner, sometimes Bouma paid for dinner, and sometimes the couples split the bill. See Morehouse Dep 14:21-25.

Moreover, it is undisputed that Bouma personally paid for the tickets to the game on the day of the accident, not Lumbermen’s. Bouma explained, however, that for a period of about 14-15 years, Lumbermen’s had purchased the University of Michigan football season tickets, and stopped doing so only when an IRS agent, in the course of an audit, suggested they not do so. Since that time, and for 14-15 years prior to his May 2008 deposition, Bouma advanced his own money for all the tickets. See Bouma Dep at 31:5 to 32:15. Bouma stated that he had “taken just about every one of our managers to a football game over the years, retired and active.” Bouma Dep 32:15-17. The record does not reflect whether Lumbermen’s ever reimbursed Bouma for the cost of game tickets or attendant entertainment, meal, and travel expenses.

And Morehouse testified that they and their wives were long-time close personal friends, and that they “typically” and “regularly” discussed Lumbermen’s personnel and the lumber business, even at social gatherings where the business purpose was “incidental.” See Morehouse Dep 14:2-15. (That was not surprising, given that they met in the business, Morehouse worked for Bouma, and Morehouse worked in the business for decades before joining Lumbermen’s). Liberty argues, reasonably, that the parties could not have intended that every get-together between a Lumbermen’s officer and a personal friend who worked, or used to work, in the lumber business, would be considered “within the scope of the officer’s duties” and therefore covered by the Liberty policy. See Liberty’s Opp at 2.

Thus, this court will not hold that as a matter of law, Bouma was or was not “acting within the scope of his duties” at the time of the accident, i.e., whether he was an insured at the time of the accident as defined by the Liberty policy. On this record, whether Bouma was acting within the scope of his duties for Lumbermen’s is an issue for a properly instructed jury. But fashioning jury instructions acceptable to the Michigan Supreme Court will be a significant challenge. No binding authority has been found. For example, the jury instructions might adopt the test of Idaho, which asks whether the employee was “furthering the interests” of the employer at the time of the accident. However, this court might deem some qualifier appropriate, such as whether the primary purpose of the trip was to further the interests of the employer.

The second liability issue is whether the “excess coverage” clauses of the State Farm and Liberty policies render the State Farm policy primary vis-a-vis Liberty’s policy under Michigan law. State Farm’s excess clause also used the term “pro rata” — though not in the customary location within the policy, or in the customary sense — while Liberty’s policy had merely an “excess” coverage clause and never mentioned the words “pro rata.” Nonetheless, the court determines that there is no genuine issue as to the interplay between the two policies: both policies are excess policies, putting them in the same “layer” of coverage, so neither is primary to the other.

That means that if Bouma was an insured under Liberty’s policy, State Farm and Liberty will share responsibility for the remainder of the settlement pro rata, i.e., each will pay according to its policy limit’s proportion of the two insurers’ combined policy limit. Liberty will be obligated to reimburse State Farm for the amount that State Farm has paid above its obligation. Michigan law provides that under a pro rata policy clause, the insurers are liable in proportion to their policy limits. It is undisputed that State Farm’s policy limit is $3 million and Liberty’s policy limit is $10 million, so State Farm would be liable for 3 thirteenths and Liberty would be liable for 10 thirteenths of the remaining settlement amount. In other words:

State Farm would be liable for: 3/13 x $8 million - $1,846,154

Liberty would be liable for: 10 / 13 x $8 million = $6,153,846

Because State Farm already paid its $3 million policy limit towards the settlement, Liberty would owe State Farm $3 million minus about $1,846,154 = about $1,153,846. State Farm also seeks interest on that amount.

BACKGROUND

On a Saturday in September 2005, four people were traveling to Ann Arbor to attend a football game between the University of Michigan Wolverines and the Notre Dame Fighting Irish. Henry Bouma, the founder and Chairman of the Board of Directors of Lumbermen’s, was driving the vehicle, which was jointly leased to Bouma and Lumbermen’s. In the vehicle were three other passengers: Robert Morehouse, former long-time Vice-President of the Grand Rapids Division of Lumbermen’s, who had recently retired; Bouma’s wife; and Morehouse’s wife. It is undisputed that the Boumas and the Morehouses are close personal friends, but it is also undisputed that Bouma intended to discuss, and the two men did discuss, specific lumber business during the trip.

They stopped at a rest area, the women exited the vehicle, and the men remained in the vehicle talking. After some time, Bouma decided to exit the vehicle, but he did not put the vehicle in “park.” Bouma opened the door and tried to put his foot on the brake, but he hit the accelerator instead; the car jumped forward over the curb and struck a 45-year-old woman, who sustained serious permanent injuries.

Three potentially relevant insurance policies were in effect at the time of the accident.

First, Bouma’s vehicle was co-leased to him and his company, Lumbermen’s, Inc. (“Lumbermen’s”). It was insured by Old Republic Insurance Company policy number MWTB-19118, with a limit of $1 million and a coverage period of February 1, 2005 to February 1, 2006. Old Republic is not a party to this action.

Second, Lumbermen’s itself had a commercial umbrella liability policy from defendant Liberty Insurance Underwriters, Inc. (“Liberty”), number LQ1B71078606042, with a limit of $10 million and a coverage period of February 1, 2005 to February 1, 2006. The Liberty policy required Lumbermen’s to have a separate primary automobile liability insurance policy with a $1 million combined single limit.

Third, Bouma himself had a personal liability umbrella insurance policy from plaintiff State Farm Fire & Casualty Company, Inc. (“State Farm”), number PN22-K5-8304-5, with a limit of $3 million and a coverage period of December 31, 2004 to December 31, 2005.

The Settlement with the Injured Person.

In December 2006, facilitative mediation resolved the claims of the injured person (who is not a party to this action) and her family against driver Bouma and his company, Lumbermen’s. The injured person agreed to accept $9 million in full and final settlement of all claims. Old Republic, which insured Bouma’s car, paid its $1 million policy limit, leaving $8 million to be paid. State Farm paid its $3 million policy limit, and Liberty paid the remaining $5 million, and they agreed that this allocation of responsibility was provisional and subject to State Farm’s right to seek declaratory judgment in federal court.

Diversity Jurisdiction

The complaint presents no federal question, so diversity is the only basis for the court’s jurisdiction. When sitting in diversity jurisdiction, this court must apply the choice-of-law rules and, if applicable, the substantive law of the forum State, Michigan. Amerisure Mut. Ins. Co. v. Carey Transp., Inc., 578 F.Supp.2d 888, 897 (W.D.Mich.2008) (Paul L. Maloney, C.J.) (citing CenTra, Inc. v. Estrin, 538 F.3d 402, 409-10 (6th Cir.2008) (citing Himmel v. Ford Motor Co., 342 F.3d 593, 598 (6th Cir.2003))); see also Savedoff v. Access Group, Inc., 524 F.3d 754, 762 (6th Cir.2008) (“We generally apply the substantive law of the forum state to actions brought pursuant to our diversity jurisdiction.”) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). This rule applies in insurance-coverage actions brought in diversity. See Amerisure, 578 F.Supp.2d at 897 (citing Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 563 (6th Cir.2008) (citing Talley v. State Farm Cas. & Fire Co., 223 F.3d 323, 326 (6th Cir.2000))).

When interpreting contracts in a diversity action, the federal courts also generally enforce the parties’ contractual choice of governing law. Amerisure, 578 F.Supp.2d at 897 (citing Savedoff, 524 F.3d at 762 (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 596, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) and M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972))). As the parties do not dispute that the interpretation of the policies is governed by Michigan substantive law, the court apples Michigan law to this dispute. See, e.g., Savedoff, 524 F.3d at 762 (“As the parties do not dispute that the student loan contracts at issue are governed by Ohio law, we apply Ohio law to the parties’ contractual dispute.”); Amerisure, 578 F.Supp.2d at 897 (“As the parties do not dispute that the Amerisure-Carey policy is governed by Michigan substantive law, the court applies Michigan law to this dispute.”).

A Federal Court’s Application of State Law

“ ‘In applying state law, we anticipate how the relevant state’s highest court would rule in the case and are bound by controlling decisions of that court.’ ” Appalachian Railcar Servs. v. Boatright Enters., Inc., 602 F.Supp.2d 829, 846-47 (W.D.Mich.2008) (Paul L. Maloney, J.) CARS”) (quoting NUFIC of Pittsburgh v. Alticor, Inc., 472 F.3d 436, 438 (6th Cir.2007) (Richard Allen Griffin, J.) (citation omitted)). If the state supreme court has not conclusively decided the issue, a federal court presumptively looks to the decisions of the state’s appellate courts: “In anticipating how the state supreme court would rule, ‘we look to the decisions of the state’s intermediate courts unless we are convinced that the state supreme court would decide the issue differently.’ ” ARS, 602 F.Supp.2d at 846-47 (citing US v. Lancaster, 501 F.3d 673, 679 n. 3 (6th Cir.2007) (Griffin, J.) (citation omitted)); see also West v. AT & T Co., 311 U.S. 223, 236-37, 61 S.Ct. 179, 85 L.Ed. 139 (1940) (“A state is not without law save as its highest court has declared it. There are many rules of decision commonly accepted and acted upon by the bar and inferior courts which are nevertheless laws of the state although the highest court of the state has never passed upon them. In those circumstances the federal court is not free to reject the state rule merely because it has not received the sanction of the highest state court .... ”).

In determining what is the controlling law of the State, a federal court also “may give weight” to the decisions of the State’s trial courts, Bradley v. GMC, 512 F.2d 602, 605 (6th Cir.1975) (citing Royal Indem. Co. v. Clingan, 364 F.2d 154 (6th Cir.1966)), especially when the trial court’s decision is consistent with state appellate decisions, Bradley, 512 F.2d at 605.

Precedential Value of Michigan Decisions

A federal court must accord the same precedential value to a state-court decision as it would be accorded by that state’s courts. See ARS, 602 F.Supp.2d at 846-47 (citing Mutuelle Generate Francaise Vie v. Life Ass. Co. of Pa., 688 F.Supp. 386, 397 n. 15 (N.D.Ill.1988) (“[O]ne Supreme Court decision (Fidelity Union Trust Co. v. Field, 311 U.S. 169, 61 S.Ct. 176, 85 L.Ed. 109 ... (1940)) ... required a federal court to ascribe the same precedential force to a New Jersey trial court decision that such a decision would receive in that state’s court system under the peculiarities of New Jersey law.”)). If a state court would not be bound by a particular state-court decision, then neither is this court. ARS, 602 F.Supp.2d at 846-47 (citing King v. Order of United Commercial Travelers, 333 U.S. 153, 161, 68 S.Ct. 488, 92 L.Ed. 608 (1948) (“a federal court adjudicating a matter of state law in a diversity suit is, in effect, only another court of the State; it would be incongruous indeed to hold the federal court bound by a decision which would not be binding on any state court.”) (citation omitted)).

Michigan Court Rule 7.215(C)(2) states that “[a] published decision of the Court of Appeals has precedential value under the rule of stare decisis.” This subsection makes no distinction based on when the decision was issued.. ARS, 602 F.Supp.2d at 846-47.

However, Michigan Court Rule 7.215(J)(1) provides that “[a] panel of the Court of Appeals must follow the rule of law established by a prior published decision of the Court of Appeals issued on or after November 1, 1990, that has not been reversed or modified by the Supreme Court or by a Special Panel of the Court of Appeals as provided in this rule.”. ARS, 602 F.Supp.2d at 846-47 (emphasis added).

Synthesizing Michigan Court Rules 7.215(C)(2) and 7.215(J)(1), the Michigan Court of Appeals accords precedential value to all of its prior published decisions, regardless of when they were issued. ARS, 602 F.Supp.2d at 846-47. When a post-November 1, 1990 published Court of Appeals decision conflicts with a pre-November 1,1990 published Court of Appeals decision, however, the post-November 1, 1990 decision prevails. Id.

When there is a conflict between two published decisions of the Court of Appeals that were both issued after November 1, 1990, Michigan courts must follow the first opinion that addressed the matter at issue. ARS, 602 F.Supp.2d at 847-48 (citing Novak v. Nationwide Mut. Ins. Co., 235 Mich.App. 675, 599 N.W.2d 546, 554 (1999) (citation omitted)).

By contrast, Michigan Court of Appeals panels are not bound by un published decisions of that same court, regardless of when they were issued. ARS, 602 F.Supp.2d at 847-48 (citing Iqbal v. Bristol West Ins. Group, 278 Mich.App. 31, 748 N.W.2d 574, 582 n. 5 (2008) (citing Mich. Ct. R. 7.215(J)(1))). Nonetheless, this court may consider and follow unpublished state-court decisions, so long as they do not contradict published decisions of the Michigan Supreme Court or Michigan Court of Appeals. See Republic-Franklin Ins. Co. v. Bosse, No. 95-3401, 89 F.3d 835, 1996 WL 301722, *5 n. 4 (6th Cir. June 4, 1996) (although unpublished decisions are not generally controlling under Ohio law, “[w]e cite them, nevertheless, due to our sensitivity to state law in deciding diversity cases.”) (citing Royal Indem. Co., 364 F.2d at 154 (“Although we are not bound in a diversity ease by an unreported decision of a State court of original jurisdiction, we may give weight to this [unreported] decision of the chancery [court] in determining what is the controlling [state] law.”)).

Finally, a federal court’s interpretation of state law is not binding. ARS, 602 F.Supp.2d at 846-47 (citing Leavitt v. Jane L., 518 U.S. 137, 146, 116 S.Ct. 2068, 135 L.Ed.2d 443 (1996) (Stevens, J., dissenting o.g., joined by Souter, Ginsburg, & Breyer, JJ.) (“[T]he decision of a federal court (even this Court)' on a question of state law is not binding on state tribunals ....”)); accord McGrath v. Toys “R” Us, Inc., 356 F.3d 246, 250 (2d Cir.2004) (citing Sargent v. Columbia Forest Prods., Inc., 75 F.3d 86, 90 (2d Cir.1996)); 20 Am.Jur.2d Courts § 225 (1965). As our Circuit recently emphasized,

No federal court has the final say on what [state] law means. Even the decision of the highest federal court, the United States Supreme Court, about the meaning of [a state] law has no more binding authority on the [state] Supreme Court than the decision of [another State’s] Supreme Court or for that matter any other court.

Ohio ex rel. Skaggs v. Brunner, 549 F.3d 468, 472 (6th Cir.2008).

Accordingly, this court will seriously consider our Circuit’s interpretation of state law, or another district court’s interpretation of state law, but is not bound by it. See ARS, 602 F.Supp.2d at 847-48. See, e.g., MPAS v. Caruso, 581 F.Supp.2d 847, 856 (W.D.Mich.2008) (Maloney, C.J.) (declining to follow U.S. District Court for the Eastern District of Michigan’s determination that MDOC is a political subdivision of the State of Michigan, a matter of state law).

The Policies’ “Excess” Coverage Clauses

The State Farm-Bouma personal liability umbrella policy’s excess clause provides,

This policy is excess over all other valid and collectible insurance. When like coverage is written in another company, we will share in payments on a pro rata basis.

State Farm’s MSJ at 4 (quoting Ex 2, State Farm Policy, Item 5 & Endorsement FE760.1).

The Liberty-Lumbermen commercial umbrella liability policy’s excess clause provides,

If other insurance applies to a loss that is also covered by this policy, this policy will apply excess of the other insurance. Nothing herein will be construed to make this policy subject to the terms, conditions and limitations of such other insurance. However, this provision will not apply if the other insurance is specifically written to be excess of this policy.

State Farm’s MSJ at 4-5; see Liberty’s MSJ, Ex 1.

Is Bouma an Insured under the Liberty Policy?

State Farm contends that Bouma is an insured under the Liberty-Lumbermen policy, which defines the term “insured” to include, in pertinent part,

6. Any of your [Lumbermen’s] partners, executive officers, directors, or employees but only while acting within the scope of their duties. However, the coverage granted by this Provision 6 does not apply to the ownership, maintenance, use, “loading” or “unloading” of any “autos,” “aircraft” or “watercraft” unless such coverage is included under the policies listed in the Schedule of Underlying Insurance and for no broader coverage than is provided under such underlying policies.

8. Any person (other than your partners, executive officers, directors, stockholders or employees) or organizations with respect to any “auto” owned by you, loaned to you or hired by you or on your behalf and used with your permission.

It is undisputed that driver Bouma was one of policyholder Lumbermen’s “executive officers, directors, or employees” at the time of the accident, so coverage under the Liberty policy depends on whether he was “acting within the scope of [his] duties” at that time. Liberty contends that its commercial umbrella liability policy was issued to Lumbermen’s alone, not to Lumbermen’s officer Bouma, and that Bouma was driving the vehicle for personal use, not for Lumbermen’s business, at the time of the accident, so he was not “acting within the scope of [his] duties” on the trip to Ann Arbor with the Morehouses.

The court’s first task is to discern the meaning of the Liberty policy’s definition of an insured, which includes Lumbermen’s officers when “acting within the scope of their duties.”

In Michigan, insurance policies are subject to the same rules of interpretation that apply to contracts in general. Sherman-Nadiv v. Farm Bur. Gen. Ins. Co. of Michigan, 282 Mich.App. 75, 761 N.W.2d 872, 874-75 (2008) (p.c.) (P.J. Jansen, O’Connell, Owens) (citing Rory v. Continental Ins. Co., 473 Mich. 457, 703 N.W.2d 23, 26 (2005)). A contract must be interpreted according to its ordinary and plain meaning, Holmes v. Holmes, 281 Mich.App. 575, 760 N.W.2d 300, 311 (2008) (P.J. Bandstra, Beckering, Gleicher) (citing St. Paul Fire & Marine Ins. Co. v. Ingall, 228 Mich.App. 101, 577 N.W.2d 188, 191 (1998) (P.J. McDonald, Saad, Smolenski)), avoiding technical or strained constructions, Ingall, 577 N.W.2d at 191. A Michigan court’s interpretation of contractual language is further guided by the following precepts:

Under ordinary contract principles, if contractual language is clear, construction of the contract is a question of law for the court. If the contract is subject to two reasonable interpretations, factual development is necessary to determine the intent of the parties and summary disposition is therefore inappropriate. If the contract, although inartfully worded or clumsily arranged, fairly admits of but one interpretation, it is not ambiguous. The language of a contract should be given its ordinary and plain meaning.

Holmes, 760 N.W.2d at 311 (quoting Meagher v. Wayne State Univ., 222 Mich.App. 700, 565 N.W.2d 401, 407 (1997) (P.J. Young, Taylor, Cir. J. Livo) (internal citations omitted)).

The Michigan Court of Appeals recently provided helpful guidance for courts seeking to discern “the ordinary and plain” meaning of a term that is left undefined by a statute or contract. The panel explained,

When the word ... appears in a contract of insurance and it is not defined in the policy, it must be construed in a manner most likely to correspond to the intention of the parties to the contract. The intention fairly attributable to the insurer and the insured, from an objective standpoint and in the absence of a contrary indication, should therefore reflect the ordinary meaning of the word as it is understood by persons generally and should highlight the characteristics which the law most often attributes to employment.

Bertrand v. Pacific Employers Ins. Co., 2001 WL 1464524, *2 (Mich.App. Nov. 16, 2001) (quoting Am. Cas. Co. v. Wypior, 365 F.2d 164, 166-67 (7th Cir.1966) (emphasis in original)). “The ‘ordinary meaning of the word as it is understood by persons generally’ is captured best in the dictionary definitions .... ” Bertrand, 2001 WL 1464524 at *2.

The first step in applying Liberty’s policy term “acting within the scope of their duties”, then, is determining whether it is ambiguous. When the words used by the parties are clear and ambiguous and have a definite meaning, the court may not look to parol or other extrinsic evidence to determine the parties’ intent. Zurich Ins. Co. v. CCR & Co., 226 Mich.App. 599, 576 N.W.2d 392, 395 (1997) (citing Michigan Chandelier Co. v. Morse, 297 Mich. 41, 297 N.W. 64, 67 (1941)). The Liberty-Lumbermen’s policy does not define the term “acting within the scope of their duties”, and it is not obvious or readily inferable from other terms in the policy what the parties intended the term to encompass. But this does not necessarily mean that the term “acting within the scope of their duties” is ambiguous, let alone that such ambiguity warrants construing the term in favor of the insured (against Liberty). See Twichel v. MIC Gen. Ins. Corp., 469 Mich. 524, 676 N.W.2d 616 (2004):

The dissent asserts that the term “owned”, because it is undefined in the policy, must be construed against the drafter. We disagree. As we recently explained in Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459, 663 N.W.2d 447 (2003), the rule of contra proferentem is a rule of last resort that does not apply unless (1) there is a true ambiguity and (2) the parties’ intent cannot be discerned. A word is not ambiguous merely because different dictionary definitions exist. Koontz v. Ameritech Servs., Inc., 466 Mich. 304, 317-18, 645 N.W.2d 34 (2002). The word “owned” is not ambiguous as used in the policy. Rather, we conclude that the plain and ordinary meaning of that word [should control] ....

Id. at 622 n. 6. Rather than hastily conclude that “acting within the scope of their duties” is ambiguous, the court may consult extrinsic evidence and persuasive authorities to discern the plain and ordinary meaning of the term.

No definition of the precise phrase or a very similar phrase is available from binding or persuasive authorities in Michigan. Although a federal court’s interpretation of state law is not binding, see ARS, 602 F.Supp.2d at 846-47 (collecting cases), the court has searched for Sixth Circuit Court of Appeals decisions interpreting the term “acting within the scope of their duties” in the insurance context under Michigan law; it appears that there are none. Likewise, no available Sixth Circuit district-court decisions have interpreted the term “acting within the scope of their duties” in the insurance context under Michigan law.

Thus, in trying to predict how the Michigan Supreme Court would interpret the policy phrase “acting within the course of their duties”, the court is left to consult decisions applying the common law of other States governing undefined terms in insurance contracts. In predicting whether the Michigan Supreme Court would likely find their sister courts’ reasoning persuasive, this court is essentially determining which of those decisions is logical, internally consistent, and does not lead to absurd results' — and, most importantly, which of those sister-court decisions, if any, employs canons of construction and logical presumptions consistent with Michigan appellate case law.

State Farm points to a decision from the Supreme Court of Idaho and a decision from the Superior Court of Pennsylvania. In Leggett v. National Union Fire Ins. Co. of Pittsburgh, Pa., 844 A.2d 575 (Pa.Super.2004), a Pennsylvania trial court reasoned as follows:

National Union claims that the term “acting within their duties” is synonymous with the term “course and scope of employment” and as such the court is bound by prior case law defining that term. We believe that if National Union wanted an exclusion defined under the term of art “within the course and scope of employment”, they would have used the term “within the course and scope of employment” rather than saying the insured had to be “acting within [his/her] duties.”

Leggett, 844 A.2d at 578.

The Pennsylvania court then consulted standard dictionaries in an attempt to construe the term “acting within his/her duties” in its “natural, plain and ordinary sense.” Leggett, 844 A.2d at 578. The Pennsylvania court stated,

We decline to interpret the policy in the narrow manner suggested by National Union. The trial court determined, most appropriately for the purposes of this case, “duty” to mean: “Obligatory tasks, conduct, service or functions that arise from one’s position (as in life or in a group).” Webster’s Ninth New Collegiate Dictionary (1990). We note, too, that Black’s Law Dictionary (5th ed.1979) defines “duty” in relevant part as a “legal or moral obligation.”

Leggett, 844 A.2d at 578. The Pennsylvania court’s consultation of a layperson’s dictionary and a legal dictionary is consistent with the practice of Michigan courts. See Snyder v. Advantage Health Physicians, 281 Mich.App. 493, 760 N.W.2d 834 (2008) (“‘Reasonable diligence’ is not defined in the court rule. We may consult a legal dictionary to define an undefined term that has a specific legal meaning.”) (citing Vodvarka v. Grasmeyer, 259 Mich.App. 499, 675 N.W.2d 847, 853 (2003) (P.J. Griffin, Neff, Murray) (“The statute does not contain a definition of the terms ‘proper cause’ or ‘change of circumstances.’ We therefore resort to the dictionary to determine the plain meaning of those words.”)).

Moreover, the Pennsylvania court’s definition of the word “duty” is consistent with the practice of the Michigan appellate courts, which recently defined “duty” as “[a]legal obligation that is owed or due to another and that needs to be satisfied; an obligation for which somebody else has a corresponding right.” Manistee Cty. Intermediate Sch. Bd. v. MASB-SEG Pr Cas. Pool, 2005 WL 1048747, *3 (Mich.App. May 5, 2005) (p.c.) (P.J. Fort Hood, Meter, Schuette) (quoting Black’s Law Dictionary (7th ed.)).

Returning to the facts of the Pennsylvania case, Leggett, the employee sustained an accident, drove to a site in order to find his company-issued cellular phone which he had misplaced. On the way to and from the site where he hoped to find his company phone, the employee took his children to a retail store and a restaurant. The Pennsylvania court held that, although these side trips were purely personal excursions, they were secondary to his primary purpose of finding the company phone. The Pennsylvania trial court reasoned as follows:

In this case, Leggett drove to Reading to search for a company-owned cell phone which he used for his job. We agree with Judge Farina that an employee has a duty to search for company property that he lost. The fact that he did it on a Saturday does not mean that he was any less carrying out a duty of his employment.

It is true that normally one is not acting within the course and scope of his employment commuting to and from work. However, the situation is different when one makes a separate trip on a normal day off to perform the obligation of finding lost property. That is more akin to going from one’s office to a job site than the regular commuting from home to the office.

The fact that Leggett made and the boys did a Scout project before leaving or made two Gasual, unplanned stops after lunch does not change the basic nature of the trip to Reading, namely, to look for the lost company-owned cell phone. The trip was job-related so the property could be recovered and used on the next work day. We agree with Judge Farina that it is therefore within the “duties” of employment.

Leggett, 844 A.2d at 578. The Pennsylvania Supreme Court affirmed without opinion. See Leggett v. NUFIC, 583 Pa. 62, 874 A.2d 1159 (2005) (p.c.).

The Supreme Court of Idaho followed Leggett in Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Dixon, 141 Idaho 537, 112 P.3d 825 (2005) (“Dixon”), which interpreted a policy that defined “insured” as “any of your partners, executive officers, directors, stockholders or employees but only while acting within their duties.” The employee in Dixon began the evening by acting within the scope of his duties when he took a company-owned vehicle to the gas station to fill the tank in anticipation of a business trip the next day. The employee went outside the scope of his duties after that, however, by visiting a bar and a friend’s house and drinking at both locations. On his way home, he missed a stop sign and struck another vehicle, killing its occupants. The Idaho Supreme Court affirmed summary judgment for the insurer, writing as follows:

The issue in this case is not the company policy concerning alcohol or drugs, as there were conflicting issues of fact concerning the efficacy of those rules. The issue is whether under this set of facts Dixon ivas furthering his employer’s interests. Dixon drove the company vehicle into town to refuel for a business trip to occur the following day. Dixon did have an obligation to fill the company vehicle with gas. Dixon, completing an obligatory task or performing a service for his employer, was acting within his duties when he drove the vehicle into New Meadows to fill it with fuel.

However, when Dixon decided to visit two bars and a friend’s home he clearly abandoned his employer’s objectives and any service remotely connected to his employer. Dixon was not going to work or coming from work after he fueled the company vehicle. Nor was Dixon off at a remote job site at the time the accident occurred. There is no evidence that Dixon returned to any activity remotely connected with his duties of employment. The fact that Dixon was driving home from his frolic did not reengage Dixon into acting within his duties for his employer. The district court did not err in granting summary judgment because as a matter of law Dixon was not acting within his duties at the time of the accident.

Dixon, 112 P.3d at 829 (emphasis added) (paragraph break added).

The court believes that the Michigan Supreme Court, applying Michigan’s well-established canons of construction, would join the Idaho and Pennsylvania decisions cited in refusing to equate “within the scope of their duties” with the phrase “in the course and scope of their employment.”

Beyond that, this court is left to speculate that the Michigan Supreme Court would likely adopt a rule similar to the rule Dixon, 112 P.3d at 829. Namely, the Michigan Supreme Court would probably hold that one acts within the scope of one’s duties when one is furthering the employer’s interest, perhaps with the qualifier that the employee’s trip or activity must have been primarily intended to further the employer’s interest. This is because if furthering the employer’s interest were merely a secondary or incidental benefit of the employee’s trip or activity, it becomes difficult to believe that the insurer intended to extend coverage so far afield from the workplace and errands that are either expressly required or fairly-directly-related to work.

It is not clear, however, whether Bouma’s trip to Ann Arbor with Morehouse was “within the scope of his duties”, i.e., whether it was primarily or sufficiently focused on “furthering the interests” of Lumbermen’s to be within those duties. A reasonable factfinder could go either way.

It is true that nobody at Lumbermen’s formally “assigned” or required Bouma to discuss lumber matters with Morehouse at any time, let alone during this particular trip. But as Leggett (Pa.Super.) and Dixon (Idaho S.Ct.) recognize, not everything an employee does or every trip he takes is expressly required, in so many words, by a superior’s directive or by his job description. So far as the decision reflects, nobody told Leggett, in so many words, that he would be disciplined, or his pay docked, or his evaluation subtly downgraded, if he did not attempt to find the company cell phone that the company had entrusted to him. But common sense and experience suggest it was reasonable for an employee in Leggett’s situation to view finding the cell phone as part of his duties for the employer.

Moreover, in the instant case, Bouma is the founder of Lumbermen’s and the Chairman of its Board of Directors, and although the wording is awkward, it is not unreasonable to say that he can “assign himself’ a task for the company. Indeed, Bouma testified as follows:

Q. As the president and then the CEO or chairman you were essentially defining your own job duties and responsibilities?

A. Correct.

Q. Keeping up these relationships again benefits Lumbermen’s in your mind?

A. Oh, very definitely.

Q. And it’s part of your feelings as to what your job duties were as president and chairman of the board to continue these relationships?

A. Yes.

Bouma Dep at 74 and 84-85. State Farm has a colorable argument that because Bouma was the founder, CEO and chairman of the Board, there was nobody to “order” or “assign” him to take the trip in order to maintain the relationship with Morehouse for the sake of the company, but his trip was no less intended to further the company’s interests because of it. State Farm writes,

If, for example, as a purely hypothetical matter, an employer told an employee, “I want you to take Joe (whether a customer, competitor, associate, client, co-employee, etc.) and your wives to a Michigan football game so that you can build, maintain or create a relationship that will potentially benefit our business” there is no question but that such an “excursion” as Liberty refers to it would, by definition, be within the scope of the employee’s duties for his employer. In the hypothetical, the employee would be pursuing the fulfillment of an obligation owed to his employer, furthering his employer’s interests, and performing a service for his employer. This is precisely what happened in the present case, as Mr. Bouma defined his own duties on behalf of the company to include maintaining this particular relationship by these particular means. This was his testimony, and there is nothing on the record presented which even remotely contradicts or calls into question his testimony.

State Farm’s Reply at 5.

In addition, based on Bouma’s testimony, a reasonable factfinder could find that a substantial and recognized part of Bouma’s role in Lumbermen’s, and much of his value to Lumbermen’s, came from his ability to cultivate and maintain relationships like the one with Morehouse. Moreover, Bouma intended to discuss specific lumber matters with Morehouse on the trip, thereby possibly gaining information, advice, and future assistance — all with an eye towards advancing the business interest and profits of his employer. Indeed, State Farm’s counsel stated at oral argument, without contradiction from Liberty’s counsel, that during the trip, Bouma showed Morehouse samples of some lumber-related material.

The fact that Bouma had also become friends with Morehouse does not negate the significance of these facts. Bouma founded Lumbermen’s in 1955 and served as president or chairman of the board for fifty-two years preceding his retirement in 2007 (the accident occurred in 2005, while he was still chairman of the board). Bouma Dep at 2, 7, and 66-68. Bouma testified emphatically and consistently that he is the public face of Lumbermen’s, had a special talent for dealing with people in a way that promoted Lumbermen’s business, which included meetings in informal settings. Bouma explained that staff were hired to perform other tasks in order to free him up for such personal networking, tending to current and potential customers (and people, like Morehouse, who might be able to bring in new customers or additional business from existing customers):

Q. Anything and everything that would benefit Lumbermen’s or that you felt was needed to watch over as the leader of that company, you felt was part of your scope of duties?

A. Very much so. I felt that my God-given gift was people. I love people and consequently my time was more valuable, you know, getting more business and helping our sales force than it was sitting doing the accounting for instance. We hired people to do that and that’s why we hired CPAs in management positions so that they could do some of [the] detailed stuff so I could continue on.

Q. From listening to you it sounds like the single most-important thing that drove the success of this company during the time that you were president and CEO was not necessarily which brand or line of countertop ... you carried or which color or colors ... you carried, but the nature of the relationships that you were able to develop, not only with your employees but with customers and buyers and others in the community?

A. 100 percent.

Bouma Dep at 76-77. Bouma gave two examples of how using his abilities in informal settings to maintain relationships with former Lumbermen’s employees ended up tangibly benefitting Lumbermen’s. In one case, a former employee referred business to Lumbermen’s, and in another case, a former employee returned to Lumbermen’s as Sales Manager for the Saginaw Division. See Bouma Dep at 83-85.

Bouma also testified that while he was friendly with the Morehouses, he was also specifically continuing to cultivate the relationship with Morehouse in a way that could tangibly benefit Lumbermen’s. Morehouse had experience, knowledge and contacts that had made him valuable to Lumbermen’s in the past and could reasonably be expected to yield results for Lumbermen’s in the future. This is partly because, unlike other Division Managers at Lumbermen’s, Morehouse had spent his whole adult life in the lumber business and had worked his way up from manual-labor positions. Specifically, at age 19 More-house began work nailing pallets at the Blue Diamond Lumberyard in Battle Creek, Michigan, then spent 20 years there working his way up to Manager of Sales and Operations. After leaving Blue Diamond, Morehouse worked a number of positions at companies in the lumber business, ending up with Standale Lumber for 5.5 years. Ultimately, Morehouse joined Lumbermen’s in 1988. See Morehouse Dep at 5-8.

Morehouse’s testimony tends to support the notion that, from the standpoint of safeguarding and increasing Lumbermen’s business, he constituted a more valuable resource than many, perhaps most others who are or were in the business — and Bouma knew that. Specifically, Morehouse’s testimony suggested that he knew well what lumber dealers (Lumbermen’s customers) needed to convince them to buy, because he was well versed in the products, prices, and sales strategies of the business. Morehouse had this exchange with counsel:

Q. And through your job as the manager and vice president of the Grand Rapids division of Lumbermen’s you knew the dealers and the buyers in every single one of those lumber companies?

A. Correct.

Q. And many more customers of Lumbermen’s as well, true?

A. Yes.

Q. And your relationship with those customers and those dealers was integral to the success of Lumbermen’s in the Grand Rapids division?

A. That is correct.

Q. Why is that true?

A. I was the only manager that Lumbermen’s had, has ever had, that came directly out of the lumber industry. They all came from some other facet, either from a manufacturer or something else, but I grew up and lived through the whole process of the lumber dealer. I knew exactly what the wholesale salesman was going to say when he came to the door because I was in charge of purchasing. I knew it from the ground up, so when I went in with our salespeople or by myself I knew exactly what to talk to the lumber dealers about because I’ve been there and I understood their needs and what they wanted. And that I felt was a very — you know, relationships was my most important forte in my makeup.

Morehouse Dep at 21-22. Consistent with Morehouse’s characterization of his role and value, Bouma testified that Morehouse conveyed to Lumbermen’s the preferences of individual sales contacts at Lumbermen’s customers, and advised Lumbermen’s who would be most effective in servicing a particular customer’s account. See Bouma Dep at 81-82.

Following Morehouse’s retirement from full-time employment in 1996, he continued to work about 20 hours per week for Lumbermen’s until November 2004, mainly assisting the executive sales manager. Morehouse helped set up sales shows, and he attended the shows and traveled with the salesmen to help them make and handle contacts, improve their sales techniques, and generally be a resource for them in any way he could. See Morehouse Dep at 5-7 and 20.

By the time he retired entirely from Lumbermen’s — only about ten months before his trip with Bouma — Morehouse personally knew all the managers and dealers at Zeeland Lumber, Standard Lumber, Standale Lumber, Ryeenga Lumber, and Hamilton Lumber. See Morehouse Dep at 20-21. Morehouse recalled at least two or three occasions, after his official retirement, where he served as an intermediary between Lumbermen’s and one of its customers. He recalled Bouma consulting him regarding Standale Lumber after his retirement, and said the consultation might have taken place during the September 2005 Ann Arbor trip but he could not remember for sure. See Morehouse Dep at 24-25. Bouma remembers that during the trip, he asked Morehouse about a buyer problem with Standard Lumber, as well as showing him new decking material and asking for his opinion. See Bouma Dep at 49 and 55-56.

On the other hand, the facts of our case are arguably distinguishable from the persuasive authorities on which State Farm relies to show that Bouma was acting within the scope of his duties when he took Morehouse to Ann Arbor. For example, there is no evidence or testimony that Bouma risked discipline or tangible financial consequence from the company if he did not take Morehouse on the football trip and discuss lumber business. Certainly there were not the kind of tangible potential consequences that the Leggett employee might have faced if he did not attempt to find the company cell phone that he had misplaced.

Similarly, there is no evidence or testimony that Lumbermen’s would be unable to obtain specific new business instead of a competitor, finish a project, or do something else time-sensitive or previously scheduled if Bouma did not take More-house on the football trip that weekend. That stands in contrast to Dixon, where the employee had a literal and pressing need to fill the company car with gasoline before a trip that was scheduled to take place the next day.

Each side has presented sufficient competent evidence, and logical argument, to support a finding on its side of the question whether Bouma was acting within the scope of his duties for Lumbermen’s at the time of the accident. The verdict will come down to the jury’s credibility determination, the relative weight of the evidence, and their own somewhat-subjective assessment of when a mixed leisure/business outing is within the scope of one’s duties for the employer. Summary judgment for either side is not appropriate on this issue.

If the Jury Finds that Bouma is an Insured under the Liberty-Lumbermen’s Policy,

How Should Liability be Apportioned Between the Liberty and State Farm Policies?

State Farm seeks to pro-rate liability for the settlement between the State Farm-Bouma policy and the Liberty-Lumbermen’s policy according to their respective limits. Liberty further contends that even if Bouma were an insured under Lumbermen’s Liberty commercial umbrella liability policy, the Liberty policy is excess over the State Farm personal umbrella policy issued to Bouma.

Again, the State Famtr-Bouma personal liability umbrella policy provides,

This policy is excess over all other valid and collectible insurance. When like coverage is written in another company, we will share in payments on a pro rata basis.

State Farm’s MSJ at 4 (quoting Ex 2, State Farm Policy, Item 5 & Endorsement FE760.1).

The Liberty-Lumbermen commercial umbrella liability policy provides,

If other insurance applies to a loss that is also covered by this policy, this policy will apply excess of the other insurance. Nothing herein will be construed to make this policy subject to the terms, conditions and limitations of such other insurance. However, this provision will not apply if the other insurance is specifically written to be excess of this policy.

State Farm’s MSJ at 4-5; see Liberty’s MSJ, Ex 1.

In Michigan, “[t]here are three layers or tiers of insurance coverage which determine the priority for payment: primary coverage; excess ‘other insurance’ coverage; and ‘true excess’ or umbrella coverage.” Meridian Security Ins. Co. v. Church Mut. Ins. Co., 2006 WL 1235091, *5 (E.D.Mich. May 8, 2006) (George C. Steeh, J.) (citing Bosco v. Bauermeister, 456 Mich. 279, 571 N.W.2d 509 (Mich.1997)). Within a specific tier or layer of coverage, liability should be prorated based on the total limits of available coverage within that tier of priority. Once coverage within that tier is exhausted, the next tier of coverage will apply. Bosco, 456 Mich, at 281-82 and 304, 571 N.W.2d 509.

The parties agree that neither of their policies provide true primary coverage. The acknowledged primary insurer here was Old Republic, which issued Bouma’s personal-liability umbrella policy and paid the $1 million limit of that policy.

Regarding the second tier of coverage, the majority view in Michigan requires an analysis of the respective “other insurance” provisions to determine the parties’ intent and reconcile the provisions. Meridian, 2006 WL 1235091 at *6. The Michigan Supreme Court recognizes three categories of “other insurance” clauses: (1) pro rata clauses, which purport to limit the insurer’s liability to a proportionate percentage of all insurance covering the event; (2) escape or no-liability clauses, which provide that there shall be no liability if the risk is covered by other insurance; and (3) excess clauses, which limit the insurer’s liability to the amount of loss in excess of the coverage provided by the other insurance. Saint Paul Fire & Marine Ins. Co. v. American Home Assurance Co., 444 Mich. 560, 514 N.W.2d 113, 115 (1994) (Mallett, J., for a unanimous Court) (quoting Fed. Kemper Ins. Co., Inc. v. Health Ins. Admin. Co., Inc., 424 Mich. 537, 383 N.W.2d 590 (1986) (Riley, J., for a unanimous Court)).

The parties agree that neither of their policies has an escape or no-liability clause, i.e., neither policy purports to exclude all coverage if the risk is covered by some other insurance.

The parties agree that Liberty’s policy is an excess policy which nowhere contains the word “pro rata.” See State Farm’s Opp at 2 (“State Farm agrees with Liberty’s position that the Liberty policy contains an ‘excess’ other insurance clause.”).

So the dispute comes down to the characterization of State Farm’s policy as pro-rata or excess. What is the consequence of each characterization? In the seminal case of Saint Paul, 444 Mich. 560, 514 N.W.2d 113, the Michigan Supreme Court held that when there is a dispute between a pro rata other-insurance policy and an excess other-insurance policy, and the clauses are not in conflict or mutually repugnant, the insurer with the pro rata other-insurance policy must cover all losses up to its policy limit before the other insurer incurs any obligation.

In Saint Paul, plaintiff Saint Paul’s other-insurance clause read as follows:

[I]f the insured has other insurance against a loss covered by this policy the Company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the Declarations bears to the total applicable limit of all valid and collectible insurance against such loss

Saint Paul, 514 N.W.2d at 116. Similarly, defendant CNA’s other-insurance clause read, in pertinent part:

If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy to a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss

Saint Paul, 514 N.W.2d at 116. The Supreme Court categorized Saint Paul and CNA’s other-insurance clauses as pro-rata clauses because their language “creates a formula for establishing the liability of the insurer when other, collectible insurance exists on a proportionate basis. In other words, they are generally intended to become effective only when other valid and collectible primary insurance is available.” Saint Paul, 514 N.W.2d at 116 (citing Jones v. Medox, Inc., 430 A.2d 488, 491 (D.C.App.1981)) (emphasis added).

Finally, defendant American Home’s other-insurance clause read as follows, in pertinent part:

[W]ith respect to acts or omissions which occur prior to the inception date of the policy, the insurance hereunder shall apply only as excess insurance over any other valid and collectible insurance and shall then apply only in the amount by which the applicable limits of liability of this policy exceeds the sum of the applicable limits of liability of all such other insurance.

Saint Paul, 514 N.W.2d at 116 (footnote 16 omitted). The Supreme Court categorized American Home’s policy as an “excess other-insurance” policy because its language evinced “the insurer’s intent that the policy only affords secondary coverage when the same loss is covered by ‘other insurance.’ ” Saint Paul, 514 N.W.2d at 116 (citation omitted).

Faced with two pro-rata other-insurance policies and one excess other-insurance policy, the Michigan Supreme Court had to figure out each insurer’s relative liability, if any. The Supreme Court began with the principle that the court should “refrain from rewriting the contracts and instead give effect to the meaning and intent of the policy language.” Saint Paul, 514 N.W.2d at 117 (citing Upjohn Co. v. NH Ins. Co., 438 Mich. 197, 476 N.W.2d 392 (1991) and Eghotz v. Creech, 365 Mich. 527, 113 N.W.2d 815 (1962)) (footnote 22 omitted).

The Supreme Court recognizes two options where a pro-rata other-insurance clause confronts an excess other-insurance clause: (1) reconcile the clauses and give effect to the intent of the contracting parties, which would require the insurer with the pro rata clause to cover all losses up to its policy limit (the majority view), or (2) find the clauses irreconcilable, disregard the contractual language, and require each insurer to pay in proportion to its policy limit’s share of all the excess policy limits (the minority view). Saint Paul, 514 N.W.2d at 117-18 (footnote 23 omitted). The Supreme Court adopted the majority view, holding that a pro-rata other-insurance policy is primary to an excess other-insurance policy. Saint Paul, 514 N.W.2d at 119-21 (following Jones v. Medox, Inc., 430 A.2d 488 (D.C.App.1981) and rejecting Lamb-Weston v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110 (1959)). See, e.g., American Auto. Ins. Co. v. Transportation Ins. Co., 288 Fed.Appx. 219, 225 (6th Cir.2008) (McKeague, J.) (“Under Michigan law, a pro rata clause has priority over an excess clause.”).

State Farm acknowledges this Saint Paul rule but merely argues that it is inapposite on the facts of this case because there is no pro-rata policy involved:

Nor does State Farm contest Liberty’s assertion that, as between an “excess” other insurance clause and a “pro rata” other insurance clause, Michigan law enforces the intent of the parties with the pro-rata policy paying first (as intended, since such clauses seek to pro-rate with other available policies) and the excess policy paying second (as intended, since the excess clause provides coverage in excess over all other valid and collectible insurance and is “unavailable” for pro-ration).

State Farm’s Opp at 2. Rather, State Farm contends that both its policy and the Liberty policy are umbrella policies which are excess of the Old Republic primary policy, so they are in the same coverage layer. State Farm argues as follows,

In such situations, Michigan law is clear. Upon the exhaustion of the limits of the primary Old Republic policy, the liability is to be apportioned between the State Farm and Liberty umbrella policies on the basis of the policy limits. Pioneer State Mutual Ins. Co. v. TIG Ins. Co., 229 Mich.App.406, 581 N.W.2d 802 (1998).

Pioneer arose from a boating accident. The allegedly negligent and responsible operator was insured by Pioneer under a watercraft liability endorsement contained in a personal liability policy issued to the operator’s father who owned the boat. In addition, the negligent operator was insured under a personal liability policy issued by TIG to his mother with whom he resided. Both the Pioneer policy and the TIG policy provided that the coverage afforded by the policy was “excess over any other valid and collectible insurance except insurance written specifically to cover as excess over the limits of liability that apply to this policy.” Pioneer, 229 Mich.App. at 408 [581 N.W.2d at 802].

The circuit court ruled in pertinent part that both Pioneer and TIG were obligated to share the liability on a 50/50 basis. On appeal, the Court of Appeals affirmed, holding that the policies were in the same layer of coverage and that liability should be apportioned on the basis of the policy limits.

Here, we are not confronted with two different “layers” of coverage. Rather, the excess provisions of both of the competing policies are, for all intents and purposes, essentially at the same “layer.” Under such circumstances, liability is to be apportioned on the basis of the policy limits. Because both of the policies in this case provide a $500,000 limit on coverage, the trial court properly apportioned the settlement cost equally between Pioneer and TIG.

Pioneer, 229 Mich.App. at 415-16 [581 N.W.2d at 802]. See also McGow v. McCurry, 412 F.3d 1207, 1221 (11th Cir.2005), where the court, applying Michigan law, held that two insurers with substantially identical “excess” other[-]insurance clauses must apportion liability according to their policy limits.

In the present case, the State Farm and Liberty umbrella policies contain “excess” other[-]insurance provisions. The Liberty policy provides:

If other insurance applies to a loss that is also covered by this policy, this policy will apply excess of the other insurance. * * * However, this provision will not apply if the other insurance is specifically written to be excess of this policy. {See Comp, Ex 1] The State Farm policy, following application of the ... endorsement, provides:

This policy is excess over all other valid and collectible insurance. When like coverage is written in another company, we will share in payments on a pro rata basis.

Simply stated, under Michigan law, policies containing “excess” other[-]insurance clauses share liability on a pro rata basis. The State Farm amendatory endorsement conforms the policy to Michigan law by providing that, “when like coverage is written in another company [meaning coverage that is ‘excess over all other valid and collectible insurance’], we will share in payments on a pro rata basis.” These two policies, both of which are excess over all