Guaranty National Insurance Co. v. North River Insurance Co.

The day after being admitted to Texarkana Memorial Hospital for psychiatric care, Margaret Wagner died after jumping out of her fourth-floor window. Due to lack of space, Wagner was placed in a less-secure open unit, as opposed to a closed unit, which had protective window screens. After a previous open-unit patient escaped through a window, the hospital installed screws limiting the window to open a few inches. Wagner’s estate sued the hospital. A jury found three negligent acts, each a proximate cause of Wagner’s death: failure to (1) monitor Wagner; (2) maintain the windows to prevent escape or suicide; and (3) provide sufficient trained staff. The jury awarded $968,985.82 in damages. The hospital had four insurance policies: (1) $500,000 in comprehensive general liability coverage from North River Insurance Company (North River) (defendant); (2) $200,000 per claim, $600,000 in aggregate professional liability coverage from United States Fire Insurance Company (US Fire) (defendant); (3) excess liability coverage from Guaranty National Insurance Company (Guaranty) (plaintiff) providing $500,000 above the general liability coverage and $500,000 per claim, $1,000,000 in aggregate above the professional liability coverage; and (4) excess liability insurance from Ranger Insurance Company (Ranger) (plaintiff) for $25,000,000 in excess of all the other insurance. US Fire paid $200,000, its claim limit. North River paid nothing, citing the policy’s exclusion for the rendering of any service or treatment conducive to health or of a professional nature. Guaranty and Ranger paid the remainder of the judgment and filed suit against North River, citing nonpayment, and US Fire, arguing $600,000 was the appropriate limit. Following four motions for summary judgment, the district court found that US Fire was liable for $200,000 and that North River was liable under its policy. North River appealed.