Interstate Fire & Casualty Co v. Washington Hospital Center Corp.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 10, 2014 Decided July 18, 2014

No. 13-7024

INTERSTATE FIRE & CASUALTY COMPANY,

APPELLEE

v.

WASHINGTON HOSPITAL CENTER CORPORATION, DOING

BUSINESS AS WASHINGTON HOSPITAL CENTER,

APPELLEE

GREENSPRING FINANCIAL INSURANCE LIMITED,

APPELLANT

MEDSTAR HEALTH, INC.,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:10-cv-01193)

Linda S. Woolf argued the cause for appellant. With her on

the briefs was Joseph B. Wolf.

Paulette S. Sarp argued the cause for appellee Interstate

Fire and Casualty Company. With her on the brief was David

Hudgins.

2

Before: GRIFFITH, KAVANAUGH and SRINIVASAN, Circuit

Judges.

Opinion for the Court filed by Circuit Judge SRINIVASAN.

SRINIVASAN, Circuit Judge: In 2003, Greenspring Financial

Insurance Limited, Inc., issued an insurance policy providing

coverage to employees of Washington Hospital Center for

claims arising out of medical incidents within the scope of their

employment. The central question in this case is whether a

nurse hired by a staffing agency and assigned to work at the

hospital on a temporary basis was a covered “employee” under

the policy. The district court concluded that the nurse qualified

as an employee of Washington Hospital for purposes of the

Greenspring policy. The court therefore ordered Greenspring to

pay the cost of defending and settling medical malpractice

claims against the nurse. We agree with the district court’s

construction of the Greenspring policy, and we see no grounds

for excusing Greenspring from its obligations under the

insurance contract.

I.

In February 2002, Washington Hospital Center and

Progressive Nursing Staffers, Inc., entered into a staffing

agreement under which Progressive agreed to provide registered

nurses to the hospital for long-term and per-diem assignments.

Washington Hospital retained the right to terminate the

assignment of any Progressive nurse who failed to meet the

hospital’s reasonable expectations or failed to follow the

hospital’s patient care policies. Washington Hospital and

Progressive also agreed that each would indemnify the other for

“any and all claims and expenses arising out of or resulting from

the . . . negligent acts . . . of its employees or agents.”

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Washington Hospital is a wholly owned subsidiary of

MedStar Health, Inc., which owns and operates several other

medical facilities in Maryland and the District of Columbia.

Greenspring Financial Insurance Limited, Inc., is also a wholly

owned subsidiary of MedStar and is MedStar’s “captive

insurer.” See Clougherty Packing Co. v. Comm’r, 811 F.2d

1297, 1298 n.1 (9th Cir. 1987) (a captive insurer is “a

corporation organized for the purpose of insuring the liabilities

of its owner”). In August 2003, Greenspring issued a general

liability policy to MedStar under which Greenspring must

indemnify the “Insured” for damages of up to $5 million per

incident resulting from covered medical incidents. The policy

defines “Insured” to include “all past, present, or future full-time

or part-time Employees” of MedStar, including employees of

MedStar subsidiaries such as Washington Hospital. The

Greenspring policy also includes an “other insurance”

clause—i.e., a clause apportioning liability in the event multiple

insurance policies cover the same risk. The clause states that

“[t]he insurance afforded by this policy is primary insurance”

except when otherwise specified.

Another insurer, Interstate Fire and Casualty Co., issued a

professional liability policy covering Progressive and its current

and former employees for claims made between November 2006

and November 2007, with a cap of $1 million per incident. The

policy includes an “other insurance” clause which states that,

“[i]f there is other valid insurance (whether primary, excess,

contingent or self-insurance) which may apply against a loss or

claim covered by this policy, the insurance provided hereunder

shall be deemed excess insurance over and above the applicable

limit of all other insurance or self-insurance.” Interstate Fire

simultaneously issued an excess commercial liability policy to

Progressive which covers Progressive and its current and former

employees for up to $4 million per incident. The policy also

4

applies “as excess of and not contributory with” any primary or

other insurance.

Chichio Hand, a registered nurse, was hired by Progressive

in 1999 and later assigned to work at Washington Hospital. In

April 2004, Nurse Hand was one of several medical

professionals at Washington Hospital involved in the treatment

of Radianne Banks. Ms. Banks, who had been admitted to

Washington Hospital while pregnant with her first child,

underwent a caesarean section and could not move her legs

afterward. In March 2007, she sued Washington Hospital and

two of its doctors in D.C. Superior Court for negligence,

alleging that she became completely wheelchair-bound as a

result of injuries she sustained at the hospital. In June 2008,

Washington Hospital filed a third-party complaint in the Banks

action seeking indemnification and contribution from Nurse

Hand and Progressive. Nurse Hand and Progressive then filed

a fourth-party complaint against Washington Hospital and one

of its doctors, likewise seeking indemnification and

contribution.

In August 2009, Ms. Banks, Washington Hospital, Nurse

Hand, Progressive, and Interstate Fire entered into a settlement

agreement resolving their respective claims. Washington

Hospital agreed to pay Ms. Banks and her attorneys $1.05

million, while Interstate Fire agreed to pay $3.055 million,

consisting of a $1.455 million payment to Ms. Banks and her

attorneys as well as the purchase of two annuities for Ms. Banks

at a combined cost of $1.6 million. Significantly, Interstate Fire

“expressly reserv[ed] the right to rely on the ‘other insurance’

clauses incorporated into its policies to seek reallocation of the

settlement as may be warranted.”

In July 2010, Interstate Fire followed through on its

reservation. It sued Washington Hospital, MedStar, and

5

Greenspring in federal district court, alleging that the defendants

owed a duty under the Greenspring general liability policy to

provide primary insurance coverage for Nurse Hand. Interstate

Fire asserted that it “stands in the shoes” of Nurse Hand and

Progressive for purposes of the litigation, and it sought damages

equal to all legal fees and costs it had paid on behalf of Nurse

Hand and Progressive. The complaint invoked the district

court’s diversity jurisdiction. 28 U.S.C. § 1332.

The parties filed cross motions for summary judgment, and

the district court issued an initial decision in March 2012. See

Interstate Fire & Cas. Co. v. Wash. Hosp. Ctr. Corp., 853 F.

Supp. 2d 49 (D.D.C. 2012) (Interstate Fire I). The court held

that Nurse Hand is an “employee” of Washington Hospital for

purposes of the Greenspring policy, and that Nurse Hand thus

qualifies as a person insured under that policy. Next, the court

rejected the defendants’ argument that the staffing agreement

between Washington Hospital and Progressive requires

Progressive’s insurer, Interstate Fire, to indemnify Washington

Hospital for any liability arising out of the actions of

Progressive’s nurses. The court held that Washington Hospital

had waived its right to indemnification when it released its

claims against Progressive and Interstate Fire in the settlement

of the Banks litigation. The court then examined the “other

insurance” clauses in the various insurance policies and

determined that Greenspring’s coverage of Nurse Hand is

primary. The court therefore granted partial summary judgment

to Interstate Fire with regard to Greenspring’s liability. In a

subsequent decision, the court ruled that Interstate Fire was

entitled to recover $3.055 million from Greenspring for

payments under the settlement agreement and $153,248.72 for

attorneys’ fees and costs, along with pre-judgment and post-

judgment interest. See Interstate Fire & Cas. Co. v. Wash.

Hosp. Ctr. Corp., 917 F. Supp. 2d 87 (D.D.C. 2013) (Interstate

Fire II). Greenspring appeals.

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II.

We review the district court’s grant of summary judgment

de novo. See United States v. Regenerative Scis., LLC, 741 F.3d

1314, 1318 (D.C. Cir. 2014). The parties agree that the District

of Columbia’s substantive law applies, and we follow the

decisions of the District of Columbia Court of Appeals with

respect to local law. See Burke v. Air Serv Int’l, Inc., 685 F.3d

1102, 1105, 1107 n.4 (D.C. Cir. 2012). Until February 1, 1971,

judgments of the District of Columbia courts were subject to

review by this court, and D.C. Circuit decisions from before that

date are binding as to local law. See Hemphill v. Wash. Metro.

Area Transit Auth., 982 F.2d 572, 574 & n.1 (D.C. Cir. 1993);

M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C. 1971). When local

law is “silent,” the common law of Maryland is “‘especially

persuasive authority,’” as Maryland law is historically “‘the

source of the District’s common law.’” TMG II v. United States,

1 F.3d 36, 41 (D.C. Cir. 1993) (quoting Napoleon v. Heard, 455

A.2d 901, 903 (D.C. 1983)).

A.

The principal issue in this case is whether Nurse Hand, who

was hired by a staffing agency (Progressive) and assigned to

work at Washington Hospital, qualifies as an “employee” of the

hospital. If so, Nurse Hand is an insured under the Greenspring

policy, implicating Greenspring’s primary coverage. It is

undisputed that Nurse Hand is also an employee of Progressive.

But “[g]enerally, a person may be the employee of two

employers” as long as “‘the service to one does not involve

abandonment of the service to the other.’” Zinn v. McKune, 143

F.3d 1353, 1361 (10th Cir. 1998) (quoting Restatement (2d) of

Agency § 226 (1958)); see Lovelace v. Anderson, 785 A.2d 726,

741 (Md. 2001). The fact that only Progressive paid a salary to

Nurse Hand does not preclude a finding that she is an employee

7

of both Progressive and the hospital. See Beegle v. Rest. Mgmt.,

Inc., 679 A.2d 480, 485 (D.C. 1996) (issue of “who paid [the

worker]’s salary” is “not an adequate basis upon which to

determine the relationships of the parties,” and trial court erred

in treating payment of salary as “decisive factor” in determining

whether employment relationship exists).

Because an insurance policy is a contract, we construe it

according to contract law principles. Stevens v. United Gen.

Title Ins. Co., 801 A.2d 61, 66 (D.C. 2002). “‘Extrinsic

evidence of the parties’ subjective intent may be resorted to only

if the document is ambiguous.’” Sears v. Catholic Archdiocese

of Wash., 5 A.3d 653, 661 n.15 (D.C. 2010) (quoting 1010

Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199,

205 (D.C. 1984)). “‘In determining whether a contract is

ambiguous, we examine the document on its face, giving the

language used its plain meaning,’ unless, in context, it is evident

that the terms used have a technical or specialized meaning.”

Beck v. Cont’l Cas. Co. (In re May), 936 A.2d 747, 751 (D.C.

2007) (citation omitted) (quoting Tillery v. Dist. of Columbia

Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)). We

deal here with an insurance contract, and the “first step” in the

construction of an insurance contract is “to determine what a

reasonable person in the position of the parties would have

thought the disputed language meant.” Travelers Indem. Co. v.

United Food & Commercial Workers Int’l Union, 770 A.2d 978,

986 (D.C. 2001) (internal quotation marks omitted). In

conducting that inquiry, District of Columbia courts routinely

consult dictionary definitions of disputed terms. See, e.g.,

Hartford Fin. Servs. Grp. v. Hand, 30 A.3d 180, 187 n.13 (D.C.

2011) (consulting Black’s Law Dictionary); Chase v. State Farm

Fire & Cas. Co., 780 A.2d 1123, 1128 n.2 (D.C. 2001)

(Webster’s International Dictionary); In re Estate of Corriea,

719 A.2d 1234, 1242-43 (D.C. 1998) (Webster’s Ninth New

Collegiate, Black’s Law, and American Heritage Dictionary).

8

The disputed term in this case is the word “employee” in the

Greenspring policy. The American Heritage Dictionary defines

“employee” as a “person who works for another in return for

financial or other compensation.” The American Heritage

Dictionary of the English Language (5th ed. online 2014).

Webster’s defines “employee” as “one employed by another

usually in a position below the executive level and usually for

wages.” Webster’s Third New International Dictionary,

Unabridged (online ed. 2014). Those definitions do not

squarely address whether an individual hired by a staffing

agency and assigned to work for another firm is an “employee”

of the latter.

The definition of “employee” in Black’s Law Dictionary

speaks to the question more directly. Black’s Law defines

“employee” as a “person who works in the service of another

person (the employer) under an express or implied contract of

hire, under which the employer has the right to control the

details of work performance.” Black’s Law Dictionary 602 (9th

ed. 2009). Beneath the definition of “employee” and in indented

text, Black’s Law also includes a definition for “borrowed

employee”: an “employee whose services are, with the

employee’s consent, lent to another employer who temporarily

assumes control over the employee’s work.” Id. Greenspring

acknowledges that the staffing agreement gave Washington

Hospital the right to control the details of Nurse Hand’s work

performance. Greenspring also acknowledges that Nurse Hand

was in fact under the hospital’s control at the time of the conduct

causing Ms. Banks’s injuries. According to the Black’s Law

definition, then, Nurse Hand qualifies as an “employee” of

Washington Hospital—and, more specifically, a “borrowed

employee” of the hospital.

9

We acknowledge that legal dictionaries such as Black’s Law

sometimes supply specialized definitions. But we have found

Black’s Law definitions to be helpful in construing insurance

policies under District of Columbia law. E.g., Essex Ins. Co. v.

Doe, 511 F.3d 198, 200 (D.C. Cir. 2008). And District of

Columbia courts routinely rely on Black’s Law definitions in the

insurance context. See Hand, 30 A.3d at 187 n.13; Estate of

Corriea, 719 A.2d at 1242; Riggs v. Aetna Ins. Co., 454 A.2d

818, 821 (D.C. 1983); McIntosh v. Aetna Life Ins. Co., 268 A.2d

518, 520 (D.C. 1970). We follow that course here.

Greenspring, for its part, argues that the definition of

“employee” in its policy includes only “full-time” and “part-

time” employees rather than “all” employees. Appellant’s Br.

18 (emphasis omitted). In Greenspring’s view, some workers

qualify as “employees” but are neither “full-time” nor “part-

time.” But the adjective “full-time” is defined as “employed for

or working the amount of time considered customary or

standard,” while “part-time” is defined as “employed for or

working less than the amount of time considered customary or

standard.” Webster’s Third New International Dictionary,

supra; see also American Heritage Dictionary, supra (defining

“full-time” as “[e]mployed for or involving a standard number

of hours of working time” and “part-time” as “[f]or or during

less than the customary or standard time”). It would seem, then,

that all employees fall into either the “full-time” or “part-time”

category (except perhaps for a category of employees who work

more than the standard amount of time, and Greenspring does

not argue that Nurse Hand falls into such a category). In any

event, there is no reason to suppose that the expansive language

in the Greenspring policy (“all past, present, or future full-time

or part-time Employees”) was intended to limit the scope of the

term “employee.” If anything, the policy’s definition of

“employee” yields the opposite effect.

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Greenspring instead urges us to construe the terms “full-

time” and “part-time” in light of the definitions used by federal

agencies for statistical purposes. See, e.g., U.S. Dep’t of Labor,

Bureau of Labor Statistics, Labor Force Statistics from the

Current Population Survey: Labor Force Characteristics,

http://bls.gov/cps/lfcharacteristics.htm (last updated Apr. 25,

2014) (“full time” employment is “35 hours or more per week”;

“part time” employment is “1 to 34 hours per week”). It is far

from clear how the Bureau of Labor Statistics definitions—even

if applicable—would advance Greenspring’s cause. If Nurse

Hand worked 35 hours or more per week, she would be a “full-

time” employee; if she worked one to 34 hours per week, she

would be a “part-time” employee. In either event, she would be

an “employee.” Greenspring, at any rate, cites no case in which

a District of Columbia court has used a Bureau of Labor

Statistics website to construe a term in an insurance policy,

much less any insurance case in which a court adhered to a

Bureau definition to the exclusion of Black’s Law Dictionary,

Webster’s, and American Heritage.

Greenspring also cites decisions from other jurisdictions

construing insurance policies with definitions of “employee”

that refer to “leased workers” and “temporary workers,” terms

that do not appear in the Greenspring policy. The policies cited

by Greenspring all state that the term “employee” includes a

“leased worker” but not a “temporary worker.” See, e.g.,

Wellington Specialty Ins. Co. v. Kendall Crane Serv., 434 F.

App’x 794, 795-96 (11th Cir. 2011) (per curiam) (quoting policy

language); Key Constr., Inc. v. Colony Ins. Co., No. 3-10-CV-

0297-BD, 2011 U.S. Dist. LEXIS 75486, at *2-3 (N.D. Tex. July

13, 2011) (same). A “leased worker” is defined by those

policies as “a person leased to you by a labor leasing firm under

an agreement between you and the labor leasing firm to perform

duties related to the conduct of your business.” Wellington

Specialty Ins., 434 F. App’x at 796. A “temporary worker” is

11

defined as “a person who is furnished to you to substitute for a

permanent ‘employee’ on leave or to meet seasonal or short-

term workload conditions.” Key Constr., 2011 U.S. Dist. LEXIS

75486, at *3. Greenspring contends that a nurse from a staffing

agency would be referred to in the insurance context as a “leased

worker” or a “temporary worker,” and that the absence of those

terms from the Greenspring policy means that the policy does

not intend to cover someone like Nurse Hand.

In construing insurance policies, however, District of

Columbia courts are primarily concerned with “‘the meaning

which common speech imports,’” not the meaning that other

insurers’ would ascribe to the same term. Travelers Indem., 770

A.2d at 986 (quoting Estate of Corriea, 719 A.2d at 1239). In

any event, the definition of “employee” set forth in those other

policies hardly impugns the conclusion that Nurse Hand

qualifies as an “employee” under the Greenspring policy. To

the contrary, the language of those policies suggests that the

term “employee” is generally understood to include “leased

workers,” and Nurse Hand appears to fit in the category of

leased workers according to the description of that term in those

policies. See Wellington Specialty Ins., 434 F. App’x at 796.

And even if Nurse Hand were a “temporary worker,” the

language of the other policies could be read to indicate that the

term “employee” would ordinarily encompass temporary

workers unless the policy expressly excludes them. As a result,

the fact that the Greenspring policy contains no mention of

“leased workers” or “temporary workers” in its definition of

“employee” affords no basis for concluding that the policy

excludes Nurse Hand from that term.

B.

In understanding the meaning of “employee” in the

Greenspring policy, the district court found it “helpful” to

12

consider the test used by District of Columbia courts when

assessing whether a person is an “employee” for vicarious

liability purposes. Interstate Fire I, 853 F. Supp. 2d at 57. As

a “general rule,” an entity is vicariously liable for the torts of an

employee but not for those of an independent contractor. See

W.M. Schlosser Co. v. Md. Drywall Co., 673 A.2d 647, 651

(D.C. 1996). In determining whether a person is an employee

or an independent contractor, District of Columbia courts

consider multiple specified factors. See Schecter v. Merchs.

Home Delivery, Inc., 892 A.2d 415, 422-23 (D.C. 2006);

Moorehead v. District of Columbia, 747 A.2d 138, 143 (D.C.

2000); Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000).

“‘While no single factor is controlling, the decisive test is

whether the employer has the right to control and direct the

servant in the performance of his work and the manner in which

the work is to be done.’” Schecter, 892 A.2d at 423 (alteration

and emphasis omitted) (quoting Beegle, 679 A.2d at 485). The

district court determined that Nurse Hand is an “employee” of

Washington Hospital under that framework because the hospital

had the right to control her conduct and to terminate her

assignment at any time, and because her care for Ms. Banks was

“clearly part of the [hospital’s] regular business.” Interstate

Fire I, 853 F. Supp. 2d at 57-58. Greenspring does not dispute

the district court’s application of the common law test, but

instead contends that the court erred by invoking that test in the

first place.

District of Columbia and Maryland courts, however, have

indicated that the “‘known principles of the common law’” can

inform the interpretation of insurance policies. Unkelsbee v.

Homestead Fire Ins. Co., 41 A.2d 168, 170-72 (D.C. 1945)

(quoting Waters v. Merchs.’ Louisville Ins. Co., 36 U.S. (11

Pet.) 213, 223 (1837)); see also Stiegler v. Eureka Life Ins. Co.,

127 A. 397, 402 (Md. 1925) (common law supplies default rule

where terms of insurance policy and statutes are silent). Courts

13

in other jurisdictions likewise look to common law principles

when construing the terms of insurance contracts—at least when

the contracts themselves do not expressly displace common law

default rules. See Crawford v. Lumbermen’s Mut. Cas. Co., 220

A.2d 480, 483 (Vt. 1966) (in answering the “perplexing

question” of whether worker is “employee” under insurance

policy, “the common law decisions on the relationship of master

and servant afford a safe guide”); see also Collin v. Am. Empire

Ins. Co., 26 Cal. Rptr. 2d 391, 403 (Cal. Ct. App. 1994); Quiring

v. GEICO Gen. Ins. Co., 953 N.E.2d 119, 129 (Ind. Ct. App.

2011); Detweiler v. J.C. Penney Cas. Ins. Co., 751 P.2d 282,

284 (Wash. 1988). Accordingly, we believe that the district

court appropriately considered common law principles of

vicarious liability in construing the term “employee” in the

Greenspring policy. And we agree with the district court that

the common law test supports concluding that Nurse Hand

qualifies as an “employee” of Washington Hospital.

C.

Greenspring argues that, instead of looking to dictionary

definitions and common law principles to understand the

meaning of the term “employee” in the Greenspring policy, the

court should rely on an affidavit in the record from Larry Smith,

the president of Greenspring and the vice president of risk

management for Washington Hospital’s parent company,

MedStar. According to Smith’s affidavit, Greenspring and

MedStar both understood that the Greenspring policy would

“apply to employees who had been hired by MedStar” and its

subsidiaries “but not to temporary workers such as agency

nurses.” Smith Decl. ¶ 3, ECF No. 35-2.

As we have explained, however, District of Columbia courts

apply unambiguous provisions of insurance policies without

resort to extrinsic evidence of the parties’ subjective intent. The

14

Smith affidavit, coming eight years after the Greenspring policy

was written and more than one year after Interstate Fire filed

suit, cannot outweigh the various considerations establishing

that Nurse Hand qualifies as an “employee” of Washington

Hospital under the Greenspring policy. See Sears, 5 A.3d at 661

n.15 (statement made in the course of litigation, “not

contemporaneous with . . . or reflected in any of the documents”

that constitute the parties’ agreement, “cannot serve to render

ambiguous contract terms that are otherwise unambiguous”).

And even assuming that the policy is ambiguous and that the

Smith affidavit affords some indication of an intent to exclude

agency nurses from coverage, any such indication would be

offset by the general rule that “‘ambiguities in an insurance

contract should be construed against the insurer who drafted the

contract . . . where other factors are not decisive.’” Beck, 936

A.2d at 751 n.4 (quoting Cameron v. USAA Prop. & Cas. Ins.

Co., 733 A.2d 965, 968 (D.C. 1999)); see Estate of Corriea, 719

A.2d at 1243; Meade v. Prudential Ins. Co., 477 A.2d 726, 728

(D.C. 1984). In the District of Columbia, that canon applies

even when—as here—the insurer who drafted the contract is

engaged in litigation against another insurance company. See

Imperial Ins., Inc. v. Emp’rs’ Liab. Assurance Corp., 442 F.2d

1197, 1199-1200 (D.C. Cir. 1970) (binding with respect to local

law). Greenspring argues against invoking the canon on the

ground that neither Nurse Hand nor Interstate Fire purchased the

policy from Greenspring. But District of Columbia courts

construe ambiguities in an insurance policy against the insurer

even when the claimant is a third-party beneficiary rather than

the purchaser of the policy. See, e.g., Price v. Doe, 638 A.2d

1147, 1149, 1152 (D.C. 1994); Nationwide Mut. Ins. Co. v.

Schilansky, 176 A.2d 786, 786-88 (D.C. 1961). The Smith

affidavit is certainly not a “decisive” factor in favor of

Greenspring’s preferred construction, cf. Beck, 936 A.2d at 751

n.4, and thus does not alter our conclusion that Nurse Hand is an

15

“employee” of Washington Hospital under the Greenspring

policy.

III.

While Greenspring’s primary position is that Nurse Hand is

not an “employee” of Washington Hospital, Greenspring also

asks us to reverse the district court’s decision even if we hold

that Nurse Hand is an employee covered under its policy.

Greenspring puts forward three arguments in support of its

alternative position, which we consider in turn.

A.

Greenspring first asks us to follow the Eighth Circuit’s

holding in Wal-Mart Stores, Inc. v. RLI Insurance Co., 292 F.3d

583 (8th Cir. 2002), as well as cases from other jurisdictions that

adhere to the Wal-Mart Stores decision. See, e.g., St. Paul Fire

& Marine Ins. Co. v. Am. Int’l Specialty Lines Ins. Co., 365 F.3d

263, 272 (4th Cir. 2004); Am. Indem. Lloyds v. Travelers Prop.

& Cas. Ins. Co., 335 F.3d 429, 436 (5th Cir. 2003). In Wal-Mart

Stores, RLI Insurance Company sought to recover $10 million

it had paid to settle a product liability lawsuit related to a

halogen lamp supplied by Cheyenne Industries and sold by Wal-

Mart at one of its retail stores. The district court concluded that

Wal-Mart’s insurer, National Union, bore primary liability for

the settlement costs and that the RLI insurance policy purchased

by Cheyenne provided only excess coverage. The district court

therefore held that RLI was entitled to recover the $10 million

it had paid to settle the halogen lamp lawsuit. See Wal-Mart

Stores, 292 F.3d at 585-87.

The Eighth Circuit reversed. It held that the vendor

agreement between Cheyenne and Wal-Mart obligated

Cheyenne to indemnify Wal-Mart for claims resulting from any

16

alleged defect in the lamps, and it found that the indemnification

provisions in the vendor agreement “squarely applie[d]” to the

case. Id. at 587-88. If National Union paid the $10 million to

settle the product liability claim, then “it would step into Wal-

Mart’s shoes and bring a subrogation action against Cheyenne

asserting Wal-Mart’s contractual right to indemnification.” Id.

at 594. RLI, as Cheyenne’s insurer, would then be obligated to

cover Cheyenne for National Union’s $10 million

indemnification claim, and “the parties would be back in the

situation they were in before th[e] action was brought.” Id. “To

prevent such wasteful litigation and to give effect to the

indemnification agreement between the parties,” the Eighth

Circuit held “that RLI cannot recover against National Union.”

Id.; accord St. Paul Fire, 365 F.3d at 276-77; Am. Indem.

Lloyds, 335 F.3d at 444.

Greenspring argues that this case is closely analogous to

Wal-Mart Stores. Just as Cheyenne agreed to indemnify Wal-

Mart for claims arising from the sale of Cheyenne lamps,

Progressive agreed to indemnify Washington Hospital for claims

arising out of the negligent acts of Progressive’s nurses.

Greenspring says that if it reimburses Interstate Fire for the cost

of defending and settling the Banks litigation, it will then step

into the shoes of Washington Hospital and assert Washington

Hospital’s contractual right to indemnification from Progressive.

And Interstate Fire, as Progressive’s insurer, will still bear the

ultimate loss.

We need not decide whether District of Columbia courts

would follow Wal-Mart Stores, because that decision would not

alter the outcome of this case in any event. First, there is no

suggestion in Wal-Mart Stores that Wal-Mart had waived its

contractual right to indemnification from Cheyenne. Here, by

contrast, Washington Hospital released any contractual right to

indemnification as part of the Banks settlement. The language

17

of the release is unequivocal: it states that Washington Hospital

“completely releases and forever discharges” Nurse Hand,

Progressive, and Interstate Fire of “all claims, demands, causes

of action, obligations, liens, damages, losses, costs, attorneys’

fees and expenses of every kind and nature whatsoever” that

Washington Hospital “may now have or may hereafter

have . . . by reason of any matter, cause or thing arising out of,

or in any manner connected with,” the Banks litigation.

Greenspring never explains how Washington Hospital’s

contractual indemnification claim could survive such an

unambiguous release.

Second, while National Union would have stepped into

Wal-Mart’s shoes if it paid $10 million on Wal-Mart’s behalf to

settle the product liability lawsuit, Greenspring would not step

into Washington Hospital’s shoes if it paid $3.055 million on

Nurse Hand’s behalf to settle the Banks action. Greenspring

instead would step into Nurse Hand’s shoes with respect to the

$3.055 million payment, and Nurse Hand would have no

indemnity claim against Progressive: an employer “held

vicariously liable for the tort of an employee” generally has “a

right of indemnity from the employee,” not the other way

around. Dobbs’ Law of Torts § 425 (2d ed. updated 2014)

(West); see also District of Columbia v. Wash. Hosp. Ctr., 722

A.2d 332, 340 n.9 (D.C. 1998). Thus, even if Washington

Hospital had not waived its indemnification claim, Greenspring

would have no entitlement to assert the hospital’s

indemnification claim while standing in the shoes of Nurse

Hand. Unlike in Wal-Mart Stores, then, a ruling in favor of

Interstate Fire would not result in a “circuity of action.” Wal-

Mart Stores, 292 F.3d at 594.

18

B.

Greenspring next argues that contribution is an equitable

remedy and that the district court erred by failing to take

equitable considerations into account. The district court did not

err. While contribution is “governed by equitable principles,”

a contribution action is still “subject to any express or implied

agreements between or among the parties sharing the liability.”

Green Leaves Rest., Inc. v. 617 H Street Assocs., 974 A.2d 222,

238 (D.C. 2009) (footnote omitted). Consequently, “‘[w]here

the parties have a contract governing an aspect of the relation

between themselves, a court will not displace the terms of that

contract and impose some other equitable duties not chosen by

the parties.’” Id. (alteration omitted) (quoting Emerine v.

Yancey, 680 A.2d 1380, 1384 (D.C. 1996)). Here, Washington

Hospital and Interstate Fire were parties to a settlement

agreement broadly governing “any matter . . . connected with”

the Banks litigation. They agreed to release each other from all

claims, demands, and obligations with one exception: Interstate

Fire reserved the right to seek reallocation of the settlement

based on the language of the insurance policies. The district

court had no discretion to displace the terms of that agreement

and impose an equitable duty upon Interstate Fire to pay more

than the insurance policies provided.

C.

Finally, Greenspring argues that some portion of the $3.055

million paid by Interstate Fire to settle the Banks litigation went

to resolve Washington Hospital’s contractual indemnity claim

against Progressive. Even if it must reimburse Interstate Fire for

Nurse Hand’s share of the settlement, Greenspring contends, it

has no obligation to reimburse Interstate Fire for Progressive’s

share. We are unpersuaded.

19

In its third-party complaint in the Banks litigation,

Washington Hospital alleged that Progressive, as Nurse Hand’s

employer, was vicariously liable for Nurse Hand’s negligence

under the doctrine of respondeat superior. But Washington

Hospital asserted no independent negligence claims against

Progressive (such as for negligent hiring or negligent

supervision). As noted above, an employer who is vicariously

liable for an employee’s torts may recover from the employee

the amount paid to discharge the liability plus reasonable legal

expenses. Thus, even if Progressive were vicariously liable to

Washington Hospital for Nurse Hand’s negligence, and even if

some portion of Interstate Fire’s $3.055 million payment went

to discharge Progressive’s liability, Interstate Fire—standing in

the shoes of Progressive—would be entitled to recover that

amount from Nurse Hand. And Greenspring, as Nurse Hand’s

primary insurer, would be obligated to reimburse Interstate Fire

for any amount that Interstate Fire had paid on account of

Progressive’s vicarious liability.

* * * * *

Because we conclude that Interstate Fire is entitled to

reimbursement from Greenspring for the amounts paid to defend

and settle the Banks action, we affirm the judgment of the

district court.

So ordered.