"Your Work" Completed

CGL – ADDITIONAL INSURED – "YOUR WORK" – ARISING OUT OF NAMED INSURED'S OPERATIONS
Worth Constr. Co., Inc. v. Admiral Ins. Co.
(Ct. Apps., decided 5/1/2008)

In Worth Constr. Co., Inc. v. Admiral Ins. Co., 2008 NY Slip Op 03992(Ct. Apps., decided 5/1/2008), a unanimous court reversed the Appellate Division's decision and granted summary judgment to the subcontractor's GL carrier, declaring that it was not obligated to defend or indmnify the GC as an additional insured in relation to an underlying construction site accident. In the underlying action, the GC had conceded on the subcontractor's motion to dismiss the third-party complaint that the subcontractor was not negligent in its installation of the stairs upon which the underlying plaintiff had fallen. Based on that concession, the Court of Appeals ruled that the GC was not entitled to coverage under the subcontractor's GL policy, which covered the GC as an additional insured "but only with respect to liability arising out of your [the subcontractor's] operations or premises owned by or rented to you[.]" The policy also defined "Your work" as "(a) Work or operations performed by you or on your behalf; and (b) Materials, parts or equipment furnished in connection with such work or operations."

In a 3-2 decision, the Appellate Division had held that, based on the definition of "Your work" in the policy, it was immaterial, for purposes of deciding additional insured coverage, whether the subcontractor (Pacific) had completed the installation of the stairs, whether its installation was negligent or whether Pacific or one of its contractors was Murphy's (the injured party's) employer. Rather, for coverage purposes, the Appellate Division ruled that it was "sufficient that [Murphy's] injury was sustained on the stairs[.]"

The Court of Appeals disagreed with that reasoning and and with the CG's contention on this appeal that the simple fact that Murphy slipped on the staircase established as a matter of law that his accident arose out of Pacific's work because the staircase was part of the "materials" that Pacific was utilizing to fulfill its subcontract. While noting that the absence of negligence, by itself, generally is insufficient to establish that an accident did not "arise out of" an insured's operations, Judge Pigott writing for the Court iterated that "[t]he focus of a clause such as the additional insured clause here 'is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained[.]'"

In this case, the Court found it evident that the general nature of Pacific's operations involved the installation of a staircase and handrails. An entirely separate company was responsible for applying the fireproofing material. At the time of the accident, Pacific was not on the jobsite, having completed construction of the stairs, and was awaiting word from Worth (the GC) before returning to affix the handrails. The allegation in the complaint that the stairway was negligently constructed was the only basis for asserting any significant connection between Pacific's work and the accident. Once Worth admitted that its claims of negligence against Pacific were without factual merit, it conceded that the staircase was merely the situs of the accident. Therefore, it could no longer be argued that there was any connection between Murphy's accident and the risk for which coverage was intended. Therefore, Pacific's insurer, Farm Family, was entitled to summary judgment dismissing the GC's DJ action.