Declaratory Judgment Action Based on Additional Insured Status Allowed to Proceed

CGL – ADDITIONAL INSURED – DUTY TO DEFEND
Time Warner Cable of New York City v. New Hampshire Ins. Co.
(Sup. Ct., New York Co., decided 5/27/2008)

Time Warner Cable brought this DJ action for reimbursement of fees and costs it incurred in defending an underlying personal injury action. A customer of TWC sued it after having been assaulted in her apartment by a person she believed was a TWC employee. That person turned out to be an employee of a TWC subcontractor, CFG Cable, and the underlying action eventually was dismissed.

In its subcontract with TWC, CFG Cable agreed to defend, hold harmless and indemnify TWC for "all claims, demands, damages, costs, losses, liabilities, causes of action, and expenses resulting from damage or claims on account of bodily injury sustained by any person, arising out of, or in any way connected to, the performance of the work under" the CFG subcontract. CFG also agree to procure primary CGL coverage of at least $2 million per occurrence/aggregate, naming TWC as an additional insured. CFG did obtain such coverage with the defendant insurer, New Hampshire Insurance Company, and TWC was named as an additional insured under CFG's policy with New Hampshire.

In lieu of answering TWC's DJ complaint, New Hampshire moved pursuant to CPLR Rule 3211(a)(7) dismiss the complaint based on its asserted failure to state a cause of action. New Hampshire argued that it was not obligated to defend TWC in the underlying action because the subcontract between CFG and TWC had expired prior to the date of the underlying incident.

In denying New Hampshire's motion to dismiss, New York County Supreme Court Justice Carol Edmead held:

[C]ontrary [to] New Hampshire Insurance’s contention, that the contract between Time Warner Cable and CFG giving rise to the procurement of the Policy was expired at the time of the alleged covered event, is not dispositive on the issue of whether the Policy affords coverage to Time Warner Cable. * * * Time Warner Cable does not seek damages against New Hampshire Insurance for an alleged failure to procure such insurance coverage pursuant to the CFG Contract. In such instance, the enforceability of CFG Contract and whether it had expired by its terms at the time of the alleged incident would be relevant, and thus, the allegations in paragraphs 9, 10, and 11 would be also relevant to whether such an obligation existed. Here, Time Warner Cable’s claim for defense and indemnification rests solely on whether it is an additional insured under the Policy, and whether the Underlying Action is a covered event under the Policy. New Hampshire Insurance points to no provision in the Policy that excludes or precludes coverage, or states any other basis in the Policy to deny coverage. Further, there is no indication that the effective coverage period under the Policy is in any way tied to or dependent upon the effective period or termination of the CFG Contract.

This is another case in which a New York court has correctly, in my opinion, recognized that it is not the provisions of the contracts between the named insured and additional insured that determine and control coverage, but the terms and provisions of those parties' insurance policies that do.