Questions of Fact Preclude Summary Judgment on Additional Insured Claim

CGL – ADDITIONAL INSURED – CONTRACTUAL INDEMNIFICATION – TIMELY DISCLAIMER
Larry E. Knight, Inc. v. QBE Ins. Corp.
(Sup. Ct., New York Co., decided 6/30/2008)

Steel subcontractor's employee trips over some plywood debris on a construction site and sues general contractor (GC). Graphic Arts Mutual (Utica National) insured the GC. QBE insured the subcontractor.

GC and GAMIC brought this DJ action seeking defense and indemnification coverage under the subcontractor's policy with QBE. Among other things, plaintiffs contended that the GC was or should have been an additional insured under QBE's policy. Plaintiffs also argued that the plywood debris was the subcontractor's responsibility because it was responsible for clean-up and there were no other subcontractors working on the day of the trip and fall. Everyone moved for summary judgment.

In denying all motions, New York County Supreme Court Justice Martin Shulman ruled that there were issues of fact concerning the exact cause of the underlying trip and fall, precluding summary judgment in either the parties' favor on the claims for either common-law or contractual indemnification. The court also found that contrary to the defendants’ assertion, the subcontract required indemnification. Justice Shulman further ruled that the additional insured endorsement of QBE's policy provided additional insured status to an entity “[als required by written contract”, and there was some evidence that the policy issued by QBE to the subcontractor named the GC as an additional insured.

Plaintiffs had also argued that QBE did not timely disclaim coverage to the GC as required by Insurance Law § 3420(d). In rejecting that argument, the court held that "if the claim falls outside the policy coverage, the insurer is not required to disclaim (National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 33 AD3d 570 [1st Dept 2006])."

Finally, the court declined to dismiss the DJ action based on defendants' argument that some of the claims, such as the duty to defend any claims arising out of the subcontract, and whether the subcontractor procured insurance coverage required thereunder, were pending in the personal injury action.