Federal Appeals Court Rules that "Executed" Means Signed or Fully Performed. Certificate of Insurance Question Certified to New York Court of Appeals.

CGL – ADDITIONAL INSURED – BLANKET ADDITIONAL INSURED ENDORSEMENT – "EXECUTED" – CERTIFICATE OF INSURANCE – ESTOPPEL
10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co.
(2nd Cir. US Ct. Apps., decided 12/23/2010)

Plaintiffs were the owner and construction manager for a commercial building in Buffalo, New York.  On August 14, 2003, they contracted with Ellicott Maintenance, Inc., to perform some interior demolition at the building.  The construction agreement required Ellicott Maintenance to procure and maintain $5,000,000 in public liability insurance for any legal liabilities arising out of the demolition project, which was to be primary to the building owner's own liability insurance.  The construction agreement also required that Ellicott Maintenance obtain, prior to the commencement of work, "Certificates of Insurance naming [the plaintiffs] as additional insureds."  Representatives of the plaintiffs and Ellicott Maintenance did not actually sign the agreement until September 12, 2003. 

At the time Ellicott Maintenance entered into the construction contract with the plaintiffs in August, it had in place a $1 million per occurrence primary CGL policy and a $2 million per occurrence umbrella policy with defendant Mountain Valley Indemnity Company.  The primary policy's blanket additional insured endorsement extended coverage to any “person or organization with whom [Ellicott Maintenance] agreed, because of a written contract[,] to provide insurance such as is afforded under [the primary policy], but only with respect to liability arising out of [Ellicott Maintenance's] operations," and only when “the written contract or agreement [between Ellicott Maintenance and the additional insured] ha[d] been executed...prior to the ‘bodily injury.’"

The umbrella policy extended coverage to additional insureds with whom Ellicott Maintenance had “agreed in writing prior to any [injury] ... to provide insurance such as is afforded” by the umbrella policy.  Unlike the primary policy, however, the umbrella Policy did not provide that its coverage of additional insureds was effective only if the written agreement between Ellicott Maintenance and any additional insureds had been “executed.”

On August 19, 2003,an entity identified by the court as "Mountain Valley's agent", issued a certificate of insurance (COI) identifying Mountain Valley as the issuer of the primary and umbrella policies, Ellicott Maintenance as the named insured, and the plaintiffs as “additional insured with respect to project: Graystone.”  The COI contained the standard limiting and disclaiming language on its front and rear sides:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.

DISCLAIMER: The Certificate of Insurance ... does not constitute a contract between the issuing insurer ... and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.

Ellicott Maintenance began work the day after it received the COI.  On September 9, 2003, three days before the construction agreement was signed, David DelPrince, an employee of a subcontractor hired by Ellicott Maintenance was injured when a roof collapsed at the Graystone site.

Plaintiffs notified Mountain Valley's agent of DelPrince's injury and potential claim by letter dated October 22, 2003, requesting that Mountain Valley defend and indemnify them in any suit brought by DelPrince. Some six months later, by letter dated April 13, 2004, Mountain Valley informed the plaintiffs that it would not defend or indemnify them because, inasmuch as the construction sgreement had not been signed on behalf of the parties before DelPrince was injured, “there was not in existence on the date of loss a written contract executed prior to the bodily injury,” as required by the terms of the primary policy. The letter further stated that even if the plaintiffs qualified as additional insureds under the primary policy as of the date of the accident, Mountain Valley would deny coverage because the plaintiffs had failed to timely notify Mountain Valley of DelPrince's injury and possible claim, as required by the primary policy.

DelPrince filed suit against plaintiffs and Ellicott Maintenance in New York State Supreme Court, Erie County, in October 2004, alleging negligence and violations of the New York Labor Law, and seeking to recover damages for the injuries he sustained.  In late January 2007, plaintiffs commenced this declaratory judgment action, alleging that they were additional insureds under the primary policy and therefore were entitled to coverage from Mountain Valley for the underlying DelPrince suit.  The plaintiffs further alleged that the COI bound Mountain Valley to provide coverage despite the absence of a signed agreement between plaintiffs and Ellicott Maintenance.  Finally, the plaintiffs alleged that Mountain Valley should be precluded from relying on the defense of untimely notice because Mountain Valley's response disclaiming coverage was itself untimely. The plaintiffs later amended their complaint to add a claim alleging entitlement to indemnification and defense as additional insureds under the umbrella policy.

The parties cross-moved for summary judgment and, adopting the September 2009 report and recommendation of the magistrate judge in whole, the District Court granted plaintiffs' motion and denied defendant's in February 2010.  On the question of whether the construction agreement was “executed” prior to DelPrince's injury, the court adopted the magistrate's conclusion that “in light of ‘common speech’ and the reasonable expectations of a businessperson”, and because Mountain Valley, as the drafter of the policy, could have used the term “signed” if it had intended to require a signature, the term “executed” as used in the primary policy should not be interpreted to require the parties' signatures to trigger coverage under that policy.  The District Court also accepted the magistrate judge's analysis as being consistent with the Nassau County Supreme Court's November 2008 decision in Burlington Ins. Co. v Utica First Ins. Co., 22 Misc. 3d 1112A, a decision the Second Department reversed on March 9, 2010, less than three weeks after the District Court's decision in this case.

On the question of whether the plaintiffs were entitled to coverage based on the COI, the magistrate judge had recommended finding that the COI incorporated the terms of the primary and umbrella policies. Relying on Niagara Mohawk Power Corp. v. Skibeck Pipeline Co., 271 A.D.2d 867 (4th Dept. 2000), the magistrate judge found that Mountain Valley's agent, acting within the scope of its authority, “issued the certificate of insurance naming [the plaintiffs] as additional insureds, upon which [the plaintiffs] were entitled to rely, regardless of the absence of a signing of the construction contract at that time.”  The magistrate judge therefore recommended estopping Mountain Valley from denying coverage to the plaintiffs, a recommendation the District Court judge adopted.  Finally, the magistrate judge rejected Mountain Valley's argument that the plaintiffs had not provided timely notice of DelPrince's injury.

Mountain Valley appealed to the United States Court of Appeals for the Second Circuit.   In a unanimous opinion, that court affirmed the District Court's finding that plaintiffs were covered as additional insureds under the umbrella policy but reserved decision on the COI estoppel question of coverage under the primary policy pending the New York Court's of Appeals' answer of this certified question:

In a case brought against an insurer in which a plaintiff seeks a declaration that it is covered under an insurance policy issued by that insurer, does a certificate of insurance by an agent of the insurer that states that the policy is in force but also bears language that the certificate is not evidence of coverage, is for informational purposes only, or other similar disclaimers, estop the insurer from denying coverage under the policy?

Significantly, the Second Circuit agreed with the Second Department's March 2010 decision in Burlington Ins. Co. v Utica First Ins. Co. that "executed" means signed or fully performed:

Because New York law unambiguously requires either the signing of a contract or its full performance for it to be "executed" within the meaning of an insurance policy requiring such prior execution, and because neither occurred here, the Construction Agreement was not executed as of the date of DelPrince's injury.  The district court's finding that it was and its conclusion that for that reason the Primary Policy was in effect at the time of the accident, are therefore in error.

On the question of whether Mountain Valley should nonetheless be estopped from denying coverage to the plaintiffs under the primary policy because Mountain Valley's agent issued, and the plaintiffs relied upon, the COI, however, the Second Circuit noted that New York's intermediate appellate courts are divided on this issue -- the First and Second Departments of the Appellate Division having ruled that informational COIs cannot give rise to an estoppel situation, while the Third and Fourth Departments having held that a certificate of insurance can estop an insurer from denying coverage where the parties intended to provide coverage to the party seeking it if the certificate was issued by an agent within the scope of its authority, and if the party seeking coverage reasonably relied on the certificate of insurance by, for example, beginning construction work.

Because of the "diversity of authority among the Appellate Divisions" on this "significant issue of state law," the Second Circuit reserved decision on the COI estoppel issue and certified the above question to the New York Court of Appeals.

With respect to the umbrella policy, however, the Second Circuit found that since the umbrella policy's additional insured endorsement did not provide that its coverage of additional insureds was effective only if the written agreement between its named insured and any additional insureds had been “executed”, plaintiffs were entitled to coverage under that policy:

Section 3(c) of the Umbrella Policy provides: "Any person or organization with whom or with which you have agreed in writing prior to any loss, `occurrence[,]' or `offense' to provide insurance such as is afforded by this policy is an insured...." Fijal Decl. Ex. K at 8 (§ 3(c)). Pursuant to Section 3(d), "Each person or organization who is an `insured' in the `underlying insurance' is an `insured' under this insurance subject to all the limitations of such `underlying insurance' other than the limits of the underlying insurer's liability." Id. (§ 3(d)).

We conclude that Section 3(c) renders the plaintiffs insureds under the Umbrella Policy. The policy requires no more than an agreement in writing. The New York Court of Appeals "ha[s] long held that a contract may be valid even if it is not signed by the party to be charged, provided its subject matter does not implicate a statute... that imposes such a requirement." Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d 363, 368, 828 N.E.2d 593, 596 (2005). "[A]n unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound." Id. at 369, 828 N.E.2d at 597.

This case and its certified question will now head to the New York Court of Appeals for an answer.  Depending on how the New York Court of Appeals answers the certified question, the Second Circuit will either affirm or reverse the District Court's finding of additional insured coverage to the plaintiffs under the primary policy.  Regardless of its impact on the outcome of this particular case, however, the New York Court of Appeals' answer of the certified question will likely affect many, many cases in which certificates of insurance have been issued identifying one or more entities as additional insureds without either a corresponding endorsement of the actual listed primary or umbrella policies or the triggering of additional insured coverage under such policies' blanket additional insured endorsements.

Issues of Fact Preclude Summary Judgment on Whether Insurer is Estopped from Denying Additional Insured Coverage

CGL – ADDITIONAL INSURED – CERTIFICATE OF INSURANCE – ESTOPPEL
Sevenson Envtl. Servs., Inc. v. Sirius Am. Ins. Co.
(4th Dept., decided 6/11/2010)

Plaintiffs submitted a certificate of insurance (COI) providing that they "and their respective officers, employees and agents [we]re named as additional insureds on [Thomas Johnson Inc.'s general liability policy with Sirius on] a direct, primary and non-contributory basis."  They also submitted an additional insured (AI) endorsement naming persons or organizations "as on file with company."  In response, Sirius submitted an affidavit of its third-party claims administrator, who averred that the named insured's underwriting file did not contain any request or notice to name plaintiffs as additional insureds on the policy.

In ruling that Supreme Court properly denied summary judgment to Sirius, the Fourth Department found that the fact that Sirius's third-party claims administrator did not locate any documentation in the named insured's underwriting file was, by itself, insufficient to establish as a matter of law that neither Sirius nor one of its agents possessed documentation naming plaintiffs as additional insureds.

The Fourth Department, however, disagreed with the lower court's ruling that Sirius was estopped from denying AI coverage to the plaintiffs:

It is well established that a certificate of insurance, by itself, does not confer insurance coverage, particularly under the circumstances of this case, in which the certificate expressly provides that it "is issued as a matter of information only and confers no rights upon the certificate holder [and] does not amend, extend or alter the coverage afforded by the policies listed below," e.g., the general liability policy. "A certificate of insurance is only evidence of a carrier's intent to provide coverage but is not a contract to insure the designated party nor is it conclusive proof, standing alone, that such a contract exists" (Tribeca Broadway Assoc., LLC, 5 AD3d at 200; see School Constr. Consultants, Inc. v ARA Plumbing & Heating Corp., 63 AD3d 1029, 1030-1031; Home Depot U.S.A., Inc. v National Fire & Mar. Ins. Co., 55 AD3d 671, 673).

Nevertheless, an insurance company that issues a certificate of insurance naming a particular party as an additional insured may be estopped from denying coverage to that party where the party reasonably relies on the certificate of insurance to its detriment (see Lenox Realty v Excelsior Ins. Co., 255 AD2d 644, 645-646, lv denied 93 NY2d 807; Bucon, Inc. v Pennsylvania Mfg. Assn. Ins. Co., 151 AD2d 207, 210-211). For estoppel based upon the issuance of a certificate of insurance to apply, however, the certificate must have been issued by the insurer itself or by an agent of the insurer (see Tribeca Broadway Assoc., LLC, 5 AD3d at 200; Niagara Mohawk Power Corp. v Skibeck Pipeline Co., 270 AD2d 867, 869; Lenox Realty, 255 AD2d at 646; see also American Ref-Fuel Co. of Hempstead v Resource Recycling, 248 AD2d 420, 423-424).

The Fourth Department held that both parties failed to eliminate all triable issues of material fact regarding whether the COI was issued by or at the direction of an agent of Sirius.

Hold Harmless Indemnitee Found Not Entitled to Additional Insured Coverage

CGL – BLANKET ADDITIONAL INSURED ENDORSEMENT – CERTIFICATE OF INSURANCE – HOLD HARMLESS AGREEMENT – TIMELY DISCLAIMER – SUPPLEMENTARY PAYMENTS PROVISION
Hargob Realty Assoc., Inc. v. Fireman's Fund Ins. Co.
(2nd Dept., decided 5/18/2010)

Fireman's Fund issued a commercial general liability insurance policy to U.S.A. Interior, LLC (USAI), that contained an additional insured endorsement, which added to the insured persons covered under the subject policy

any entity the Named Insured is required in a written contract to name as an insured ... but only with respect to liability arising out of work performed by or on behalf of the Named Insured for the Additional Insured.  (Emphasis added.)

Plaintiff entered into a construction contract with USAI pursuant to which USAI was to perform demolition work at certain premises owned by the plaintiff. The only written agreements between USAI and the plaintiff pertaining to the project were a one-page proposal from USAI specifying the bid price and work to be performed and a hold harmless agreement.  Pursuant to the hold harmless agreement, USAI, as the subcontractor, agreed to indemnify and hold harmless the plaintiff, as the owner, "from and against any and all claims, suits, liens, judgment, damages, losses and expenses arising in whole or in part ... from the acts, omissions, breach or default of [USAI] in connection with the performance of any work by or for [USAI]," except for claims arising from Hargob's own negligence.

Plaintiff commenced this declaratory judgment action for defense and indemnification coverage from Fireman's Fund in relation to an underlying personal injury action that presumably related to USAI's demolition work for plaintiff.  In AFFIRMING Nassau County Supreme Court's order granting Fireman's Fund's motion for summary judgment, the Second Department held:

1. Hold Harmless Agreement:  Notwithstanding USAI's written agreement to indemnify the plaintiff, the hold harmless agreement did not contain any requirement that USAI name the plaintiff as an additional insured under the subject policy and, thus, the additional insured endorsement of USAI's policy with Fireman's Fund was not applicable.
   
   
2. Certificate of Insurance:  The USAI certificate of insurance proffered in opposition to Fireman's Fund's motion, listing the plaintiff as an additional insured under the subject policy, was insufficient to alter the language of the policy itself, especially since the certificate recited that it was for informational purposes only, that it conferred no rights upon the holder, and that it did not amend, alter, or extend the coverage afforded by the policy.
   
   
3. Timely Denial of Coverage:  Fireman's Fund's denial of coverage under the additional insured endorsement constituted a denial based upon a "lack of inclusion" rather than "by reason of exclusion" and, thus, it was not required to deny coverage where none existed.  Therefore, to the extent that the denial of coverage was based upon lack of coverage as an additional insured pursuant to the additional insured endorsement, a timely disclaimer was unnecessary.
   
   
4. Supplementary Payments Provision:   The policy's supplementary payments provision, which obligated Fireman's Fund to defend an indemnitee of the named insured when certain specified conditions are met, did not also afford liability coverage. "Contrary to the plaintiff's contention, the supplementary payments provision did not demonstrate an intent by [Fireman's Fund] to afford the plaintiff coverage solely on the basis that it is an indemnitee of the named insured, in the absence of the plaintiff's addition as 'an insured' under Section II of the subject policy pursuant to the additional insured endorsement.   (see Stainless, Inc. v Employers Fire Ins. Co., 69 AD2d at 33).  Liability coverage under the policy is afforded by Section I, not the supplementary payments provision. Therefore, Hargob's status as an indemnitee does not operate to confer upon it status as an additional insured, and it is, thus, not entitled to liability coverage under the subject policy pursuant to the supplementary payments provision."

Don't Ask, Don't Sell -- Suit Against Insurance Agent Dismissed

AGENT E&O – CONSTRUCTION MANAGEMENT LIABILITY INSURANCE – SPECIAL RELATIONSHIP – REQUEST FOR CERTIFICATE OF INSURANCE
Axis Constr. Corp. v. O'Brien Agency, Inc.
(Sup. Ct., Suffolk Co., decided 10/21/2009)

Plaintiff, a general contractor and construction manager, brought this action against its insurance agent, alleging that it had failed to procure construction management liability insurance.  In late 2002 and early 2003, the plaintiff made some inquiries of O’Brien regarding whether it needed to procure construction management liability insurance.  O'Brien advised plaintiff that it did not have construction management liability insurance, that it was available but expensive, and that the plaintiff's existing business, as it was described to him, was covered by the existing general liability insurance policy.  Plaintiff did not ask O’Brien to procure construction management liability insurance for it in 2002 or 2003.

In June and July 2003, plaintiff entered into two construction management contracts to build modular elementary school buildings in New Jersey.  Both contracts clearly required the plaintiff to have construction management professional liability insurance in addition to CGL and excess liability insurance.  Plaintiff reportedly sent the insurance provisions of the contracts to defendants, and the agency issued certificates of insurance for the contracts in September and October 2003.  The certificates, which were sent to the plaintiff, indicated that the plaintiff had existing general liability, excess liability, automobile liability, and property insurance, but not construction management liability insurance as required by the contracts.  There was no evidence that plaintiff subsequently asked O’Brien to procure the required construction management insurance for it.

In January 2004, the modular building company declared plaintiff in default of ts contracts and commenced two successive lawsuits in New Jersey.  Through 2009, plaintiff allegedly incurred more than $1 million in legal and expert witness fees defending the second action and a third-party action. 

Plaintiff subsequently commenced this action against the defendant agencies, seeking to impose liability on them for allegedly failing to procure construction management liability insurance on plaintiff's behalf.  Plaintiff alleged that it had both express and implied agreements with the defendants, dating back to 1993, to provide advice regarding its insurance needs and to procure insurance for it when its coverage was insufficient.  Plaintiff alleged that the agency defendant breached those agreements by failing to procure construction management liability insurance on its behalf. The defendants moved for summary judgment dismissing the complaint.

In granting summary judgment to defendants, Suffolk County Supreme Court Justice Elizabeth Emerson reviewed New York's common law rules of insurance agent liability for failing to procure insurance and held that plaintiff had failed to request construction management liability insurance prior to 2005:

It is well settled that insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or to inform the client of their inability to do so.  Insurance agents do not have a continuing duty to advise, guide, or direct a client to obtain additional insurance coverage (Murphy v Kuhn, 90 NY2d 266, 270).  Insurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status.  Insureds are in a better position than general insurance agents or brokers to know their personal assets and their ability to protect themselves, unless the latter are informed and asked to advise and act (Id. at 273).  Unlike a recipient of the services of a doctor, attorney, or architect, the recipient of the services of an insurance broker is not at a substantial disadvantage to question the actions of the provider of services (Id. at 273).

Nevertheless, the Court of Appeals has acknowledged that exceptional and particularized situations may arise in which an insurance agent, through his conduct or by express or implied contract, assumes or acquires duties in addition to those fixed at common law (Id. at 272).  Whether such additional responsibilities should be recognized and given legal effect is governed by the particular relationship between the parties and is best determined on a case-by-case basis (Id. at 272).  While the New York courts disfavor finding such a relationship, they may recognize an additional duty in exceptional situations, for example, when the agent receives compensation for consultation beyond the premium payments, when the insured relies on the expertise of the agent regarding a question of coverage, or when there is an extended course of dealing sufficient to put an objectively reasonable insurance agent on notice that his advice is being sought and is specially relied upon (Id. at 272; see also, Curanovic v New York Central Mutual Fire Ins. Co., 307 AD2d 435,438). The burden of establishing such a relationship is on the insured (Murphy v Kuhn, supra at 273).

The court finds that the record establishes as a matter of law that the plaintiff failed to request the specific coverage at issue prior to November 2005 (see, Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 7 NY3d 152, 156-158). While the plaintiff made some inquiries of O’Brien in 2002 and 2003 regarding whether it needed to obtain construction management liability insurance, the record reveals that the plaintiff did not specifically request O’Brien to procure such insurance at that time.  Moreover, there is no evidence in the record that the plaintiff requested O’Brien to procure construction management liability insurance either before or after it executed the I-R Mobile and William Scotsman contracts.  While the plaintiff sent the insurance provisions of the I-R Mobile contract to the O’Brien Agency on July 24, 2003, it was in connection with a request for a certificate of insurance.  The court finds that such a request is not a specific request for a certain type of coverage.  Accordingly, it was insufficient to trigger O'Brien's common-law duty (Id. at 157-158).

Justice Emerson also rejected the plaintiff's contention that it had a special relationship with O’Brien because O'Brien had been its insurance agent for 16 years, was aware of plaintiff's construction management business, had reviewed  the insurance requirements contained in the construction contracts that plaintiff bid on to determine whether plaintiff had adequate insurance coverage, and had agreed to advise the plaintiff and make recommendations to it regarding insurance matters:

The court finds that the services provided by O’Brien to the plaintiff in his capacity as an insurance agent do not rise to the level of a special relationship.  Although the parties had an extended course of dealing, the plaintiff did not compensate O’Brien for his insurance advice apart from its payment of premiums, nor did it delegate its insurance decision-making responsibility to O’Brien (Hoffend & Sons, Inc. v Rose & Kiernan, Inc., supra at 158).  The record reflects that the plaintiff, a sophisticated commercial entity, was actively involved with O'Brien in procuring both the QBE and RLI insurance policies.  The plaintiff is presumed to have had knowledge of the contents of those policies (see, McGarr v Guardian Life Ins. Co. of Am., 10 AD3d 254, 256; Busker on the Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376, 377; Rotanelli v Madden, 172 AD2d 815, 817), as well as the contents of the I-R Mobile and William Scotsman contracts (see, Daniel Gale Assocs. v Hillcrest Estates, 283 AD2d 386, 387; Sofio v Hughes, 162 AD2d 518, 519; Avanta Bus. Servs. Corp, v Colon, 4 Misc 3d 117, 119).  In fact, the record reveals that the plaintiff was well aware that it did not have the construction management liability insurance explicitly required by the I-R Mobile and William Scotsman contracts.  O’Brien advised the plaintiff, in 2002 or 2003, before it entered into those contracts, that it did not have construction management liability insurance.  Moreover, as previously discussed, the plaintiff sent the insurance provisions of the I-R Mobile contract to the O'Brien Agency on July 24, 2003, in connection with a request for a certificate of insurance.  The certificates that were sent back to the plaintiff clearly indicated that the plaintiff had only general liability, excess liability, automobile liability, and property insurance. The plaintiff, a sophisticated commercial entity who was in a better position than O’Brien to protect itself, did nothing to procure construction management liability insurance at that time.  The court finds that, under these circumstances, the plaintiff has no cause of action against O’Brien.  It was the plaintiff's failure to obtain the construction management insurance explicitly required by the I-R Mobile and William Scotsman contracts, and not any breach of duty by O’Brien, that ultimately caused the plaintiff's damages (see, Busker on the Roof Ltd. Partnership Co. v Warrington, supra at 377).  Accordingly, the complaint is dismissed insofar as it is asserted against the O’Brien Agency.

Takeaway points from this decision include:

• an insured's request to its agent for a certificate of insurance is not, by itself, a specific request for insurance; 
• absent a specific request or a special relationship, an agent cannot be held liable for allegedly failing to procure certain insurance; 
• regardless of how long the insured and agent have had a business relationship, without compensation to the agent, or a delegation to or assumption by an agent of an insured's decision-making responsibilities, it is unlikely that a special relationship will be found to exist; 
• sophisticated insureds that are involved in the procurement of their own insurance are less likely to be found to have had a special relationship with their agent, sufficient to impose liability for failing to procure insurance; and 
• insureds, especially sophisticated ones, are presumed to have read and know the contents of their insurance policies. 

New York Supreme Dismisses All Claims for Coverage Against Employer's CGL Insurer Following Insured's Confession of Judgment in Favor of Owner

CGL – BLANKET ADDITIONAL INSURED ENDORSEMENT – EMPLOYEE INJURY EXCLUSION – CONTRACTUAL LIABILITY EXCLUSION – CERTIFICATE OF INSURANCE – FILING AND PRE-APPROVAL OF POLICY PROVISIONS
Cipriani USA, Inc. v. Utica First Ins. Co.
(Sup. Ct., New York Co., decided 8/18/2009)

For those involved in construction accident, contractor-subcontractor, CGL and additional insured coverage matters, this decision is worth reading from beginning to end.  New York County Supreme Court Justice Carol Edmead does an excellent job outlining the parties' arguments and analyzing the salient coverage issues.

Cipriani hired Indigo Blue Group, Utica First's named insured under a CGL policy, to perform work at Cipriani's premises pursuant to a contract, dated June 11, 2003.  In October 2003 an employee of Indigo was injured during that work and sued Cipriani, which in turn impleaded Indigo for contractual indemnification.  In February 2004, Utica First issued separate letters to Indigo and Cipriani, denying coverage to each based on various policy exclusions.  In October of 2007, Indigo consented to the settlement of the underlying lawsuit for $75,000 and to judgment over in Cirpiani's favor for contractual indemnification in the amount of $88,462.64, which included attorneys' fees.  Indigo then assigned and transferred all rights, title and interest to Cipriani for all claims, demands and causes of action which Indigo had against Utica First, Gary G. Emmanual Brokerage, Inc. and Morstan Agency, Inc. in consideration of Cipriani's payment of the settlement.  Cipriani then brought this action against Utica First, the agent and the broker for payment of Indigo's confession of judgment.

Utica First moved pursuant to CPLR 3211(a)(1) [documentary evidence] and (7) [fails to state cause of action] to dismiss the complaint and all cross claims against it and requested that since there were no question of material fact, the court treat the motion as one for summary judgment pursuant to CPLR 3211(c) and declare, pursuant to CPLR § 3001, that Utica First had no obligation to defend or indemnify either Cipriani or Indigo in relation to the underlying action.

In GRANTING Utica First's motion and declaring that it was not obligated to defend or indemnify either Cipriani or Indigo in relation to the underlying action, Justice Edmead held:

►  Utica First had made an adequate showing of documentary evidence to merit relief under CPLR 3211(a)(1);

►  by virtue of Indigo's post-confession of judgment assignment of its rights against Utica First and its agent and broker, Cipriani did have legal standing to maintain this action;

►  the policy's blanket additional insured provision was not triggered and did not afford independent liability coverage to Cipriani because the contract between Cipriani and Indigo explicitly did "not require the Contractor to include the Owner, Architect or other persons or entities as additional insureds on the Contractor's Liability insurance"; contract language that merely requires the purchase of insurance will not be read as also requiring that a contracting party be named as an additional insured;

►  even if Cipriani were deemed an additional insured, the policy's employee injury exclusion and contractual liability exclusion unambiguously applied to negate liability coverage in favor of Cipriani and Indigo;

►  the employee injury exclusion in Indigo's policy with Utica First is not against public policy;

►  the certificate of insurance issued to Cipriani did not raise a question of fact because "a certificate of insurance purporting to afford a party coverage, which on its face states that it is issued for informational purposes only, cannot by itself establish coverage";

►  the indemnity clause in Indigo’s contract with Cipriani likewise did not create coverage under Indigo's policy with Utica First; 

►  Utica First's alleged failure to file its employee injury exclusion with the New York State Insurance Department for approval did not create an issue of fact because "the failure of plaintiff to file an endorsement with the Insurance Department for approval 'does not, by itself, void the policy clause, but rather carries its own penalties for non-filing. Further, such clause is void only if the substantive provisions of the clause are inconsistent with other statutes or regulations' (National Union Fire Ins. Co. of Pittsburgh, Pa. v Ambassador Group, 157 AD2d 293,556 NYS2d 549 [lst Dept 1990]). Here, there is no showing that the Exclusions are inconsistent with other statutes or regulations"; and

►  there was no indication that additional discovery would raise an issue as to Utica First's liability under the policy.

Insurance Requirement in Bid Documents Does Not Trigger Blanket Additional Insured Coverage

CGL – ADDITIONAL INSURED – CERTIFICATE OF INSURANCE
Illinois Natl. Ins. Co. v. American Alternative Ins. Corp.
(1st Dept., decided 1/22/2009)

Defendant's policy with a nonparty subcontractor included as an additional insured "any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy."

The contract between the subcontractor and the general contractor (GC) and City of New York did not contain a requirement that the GC and City be named as additional insureds.  The bid documents, however, stated that the work "shall be governed by" certain terms and conditions, including a requirement that the GC and City plaintiffs be added as additional insureds on the subcontractor's policy. 

Plaintiff, which insured the CG andCity, argued that the language of the bid documents constituted a "contract or agreement" and triggered the automatic or blanket additional insured coverage under the defendant insurer's policy.  The First Department disagreed, AFFIRMING the motion court's order denying plaintiffs' motion and granting defendant's cross motion declaring that defendant was not obligated to defend or indemnify the GC and City in an underlying personal injury action.

Additionally, the First Department reminded that "[t]he certificate of insurance generated by the subcontractor's broker, by its terms, confers no rights upon the certificate holder".  

Certificate of Insurance Is Informational Only and Conveys No Additional Insurance by Itself to Coop Owners

CGL – BLANKET ADDITIONAL INSURED ENDORSEMENT – CERTIFICATE OF INSURANCE
Weintraub v. Utica First Ins. Co.
(Sup. Ct., NY Co., decided 12/9/2008)

In September 2005, Richard and Liane Weintraub contracted with My Home, LLC, an affiliate of My Home, Inc., to renovate their cooperative apartment located at 969 Park Avenue in New York City. The renovations began in January 2006.


My Home, Inc. was insured by Utica First in 2005 and 2006, and procured certificates of insurance for those years from its independent insurance agent, Robert C. Mangi Agency, naming the Weintraubs as additional insureds. 

Plastic surgeon Dr. Pamela Lipkin owned the cooperative unit below the Weintraubs' unit, where she operated a cosmetic surgery medical office.  Lipkin and her corporation sued the Weintraubs, My Home and others for damages to her coop and business allegedly due to the renovation of the Weintraubs' apartment.

Ini February 2008, after extensive motion practice and a trip to the First Department in the underlying action, the Weintraubs and their insurer, AIG, commenced this declaratory judgment action against Utica First, seeking defense and indemnification coverage for the Weintraubs with respect to the Lipkin suit as additional insureds under My Home's CGL policy with Utica First.   Utica moved to dismiss the complaint or for summary judgment, and plaintiffs cross-moved for summary judgment.

In granting Utica First's motion and denying the plaintiffs' cross motion, New York County Supreme Court Justice Walter Tolub held that since the Weintraubs were not actually listed as additional insureds on the Utica First policy, and My Home's contract with the Weintraubs did not required My Home to procure additional insured coverage for the Weintraubs in connection with the renovation project, the blanket additional insured endorsement's coverage was not triggered.  Justice Tolub rejected the plaintiffs' argument that an implied-in-fact contract was formed between My Home and the Weintraubs regarding My Home’s obligation to procure insurance coverage for the Weintraubs with respect to the renovation project.

With respect to the Weintraubs' claim that they were entitled to additional insured coverage from Utica First because the certificates of insurance (COIs) My Home's agent issued listed them as additional insureds, Justice Tolub rejected the plaintiffs' reliance of Third Department case law and instead cited to decisions from the First and Second Departments in ruling that the COIs were informational only and did not themselves afford coverage to the Weintraubs:

Moreover, with respect to the Certificates of Insurance issued by Mangi wherein the Weintraubs were named as additional insureds, each of these Certificates contain therein bold capital letters the following statements:  "THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RlGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW." A virtually identical statement of disclaimer has been held by the Appellate Department, First Department, to be insufficient to establish that the named certificate holder was an additional insured under an insurance policy, where the policy itself made no provision for coverage. Moleon [v Kreisler Borg Flormari General Construction Co., Inc., 304 AD2d 337, 339 (1st Dept 2003)], supra, at 339. See also Alib, Inc. v Atlantice Casualty Insurance Company, 52 AD3d 419 (1st Dept 2008); Glynn v United House of Prayer for All People, 292 AD7d 319, 322 (1st Dept 2002) ; Herbert St. George v W. J. Barney Corp., 270 AD2d 171, 172 (1st Dept 2000). Therefore, the law is well-settled in the First Department that a certificate of insurance issued only for informational purposes confers no rights on the holder, even if it purports to name such holder as an additional insured, when the underlying insurance policy made no provision for coverage.

The handful of cases cited by plaintiffs for a contrary proposition do not bind this Court, as such cases originated from the Appellate Division, Third Department. See e.g., Lenox Realty Inc. v Excelsior Ins. Co., 255 AD2d 644 (3d Dept 1998) (insurer equitably estopped from denying coverage where party for whose benefit the insurance was procured relied on the certificate of insurance to that party‘s detriment); Bucon, Inc. v Pennsylvania Manufacturing Association Ins. Co., 151 AD2d 207, 210 (3d Dept 1989) (”by issuing the certificate of insurance in which plaintiff was named as an additional insured, [insurer] was estopped from denying coverage for plaintiff“).

In accord with the First Department, but in disagreement with the Third Department, the Second Department has ruled that: (1) a certificate of insurance issued only for information purposes and conferred no rights on the holder was insufficient to establish that the plaintiff was insured by the insure; and ( 2 ) even if the insurer might be held liable for the acts of its agent, “the doctrine of [equitable] estoppel may not be invoked to create coverage where none exists under t h e policy,” despite the fact that the agent issued the certificate of insurance that named the plaintiff as an additional insured. American Ref-Fuel Company v Resource Recycling, Inc., 248 AD2d 420, 423-24 (2d Dept 1998).  In so ruling, the Second Department also held that the defendant insurer was “not obligated to defend and indemnify the plaintiff in the underlying action.” Id. at 424.

Judgment for Utica First dismissing this DJ action.

Question of Fact on Additional Insured Coverage Found from "Unusual Chronology" of Certificate of Insurance and Purchase Order

CGL – ADDITIONAL INSURED – MEANING OF "EXECUTED" – BLANKET ADDITIONAL INSURED ENDORSEMENT – CERTIFICATE OF INSURANCE
Burlington Ins. Co. v Utica First Ins. Co.
(Sup. Ct., Nassau Co., decided 11/10/2008)

The date when an underlying contract was "executed" can be important for purposes of triggering additional insured (AI) coverage under certain blanket AI endorsements.  This is such a case. 

New York Interiors had a CGL policy with Utica First that contained a blanket additional insured endorsement, which provided:

WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization, including any person or organization shown in the schedule above, (called additional insured) whom you are required to add as an additional insured on this policy under a written contract or agreement; but the written contract or agreement must be:

1. Currently in effect or becoming effective during the term of this policy; and
2.  Executed prior to the "bodily injury", "property damage" or "personal and advertising injury".

Burlington Insurance Company insured Manlyn Development Corp, which subcontracted drywall and ceiling work on a commercial construction project to New York Interiors.  The subcontract was memorialized in a purchase order, dated June 26, 2003, which required New York Interiors to carry CGL insurance of at least $1 million and name Manlyn as an additional insured on a certificate of insurance (COI).

TheCOI was dated June 3, 2003 (23 days before the purchase order date).  Although the purchase order was dated June 26, 2003, Manlyn did not sign and authorize it until July 9, 2003; New York Interiors signed the purchase order on July 23, 2003.

On June 27, 2003 (one date after the purchase order was dated but on the same date New York Interiors began its work), a pedestrian fell through an open sidewalk cellar door and was injured.   The pedestrian sued Manlyn and New York Interiors, and Burlington tendered Manlyn's defense and indemnification in that action to Utica First, which rejected the tender based on the fact that the purchase order was not signed until after the accident.  Burlington eventually settled the personal injury action for $62,500 and brought this action to recover that amount plus $56, 122.85 it spent in defending Manlyn.

Both insurers moved for summary judgment.  Burlington argued that although the purchase order was not signed prior to the accident date, all of the essential terms had been agreed upon, and New York Interiors had begun work on the day of the accident.  Burlington argued that partial performance renders a contract executed within the meaning of the policy.

In denying Utica First's motion, Nassau County Supreme Court Justice Thomas Phelan held, in effect, that a contract need not be signed to be considered "executed":

Utica argues that the New York Interiors' contract with Manyn was not executed prior to the accident because it had not been signed.  However, the term executed may have a variety of different meanings depending upon the context in which it is used. The term "executed contract" may refer to one that has been fully performed by the parties (Black' s Law Dictionary, 6th  Ed. 1990). However, to "execute" a contract may also mean "to perform all the necessary formalities, as to make and sign the contract" (Id). Unless the contract is within the statute of frauds, a writing is not one of the formalities necessary to the formation of the contractt.  Thus,  where the parties discuss a writing, they may intend not to be bound until the writing is executed, or the writing may serve as a convenient memorial of an agreement already reached (Wise Co. v. Wecoline Products, Inc., 286 NY 365 (1941)).

A reasonable businessperson would expect that, under the blanket additional insured endorsement, other contractors would be additional insureds if New York Interiors was contractually obligated to obtain insurance for their benefit. The purpose of the prior written contract provision is simply to prevent a fraudulent scheme where the contractors agree to name one of the parties as an additional insured after the accident.  The New York Interiors contract with Manlyn did not expand the liabilty assumed by Utica because of the blanket additional insured endorsement. Indeed, an insurer may assume even liabilties which arose before the policy date, provided there is no fraud or concealment by the insured (Appelman Insurance Law and Practice § 4266). A fortiorari, provided there is no fraud by the named insured and the other contractor, a writing memorializing a prior agreement to name an additional insured may be signed within a reasonable time after the loss.

This part of Justice Phelan's ruling seems to be at odds with the First Department's decision in Rodless Props., L.P. v Westchester Fire Ins. Co., 40 AD3d 253 (1st Dept. 2007), in which the First Department held that the undefined term "executed" as used in a blanket AI endorsement is not ambiguous and means either a contract that has been signed or a contract that has been fully performed by both parties.  In attempting to distinguish Rodless Properties, Justice Phelan thought it important that in that case there was no proof of an oral contract to name the owner as an additional insured because the certificate of insurance was issued as a matter of information only and was tendered after the loss.  If Utica First appeals, my money will be on a reversal/modification of this part of the decision.

Based on testimony of New York Interior's owner that New York Interiors employees opened the sidewalk cellar door to deliver materials to the site on the day of the accident, the court found that the accident arose out of New York Interiors' work for Manlyn to trigger AI coverage under the Utica First policy.  However, in denying summary judgment to Burlington, Justice Phelan found that there was a triable issue as to whether Manlyn and New York Interiors fraudulently agreed to name Manlyn as an additional insured on New York Interiors' policy:

While the certificate of insurance is dated over thee weeks before the purchase order, there is no evidence as to when the certificate was tendered to Manlyn. Moreover, the purchase order is dated only one day before the accident.  Because of the unusual chronology of the documents, the court cannot conclude as a matter of law that no fraud took place. Accordingly, plaintiffs ' cross-motion for summary judgment is denied.

Action Against Broker for False Certificate of Insurance Dismissed

CGL – CERTIFICATE OF INSURANCE – BROKER LIABILITY
Tishman Constr. Corp. v. American Safety Indem. Co.
(Sup. Ct., New York Co., decided 10/16/2008)

An employee of one of Tishman's subcontractors, Manhattan Concrete Structures, was injured while working at a construction site.  The subcontract required required Manhattan to indemnify Tishman and its parent and subsidiary companies, and to procure insurance naming them as additional insureds.

When American Safety denied additional insured coverage to Tishman for that construction-site accident and related personal injury action, Tishman commenced this action against Manhattan's broker, John Joseph Insurance Brokerage, Inc., alleging causes of action for fraud and misrepresentation for the broker's alleged issuance of a false certificate of insurance (COI).  Tishman also sued American Safety, which successfully moved for summary judgment.

After discovery, the broker moved for summary judgment based on its arguments that: (1) it had not issued the COI in question; and (2) it had no legal relationship with Tishman sufficient to support any cause of action against it. Through an affidavit of its vice-president, the broker established:

• Manhattan never requested that the broker issue a COI to Tishman;
• it procured from American Safety a policy of insurance for Manhattan bearing policy number 10 AP-GL-00383;
• the COI listed an incorrect policy number -- 10APGL000;
• the fax number on the COI was not the broker's;
• the signature on the COI -- "John Joseph" was not the broker's; when the broker issues a COI, it is signed with the name of the individual broker, not the company; 
• no one by the name "John Joseph" has ever been associated with the broker; John and Joseph are the first names of the husbands of the broker's co-owners. 
  

In opposition to the broker's motion, Tishman pointed to the various references to "John Joseph" on the COI and to the fact that Manhattan's application for insurance from American Safety was signed by "John Joseph" as the producer.  Tishman did not, however, come forward with any proof that it had any relationship with the broker, that it received any verbal representation from the broker, or that the broker actually provided the COI to Tishman.

Based on this evidence, New York County Supreme Court Justice Shirley Werner Kornreich granted the broker's motion for summary judgment, holding:

An insurance broker cannot be held liable for a negligent misrepresentation in an insurance certificate to a party with whom the broker has no contractual relationship absent proof of a relationship approaching privity. Benjamin Shapiro Realty Co., LLC v. Kemper Nat’l Ins. Cos., 303 A.D.2d 245, 245-246 (1st Dep‘t 2003); Superior Ice Rink v. Nescon Contracting Corp., 40 A.D.3d 963 (2d Dep’t 2007). Moreover, a disclaimer stating that an insurance certificate is for information only bars a negligent misrepresentation claim. Benjamin Shapiro Realty Co., LLC v. Kemper Nat’l Ins. Cos., supra. In Benjamin Shapiro Realty and Superior Ice Rink, there was no dispute that the insurance broker had issued an incorrect certificate, and the Courts still held that a third party could not sue the broker for negligent misrepresentation based upon a certificate issued to its client, the insured.  Tishman has failed to come forward with evidence that the Broker was connected to Tishman by either word or deed.  See, Houbigant, Inc. v. Deloitte & Touche LLP, 303 A.D.2d 92,94 (1st Dep’t 2003) (before law permits negligence claim against professional by non-client third party, there must be “linking conduct” by word or action by professional to non-client).

The other basis of liability asserted by Tishman is intentional fraud or misrepresentation. There are cases which hold that a broker can be held liable for fraud, collusion or other special circumstances in the issuance of an insurance certificate. See, Griffin v. DaVinci Dev., LLC, 44 A.D.3d 1001 (2d Dep’t 2007); Binyan Shel Chessed, Inc. v. Goldberger Ins. Brokerage, Inc., 18 A.D.3d 590, 592 (2d Dep’t 2005)(summary judgment on fraud claim denied for need of discovery where broker allegedly made representations directly to plaintiff); Superior Ice Rink v. Nescon Contracling Corp., supra.  In order to recover for fraud, a plaintiff must prove the following elements: a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury. Global Mins. & Metals Corp. v. Holme, 35 A.D.3d 93, 98 (1st Dep‘t 2006). In this case, Tishman cannot prove the first element of fraud, a misrepresentation made to it by the Broker. Discovery is now complete. The Broker has come forward with evidence that it did not make a representation to Tishman. Tishman has failed to come forward with contrary evidence sufficient to raise an issue of fact. There is no proof that the Broker made a representation to Tishman or provided it with the Certificate. At most, an inference could be drawn that the Broker gave the Certificate to Manhattan. Hence, the Broker is entitled to dismissal of the complaint.

The court also declined to impose sanctions on Tishman for not voluntarily discontinuing this action against the broker and instead "requiring" it to move for summary judgment:

This is not a case where a party engaged in litigation misconduct or continued to press a claim after it had been rejected by the court (citations omitted).  Here, the court had denied the Broker’s first motion to dismiss and ordered discovery to proceed. While the Broker’s attorney did write to Tishman asking it to withdraw the complaint without the necessity of a summary judgment motion, in light of the unexplained etiology of the Certificate, the court does not consider Tishman’s conduct to be beyond the pale of legitimate advocacy.

Additional Insured Coverage Denied

CGL – ADDITIONAL INSURED – CERTIFICATE OF INSURANCE – EMPLOYEE INJURY EXCLUSION
ALIB, Inc. v. Atlantic Cas. Ins. Co.
(1st Dept., decided 6/26/2008)

In AFFIRMING Bronx County Supreme Court's order declaring that plaintiff was not entitled to coverage as an additional insured under its subcontractor's CGL policy with Atlantic, the First Department ruled: (1) ALIB was not afforded additional insured status under the CGL policy issued by Atlantic to AFA Construction because the written contract entered into between AFA and ALIB did not require AFA to name ALIB as an additional insured, as required by the subject policy; (2) the certificate of insurance, which contained the disclaimer that it was "issued as a matter of information only and confers no rights upon the certificate holder" and that it did not "amend, extend or alter the coverage afforded" by the subject policy, did not confer additional insured status, even if assurances were provided that ALIB was an additional insured; and (3) even if ALIB did qualify as an additional insured, coverage was negated by the policy's employee exclusionary clause, and Atlantic's disclaimer, issued 20 days after receiving notice of the claim, was timely.

What's In an Adjective? -- Contractor's Oral Agreement to Name Owner as Additional Insured Enforced Against Contractor's CGL Insurer

CGL – ADDITIONAL INSURED – CERTIFICATE OF INSURANCE – ORAL AGREEMENT TO NAME OWNER AS ADDITIONAL INSURED
Superior Ice Rink, Inc. v. Nescon Contr. Corp.
(2nd Dept., decided 6/17/2008)

Nescon contracted with Superior Ice Rink to paint the roof of Superior's facility.  Superior's manager and Nescon's principal orally agreed that in order for Nescon to perform any work, Nescon had to name Superior as an additional insured under an insurance policy issued to Nescon by Merchants Mutual Insurance Company.  Nescon requested and obtained from its insurtance broker a certificate of insurance indicating that Superior was an additional insured under the Merchants policy.

In a section entitled "Additional Insureds-By Contract, Agreement or Permit," Nescon's policy with Merchants provided that any organization Nescon was required by "a written contract, agreement or permit" to name as an insured would be included as an insured with respect to liability arising out of Nescon's work performed for that organization at the location designated in "the contract, agreement or permit."

Two Nescon workers were injured during the job and sued Superior, which tendered to Merchants. Merchants disclaimed coverage on the ground that Nescon had no written agreement with Superior to name it as an additional insured.

On motions and cross motions for summary judgment, the Nassau County Supreme Court agreed with Merchants and upheld its disclaimer.  In MODIFYING that order to reverse the granting of summary judgment to Merchants, the Second Department held:

When determining whether a third party is an additional insured under an insurance policy, a court must ascertain the intention of the parties to the policy, as determined from within the four corners of the policy itself (citations omitted). * * *

When the terms and conditions of an insurance policy are clear and unambiguous, the construction of the policy presents questions of law to be determined by the court (citation omitted). Merchants contends that it is clear that the word "written" in the phrase "written contract, agreement or permit" modifies the words "contract," "agreement" and "permit," and hence, that Superior was not an additional insured because Nescon was not required by a written contract, written agreement or written permit to name Superior as an insured under Nescon's policy. However, since the word "written" could also be reasonably interpreted to only modify the word "contract," we find that the phrase is ambiguous (citation omitted).

* * * * *

Applying these principles, we conclude that Nescon's policy must be interpreted as providing that any organization Nescon was required by an oral or written agreement to name as an insured under the policy would be an additional insured under the policy. Since the record demonstrates that Nescon was required by an oral agreement to name Superior as an insured under the policy, the Supreme Court should have granted Superior's cross motion for summary judgment on the complaint insofar as asserted against Merchants and declaring that Merchants is obligated to defend and indemnify Superior in the underlying personal injury actions, and denied Merchants' motion, in effect, for summary judgment dismissing the complaint insofar as asserted against Merchants and declaring that it is not so obligated.