CGL – ADDITIONAL INSURED – LIABILITY ARISING OUT OF "YOUR WORK" – INSURANCE LAW § 3420(D) INAPPLICABLE
KMAPS Corp. v. Nova Cas. Co.
(4th Dept., decided 7/3/2008)
New York reporters are replete with cases addressing when an owner's or general contractor's liability may be said to have "arisen" out of a named insured subcontractor's work for the owner or general contractor, for purposes of triggering additional insured coverage in favor of the owner or GC under the subcontractor's CGL policy. This is such a case, on Round #2 to the Appellate Division, Fourth Department. Since I represented and argued this case for Nova, I can share the lower court's Decision and Order and Appellant's Brief with you.
KMAPS hired separate subcontractors Nestor Santana and Victor Cobos to install television cable. KMAPS was itself a contractor for Paragon Cable. KMAPS sent Cobos to a job site where Santana was already working, and since he was working inside already, Santana told Cobos to install cable outside the building. Cobos had his own equipment and assistant. While installing the cable, Cobos fell and broke a window with his hand, injuring himself.
Cobos sued the property owners and Paragon Cable, which in turn impleaded KMAPS. KMAPS and its CGL insurer, Security Indemnity Insurance Company, tendered KMAPS' defense and indemnification to Santana's CGL insurer, Nova Casualty Company. Santana's policy covered KMAPS as an additional insured "but only with respect to liability arising out of * * * '[Santana's] work' for the additional 'insured' [KMAPS][.]" Nova, while acknowledging that KMAPS was listed as an additional insured on Santana's policy with Nova, neither accepted the tender nor denied coverage to KMAPS. KMAPS eventually impleaded Santana.
The underlying personal injury action ultimately settled, with KMAPS contributing $60,000 and Santana contributing $15,000 towards the settlement. KMAPS and its insurer then continued their pursuit of liability coverage from Nova in this DJ action.
On trip #2 to the Appellate Division, the Fourth Department unanimously REVERSED the Erie County Supreme Court's grant of summary judgment to KMAPS and vacated its declaration of coverage in KMAPS' favor. The Fourth Department found that Nova had raised an issue of fact as to whether KMAPS was entitled to a defense and indemnification with respect to injuries sustained by Cobos in the underlying action, a different subcontractor who was not insured by Nova.
The Fourth Department also ruled that the lower court had erroneously determined that Nova was obligated under Insurance Law § 3420(d) to provide KMAPS with a timely disclaimer of coverage. The "arising of out 'your work'" language of the additional insured endorsement of Nova's policy with Santana did not operate as an exclusion to coverage and "requiring payment of a claim upon failure to . . . disclaim [in a timely manner] would create coverage where it [may] never [have] existed". Finally, the court also concluded that because it is the insured's burden to establish coverage in the first instance, the lower court erred in determining that Nova was required to assert lack of coverage as an affirmative defense.
Back to Supreme Court we go. Again.
Showing posts with label Your Work. Show all posts
Showing posts with label Your Work. Show all posts
Sunday, July 6, 2008
Friday, May 2, 2008
"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.
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.
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