There Are No Such Things -- First Department Affirms Dismissal of CGL Insurer's "Equitable Indemnity" and "Equitable Reapportionment" Causes of Action

COMMERCIAL GENERAL LIABILITY – COMMERCIAL UMBRELLA LIABILITY – COINSURANCE RECOVERY ACTION 

United Natl. Ins. Co. v. Travelers Prop. Cas. Co. of Am.
(1st Dept., 2/27/2018)

Construction site accident.  Injured employee of subcontractor Phoenix Mechanical Piping, LLC, sued the property owner, Metropolitan Tower Life Insurance Company, and general contractor Independent Temperature Control Services, Inc. (ITCS).  ITCS impleaded Phoenix Mechanical, presumably for contribution and/or indemnification.

Plaintiff, Utica National Insurance Company, insured Phoenix Mechanical under a CGL policy with a $1 million per occurrence coverage limit.  Defendant Travelers insured MetLife, Inc. under a CGL policy with a $2 million per occurrence limit.  Defendant Zurich insured MetLife under a commercial umbrella liability policy with a $25 million per occurrence limit.  Defendant National Union insured Phoenix Mechanical under a commercial umbrella liability policy with a $1 million per occurrence limit.

United National defended the personal injury action, allegedly expending over $500,000 in doing so.  Following a jury trial, judgment was entered for the underlying personal injury plaintiff in the amount of $6,697,534.93. United National paid $1,075,000 in indemnification towards that judgment, with Travelers, Zurich and National Union paying the rest.

United National then brought this coinsurance recovery action against the defendant insurers, alleging that because it did not owe defense or indemnification coverage to Phoenix Mechanical at all based on the "Residential Projects Exclusion" contained in United National’s policy, the defendant insurers were obligated to reimburse United National for its defense and indemnification costs.  United National's complaint alleged seven causes of action, styled as:

I.     Equitable Indemnity
II.    Equitable Indemnity
III.   Equitable Contribution
IV.    Equitable Reapportionment
V.     Equitable Subrogation
VI.   Equitable Subrogation
VII.  Declaratory Judgment

Supreme Court granted Zurich's motion to dismiss the first, second and fourth causes of action of the complaint and United National appealed.  In AFFIRMING the dismissal order, the First Department held:

The motion court properly dismissed plaintiff's first and second causes of action for "equitable indemnity" and fourth cause of action for "equitable reapportionment" as against Zurich since there is no recognized cause of action for equitable indemnity or equitable reapportionment under New York law. Furthermore, even assuming that truth of the facts as alleged by plaintiff, these claims do not "state[] the elements of a legally cognizable cause of action" (P.T. Bank Cent. Asia, N.Y. Branch v ABN AMRO Bank N.V., 301 AD2d 373, 376 [1st Dept 2003]; see 1199 Hous. Corp. v International Fid. Ins. Co., 14 AD3d 383, 384 [1st Dept 2005]).

In insurer coinsurance recovery actions, there are no such things as equitable indemnity or equitable reapportionment in New York.

Coinsurance Recovery Action Against New York State Insurance Fund Must Be Brought in New York Court of Claims

CGL – COINSURANCE CONTRIBUTION – SUIT AGAINST STATE INSURANCE FUND
Twin City Fire Ins. Co. v. State Ins. Fund
(1st Dept., decided 9/24/2009)

The New York State Court of Claims is the exclusive forum for civil litigation seeking damages against the State of New York or certain other State-related entities such as the New York State Thruway Authority, the City University of New York and the New York State Power Authority (claims for the appropriation of real property only).  Plaintiff's denomination of this action as being one for declaratory relief notwithstanding, the Court of Claims is also the forum in which a commercial general liability insurer must sue the New York State Insurance Fund for recovery of coinsurance contribution of defense and indemnification costs for a mutual insured, holds the First Department in this case.

CGL and Garage Insurers Found to Owe Policy Limit Coinsurance to Employers' Liability Insurer

CGL – GARAGE POLICY – EMPLOYER'S LIABILITY POLICY – COINSURANCE CONTRIBUTION – UNTIMELY DISCLAIMER
State Ins. Fund v. American Hardware Mut. Ins. Co.
(2nd Dept., decided 7/7/2009)

Question:  In New York, when does a CGL or a garage policy apply to cover a garage employee's injuries sustained during employment?  Answer:  When  the insurers wait more than four months to disclaim coverage based on those policies' employee injury exclusions, that's when. 

The parties in this coinsurance contribution action insured World of Hitches N Rentals in North Bellmore, New York -- the State Fund (SIF) under a WC/EL policy; and American Hardware under a $300K CGL policy and a $300K garage policy.  An employee of the insured was burned when a container he was filling with kerosene exploded.  He sued various defendants, three of which impleaded the insured, World of Hitches, in a third-party action.  Although both insurers initially assumed World of Hitches' defense, SIF took over that defense after American Hardware disclaimed coverage under both policies more than four months after receiving notice of the third-party action, based on the policies' employee injury exclusion.

Then underlying action eventually settled for $1,475,000, with SIF contributing $750,000 and agreeing to waive its $225,000 WC lien in the amount of $225,000. SIF then brought this action for a proportionate coinsurance contribution towards its defense and indemnification costs relative to the underlying action and successfully moved for summary judgment, the trial court awarding SIF $650,000 in principal, representing approximately two-thirds of its combined indemnity contribution of $975,000, and two-thirds of its defense costs in the underlying personal injury action.

On appeal, the Second Department agreed with the trial court's determinations that "[s]ince the disclaimer was based on policy exclusions, the defendants were required to provide World of Hitches with timely notice of its disclaimer under Insurance Law § 3420(d)", and American Hardware's disclaimer,  issued more than four months after receiving notification of the third-party action, was untimely as a matter of law.  The Second Department rejected the defendants' contention that SIF was obligated to demonstrate prejudice from their delay in disclaiming.

The Second Department also rejected the defendants' argument that that even if the disclaimer was untimely, no coverage was provided under the garage policy because the employee was not injured while engaged in garage operations:

The record establishes that the employee's actions were taken in furtherance of the garage business (compare Lancer Ins. Co. v Whitfield,AD3d, 2009 NY Slip Op 02975 [2d Dept 2009]; Singh v Allcity Ins. Co., 1 AD3d 501; Minerva v Merchants Mut. Ins. Co., 117 AD2d 720).

The Second Department did, however, MODIFY the trial court's ruling to reduce the indemnification coinsurance award from $650,000 down to $300,000, holding:

Although the defendants were obligated to defend and indemnify World of Hitches in the underlying action (see Moore v Ewing, 9 AD3d 484), and thus must pay their proportionate share of the settlement (see Hawthorne v. South Bronx Community Corp., 78 NY2d 433) and defense costs incurred in the underlying action, their contribution may not exceed the limits of the policies. Here, both policy limits were $300,000 per accident. Moreover, the garage policy provided that all of the defendants' policies were mutually exclusive in that if more than one policy applied to the same accident, the maximum limit of liability under all the policies would not exceed the highest applicable limit under one policy. Thus, the maximum amount the defendants were required to contribute to the settlement was $300,000, and the judgment must be modified accordingly. 

This aspect of the Second Department's decision is noteworthy in standing for two propositions:  that an untimely disclaimer under Insurance Law § 3420(d) does not: (1) increase the disclaiming insurer's coinsurance obligation above policy limits; or (2) preclude the disclaiming insurer from later relying on policy conditions that limit such coinsurance contributions.

Unqualified Assumption of Additional Insureds' Defense for Two Years Estops Insurer from Seeking Contribution from Co-Insurer

CGL – ADDITIONAL INSUREDS – COINSURANCE – OTHER INSURANCE – ESTOPPEL BETWEEN INSURERS
Liberty Ins. Underwriters, Inc. v. Arch Ins. Co.
(1st Dept., decided 4/14/2009)

The City of New York and its Department of Environmental Protection were involved in a construction project with Crescent Contracting Corp.  The DEP entered into a general contract with Yonkers Contracting Company in relation to that project.  As required by that contract, Yonkers purchased CGL coverage from Arch Insurance Company, and the Arch policy contained an additional insured endorsement affording AI coverage to any parties Yonkers was contractually obligated to name as AIs.  The AI coverage endorsement stated that "[c]overage afforded to these additional parties will be primary to, and noncontributory with, any other insurance available to that person or organization."

Crescent had CGL insurance with Liberty, presumably also insuring the City and DEP as AIs in some capacitiy.  The Liberty policy's "Other Insurance" clause provided that "if other valid and collectible insurance [was] available to any insured for a loss [Liberty] cover[ed] * * *, then this insurance [wa]s excess of such insurance and [Liberty would] have no duty to defend any claim or 'suit' that any other insurer ha[d] a duty to defend."

An employee of Yonkers was injured while working on the construction project and brought a personal injury action against the City, DEP and Crescent.  Through its attorneys, Arch initially agreed in April 2006 to defend and indemnify the City and DEP in the personal injury action.  A week later, Arch tendered the City's and DEP's defense and indemnification to Liberty, which Liberty accepted in a May 2006 letter containing no reservation of rights. 

Liberty defended the City and DEP in the personal injury action for two years.  On March 1, 2008, three days after a pre-trial conference was held in that action, Liberty sent a letter to the City's Law Department purporting to reserve Liberty's rights, stating that Liberty would not indemnify the City or DEP in the personal injury action "if there is no liability on the part of Crescent[.]"  Liberty also noted in that letter that its coverage was excess to coverage available to the City and DEP under Yonkers' policy with Arch.

When Arch refused to re-assume the City's and DEP's defense, Liberty commenced this declaratory judgment action seeking declarations that Arch was obligated to defend and indemnify the City and DEP and that Arch's coverage was primary to Liberty's excess coverage.  Finding that Liberty was "estopped from requesting contribution" because it had "unqualifiably" taken over the defense and indemnification of the underlying personal injury action and failed to reserve any rights as against Arch, New York Supreme granted Arch's cross motion for summary judgment and declared that Liberty was obligated to defend and indemnify the City and DEP in the underlying action and reimburse Arch for the costs it incurred in defending the underlying action prior to Liberty's acceptance of Arch's tender.

In MODIFYING the motion court's order, the First Department agreed that Liberty was equitably estopped from seeking coverage contribution from Arch, but held that Arch was not entitled to recover its pre-tender defense costs.  Relying on established Second Department case law, the First Department rejected Liberty's argument that the doctrine of equitable estoppel should only apply to coverage disputes between insureds and their insurers:

"The doctrine of estoppel precludes an insurance company from denying or disclaiming coverage where the proper defending party relied to its detriment on that coverage and was prejudiced by the delay of the insurance company in denying or disclaiming coverage based on the loss of the right to control its own defense" (Merchants Mut. Ins. Group v Travelers Ins. Co., 24 AD3d 1179, 1182 [2005] [internal quotation marks and brackets omitted]). We reject plaintiff's argument that this doctrine should be limited to coverage disputes between insurers and insureds, and not applied to coverage allocation disputes between insurers (see e.g. Fireman's Fund Ins. Co. v Zurich Am. Ins. Co., 37 AD3d 521 [2d Dept 2007]; Donato v City of New York, 156 AD2d 505, 507-508 [2d Dept 1989]). Lumbermens Mut. Ins. Co. v Lumber Mut. Ins. Co. (148 AD2d 328 [1st Dept 1989]), cited by plaintiff, is not to the contrary. Lumbermens merely held that failure by an insurer to reserve its rights under the circumstances of that case did not constitute an intentional relinquishment, or waiver, of the right to seek contribution from another insurer (id. at 330). It did not address the issue of whether an insurer may be estopped, by its unqualified assumption of the defense of an action, from seeking contribution from another insurer. No issues of fact exist as to whether defendants, in tendering the defense to plaintiff, lacked knowledge that plaintiff would ultimately claim to be only an excess insurer, or whether defendants lost control of the underlying defense and were otherwise prejudiced by plaintiff's assumption thereof for two years without reserving a right to disclaim coverage (see Federated Dept. Stores v Twin City Fire Ins. Co., 28 AD3d 32, 39 [2006]). Defendants, however, are not entitled to reimbursement of defense costs incurred before tendering the defense to plaintiff (see Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD2d 84, 94 [2005]), and we modify the declaration accordingly. 

 Had there been either a pre-tender discussion between Arch and Liberty about the priority of their respective coverage obligations or a reservation of rights in Liberty's tender acceptance letter, the result may have been different.  Three takeaway points from this case are:

1. when accepting a tender of defense and indemnification from another insurer, be sure to address and expressly reserve one's rights vis-à-vis coverage priority and defenses;
2. pre-tender defense costs are not recoverable; and 
   
3. equitable estoppel can apply between coinsurers.

General Obligations Law § 15-108 Applies Only to Joint Tortfeasors, Not Co-Insurers

CGL – CO-INSURANCE – CONTRIBUTION – GENERAL OBLIGATIONS LAW § 15-108
Scotts Co., LLC v. Pacific Employers Ins. Co.
(1st Dept., decided 4/9/2009)

New York General Obligations Law § 15-108 provides:

Release or covenant not to sue.  (a) Effect of release of or covenant not to sue tortfeasors. When a release or a covenant not to sue or not to enforce a judgment is given to one of two or more persons liable or claimed to be liable in tort for the same injury, or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms expressly so provide, but it reduces the claim of the releasor against the other tortfeasors to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, or in the amount of the released tortfeasor's equitable share of the damages under article fourteen of the civil practice law and rules, whichever is the greatest. 

(b)  Release of tortfeasor. A release given in good faith by the injured person to one tortfeasor as provided in subdivision (a) relieves him from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules. 

(c)  Waiver of contribution. A tortfeasor who has obtained his own release from liability shall not be entitled to contribution from any other person. 

(d)  Releases and covenants within the scope of this section. A release or a covenant not to sue between a plaintiff or claimant and a person who is liable or claimed to be liable in tort shall be deemed a release or covenant for the purposes of this section only if: 

(1) the plaintiff or claimant receives, as part of the agreement, monetary consideration greater than one dollar; 

(2) the release or covenant completely or substantially terminates the dispute between the plaintiff or claimant and the person who was claimed to be liable; and 

(3) such release or covenant is provided prior to entry of judgment.

Does GOL § 15-108 apply to coinsurance claims among co-insurers?  No, says the First Department in this case.

In 2000, the insured Scotts Company and one of its GL insurers, Pacific Employers Insurance Company (PEIC), entered into a settlement and release resolving DJ litigation over liability coverage for asbestos-related claims. In relation to a 2003 action brought in California state court, Scotts commenced this action and unsuccessfully moved to set rescind and void that release, and the First Department affirmed.  Under the terms of that release, PEIC agreed to pay less than 3% of Scotts' past defense costs and none of Scotts' future defense costs.

The release, in paragraph 15, entitled "Waiver of Rights Against Other Settling Insurers," provided that PEIC waived its right to "seek contribution ... from any of Scotts' other insurers that has a written agreement with Scotts that waives such rights against the ACE Companies."  However, that section went on to provide that:

[a]s against any other company, the ACE Companies will not initiate any action to seek contribution against any such company. In the event any such other company initiates an action against the ACE Companies for contribution or indemnity, the ACE Companies preserve their rights to assert counterclaims for contribution or indemnity from any such company.

In the California action, another one of Scotts' insurers, Wausau, cross-claimed against PEIC, asserting that it was required equitably contribute to the costs of defending asbestos claims against Scotts. In December, 2006, a California state court judge granted Wausau summary judgment, finding that PEIC had such a duty, and that PEIC must reimburse Wausau for 87.4% of past defense costs for the asbestos claims. The Court of Appeals in California denied review of the order in 2007.

PEIC then moved to amend its third-party complaint in this action, in effect, to preclude Scotts' other insurers, including Wausau, from obtaining coinsurance contribution from PEIC.  PEIC based its proposed amended third-party complaint on GOL § 15-108, arguing that that statute immunized PEIC from the co-insurers' contribution claims.  New York Supreme denied PEIC's motion to amend, and PEIC appealed. 

In AFFIRMING the denial of PEIC's motion to amend its third-party complaint, the First Department held:

The court properly denied appellant's motion to amend the third-party complaint since the proposed amendment did not state a viable claim for relief. The amendment sought to enjoin appellant's co-insurers from proceeding against appellant for contribution based upon appellant's settlement agreement with the insured and upon General Obligations Law § 15-108. The court correctly found that the settlement agreement's express contemplation of contribution claims by the co-insurers was a waiver of § 15-108's protections (see Mitchell v New York Hosp., 61 NY2d 208, 213 [1984]). Moreover, § 15-108 applies only to joint tortfeasors, not to co-insurers (HRH Constr. Corp. v Commerical Underwriters Ins. Co., 11 AD3d 321, 323 [2004]).

If insurance coverage litigation can be ironic, this might be an instance.  Although Scotts failed in its attempt to have the release set aside -- memorializing a settlement that had PEIC paying $325,000 to release $80 million in coverage -- Wausau succeeded in recovering 87.4% of Scotts' past defense costs back from PEIC, notwithstanding PEIC's release with Scotts, by which it had paid less than 3% of those past defense costs.  The result in this matter should not be all that surprising.  In settling separately with an insured, it is difficult to provide for and extinguish coinsurance claims of co-insurers.  Perhaps PEIC contemplated later raising GOL § 15-108 to defend against such coinsurance claims at the time it entered into the release with Scotts, which expressly provided that it was to be governed by New York law.  

Consider this text from the motion court's decision:

[I]t has been repeatedly, and long held, that unless public policy is thwarted, parties to a civil dispute are generally free to chart their own litigation course, choose the law to be applied (or, indeed, not applied), and may stipulate away statutory, and even constitutional rights. See e.g. Mitchell v New York Hosp., 61 NY2d at 214 (1984); T. W. Oil v Consolidated Edison Co. of NY, 57 NY2d 574, 579-580 (1982); Rector, Church Wardens & Vestrymen of St. Bartholomew's Church v Committee to Preserve St. Bartholomew's Church, 56 NY2d 71, 76 (1982); Martin v City of Cohoes, 37 NY2d 162, 165 (1975); Matter of New York, Lackawanna & Western R. R. Co., 98 NY 447, 453 (1885). It is also worthy of note that GOL §15-108(c) has specifically been deemed waivable by the Court of Appeals. Mitchell v New York Hosp., 61 NY2d at 214.

A Primary Policy By Any Other Name Is Still a Primary Policy

CGL – COINSURANCE – PRIORITY OF COVERAGE
233rd St. Partnership, L.P. v. Twin City Fire Ins. Co.
(1st Dept., decided 6/10/2008)

State National Insurance Company provided primary CGL coverage to the plaintiff with respect to an underlying personal injury action. Twin City contended that its coverage was excess. New York Supreme agreed with Twin City and declared that it was not obligated to reimburse plaintiffs for their defense expenses in the underlying action.

The First Department REVERSED, holding:

The court erred in basing its determination that defendant's policy was excess solely on the wording of that policy. We find that since, among other things, there is no primary insurance underlying defendant's policy, and its coverage is subject only to the payment of a deductible, the policy is not a true excess policy, but rather is a primary policy that, under certain circumstances, purports to shift losses to other available insurance (see Bovis Lend Lease LMB, Inc. v. Great Am. Ins. Co., __ AD3d __, 2008 NY Slip Op 3150, *9-10 [1st Dept 2008]; Cheektowaga Cent. School Dist. v. Burlington Ins. Co., 32 AD3d 1265 [2006]). Since we find that both State National's and defendant's policies are primary, their other insurance clauses cancel each other out, and both insurers are rendered co-primary (citations omitted).

Priority and Contributions of Commercial Auto Liability Coverages Determined

COMMERCIAL AUTO – PERMISSIVE USE – COINSURANCE – CONTRIBUTION AMONG COINSURERS – NOTICE TO EXCESS INSURER – "SAVINGS CLAUSE"
National Union Fire Ins. Co. of Pittsburgh, PA v. Connecticut Indem. Co.
(1st Dept., decided 6/10/2008)

This is a DJ action regarding the relative insurance coverage responsibilities of several insurers for a $2.4 million dollar settlement (presumably funded by National Union) in an underlying case. The underlying case involved an accident that occurred on May 3, 1999, when Howard Bailey, who was driving the insured tractor, collided with a disabled truck causing injury to a person who had stopped to assist with the disabled truck.

Associates owned the tractor that Bailey was driving. Associates insured the tractor with defendant Lumbermens. Associates leased the tractor to Conway, who subleased the vehicle to Gibson/Sunrise, which in turn, leased the vehicle and its driver Bailey, to Howard's Express. Each of these lessees/sublessees obtained insurance covering the tractor.

In MODIFYING the lower court's decision on motions, the First Department rejected Lumbermens' argument that Associates did not grant permission to Howard's Express to use the subject tractor within the meaning of the insurance policy.

In New York, proof of ownership of a motor vehicle creates a "very strong presumption" that the driver was using the vehicle with the owner's permission, express or implied, and this presumption continues "unless and until there is substantial evidence to the contrary" (Tabares v Colin Serv. Sys., 197 AD2d 571 [1993]; see Leotta v Plessinger, 8 NY2d 449, 461 [1960]). There is no such substantial evidence here.

The First Department also held that coverage under the Lumbermens policy, which stated that "[f]or any covered auto' you own, this Coverage Form provides primary insurance", was co-primary, rejecting Lumbermens argument and the lower court' s holding that a manuscript endorsement in the Lumbermens policy rendered its coverage excess.

By its plain terms, the manuscript endorsement refers to a situation "[w]hen you have other insurance for an auto' covered by this policy." You, in insurance parlance, refers to the insured (here, Associates)[.]

Lumbermens was thus responsible for reimbursing National Union $1 million, plus statutory interest.

The First Department next addressed the allocation of the remaining $454,640.15 among the excess insurers. The Legion policy could not be taken into account in making that allocation because Legion was in liquidation and therefore its limits were not "available coverage" within the meaning of the policies' respective "other insurance" provisions.

National Union and Federal provided umbrella coverage. The terms of these policies indicated that they were excess to the excess coverage that Connecticut Indemnity Company and US Fire provided.

Connecticut apparently had disclaimed excess coverage to Gibson/Sunrise based on its late notice, and Supreme Court granted summary judgment to Connecticut. The First Department disagreed that Gibson/Sunrise's notice was untimely as a matter of law and remitted the question of the timeliness of Gibson/Sunrise's notice back to Supreme Court for determination:

Under some circumstances, a five-month delay may be unreasonable, but here a question of fact exists as to whether the insured had a good-faith belief in nonliability. Where notice to an excess carrier such as Connecticut is in issue, the focus is on whether the insured reasonably should have known that the claim against it would likely exhaust its primary insurance coverage and trigger its excess coverage, and whether any delay between acquiring that knowledge and giving notice to the excess carrier was reasonable under the circumstances[.]

Finally, the First Department ruled that the "bobtail" exclusion in Connecticut's policy was void as against public policy and, in contradiction to a 2007 Second Department ruling on this issue, declined to enforce a "savings clause" in the policy that provided coverage up to the minimum amounts the financial responsibility law requires in the event the bobtail exclusion was held to be invalid.

We agree with the reasoning of those courts which hold that permitting an insurer to limit its liability even in cases where its policy exclusion is held to be invalid would render the finding on the issue of validity essentially meaningless (see Connecticut Indem. Co. v. 21st Century Transport Co., Inc., 186 F Supp 2d 264, 278 [EDNY 2002]; R.E. Turner, Inc. v. Connecticut Indemn. Co., 925 F Supp 139, 149 [WDNY 1996]; Connecticut Indem. Co. v Carela, 2007 WL 2363123 (DNJ Aug 15, 2007] [applying New York law]; but see Connecticut Indem. Co. v. Hines, 40 AD3d 903 [2d Dept 2007]). If the exclusion is void because it is against public policy, it can not be saved. Thus, the Connecticut policy must be read as affording liability up to its full limits.

Fourth Department Coverage Decisions -- April 25, 2008

UM COVERAGE – VENUE OF ARBITRATION HEARING
Matter of the Arbitration Between Erie Ins. Co. and Malcolm
(4th Dept. decided 4/25/2008)
The venue of an uninsured motorists coverage arbitration may not be held more than 100 miles from the insured's residence.
In Matter of the Arbitration Between Erie Ins. Co. and Malcolm, the court granted the insurer's CPLR article 75 petition to change the venue of the insured UM arbitration from Kings County to Erie County. In originally granting the insured's request to change the venue from Erie County to Kings County, the AAA arbitrator violated that AAA's own rule that an arbitration hearing may not be held more than 100 miles from an insured's residence. The insured's listed residence was in West Seneca, Erie County.

SUBROGATION – WAIVER OF SUBROGATION
American Motorists Ins. Co. v. Louis Ciminelli Construction Co.
(4th Dept. decided 4/25/2008)
In American Motorists Ins. Co. v. Louis Ciminelli Construction Co., the court affirmed the lower court's granting of summary judgment to the general contractor and sprinkler system subcontractor based on the waiver of subrogation provision of the general contract. The court also rejected the subrogating insurer's contention that the waiver of subrogation provision does not apply to postconstruction losses.

CGL – COINSURANCE – ADDITIONAL INSURED – PRIORITY OF COVERAGE
B.F. Yenny Construction Co. v. OneBeacon Ins. Grp.
(4th Dept. decided 4/25/2008)
In B.F. Yenny Construction Co. v. OneBeacon Ins. Grp., the court ruled that the lower court erred in relying on construction subcontract language rather than the language of the two insurance policies to determine the priority of coverage between those policies. Pursuant to the "other insurance" and "method of sharing" provisions of those policies, both One Beacon (which insured the GC as an additional insured) and Selective (which insured the GC as a named insured) were found obligated to provide primary coverage and to share equally in the costs of the GC's defense and indemnification in the underlying action.

CGL – GARAGE LIABILITY POLICY – "YOUR CUSTOMERS" – WHO IS AN "INSURED"
Graphic Arts Mutual Ins. Co. v. Russell
(4th Dept. decided 4/25/2008)
In Graphic Arts Mutual Ins. Co. v. Russell, the court affirmed the lower court's ruling that Graphic Arts Mutual was obligated to defend and indemnify defendant who was test driving a vehicle owned by the plaintiff's car dealership insured. The Graphic Arts garage liability policy excluded by definition from coverage customers of the dealership who had liability insurance of at least mandatory minimum limits. The court rejected Graphic Arts Mutual's argument that the defendant was its named insured dealership's "customer", holding that the defendant, who had had no contact with the dealership and transacted no business with the dealership, could not be construed to fall within the "[y]our customers" language of the garage liability policy.