Ongoing or Completed Operations -- Additional Insured Coverage Found

CGL – ADDITIONAL INSURED – ONGOING OPERATIONS – UNTIMELY & INSUFFICIENT DISCLAIMERS
One Beacon Ins. v. Travelers Prop. Cas. Co. of Am.
(3rd Dept., decided 5/8/2008)

A golfer slipped and fell on a newly constructed deck at the club house owned by Saratoga National Golf Club, Inc. When the lawsuit he commenced to recover for his injuries extended to the contractors involved in the construction project, believe it or not, the insurers for those contractors could not agree on their relative coverage responsibilities, leading to this DJ action.

OneBeacon insured the owner, which was an additional insured under a CGL policy issued by Great American Insurance Company of New York to the deck subcontractor. That policy also provided additional insured coverage to the GC, so long as the deck subcontractor's operations were "ongoing" at the time of the occurrence. Great American had also issued an OCP policy to the GC, and Travelers, the GC's own CGL insurer, cross-claimed for coverage under the OCP policy.

In AFFIRMING the lower court's order on motions, the Third Department disagreed with Great American's contention that there was no evidence in the record showing that its named insured, the deck subcontractor, was still working on the deck at the time of the accident. Great American's CGL policy expressly limited coverage of additional insureds to "liability arising out of [the deck subcontractor's] ongoing operations" and, thus, the existence of CGL coverage for the owner and GC as to the underlying accident depended upon whether the deck subcontractor's work on the project had been completed at the relevant time. The appellate court found that "[w]hile the record contains evidence that the deck had been constructed and was in use before the accident, there is also the deposition testimony of [the deck subcontractor]'s president in the underlying negligence action and a punch list prepared by the project architect showing that there was work remaining to be done on the deck by [the deck subcontractor] at the time of the accident. This evidence is sufficient to support Supreme Court's finding of a material question of fact as to coverage."

With respect to the various claims that Great American had not either properly or timely disclaimed coverage, the Third Department noted that as to the owner, Great American issued no disclaimer. "Although the failure to disclaim would not preclude Great American from asserting a lack of coverage on the basis of the completion of the deck subcontractor's operations , its failure forfeits its affirmative defense of late notice."

As to the GC, Great American did not disclaim until approximately six months after receiving notice of its claim under the CGL policy and seven months after notice of its claim under the OCP policy. Great American did not seek to to explain its delay. While noting that the GC's notices of claim were late, the Third Department agreed with the lower court that that Great American's disclaimers were untimely as a matter of law and, therefore, Great American could not deny coverage based upon late notice. Additional, the appellate court found that Great American's failure to specifically disclaim upon the basis of the GC's late notice further precluded it from raising lateness as a defense to the GC's claim under its policies.