Only Causal Link Between Named Insured's Acts or Omissions and Injury Required for Additional Insured Coverage to Apply

CGL – SCOPE OF ADDITIONAL INSURED COVERAGE – CAUSED BY NAMED INSURED'S ACTS OR OMISSIONS – CAUSAL LINK – ANTISUBROGATION RULE  
Burlington Ins. Co. v. NYC Transit Auth.
(1st Dept., decided 8/11/2015)

If a CGL policy provides additional insured coverage "only with respect to liability for bodily injury ... caused, in whole or in part, by [the named insured's] acts or omissions ... [i]n the performance of [the named insured's] ongoing operations", must the named insured have been negligent or otherwise at fault for causing the bodily injury for such additional insured coverage to apply?

Breaking Solution's policy with Burlington Insurance Company provided that certain entities were additional insureds "only with respect to liability for bodily injury ... caused, in whole or in part, by [the named insured's] acts or omissions ... [i]n the performance of [the named insured's] ongoing operations[.]"

The question addressed by the First Department, Appellate Division, in this case was whether this "acts and omissions" language of the additional insured provision provides additional insured coverage where there is a causal link between the named insured's conduct and the injury, regardless of whether the named insured was negligent or otherwise at fault for causing the accident.  In REVERSING Supreme Court's orders granting Burlington's motion to amend its DJ complaint to assert a contractual indemnification claim against the putative additional insureds --  defendants New York City Transit Authority (NYCTA) and Metropolitan Transit Authority (MTA) -- and then granting Burlington summary judgment on its contractual indemnification claim against the NYCTA, the First Department held:

This Court's most recent precedents have construed additional insured endorsements containing substantially the same "acts and omissions" language as do the endorsements at issue here as providing additional insured coverage where there is a causal link between the named insured's conduct and the injury, regardless of whether the named insured was negligent or otherwise at fault for causing the accident. Adhering to these precedents, we hold that defendants were entitled to coverage as additional insureds in the underlying action under the subject insurance policy. Given that the policy covers defendants for this loss, the anti-subrogation rule bars Burlington from recovering, as subrogee of the City of New York, contractual indemnification from defendant NYCTA, under the lease agreement between the City and NYCTA, for the amounts Burlington has paid to defend and settle the underlying action on behalf of the City.

NYCTA and MTA engaged Breaking Solutions to supply concrete-breaking excavation machines and personnel to operate the machines under NYCTA's direction.  An explosion occurred in a Brooklyn subway tunnel that was being excavated by a Breaking Solutions machine. The explosion occurred when the excavator came into contact with an energized electrical cable buried below the concrete. It is undisputed that it had been NYCTA's responsibility to identify and mark or protect hazards in advance, so as to enable the excavator operator to avoid them, and to shut off power to electrical cables in the work area. An employee of NYCTA was injured in that explosion and sued. In the course of discovery in that action, it emerged that, while the Breaking Solutions excavator had caused the explosion by disturbing the buried cable, there had not been any negligence or other fault on the part of the Breaking Solutions employee who operated the excavator.  NYCTA's internal documents essentially admitted that it was at fault for the incident.

On that basis Burlington, which had defended and indemnified the City of New York in the personal injury action, sought contractual indemnification from NYCTA as the City's subrogee.  Among other grounds, NYCTA argued that because it qualified for additional insured coverage under Breaking Solutions' policy with Burlington, the antisubrogation rule applied to bar Burlington's claims against it.  Based on its finding that the "caused, in whole or part, by [the named insured's] acts or omission" language of the Burlington policy required only a casual link between the named insured's acts or omissions and the injury, rather than proof of the named insured's negligence or fault, the First Department reversed the lower court's orders and granted summary judgment to NYCTA and MTA, dismissing Burlington's complaint.