The Travelers Indemnity Company of Connecticut v. Colony Insurance Company

Background

Travelers and Colony issued commercial general liability policies covering different companies involved in a construction project. Travelers insured Kraman Iron Works, Inc. Colony insured Steel Riser Corp. Kraman hired Steel Riser to perform miscellaneous steel installation, including installing handrails. Kraman’s contract with Steel Riser required Steel Riser to maintain liability insurance and name Kraman as an additional insured.

In the underlying personal-injury lawsuit, Quinntay Morris alleged that he fell down stairs after a handrail became dislodged. The underlying case included claims against Structure Tone, LLC and 6163 Crosby Street, Inc., and later included claims involving Kraman and Steel Riser. Travelers tendered the claim to Colony and sought a defense and coverage. Colony did not defend Kraman, Structure Tone, or 6163 Crosby.

Travelers moved for summary judgment under Federal Rule of Civil Procedure 56, which permits judgment without a trial when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. Colony opposed Travelers’ motion and purported to cross-move for summary judgment.

Kraman’s Additional-Insured Status and Defense

The court held that Kraman was an additional insured under the Colony policy. The policy covered organizations required by written contract with Steel Riser to be additional insureds, and Kraman’s written contract with Steel Riser expressly required that Kraman be named as an additional insured.

The court also held that Colony had a duty to defend Kraman. Under New York law, an insurer’s duty to defend is broader than its duty to indemnify, meaning an insurer may have to provide a defense even if it ultimately might not have to pay the claim. The duty arises when the underlying allegations or facts known to the insurer create a reasonable possibility of coverage.

The underlying allegations, Travelers’ tender letter, the claim notice, and the second third-party complaint identified a possible connection between Morris’s injury and Steel Riser’s installation of the handrail. The court therefore rejected Colony’s argument that it had no duty to defend because Steel Riser’s responsibility for the injury had not yet been established. The court noted that the underlying court had denied Steel Riser’s summary-judgment motion because factual disputes remained about whether negligent handrail installation caused Morris’s fall.

The court also rejected Colony’s argument that Travelers was barred from pursuing the defense claim because of the underlying court’s ruling that Steel Riser had failed to properly name Kraman as an additional insured. The court found that Travelers was not a party to that dispute and had not received a full and fair opportunity to litigate the issue in its own interests. The court also noted that the wording of the underlying ruling was ambiguous about whether it decided Kraman’s status under the Colony policy at issue here.

6163 Crosby and Structure Tone

The court denied Travelers’ request for summary judgment concerning Colony’s duty to defend 6163 Crosby and Structure Tone. The short contract between Kraman and Steel Riser expressly referred to Kraman as the contractor and required Kraman to be named as an additional insured. It did not identify Structure Tone by name or position and did not clearly require Steel Riser to add Structure Tone as an additional insured.

The contract also did not clearly establish that 6163 Crosby was an additional insured. The reference to “Owner” in suggested certificate-of-insurance language was, at most, ambiguous. The court explained that the insurance policy, not an insurance certificate, determines additional-insured status. Travelers also did not provide other evidence or admissible extrinsic evidence resolving the ambiguity in favor of 6163 Crosby.

The court distinguished the contract’s indemnification provision from an additional-insured provision. The indemnification language might support a claim by Structure Tone or 6163 Crosby directly against Steel Riser, but it did not establish that either entity was insured under Colony’s policy or that Colony owed either entity a defense or indemnity obligation.

Motions and Disposition

The court granted Travelers’ motion for summary judgment in part and denied it in part. It granted the motion to the extent Travelers sought an order that Colony owed a duty to defend Kraman, that Colony’s coverage was primary and Travelers’ coverage was excess, and that Colony was liable for sums Travelers incurred defending Kraman in the underlying action.

The court denied Travelers’ motion to the extent it sought an order that Colony owed a duty to defend 6163 Crosby and Structure Tone or was liable for Travelers’ defense costs for those entities.

The court denied Colony’s motion for summary judgment. Colony had not filed a required notice of motion, supporting affidavits or exhibits, or its own statement of undisputed material facts. The court treated the purported cross-motion as procedurally defective and denied it. The court directed the Clerk of Court to close the two motion entries.