Harleysville Worcester Insurance Company v. Consigli & Associates, LLC

Background

This is an insurance-coverage dispute involving Consigli & Associates, LLC and several insurers. Harleysville seeks a declaration concerning whether it must defend or indemnify Consigli in an ongoing New York state-court action brought by 99 Wall. That action concerns two water events at a construction project at 99 Wall Street. The state-court action had not yet determined whether Consigli was liable or what percentage of fault, if any, Consigli had.

Harleysville, National Union, Catlin, Starr, and Zurich previously moved for summary judgment. In an Opinion and Order issued March 3, 2025, the court denied summary judgment to Harleysville and National Union and granted summary judgment to Catlin, Starr, and Zurich. Harleysville and National Union then filed the motions addressed in this opinion.

Consigli had also asserted counterclaims alleging that Harleysville acted in bad faith and breached its duty of good faith and fair dealing by entering into a partial settlement. Those counterclaims had been stayed since December 20, 2023.

Harleysville’s Motion

The court denied Harleysville’s motion for reconsideration and clarification. It explained that reconsideration is available only when a party identifies an overlooked controlling decision or evidence, a change in controlling law, new evidence, clear error, or manifest injustice. Harleysville largely repeated arguments made during summary-judgment briefing, and any new arguments could have been made earlier.

The court declined to reconsider its prior holding that, at least at this stage, Harleysville continues to owe Consigli a duty to defend after the partial settlement. The court had previously found a factual dispute about whether that settlement affected Consigli’s contractual rights because Consigli’s bad-faith counterclaims remained unresolved. The court stated that the duty to defend is based on the insurance policies and is separate from any damages Consigli might recover on its bad-faith counterclaims.

The court also declined to reconsider its holding that Exclusion J did not bar Harleysville’s duties concerning Consigli. The court found that Harleysville had not shown clear error and that the policy language did not establish that the exclusion applied to the alleged property damage. Any ambiguity in the exclusion was interpreted in favor of coverage.

Harleysville also sought reconsideration of the ruling that it was not entitled to contribution from Catlin for a share of pre-settlement defense costs and interest. The court treated that request as abandoned because Harleysville did not address Catlin’s opposing arguments in its reply. The court therefore declined to reconsider that ruling.

The court further denied Harleysville’s request to clarify or reconsider whether its coverage obligations extended to consequential losses allegedly resulting from Consigli’s delayed completion of the work. The court found no ambiguity in its earlier opinion. It held that Harleysville’s duty to defend extended to the entire underlying action, including claimed losses that Harleysville characterized as resulting from delayed completion. The court stated that the potential duty to indemnify depended on the outcome of the underlying action and that a declaration on indemnity at this stage would be premature.

National Union’s Motion

The court granted in part and denied in part National Union’s motion for reconsideration and clarification. It granted clarification because its earlier discussion of the contractors’ exclusion had been brief. The court then specifically addressed National Union’s argument that the exclusion barred coverage for damage to any part of the entire building being renovated or converted.

The contractors’ exclusion excludes coverage for property damage to property being installed, erected, or worked upon by the insured or its agents or subcontractors. Applying New York law, the court held that National Union had not shown that its broad interpretation—that “property” meant the entire building—was the only reasonable interpretation. Because “property” was undefined, the exclusion could reasonably be read more narrowly, such as applying to the ceiling of the elevator control room that Hig allegedly worked on, rather than the elevator control panel allegedly damaged by the resulting water event.

The court also reasoned that National Union’s broad reading could make another, narrower property-damage exclusion meaningless. It rejected National Union’s reliance on two decisions from outside the Second Circuit that did not apply New York law. The court concluded that the contractors’ exclusion did not, as a matter of law, bar coverage for Consigli and denied National Union’s request to reconsider the earlier denial of summary judgment.

Disposition

The court denied Harleysville’s motion for reconsideration and/or clarification. It granted in part and denied in part National Union’s motion for reconsideration and/or clarification. The Clerk of Court was directed to terminate the listed docket entries, and the parties were ordered to meet and confer and file a joint status letter within 14 days of the order.