The Travelers Indemnity Company of Connecticut v. Hudson Excess Insurance…

Background

This case is an insurance-coverage dispute involving an underlying personal-injury action. Anabel Rebollar alleged that she was injured on October 3, 2020, by an entry system or lock on a metal gate at 334 East 112th Street in New York. She asserted negligence claims against the Hope Housing Entities, Notias Construction, Inc., Jind Construction, Inc., and Kiska Solutions, Inc., including claims that the defendants failed to maintain the premises’ equipment, locks, and entry system. Discovery in the underlying action was still ongoing when the parties filed their motions.

Notias had subcontracted work to Jind and Kiska. Jind performed work involving the building’s main gate, while Kiska performed work involving key-fob systems. Travelers insured Notias under a commercial general liability policy. Hudson insured Jind, and Steadfast insured Kiska. The Jind subcontract required Jind’s insurance to cover Notias as an additional insured on a primary and non-contributing basis. The Kiska subcontract contained materially identical insurance requirements.

Travelers tendered Notias’s defense and indemnification to Hudson several times beginning in 2022. Hudson did not respond and did not assume or contribute to Notias’s defense. Travelers first tendered the defense to Kiska in November 2023 and to Steadfast in February 2024. Steadfast also did not assume or contribute to the defense. Travelers stated that it had incurred approximately $48,866.11 defending Notias.

The Motions

Travelers moved for summary judgment, asking the court to declare that Hudson and Steadfast had duties to defend Notias and that Travelers’ coverage was excess to theirs. Hudson cross-moved for summary judgment, arguing that Jind could not possibly be responsible for the injury because Jind had completed its work before the accident and had not installed the locking mechanism. Steadfast cross-moved for summary judgment, arguing that Travelers gave untimely notice. Steadfast alternatively argued that its policy was excess to Hudson’s policy.

Hudson’s Duty to Defend

Under New York law, an insurer’s duty to defend is broad and is generally determined from the allegations in the underlying complaint. The duty applies when the allegations may reasonably fall within the policy’s coverage, even if the allegations are groundless or may ultimately prove unsuccessful. An insurer may avoid the duty only when it establishes as a matter of law that there is no possible factual or legal basis for a duty to indemnify.

The court held that the allegations against Jind plausibly fell within Hudson’s coverage because Rebollar directly alleged that Jind and others negligently maintained the equipment, locks, and entry system. The court rejected Hudson’s reliance on evidence from the underlying litigation showing that Jind might not have been responsible for the mechanism. That evidence concerned the merits of the injury claim and did not eliminate the duty to defend at this stage.

The court also held that Hudson’s policy was primary to Travelers’ policy. The Jind subcontract required Jind’s insurance for Notias to be primary and non-contributing, and Hudson’s policy included an endorsement making its coverage primary when required by a written contract.

Steadfast’s Duty to Defend

The Steadfast policy required notice of an occurrence as soon as practicable. It also stated that late notice would not invalidate a claim unless Steadfast was prejudiced. Under New York Insurance Law, when notice is provided more than two years after the time required by the policy, the insured bears the burden of showing that the insurer was not prejudiced.

Notias was first brought into the underlying action on November 18, 2021. Travelers did not tender the defense to Kiska until November 14, 2023, and did not tender it directly to Steadfast until February 6, 2024. The court held that Notias knew, when it was brought into the case, that Kiska’s subcontract required Kiska to obtain insurance covering Notias. The court found the delay of more than two years unreasonable and held that Travelers therefore bore the burden of showing that Steadfast was not prejudiced.

The court found Travelers’ showing insufficient. Travelers stated only that Steadfast, Kiska, and Kiska’s defense counsel had opportunities to participate in the underlying litigation. The court held that this did not create a genuine dispute about whether the delay prejudiced Steadfast’s ability to investigate or defend the claim. The court therefore held that Steadfast had no duty to defend Notias. Because of that ruling, the court did not decide which policy had priority between Steadfast and Hudson.

Disposition

The court granted in part and denied in part Travelers’ motion for summary judgment. It denied Hudson’s cross-motion for summary judgment and granted Steadfast’s cross-motion for summary judgment. The court declared that Hudson has a duty to defend Notias, Hudson’s coverage is primary, Travelers’ coverage is excess to Hudson’s coverage, and Steadfast has no duty to defend Notias.

The court did not enter a money judgment against Hudson because it lacked sufficient information to determine damages. It reserved judgment on that issue and directed Travelers and Hudson to meet and confer and submit a joint letter by October 17, 2025, addressing whether they could resolve the amount of any money judgment and, if not, proposing a process for resolving it.