Travelers Property Casualty Insurance Co. of America v. Hudson Excess Insurance…

Background

This insurance-coverage dispute arose from a New York state-court lawsuit involving injuries to Christian Fares during construction work at a property owned by 63 Madison Owner LLC. Schimenti Company, LLC was the general contractor, Park Construction Group, Ltd. was a subcontractor, and 2BD Services, Inc. was Park’s subcontractor. Fares alleged that unsafe conditions, debris, inadequate manpower, and inadequate safety equipment contributed to his fall.

Travelers insured Schimenti and 63 Madison as an additional insured. Park’s contract with Schimenti required Park to obtain insurance covering Schimenti and 63 Madison on a primary and non-contributory basis, and Park obtained that coverage from Hudson. The Hudson policy covered additional insureds for bodily injury caused, in whole or in part, by Park’s acts or omissions.

Park’s contract with 2BD required 2BD to obtain insurance covering Park and 63 Madison on a primary and non-contributory basis. 2BD obtained that coverage from Main Street. The Main Street policy covered additional insureds for bodily injury caused, in whole or in part, by 2BD’s acts or omissions.

Travelers paid defense costs for Schimenti and 63 Madison and sought coverage from Hudson. Hudson declined to provide their defense and later sought coverage from Main Street for Park and 63 Madison. Hudson did not tender Main Street for at least two years and appears to have first demanded a defense during this litigation.

Travelers’ Motion

The court granted Travelers’ motion for summary judgment in full. Under New York law, an insurer’s duty to defend is broad and arises when the underlying allegations suggest even a reasonable possibility of coverage. The Hudson policy limited additional-insured coverage to bodily injury caused, in whole or in part, by Park’s acts or omissions.

The court held that Fares’s allegations plausibly connected the injury to Park. The allegations included inadequate manpower and unsafe, debris-filled conditions, while Park’s agreement required it to provide an adequate workforce and keep the work area free from debris and unsafe conditions. The court therefore held that Hudson owed Schimenti and 63 Madison a duty to defend, regardless of whether Fares was employed by Park or by 2BD.

The court also held that Hudson’s coverage was primary and non-contributory. The Schimenti-Park Agreement required that coverage, and the Hudson policy made additional-insured coverage primary and non-contributory when a written contract required it. Because Travelers’ policy was excess over other available insurance, Travelers’ coverage for Schimenti and 63 Madison was excess over Hudson’s coverage.

The court further declared that Travelers was entitled to reimbursement of defense costs from Hudson. It did not determine the amount of those costs. Issues concerning the amount, necessity, and reasonableness of the fees could be addressed in a later proceeding.

Hudson’s and Main Street’s Motions

Hudson sought declarations that Park and 63 Madison were additional insureds under the Main Street policy, that Main Street had to defend them, that Main Street’s coverage was primary, and that Hudson was entitled to defense-cost reimbursement. Main Street sought a declaration that it had no duty to defend or indemnify Park or 63 Madison.

The court held that Park was an additional insured under the Main Street policy because 2BD performed work for Park, Park and 2BD had a written agreement, and that agreement required 2BD to name Park as an additional insured. The court did not grant Hudson summary judgment concerning 63 Madison. It found that 63 Madison was not a signatory to the Park-2BD Agreement and that the record did not show a separate agreement between 63 Madison and 2BD, but it noted that the parties had not briefed the issue and that another part of the policy might support coverage.

The court held that Main Street owed Park a duty to defend. Park’s third-party complaint alleged that, if Park were liable, 2BD’s negligence caused the injury. That allegation was sufficient to create a reasonable possibility of coverage under the Main Street policy.

The court rejected Main Street’s argument that Hudson’s late notice eliminated any duty to defend. The court found that the underlying case had not substantially advanced: fact discovery remained open, no depositions had occurred, expert discovery remained open, dispositive motions had not been filed, and no trial date had been set. Hudson therefore showed that Main Street was not prejudiced by the late notice, and Main Street did not identify evidence showing actual prejudice.

The court also held that Main Street’s coverage for Park was primary and non-contributory because the Park-2BD Agreement required that type of coverage and Main Street did not present an argument to the contrary. The court granted Hudson’s request for a declaration that Main Street must reimburse Hudson for defense costs, but did not decide the amount of those costs.

Disposition

The court granted Travelers’ motion for summary judgment, granted Hudson’s motion for summary judgment in part, and denied Main Street’s motion for summary judgment. The court directed the Clerk to terminate the three summary-judgment motions and stated that it would later set a briefing schedule concerning fees owed.