Avante Contracting Corp and Upland Specialty Insurance Company v. Northfield…

Background

Avante was the general contractor for renovation work at a Brooklyn worksite owned by RiseBoro TPT X Housing Development Fund Corp. Avante hired DGA Construction Corp. to perform demolition and carpentry work. DGA had a commercial general liability policy issued by Northfield, and the subcontract required insurance naming Avante as an additional insured. Upland separately insured Avante, with Riseboro as an additional insured under the Upland policy.

DGA employee Byron Dario Villa Cuzco was injured after allegedly falling through a hole at the worksite. Cuzco sued Riseboro and Avante in New York state court. The underlying complaint did not specify what work Cuzco was performing when he was injured. The parties disputed whether he was performing interior light demolition, removing sheetrock and windowsills as part of carpentry or drywall work, or performing work related to tile removal.

Northfield’s policy limited coverage to bodily injury and property damage caused by operations classified in the policy: interior carpentry, drywall or wallboard installation, interior painting, and interior tile, stone, marble, mosaic, or terrazzo work. Northfield denied coverage, asserting that the accident was not caused by a covered operation. Avante and Upland then brought this declaratory-judgment action.

Summary-judgment ruling

The court held that the Northfield policy did not clearly exclude removal work connected to a covered operation. The policy did not define the covered operations or impose time limits on when covered work could occur. The court reasoned that removal of old materials could be part of installing new drywall, tile, paint, or carpentry. It also concluded that the parties’ disagreement about the work Cuzco was performing presented a genuine dispute about a material fact, preventing summary judgment for Northfield.

Under New York law, an insurer’s duty to defend is broader than its duty to indemnify. The duty applies when the underlying complaint, read broadly, presents any possible factual or legal basis for coverage. Because Cuzco’s complaint alleged that he was a DGA employee working at the site and because the possible descriptions of his work could involve covered operations, the court found at least a potential for coverage. Northfield therefore had to defend Avante in the underlying action.

The court also found that the subcontract required DGA to obtain primary and non-contributory insurance naming Avante as an additional insured. The Northfield policy made coverage primary when a written contract required primary or primary and non-contributory insurance. The Upland policy, by contrast, made its coverage excess over other primary insurance available to Avante as an additional insured. Based on those provisions, the court held that Northfield should have provided the defense and that Upland could recover the defense costs it had incurred.

Disposition

The court granted plaintiffs’ Motion for Partial Summary Judgment and denied Northfield’s Cross Motion for Summary Judgment. It granted summary judgment to Avante on its request for a declaration that it was entitled to a defense in the underlying action and granted summary judgment to plaintiffs concerning Upland’s recovery of incurred defense costs. The court dismissed Northfield’s motion concerning Riseboro without prejudice because Riseboro was not a party to this action and the parties had not submitted briefing, arguments, or evidence concerning Riseboro. The parties were directed to submit a proposed judgment and, if necessary, competing submissions concerning the amount of Upland’s defense costs. The court did not analyze the parties’ arguments under New York Insurance Law § 3420 because it found potential coverage sufficient to resolve the motions.