Piece Management, Inc. v. Atlantic Casualty Insurance Company

Background

Piece Management, Inc. hired Narway Inc. to build a glass door at a restaurant. The door allegedly collapsed onto Mustafaa Dais while he was leaving the restaurant. Dais sued the restaurant in New York state court and later added Piece and Narway as defendants.

The subcontract required Narway to maintain general liability insurance and add Piece as an additional insured. Narway obtained a policy from Atlantic Casualty Insurance Company. Piece asked Atlantic to defend it in the Dais lawsuit, asserting that it qualified as an insured under the policy. Atlantic refused and moved to dismiss Piece’s lawsuit, which sought declarations that Atlantic had duties to defend and indemnify Piece.

Policy and defense claim

The policy’s general coverage language gave Atlantic the right and duty to defend an insured against a suit seeking covered damages. An endorsement, however, stated that Atlantic had the right, but not the duty, to defend someone qualifying as an additional insured.

The policy had separate provisions for additional-insured coverage involving ongoing operations and completed operations. The completed-operations provision covered liability caused by Narway’s work after it became part of the completed-operations hazard. The policy stated that work was deemed completed when the relevant work at the site had been put to its intended use by someone other than another contractor or subcontractor.

The court concluded that the glass door had been completed when Dais used it to leave the restaurant. It therefore held that the completed-operations provision, rather than the ongoing-operations provision, applied. Under that provision, Piece was at most an additional insured, and Atlantic had only the right—not the duty—to defend it.

The court also declined to consider discovery materials from the state-court lawsuit that Atlantic submitted with its motion. Those materials were outside the complaint and were not incorporated into it. The court concluded that the materials’ authenticity did not change that result.

Indemnity claim

The court separately addressed Piece’s request for a declaration that Atlantic had a duty to indemnify it. Under New York law, deciding indemnity is generally premature before it is known whether the underlying loss will be covered. Because issues concerning liability in the Dais lawsuit remained unresolved, the court dismissed this claim without prejudice.

Disposition

The court granted Atlantic’s motion to dismiss. Piece’s claim for a declaration that Atlantic had to defend it in the Dais lawsuit was dismissed with prejudice. Piece’s claim for a declaration that Atlantic owed a duty to indemnify it was dismissed without prejudice. The Clerk was directed to enter judgment and close the case.