Metropolitan Transportation Authority v. James River Insurance Company

Background

The Metropolitan Transportation Authority, the New York City Transit Authority, and El Sol Contracting & Construction Corp. sued James River Insurance Company over James River’s denial of insurance coverage. The dispute arose from an underlying personal-injury action filed by Lance Myck, an employee of Nuco Painting Corporation, after he was allegedly injured while working on a construction project owned by the Metropolitan Transportation Authority. El Sol was the prime contractor, and Nuco was a subcontractor.

James River had issued Nuco a general-liability policy. The policy covered Nuco’s legal obligations for covered bodily injuries and provided additional-insured coverage as required by written contract. But it excluded liability arising from operations at a project where the contractor, project manager, or owner had provided a consolidated insurance program, commonly called an owner-controlled insurance program.

The subcontract stated that the project would be covered by the owner’s insurance program and that the program included general-liability insurance for on-site activities. After Myck sued the plaintiffs, they sought coverage from James River as additional insureds. James River denied the request.

Prior ruling and motions

The court previously granted James River’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege a legally sufficient claim. The court concluded that the policy did not cover the plaintiffs for Myck’s on-site injury because the subcontract assigned on-site general-liability coverage to the owner-controlled insurance program. The court also dismissed the plaintiffs’ declaratory-judgment claims as duplicative of their breach-of-contract claim, while allowing the plaintiffs to seek permission to amend.

The plaintiffs then moved for reconsideration under Rules 59 and 60 and sought permission to amend under Rule 15(a). They proposed adding allegations that Nuco was an “excluded contractor” under the owner-controlled insurance program and adding “El Sol Contracting Company Inc./El Sol Limited Enterprises, J.V.” as a plaintiff in place of El Sol Contracting & Construction Corp.

Reconsideration

The court denied the motion for reconsideration. It explained that reconsideration is an exceptional remedy and generally requires an intervening change in controlling law, new evidence, or a need to correct a clear error or prevent serious injustice. The plaintiffs argued that the court had wrongly relied on an exclusion in the policy, but the court stated that its prior decision rested on the plain language of both the policy and the subcontract. The court found that the plaintiffs were attempting to relitigate an issue already decided rather than identifying a proper basis for reconsideration.

Amendment

The court also denied the motion to amend. It reasoned that the proposed amendment would be futile because the amended complaint still could not survive a Rule 12(b)(6) motion. According to the court, the subcontract provided that the owner-controlled insurance program covered on-site general liability, and it did not create an exception for excluded contractors.

The court assumed for purposes of its analysis that Nuco might have been excluded from the owner-controlled insurance program and might have been required to maintain its own insurance. Even so, the court found that those facts would not establish coverage under James River’s policy for Myck’s on-site injury. The court also concluded that the owner-controlled insurance program manual could not alter the clear terms of the subcontract or policy, particularly because the manual stated that the contract language would control if the documents conflicted.

Because the proposed substantive amendment was futile, the court did not address the request to replace El Sol Contracting & Construction Corp. with the other El Sol entity. The court denied the plaintiffs’ motion for reconsideration and for leave to amend, directed the Clerk of Court to terminate the pending motion, and ordered the case closed.

Disposition

The motion for reconsideration was denied. The motion for leave to amend was denied. The Clerk of Court was directed to close the case.