Starr Indemnity & Liability Company v. Excelsior Insurance Company

Background

Starr sought a declaration that Excelsior had to indemnify parties sued in an underlying personal-injury action brought by Kenneth Jacobsen. Jacobsen alleged that he was injured when scaffolding tipped while he was working at a construction site. The underlying defendants were JPMorgan Chase & Co., Americon Construction, Inc., and the New York City Industrial Development Agency. Jacobsen’s claims included alleged violations of New York Labor Law.

Americon had required Tri-State Computer Flooring Co., Inc., a subcontractor, to obtain insurance naming Americon, JPMorgan, and other required entities as additional insureds. Tri-State obtained a commercial general liability policy and a commercial umbrella policy from Excelsior. The agreement between Tri-State and Americon required Tri-State’s coverage for Americon to be primary and noncontributory and required Tri-State to defend and indemnify Americon and related entities for bodily-injury claims connected with Tri-State’s operations.

The underlying case settled for $3,750,000. In a related third-party action, a jury found Tri-State 35% at fault and the underlying defendants 65% at fault. Starr paid 65% of the settlement, and Excelsior paid 35%. Starr then sought reimbursement for 50% of its payment, arguing that Starr’s and Excelsior’s policies provided co-insurance for the underlying defendants.

Parties’ Arguments

Starr argued that the underlying defendants qualified as additional insureds under Excelsior’s policies and that Tri-State’s negligence triggered Excelsior’s indemnity obligation. Excelsior argued that its responsibility was limited to the 35% share of fault assigned to Tri-State and that its payment of 35% of the settlement satisfied its obligations.

Court’s Analysis

The court applied New York law because the parties’ briefing showed agreement that New York law governed the contract-interpretation issues. It treated the dispute as one suitable for summary judgment because the material facts were not genuinely disputed and the outcome turned on interpreting the contracts and insurance policies.

The court concluded that the underlying defendants were additional insureds. The Tri-State-Americon agreement required insurance protecting Americon and JPMorgan from bodily-injury claims arising from Tri-State’s operations, required Americon to be named as an additional insured, and required other entities that Americon had to name to receive the same status. Excelsior’s policies provided blanket additional-insured coverage for entities Tri-State had agreed in writing to add. The court also concluded that the written agreement required Excelsior’s coverage to be primary and noncontributory rather than excess.

The court then examined whether the underlying defendants’ liability fell within the policy language covering bodily injury caused, in whole or in part, by Tri-State’s acts or omissions. Relying on the jury’s finding that Tri-State was 35% responsible, the court held that the injuries were caused in part by Tri-State’s operations. Because the underlying defendants were not solely responsible for the injuries, the additional-insured coverage was triggered. The court stated that the broader policy language covering liability arising out of Tri-State’s operations would also have required indemnification, but it did not need to decide which standard controlled because the narrower standard was satisfied.

The court rejected Excelsior’s argument that the jury’s 35% allocation limited Excelsior’s insurance obligation. It distinguished Excelsior’s responsibility for liability attributable to Tri-State from its separate contractual obligation to provide coverage to additional insureds. The court held that Excelsior could not use the jury’s percentage allocation to avoid the broader additional-insured obligations in its policies.

Disposition

Judge Katherine Polk Failla granted Starr’s motion for summary judgment and denied Excelsior’s cross-motion for summary judgment. The court declared that Excelsior had a duty to indemnify the defendants in the underlying action and held that Starr was entitled to recover 50% of the settlement payment it made on their behalf. The court directed the Clerk of Court to terminate the pending motions, adjourn the remaining dates, and close the case.