Western Waterproofing Company, Inc. v. Zurich American Insurance Company

Background

Western Waterproofing previously sought partial summary judgment—a ruling that resolved part of the case without a trial—on whether Zurich American Insurance Company and AWAC had duties to defend and indemnify Western in an underlying lawsuit. In an earlier order dated February 3, 2022, the court denied Western’s motions against Zurich and AWAC, granted Zurich’s and AWAC’s cross-motions for partial summary judgment, and granted in part the cross-motion by excess insurers Starr and Navigators, limited to whether their duties arose from the Zurich commercial general liability policy.

Western then filed two alternative motions challenging those rulings. It moved for reconsideration under Local Civil Rule 6.3 and requested certification of an interlocutory appeal under 28 U.S.C. § 1292(b), which allows a district court to authorize an immediate appeal of certain nonfinal rulings.

Reconsideration

The court explained that reconsideration is available only when the moving party identifies a controlling change in law, new evidence, or a clear error or manifest injustice. Western argued that the court had erred by ruling on Starr’s and Navigators’ responsibilities before Western asserted claims against them and by interpreting the employer-liability exclusion too broadly.

The court denied reconsideration. It stated that Starr and Navigators had intervened because they had a direct financial interest, had denied coverage in their answers, and were eligible for summary judgment on a defense. The court also noted that Western had not explained why it failed to amend its complaint against them after notifying them of the underlying lawsuit and after the court allowed their intervention. The court therefore concluded that deciding their duties under the Zurich policy was not premature.

The court clarified that its earlier ruling did not decide the scope of Starr’s or Navigators’ own excess policies. Instead, it held only that neither insurer had a duty to defend or indemnify Western in the underlying action based on coverage provisions in the Zurich policy.

The court also rejected Western’s challenge to the employer-liability exclusion. The underlying lawsuit alleged damages resulting from bodily injuries suffered by Delgado and Jackson, who were Western employees. The exclusion barred coverage for bodily injury to an employee of the insured arising out of employment. The court concluded that the damages-causing injuries were therefore excluded from the policy’s coverage.

The court further held that language extending the exclusion to an insured’s obligation to share damages with or repay another party expanded the exclusion rather than limited it. It also rejected Western’s argument that the absence of directly controlling case law made the exclusion ambiguous. The court found that the policy’s text unambiguously excluded damages incurred because of bodily injuries suffered by Western’s employees.

The court additionally granted Zurich’s request to strike portions of Western’s reply briefs that relied on new case law. The court stated that Western could have cited those authorities earlier in the litigation.

Interlocutory appeal

The court denied certification for an immediate appeal because Western failed to satisfy any of the three requirements under Section 1292(b): a substantial ground for disagreement, a controlling question of law, and an immediate appeal that would materially advance the litigation.

The court found no substantial ground for disagreement because no conflicting authority had been identified and the employer-liability exclusion had a straightforward meaning. It also found that reversing the exclusion ruling would not end the case and that the issue was primarily the application of settled New York contract and insurance law to this policy and these allegations. Reversing the ruling concerning Starr and Navigators would likewise have little effect because the court would still interpret the Zurich policy and the excess insurers would remain parties.

Finally, the court found that an appeal would not materially advance the litigation. Other disputes remained pending, including Western’s coverage claims against Allied Specialty, Western’s claims against Gotham and ZDG, cross-claims by Gotham and ZDG against the excess insurers, and counterclaims by Gotham and ZDG against Western.

Disposition

Judge Alison J. Nathan denied Western’s motion for certification of an interlocutory appeal, denied Western’s motion for reconsideration, and granted Zurich’s motion to strike portions of Western’s reply briefs. The court ordered the parties to submit a proposed case-management plan within two weeks. The order resolved docket numbers 215 and 221.