New York Marine and General Insurance Company v. Travelers Property Casualty…

Background

New York Marine sued Travelers seeking a declaration about Travelers’ duty to defend and indemnify Omnibuild Construction Inc. in a personal-injury lawsuit pending in New York state court. Omnibuild was a primary insured under New York Marine’s policy and an additional insured under Travelers’ policy.

Thomas McHenry, an employee of Alliance Mechanical Group, was injured at a construction project when he struck his head on a low-hanging beam or structure and fell down a stairwell. McHenry sued Omnibuild and others, but did not name Alliance as a defendant or allege that Alliance caused his injuries. Omnibuild and the other defendants later brought Alliance into the state-court case as a third-party defendant. That third-party complaint alleged, based only on information and belief, that the accident arose from Alliance’s work and that Alliance’s negligence caused McHenry’s injuries.

Alliance’s Travelers policy included a blanket additional-insured endorsement. It covered an additional insured only to the extent that the injury was caused by acts or omissions of Alliance or one of its subcontractors in performing covered work. The endorsement did not cover the additional insured’s own independent acts or omissions.

Motions and governing law

The parties filed cross-motions for summary judgment. Summary judgment is a decision without a trial when the evidence shows no genuine dispute over an important fact and one party is entitled to judgment under the law. New York Marine did not respond to Travelers’ statement of material facts, so the court treated those facts as admitted under the court’s local rule.

The parties agreed that New York law applied. Under that law, an insurer’s duty to defend is broad: the insurer generally must defend when the allegations in the underlying complaint suggest a reasonable possibility that the policy covers the claim. The court looks to pleaded facts rather than unsupported labels or conclusions. An insurer may also have a duty to defend based on underlying facts known to it that create a reasonable possibility of coverage.

Court’s analysis

The court interpreted the policy’s requirement that the injury be “caused by” Alliance’s acts or omissions as limiting coverage to injuries proximately caused by Alliance. In this context, the provision protected Omnibuild from liability imposed because of Alliance’s negligence, rather than from liability based on Omnibuild’s own independent conduct.

The underlying complaint did not allege that Alliance was responsible for the beam or structure that caused McHenry’s injury. It mentioned Alliance only as McHenry’s employer and as the subcontractor performing heating, ventilation, and air-conditioning work. The record stated that Alliance was responsible only for that work, not for maintaining the workspace or other construction. The court therefore concluded that the complaint did not suggest a reasonable possibility that Omnibuild’s potential liability was covered by Travelers’ policy.

The court also rejected New York Marine’s reliance on the third-party complaint. That pleading’s conclusory assertion that Alliance’s negligence caused McHenry’s injuries was not supported by facts suggesting that Alliance was responsible for the accident. The court further found no other underlying facts known to Travelers that created a reasonable possibility of coverage. Materials describing the accident attributed it to a poorly placed beam, and an email from McHenry’s counsel stated that the condition causing the injury had nothing to do with Alliance’s heating, ventilation, and air-conditioning work.

Disposition

The court concluded that Travelers had no duty to defend Omnibuild and, because there was no duty to defend, no corresponding duty to indemnify Omnibuild. New York Marine’s motion for summary judgment was DENIED, and Travelers’ motion for summary judgment was GRANTED. The court directed the Clerk to enter judgment consistent with the opinion and close the case.