The Charter Oak Fire Insurance Company v. Allied World National Assurance…

Background

Travelers sued Allied for a declaratory judgment—a ruling defining the parties’ insurance obligations. The dispute concerned an underlying state-court tort action in which Leonel A. Centeno alleged that he suffered bodily injury after falling from a ladder while working at a Stickley Furniture Store project. The defendants in that action were Second Brook Properties LLC, Stickley Audi & Co., d/b/a Stickley IC-DISC, Inc., Stickley Furniture Co., and L & JG Stickley, Inc. The opinion collectively calls them the Tort Defendants.

Centeno was working for Cooper Works Inc. when he fell. Cooper had been hired to perform work on the property, and third-party claims were asserted against Cooper for contractual indemnity, breach of a contract requiring insurance, common-law indemnity, and contribution. Travelers insured the Tort Defendants under a policy that generally made its coverage excess when other insurance was available to an additional insured. Allied insured Cooper under a policy containing an additional-insured endorsement and a provision making Allied’s insurance primary and noncontributory when specified conditions were met.

Travelers sent Allied tender letters asking Allied to defend and indemnify the Tort Defendants. Allied refused. The parties filed cross-motions for summary judgment, which asks whether the undisputed record requires judgment as a matter of law.

The 2015 agreement

The 2015 agreement required Cooper to maintain insurance for Stickley and stated that Stickley was an additional insured on a primary and noncontributory basis. Allied argued that the agreement was ambiguous and applied only to an earlier project, relying in part on testimony from Cooper’s owner. The court rejected that argument. It held that the agreement was unambiguous because it had no expiration date or job-specific limitation and required Cooper to “provide and maintain” the specified insurance.

The court also held that Allied’s policy did not require the earlier written agreement to identify a particular job, time period, or named insured. The 2015 agreement therefore satisfied Allied’s requirement that additional-insured status be required by a written contract executed before the occurrence. Because the agreement expressly required primary and noncontributory coverage, and because the other conditions in Allied’s policy were met, the court held that Stickley was an additional insured under Allied’s policy on a primary and noncontributory basis.

The 2019 agreement

Travelers also argued that a 2019 construction contract required Cooper to name Stickley Audi as an additional insured through incorporation of an AIA insurance document. The contract referred to AIA Document A201-2007, whose relevant provision required the contractor to name the owner as an additional insured. But the contract also stated that all references to A201-2007 meant the updated A201-2017 version. The parties submitted conflicting evidence about their knowledge and intent concerning the incorporated terms.

The court identified unresolved concerns about whether the parties knew of and consented to the substituted A201-2017 terms. It did not need to resolve that issue because the 2015 agreement independently established coverage for Stickley and related entities.

Which entities were covered

Allied argued that the 2015 agreement covered only Stickley, while Travelers argued that Stickley Audi was merely Stickley’s d/b/a and that coverage of one therefore covered the others. The court accepted that there was no legal difference between Stickley and Stickley Audi for this dispute. It concluded that the 2015 agreement provided primary coverage for Stickley, Stickley Audi, and Stickley Furniture, which the opinion describes as a nonexistent entity.

The court rejected Travelers’ argument that Second Brook was also covered under either the 2015 or 2019 agreement. It concluded that Second Brook was not covered by Allied’s policy.

Defense and indemnification

The court held that the underlying complaint alleged bodily injury that was possibly caused, at least in part, by Cooper’s acts or omissions. That possibility triggered Allied’s duty to defend Cooper and entities qualifying as additional insureds under Allied’s policy. The court therefore granted Travelers’ summary-judgment motion in part as to defense costs for Stickley, Stickley Audi, and Stickley Furniture.

The court treated indemnification differently. Allied’s indemnification obligation depended on whether the injury was ultimately caused by Cooper’s acts or omissions, or by people acting on Cooper’s behalf. Because liability in the underlying action had not yet been determined, the court held that Travelers’ request for a ruling on indemnification was premature and denied that portion of Travelers’ motion.

Disposition

The court granted in part and denied in part Travelers’ motion for summary judgment. It granted the motion as to defense costs for Stickley, Stickley Audi, and Stickley Furniture, and denied it as to indemnification and coverage for Second Brook. The court likewise granted in part and denied in part Allied’s cross-motion for summary judgment. It directed the Clerk of Court to close the motions and the case. Judge J. PAUL OETKEN entered the order on March 27, 2023.