Consolidated Edison Company of New York, Inc. v. Ace American Insurance Company

Background

Altagracia Ramirez sued Plover Development Fund Company, Inc. and Plover Apartments, LLC after tripping on a sidewalk near 1175 Gerard Avenue in the Bronx on April 20, 2015. The Plover entities brought ConEd into that lawsuit, alleging that ConEd had opened the sidewalk and placed gravel where Ramirez fell.

ConEd had contracted with Petmar Builders, A Division of Yonkers Contracting Co. Inc. to perform work on ConEd’s gas lines in the Bronx. The contract required Petmar to obtain insurance naming ConEd as an additional insured. ACE issued the relevant policy to Petmar’s parent company, Yonkers Contracting Company, Inc. The policy’s additional-insured coverage applied to liability for bodily injury caused, in whole or in part, by Petmar’s work.

ConEd tendered the defense of the underlying lawsuit to ACE. ACE investigated and learned that Petmar had worked at the accident location on July 30, 2014—about 10 months before Ramirez’s accident. The investigation also indicated that Petmar had performed a temporary patch, while ConEd was expected to arrange a permanent repair. ACE nevertheless declined to defend ConEd, stating that there was no coverage because Petmar’s work had been completed and signed off 10 months before the accident.

Motions and legal standard

The parties filed cross-motions for summary judgment. ConEd sought a ruling that ACE had a duty to defend it. ACE sought a ruling that it had no such duty.

Applying New York law, the court explained that an insurer’s duty to defend is broader than its duty to indemnify. The insurer must defend when the allegations and facts known to it create a reasonable possibility of coverage. This duty applies to additional insureds as well as named insureds. The court considers the factual information available to the insurer when the defense was requested, not merely conclusory assertions or speculation.

Court’s analysis

The court held that the information available to ACE created a reasonable possibility that Petmar’s conduct proximately caused Ramirez’s injury. ACE knew that Petmar had worked at the accident location, had made a temporary patch, and was not responsible for the permanent repair. The underlying third-party complaint alleged that gravel at that location caused Ramirez’s fall. Together, those facts supported a reasonable possibility that Petmar’s work had created or contributed to the dangerous condition.

The court rejected ACE’s argument that the 10-month interval between Petmar’s work and the accident eliminated proximate cause as a matter of law. The passage of time is one factor in deciding whether conduct legally caused an injury, but it does not automatically sever the causal chain. The court also concluded that the statement in ConEd’s work report that the location was “left safe” did not definitively establish that the work was actually safe.

The court acknowledged that ACE had reasonable arguments based on the sparse allegations in the initial lawsuit and the conclusory allegations in ConEd’s third-party complaint. But the additional facts obtained through Yonkers’ investigation supported the possibility that Petmar had performed the temporary patch at the accident location. The court also rejected ACE’s argument that it could not consider allegations in a third-party complaint filed by the party seeking insurance coverage. The court stated that an insurer must consider well-pleaded facts in such a complaint when evaluating its duty to defend.

Disposition

The court held that the underlying facts suggested a reasonable possibility of coverage and that ACE therefore had a duty to defend ConEd in the underlying action. ConEd’s motion for summary judgment was GRANTED, and ACE’s motion for summary judgment was DENIED. The court directed the clerk to terminate the two pending motions.