Tremont Renaissance Housing Development Fund Company v. Lexington Insurance…

Background

The plaintiffs were Tremont Renaissance Housing Development Fund Company, Inc., Tremont Renaissance LLC, Tremont Renaissance Affordable LLC, Mastermind Development LLC, and Joy Construction Corporation. They sued Lexington Insurance Company and International Insurance Company of Hannover SE, seeking a declaration that Lexington had to defend and indemnify them in an underlying New York state-court personal-injury and New York Labor Law case involving Gregory Weidtman’s accident at the Tremont construction project. Hannover had not answered or appeared.

The Tremont plaintiffs had contracted with Joy, the general contractor. Joy subcontracted with Urban Precast LLC to supply and install concrete planks. Urban Precast obtained insurance policies from Lexington that required primary and non-contributing additional-insured coverage. Urban Precast also subcontracted with NYC Crane Hoist & Rigging LLC, whose employee, Gregory Weidtman, was injured at the project site in 2017. RLI Insurance Company, Joy’s insurer, was defending the plaintiffs in the underlying case. RLI asked Lexington to defend and indemnify the plaintiffs, but Lexington rejected the request.

Lexington’s Motion to Dismiss or Stay

Lexington argued that the federal case should be dismissed or stayed under a rule allowing a federal court to decline or pause a declaratory-judgment case when a parallel state proceeding is pending. Judge Daniels denied that motion. The court found that the two cases were not parallel because Lexington and Hannover were not parties to the state case, and because the state case concerned negligence and labor-law violations while the federal case concerned insurance coverage. The court also noted that Lexington had removed the case to federal court.

Duty to Defend and Additional-Insured Status

The court adopted Magistrate Judge Jennifer Willis’s report and recommendation in full. It held that the plaintiffs were additional insureds under Lexington’s commercial general liability and umbrella policies. The policies also required primary and non-contributing coverage. The court rejected Lexington’s argument that Hannover’s absence prevented it from deciding Lexington’s obligations, finding that Hannover was not a required party for resolving the plaintiffs’ claims against Lexington.

The court held that Lexington had a duty to defend the plaintiffs in the underlying case. Under New York law, this duty is broad and applies when the allegations potentially fall within the policy. Weidtman alleged that he was injured while performing work connected to Urban Precast’s contract with Joy, which was enough to trigger Lexington’s duty to defend.

The court also held that Lexington owed the plaintiffs reimbursement for reasonable defense costs incurred after the defense request, including reasonable attorney fees and costs. The plaintiffs could not recover costs already reimbursed by RLI. The court stated that pre-request defense costs were not owed. Because the plaintiffs had not submitted documentary evidence establishing the amount of defense costs, the court said an inquiry into damages would be necessary unless the parties agreed on the amount.

Duty to Indemnify

The court denied the plaintiffs’ motion for summary judgment on Lexington’s duty to indemnify. Unlike the duty to defend, the duty to indemnify depends on the actual basis for liability in the underlying case, rather than only on the allegations. A factual dispute remained about whether Weidtman’s accident arose out of Urban Precast’s work for the plaintiffs. Because that dispute could not be resolved on summary judgment, the court did not grant the requested indemnity ruling.

Disposition

The court denied Lexington’s cross-motion to dismiss or stay. It granted the plaintiffs’ motion for summary judgment as to Lexington’s duty to defend and denied the motion as to Lexington’s duty to indemnify. The plaintiffs were found to be additional insureds entitled to primary and non-contributing coverage, Lexington was required to reimburse eligible post-request defense costs incurred to date, and pre-request defense costs were not owed. The court directed that the amount of damages would be addressed through a separate referral unless the parties reached an agreement.