The Travelers Indemnity Company of America v. Ohio Security Insurance Company

Background

Ohio Security issued a commercial general liability policy to Sutega USA Corp. Travelers insured Shawmut Design and Construction. Shawmut, Zara USA, Inc., and Sutega entered into agreements concerning construction of a new Zara store. Sutega’s site-access agreement required it to name Shawmut as an additional insured and provide primary, non-contributory coverage.

John Autenrieth was injured at the construction site on October 27, 2015, while using a table saw. He later sued Eklecco Newco LLC, Shawmut, Apollo, Pyramid Management Group, LLC, Zara, and Palisades Center, LLC in New York state court. Zara later filed a third-party complaint naming Sutega. Travelers sought a declaration that Ohio Security had duties to defend and indemnify Shawmut, Zara, Eklecco, and Pyramid. By the time of the motions, Travelers pursued summary judgment only as to Shawmut and did not oppose Ohio Security’s motion concerning Zara, Eklecco, or Pyramid.

Choice of Law

The parties disputed whether Florida or New York law governed the Ohio Security policy. The court applied New York’s choice-of-law rules and found no actual conflict for purposes of the motions because Ohio Security would have a duty to defend Shawmut under Florida law, which Ohio Security argued should apply.

Shawmut’s Additional-Insured Status

The court held that Shawmut qualified as an additional insured under the Ohio Security policy. The policy extended insured status to an organization that Sutega agreed to add as an additional insured in a written contract. The site-access agreement expressly required Sutega to name Shawmut as an additional insured.

The policy also required the potential liability to have been caused, at least in part, by Sutega or its agents, during Sutega’s ongoing operations for Shawmut that were the subject of the written agreement. The underlying complaint alleged that Apollo caused Autenrieth’s injuries and that Shawmut’s liability was based partly on Apollo’s actions. The parties agreed that Apollo was acting as Sutega’s subcontractor. The court concluded that the site-access agreement concerned Sutega’s work at the project, so the injury potentially arose from Sutega’s ongoing operations for Shawmut.

Because an insurer’s duty to defend is broad, the relevant question was whether the underlying claim could potentially fall within the policy’s coverage. The court therefore held that Ohio Security had a duty to defend Shawmut in the underlying state-court lawsuit.

Zara, Eklecco, and Pyramid

Ohio Security argued that Zara, Eklecco, and Pyramid were not additional insureds because Sutega had not agreed in a written contract to add them as additional insureds. Travelers did not respond to those arguments. The court granted this portion of Ohio Security’s motion as unopposed. Travelers did not seek summary judgment concerning those entities.

Priority of Coverage

Both policies provided coverage for Shawmut, so the court compared their “other insurance” provisions to determine which policy was primary. Travelers’ policy stated that its coverage was excess when the insured was also an additional insured under another policy. Ohio Security’s policy stated that it would be primary and would not seek contribution when a written agreement required primary and non-contributory coverage and the other policy was excess. The site-access agreement required Sutega to provide Shawmut with primary and non-contributory coverage.

Ohio Security did not respond to Travelers’ argument on this issue. Based on the insurance contracts and Ohio Security’s failure to respond, the court agreed that Ohio Security’s coverage for Shawmut was primary and non-contributory.

Indemnity

Ohio Security argued that the court should wait until the underlying state-court lawsuit ended before deciding whether Ohio Security had a duty to indemnify Shawmut. Travelers did not oppose that request. The court deferred ruling on the duty to indemnify.

Disposition

The court granted Travelers’ motion for summary judgment. It granted in part and denied in part Ohio Security’s motion. The court deferred the indemnity issue, directed the clerk to terminate the two motion docket entries, and ordered the parties to file a joint status letter proposing next steps by May 27, 2024.