IN Southwest Marine and General Insurance Co. v. United Specialty Insurance Co .The US District Court for the Southern District of New York recently highlighted the limitations on a joint policy endorsement that extends commercial general liability insurance to additional insureds.
Hanjo Contractors Inc. subcontracted Manhattan Steel Design to perform work on a building in New York. In February 2016, Manhattan Steel employee Oscar Perez was struck and injured by a falling object at the project site. Perez later filed suit against Hanjo and the other defendants.
United Specialty Insurance Co . had issued a commercial general liability policy to Manhattan Steel, which was not named as a defendant in the suit. The policy listed Hanjo as an additional insured, but only with respect to liability for bodily injury “caused, in whole or in part, by” the acts or omissions of Manhattan Steel, or the acts or omissions of those acting on behalf of Manhattan Steel in carrying out ongoing operations for the alleged additional insured. The policy also contained an “exclusion clause,” which barred coverage for “bodily injuries” to a Manhattan Steel employee arising out of and in the course of his or her employment, and an “independent contractor exclusion,” which excluded body coverage. damage to independent contractors.
Hanjo filed suit with United Specialty on October 4, 2016 and again on October 20, 2016, seeking coverage as an additional insured under Manhattan Steel’s CGL policy. United Specialty denied coverage on November 10, 2016, citing limitations on additional endorsements provided, as well as acting on and/or independent contractor exclusions. After denying liability, Hanjo and Southwest Marine and General Insurance Co., which defended Hanjo in the lawsuit, filed a declaratory judgment action against United Specialty. Southwest and Hanjo sought, in part, a declaration that United Specialty had a duty to defend and indemnify Hanjo in the lawsuit as an additional insured under the Manhattan Steel CGL policy. Plaintiffs also argued that United Specialty waived its right to rely on the independent contractor action and exclusions by waiting too long to deny coverage under New York Insurance Law section 3420.
On the motions for summary judgment, the plaintiffs argued that the allegations in the lawsuit created a reasonable probability that Perez’s injuries were proximately caused by Manhattan Steel’s acts and omissions, citing allegations that Perez was injured “in the performance of his job duties.” for Manhattan Steel. The court rejected this argument. The court acknowledged that in a 2019 decision, All State Interior Demolition Inc. v. Scottsdale Insurance Co., the state appellate court held that coverage under a similar additional insured endorsement was triggered—even though there were no negligence claims against the named insured—because: (1) the named insured’s actions were implicated through the allegations in the complaint; and (2) a third-party complaint is filed against said insured expressly alleging negligence. The plaintiffs argued that The whole country triggered coverage for Hanjo under the United Specialty policy issued to Manhattan Steel, but the court disagreed. The court found that there were no allegations in the underlying complaint that Manhattan Steel created or controlled the conditions that led to Perez’s injury. Instead, the court noted that it was Hanjo and the other named defendants who allegedly controlled the workplace, and that the complaint did not even name Manhattan Steel, other than stating that it was Perez’s employer. The court held that the acts of a named insured are not sufficiently implicated for purposes of triggering the relevant supplemental insurance language simply because the accident occurred in the workplace.
As a result of its conclusion regarding the additional approval secured, the court found that it did not need to resolve the issue of whether United Specialty’s disclaimer was timely under section 3420(d)(2). The court reasoned that section 3420(d)(2) does not require a timely disclaimer when liability is not caused by an insured or additional insured.