MMP&S Secures a Complete Reversal in the New York Appellate Division on Coverage Dispute

Sarah Ziolkowski of MMP&S secured the complete reversal of a lower court order that denied an insurer’s motion for summary judgment and refused to declare that the insurer had no duty to defend or indemnify the plaintiffs in an underlying Labor Law case.  The seven plaintiffs consisted of the owners and the general contractor of a project where an employee of an insured subcontractor was injured.  The insured had only contracted directly with the general contractor. The lower court denied the insurer’s motion for summary judgment in its entirety. The Appellate Division, Second Department, however, reversed the lower court’s decision and declared that the insurer was not obligated to provide additional insured coverage to the six plaintiffs with whom its insured had not contracted. The Second Department held that blanket additional insured endorsement to the subcontractor’s policy, which provided: “Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations only as specified under a written contract . . . that requires that such person or organization be added as an additional insured on your policy,” required contractual privity between the insured and prospective additional insured. The Second Department found that only the general contractor would satisfy this requirement. The Second Department, thereafter, engaged in a priority of coverage analysis and found that the subcontractor’s insurer, which specifically provided that it would be excess to all other coverage available to an additional insured, was excess to the coverage afforded to the general contractor by its own policy of insurance.  Thus, the Second Department held that there was presently no duty to defend the general contractor and any coverage available to the general contractor would be excess to the general contractor’s own coverage. Finally, the Second Department dismissed the Plaintiffs claim for recovery of attorneys’ fees in this coverage action, a branch of the insurer’s motion for summary judgment that the lower court did not address, finding no legal basis for the fees incurred by commencing this declaratory judgment action.

Practice Areas:
Appellate Practice
Construction Accidents & NY Labor Law