The Cincinnati Insurance Company v. Harleysville Insurance Company, et al

Filing 32

-CLERK TO FOLLOW UP- ORDER granting in part and denying in part 22 Plaintiff's Motion for Summary Judgment; granting in part and denying in part 27 Defendant's Motion for Summary Judgment. Signed by Hon. Michael A. Telesca on 10/25/2016. (ET)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
__________________________________________
THE CINCINNATI INSURANCE COMPANY,
Plaintiff,

15-CV-6501T

v.
HARLEYSVILLE INSURANCE COMPANY,
et al,

DECISION
and ORDER

Defendants.
__________________________________________
I.

INTRODUCTION
Plaintiff Cincinnati Insurance Company (“Cincinnati”)

brings

this declaratory judgment action, under the Court’s diversity
jurisdiction,
involving

seeking

interpretation

defendants

of

Harleysville

an

insurance contract

Insurance

Company

(“Harleysville”), University of Rochester Medical Center/Strong
Medical Center (“UR” or “the Hospital”), LeChase Construction
Corp., LeChase Construction Services LLC (“LeChase”), J.T. Mauro
Co., Inc. (“Mauro”), and The Kimmel Company, Inc. (“Kimmel”).
Cincinnati (the insurance carrier to Mauro) specifically claims
that Harleysville (the insurance carrier to Kimmel) is required to
defend and provide primary insurance coverage to LeChase, Mauro,
and UR in a pending action in New York Supreme Court in which a
Kimmel

employee

seeks

damages

for

injuries

sustained

while

performing repairs to a building owned by UR.
As a result of Harleysville’s refusal to defend and indemnify
Mauro, LeChase and UR in the state action, Cincinnati commenced the
instant

federal

court

action

requesting,

inter

alia,

a

determination that the Harleysville’s insurance contract issued to
Kimmel provides additional insured status to UR, LeChase, and
Mauro.

Cincinnati

now

moves

for

summary

judgment

against

Harleysville claiming that there are no material issues of fact in
dispute and that it is entitled to judgment in its favor as a
matter of law.
judgment

Harleysville has filed a cross-motion for summary

requesting

the

Court

to

interpret

the

Harleysville

insurance contract in its favor and against Cincinnati’s claims.
For the reasons set forth below, Cincinnati’s motion for summary
judgment is granted in part and denied in part.
II.

BACKGROUND

A.

Underlying incident and New York State action
On December 11, 2008, Jumall Little (“Little”), an employee of

Kimmel was performing HVAC repairs (“the project”) on the roof of
a building owned by the University of Rochester’s Strong Memorial
Hospital when he fell through a skylight.

On August 3, 2011,

Little commenced the underlying state action in Monroe County
Supreme Court against UR/the Hospital, LeChase (general contractor
for the project), Mauro (the subcontractor to LeChase), and Kimmel
(the subcontractor to Mauro), seeking damages for personal injuries
that he suffered as a result of the December 11, 2008 incident.
Little based his claims against UR, LeChase, and Mauro in the
underlying action on common law negligence and violations of New
York Labor Law Sections 200, 240, and 241(6) for allegedly failing

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to provide proper protection and equipment or to maintain safety
devices at the premises.

UR, LeChase, and Mauro filed third-party

claims against Kimmel, Little’s employer, in that action.
B.

Contracts and Subcontracts
UR, owner of the premises at issue, had entered into the prime

contract with general contractor LeChase to provide repairs to the
Hospital’s

HVAC

system.

LeChase

thereafter

entered

into

a

subcontract with Mauro (the “Mauro subcontract”) wherein Mauro
agreed to perform the project under the prime contract and procure
and

maintain

primary

and

non-contributory

general

commercial

liability (“GCL”) insurance, naming LeChase and UR as additional
insureds.
Mauro then entered into a subcontract with Kimmel (the “Kimmel
subcontract”) wherein Kimmel agreed to perform the HVAC project,
perform its duties in accordance with the Mauro subcontract and the
prime contract, and assume all the obligations and responsibilities
assumed by Mauro toward LeChase and UR.

Kimmel was further

obligated to indemnify and defend “J.T. Mauro Co., Inc. [and] the
Owner” in connection with all claims for bodily injuries caused in
whole or in part by any negligent act or omission of Kimmel and its
employees. (Docket No. 22-I (Attachment No. 3.1A)). Kimmel was also
required to maintain a primary and non-contributory CGL insurance
policy naming “Owner and all other parties required of [Mauro]” as
“insureds on the CGL, using ISO Additional Insured Endorsement[.]”

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(Docket No. 22-I (Attachment No. 3.1B)).

This language is clear

and unambiguous that pursuant to the Kimmel subcontract, Kimmel was
specifically required to maintain a CGL insurance policy naming
only Mauro and UR as additional insureds.

It is noteworthy that an

attachment to the Kimmel subcontract, entitled “Certificate of
Liability Insurance,” refers directly to the Harleysville coverage
and

provides

UR/Strong

are

the

following:

named

as

“Certificate

Additional

Holder

Insureds

with

[Mauro]

and

respect

to

operations performed at TKC#3-3542, U/R 6-6900.” (Docket No. 22-I,
p.

11).

No

mention

is

made

of

LeChase,

specifically,

and,

therefore, it cannot be considered an additional insured to the
Harleysville policy.
The Kimmel subcontract, as to performance, provides:
Subcontractor agrees to perform the work identified below
in accordance with this Subcontract, any attachments and
all documents comprising the Prime Contract between
[Mauro] and [LeChase] and [UR], all of which are
incorporated by reference (“The Contract Documents”).
The Subcontractor shall assume toward [Mauro] all the
obligations and responsibilities which [Mauro] assumes
toward [LeChase] and [UR], except as otherwise expressly
provided in this Subcontract.
(Docket No. 22-I, p. 2). This provision requires Kimmel to “assume
toward [Mauro] all the obligations and responsibilities which
[Mauro] assumes toward [LeChase] and [UR]” in the performance of
the contract.

Yet no reference to LeChase is listed in the

insurance requirements (Attachment 3.1B) of the Kimmel subcontract
to specifically include it as an additional insured.

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C.

Insurance policies
Cincinnati

issued

a

CGL

insurance

policy

to

Mauro

with

effective dates of March 1, 2008 to March 1, 2009, policy numbered
CPP 082 26 45, with limits of $1,000,000.00 per occurrence, and
$2,000,000.00

in

the

aggregate

(the

“Cincinnati

policy”).

Harleysville issued a CGL policy to Kimmel for the period of March
1,

2008

to

March

1,

2009

with

limits

of

$1,000,000.00

per

occurrence, and $2,000,000.00 in the aggregate (the “Harleysville
policy”). The Harleysville policy provided the following provision
for additional insureds: “ADDITIONAL INSURED – OWNERS, LESSEES, OR
CONTRACTORS

–

AUTOMATIC

STATUS

WHEN

REQUIRED

IN

CONSTRUCTION

AGREEMENT WITH YOU.” Cincinnati’s motion for summary judgment,
Exhibit A.

This language is clear and unambiguous that the

Harleysville policy applies to “additional insureds - owners, . .
. or contractors” automatically when required in a construction
agreement with Kimmel.
D.

Additional Insured Endorsements
The dispute between Cincinnati and Harleysville centers on

their conflicting interpretations of two endorsements contained in
the Harleysville policy: CG 20 10 and CG 20 33.

Endorsement CG 20

10 provides that an additional insured includes the persons or
organizations shown in the Schedule
but only with respect to liability for ‘bodily injury’ .
. . caused, in whole or in part by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf;
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in the performance of your ongoing operations for the
additional insured(s).
Endorsement CG 20 33 provides additional insured status to “any
person or organization for whom you are performing operations when
you and such person or organization have agreed in writing in a
contract or agreement that such person or organization be added as
an additional insured on your policy.”
E.

The present action
Cincinnati demanded that Harleysville provide a defense and

indemnification to each of the defendants in the underlying state
action, which include Mauro, LeChase, and UR.

On November 14,

2011, Harleysville disclaimed coverage to UR and LeChase, following
which

Cincinnati commenced this action on August 20, 2015 (Docket

No. 1) and moved for summary judgment on May 16, 2016 requesting
the Court to determine that UR, LeChase, and Mauro are to be
considered

additional

(Docket No. 22).

insureds

under

the

Harleysville

policy

On July 15, 2016, Harleysville filed a cross-

motion for summary judgment (Docket No. 27).
III. DISCUSSION
A.

Summary Judgment Standard
Rule 56(a) of the Federal Rules of Civil Procedure provides

that

summary

judgment

shall

be

granted

if

the

moving

party

demonstrates “that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”
When considering a motion for summary judgment, all genuinely
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disputed facts must be resolved in favor of the party against whom
summary judgment is sought. See Tolan v. Cotton,
134 S. Ct. 1861, 1863 (2014).

, U.S.,

If, after considering the evidence

in the light most favorable to the nonmoving party, the Court finds
that no rational jury could find in favor of that party, a grant of
summary judgment is appropriate. See Scott v. Harris, 550 U.S. 372,
380 (2007)(citing Matsushita Elec. Industrial Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-587 (1986)).
B.

Interpretation of the Harleysville Policy clearly establishes
that Mauro and UR qualify as additional insureds under this
policy.
Because

the

parties

do

not

dispute

the

material

facts

underlying the claim, this case turns on the interpretation of the
Harleysville policy whether LeChase and UR qualify as additional
insureds.

It is undisputed that this diversity action is governed

by New York law. “Under New York insurance law, the plain language
of an insurance policy, read ‘in light of common speech and the
reasonable expectations of a businessperson’ will govern if the
language is unambiguous.” VAM Check Cashing Corp. v. Fed. Ins. Co.,
699 F.3d 727, 729 (2d Cir. 2012), quoting Belt Painting Corp. v.
TIG Ins. Co., 100 N.Y.2d 377, 383(2003).
A reviewing court must decide whether, affording a fair
meaning to all of the language employed by the parties in
the contract and leaving no provision without force and
effect, there is a reasonable basis for a difference of
opinion as to the meaning of the policy. If this is the
case, the language at issue would be deemed to be
ambiguous and thus interpreted in favor of the insured.

Page -7-

Id., quoting Fed. Ins. Co. v. IBM, 18 N.Y.3d 642, 646 (2012).
In opposition to Cincinnati’s motion for summary judgment and
in support of its cross-motion for summary judgment, Harleysville
agrees that Mauro is an additional insured under its policy but
denies that it owes additional insured status to UR or LeChase.
Harleysville argues that the CG 20 33 privity endorsement confers
additional insured status only to entities in contractual privity
with Kimmel.

Therefore,

because

there were no

contracts

in

existence between Kimmel and UR or LeChase on the date of the
accident, they cannot claim additional insured status.
Cincinnati agrees that CG 20 33, “the Privity Endorsement[,]
does not provide additional insured status to U of R or LeChase.”
Cincinnati’s memorandum of law in opposition (Docket No. 29-4), p.
2.

Cincinnati asserts, however, that the GC 20 10 endorsement

provides “automatic

additional

insured status

to

U of

R

and

LeChase.” Cincinnati’s memorandum of law in opposition (Docket No.
29-4), p. 2.
Harleysville responds that GC 20 10 applies only “to entities
identified in the attached ‘Schedule.’ The ‘Schedule’ is blank and,
therefore, the reader is referred to the Declarations Page for
further instructions,” which provides:
Additional Insured - Owners, Lessees Or
Contractors - Scheduled Person Or Organization
Designation of Premises:
Location 001 Building 001
Name of Person or Organization: Rochester Institute Of
Technology
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120 Lomb Memorial Dr
Rochester NY 14623
Contractor
Additional Insured - Owners, Lessees Or
Contractors - Automatic Status When Required In
Construction Agreement With You
ADDITIONAL INSURED - OWNERS, LESSEES, OR
CONTRACTORS - AUTOMATIC STATUS WHEN
REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU.
Harleysville Policy MPA8E1653 (Docket No. 22-9 (p. 16-17, 67-68)).
Cincinnati argues that Harleysville fails to recognize the second
“additional insured” provision, as shown above, which covers those
in “construction agreements” with Kimmel. Cincinnati’s memorandum
of law in opposition (Docket No. 29-4), p. 5.

Harleysville

responds that the privity endorsement (CG 20 33) must be read in
conjunction

with

CG

20

10

(covering

those

in

construction

agreements with Kimmel), arguing that to do otherwise would render
the privity endorsement meaningless.

Harleysville does concede,

however, that Kimmel was required to provide coverage to UR and
Mauro as additional insureds under the Kimmel subcontract.
The Court finds the language of the Harleysville policy to be
unambiguous.

Endorsement CG 20 33 clearly confers additional

insured status only upon persons or organizations for whom the
insured

is

agreement

“performing
that

requires

operations”
the

as

insured

provided
to

add

in

that

organization as an additional insured to the policy.

a

written

person

or

A plain

reading of the Kimmel subcontract reveals that Kimmel agreed to
name Mauro and UR as additional insured parties.
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At no point in

the subcontract does Kimmel expressly agree to add LeChase to the
Harleysville

policy

as

an

additional

insured.

Cincinnati’s

argument that the provision in the Kimmel subcontract in which
Kimmel agreed to assume toward Mauro all the obligations and
responsibilities that Mauro assumed toward LeChase in the Mauro
subcontract obligated Kimmel to name LeChase as an additional
insured to the Harleysville policy is unavailing.

It is well

settled that the requirement to procure additional insured coverage
must be specifically stated in a construction contract before it
can be interpreted as such.
clauses

in

a

construction

“Under New York law, incorporation
subcontract,

which

incorporate

by

reference clauses in the prime contract into the subcontract, bind
a subcontractor only to the prime contract provisions relating to
the

scope,

quality,

character

and

manner

of

the

work

to

be

performed by the subcontractor.” S. Leo Harmonay, Inc. v. Binks
Mfg. Co., 597 F. Supp. 1014, 1024 (S.D.N.Y. 1984), aff'd sub nom.
Harmonay Inc. v. Binks Mfg. Co., 762 F.2d 990 (2d Cir. 1985).

The

Kimmel subcontract contains no clear language requiring Kimmel to
provide additional insured coverage to LeChase.

While this may

have been contemplated by the parties, it was never expressly
stated in the general conditions or the insurance requirements of
the subcontract, nor does the “Certificate of Liability Insurance”
attached to the Kimmel subcontract reveal any such intention.
Thus, Cincinnati’s argument that under GC 20 10 the second
additional insured designation listed in the policy’s Declarations,
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which

provide

that

owners,

lessees,

or

contractors

are

automatically entitled to additional insured status when required
in a construction agreement with Kimmel, is unsupported as to
LeChase.

While both parties agree that GC 20 10 would not require

contractual

privity

endorsement

is

with

limited

Kimmel,
to

the

entities

Court

finds

identified

that

as

person(s) or organization(s) in the Declarations.

this

scheduled
Cincinnati

contends that although neither LeChase or UR are actually named in
the Declarations, the second additional insured designation, which
provides

for

Agreement

“Automatic

With”

Kimmel,

Status

When

triggers

Required

their

In

Construction

coverage

under

the

Harleysville policy.
A plain reading of CG 20 10 precludes this interpretation as
to LeChase since it expressly requires that any additional insured
must be listed “in the Schedule.” The Schedule, which is blank,
contains

headings

identifying

additional

insured

organizations and locations of the covered operations.

persons

or

The reader

is then directed to the Declarations for a listing of the Scheduled
entities.
LeChase

nor

A review of the Declarations reveals that neither
UR

Organization.”

have

been

named

Consequently,

as

LeChase

insured status pursuant to CG 20 10.

a

“Scheduled

cannot

claim

Person

or

additional

Affording a fair meaning to

all of the language employed by the parties in this policy, the
Court concludes that there is no reasonable basis for a different
interpretation of this endorsement.

Consequently, the Court finds

Page -11-

that

LeChase

does

not

qualify

for

additional

insured

status

coverage under the Harleysville policy.
B.

Reimbursement of fees and costs in defense of Mauro.
Cincinnati contends that it is entitled to reimbursement of

attorneys’ fees and costs incurred during its defense of Mauro in
the underlaying action.

Harleysville responds that Cincinnati

elected to control the defense of Mauro as a strategic measure and,
therefore, should bear the costs of such a defense.

Cincinnati

replies that Harleysville agreed to conditionally represent Mauro
“subject to all terms and conditions of our insured’s Commercial
Liability Policy” only and declined to indemnify Mauro. The record
reveals that Harleysville initially disclaimed additional insured
coverage for Mauro on November 14, 2011.

However, in April 2012,

Harleysville subsequently stated that it would provide a qualified
defense to Mauro subject to policy terms and conditions and without
the reimbursement of past defense costs.

Based on this showing,

and because Harleysville concedes that it owes a duty to defend and
indemnify Mauro as an additional insured under the Harleysville
policy, Cincinnati is entitled to reimbursement for costs related
to its defense of Mauro up to the date of this Order.
IV.

CONCLUSION
For

the

reasons

set

forth

above,

the

Court

finds

that

Harleysville is required to afford coverage to Mauro and UR as
additional insureds under its insurance policy with Kimmel but not

Page -12-

as to LeChase, which the Court finds does not qualify as an
additional insured under the same policy.

Cincinnati’s motion for

summary judgment seeking declaratory judgment is therefore granted
as to Mauro and UR but denied as to LeChase.

Harleysville’s cross-

motion for summary judgment seeking to disclaim insurance coverage
is

granted

as

to

LeChase

only

and

denied

as

Mauro

state

court

and

UR.

Therefore, it is hereby
ORDERED

that,

in

the

underlying

action,

Harleysville is required to defend and indemnify Mauro, which is
determined to be an additional insured under the Harleysville
policy issued to Kimmel; and it is further
ORDERED

that,

in

the

underlying

state

court

action,

Harleysville is required to defend and indemnify the University of
Rochester Medical Center/Strong Medical Center, which is determined
to be an additional insured under the Harleysville policy issued to
Kimmel; and it is further
ORDERED

that,

in

the

underlying

state

court

action,

Harleysville is not required to afford insurance coverage to
LeChase, which is determined not to be an additional insured under
the Harleysville policy; and it is further
ORDERED that Harleysville is required to reimburse Cincinnati
for reasonable costs and fees incurred by Cincinnati in its defense
of Mauro in the underlying state action; and it is further
ORDERED that the Clerk of the Court close this case.

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ALL OF THE ABOVE IS SO ORDERED.
S/ Michael A. Telesca
MICHAEL A. TELESCA
United States District Judge
Dated:

Rochester, New York
October 25, 2016

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