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;
Page -5-
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
Page -6-
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
Page -8-
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.
Page -9-
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,
Page -10-
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.
Page -13-
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
Page -14-
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