Zvi Construction Co., LLC v. The Hartford Insurance Company et al
Filing
76
MEMORANDUM AND ORDER denying 39 Motion for Summary Judgment; denying 44 Motion for Summary Judgment; granting 45 Motion for Summary Judgment; granting 50 Motion for Summary Judgment. So Ordered by Chief Judge Mary M. Lisi on 7/18/2011. (Duhamel, John)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
ZVI CONSTRUCTION CO., LLC
Plaintiff,
v.
C.A. No. 09-547-ML
THE HARTFORD INSURANCE COMPANY
and H. CARR & SONS, INC.,
Defendants.
H. CARR & SONS, INC.,
Third-Party Plaintiff,
v.
WILLIS OF NEW YORK, INC., f/k/a WILLIS
CONSTRUCTION SERVICES
CORPORATION OF CONNECTICUT,
Third-Party Defendant.
MEMORANDUM AND ORDER
The
plaintiff
in
this
case,
ZVI
Construction
Co.,
LLC
(“ZVI”)1, a Massachusetts construction management company, seeks a
declaration (Count I of ZVI’s complaint) that ZVI is an additional
insured under a liability insurance policy (the “Policy”) issued by
defendant
The
Hartford
Insurance
Company
(“The
Hartford”)
to
1
Although ZVI is the named plaintiff in this action, it is
undisputed that Travelers Insurance Company (“Travelers”), ZVI’s
insurer, is conducting this litigation in the name of ZVI. H. Carr
SOF 24.
1
defendant H. Carr & Sons, Inc. (“H. Carr”), a Rhode Island general
service interior contractor, with respect to claims brought against
ZVI by former H. Carr employee David Siden (“Siden”) after Siden
was injured on a construction project.
asserting
claims
of
Breach
of
Contract
In addition, ZVI is
(Count
II),
Unjust
Enrichment (Count III), and Detrimental Reliance (Count IV) against
H. Carr.
ZVI seeks damages allegedly caused by The Hartford’s
refusal to defend and indemnify ZVI in connection with Siden’s
claim or, in the alternative, ZVI seeks damages against H. Carr
based on H. Carr’s alleged breach of its agreement with ZVI to
obtain insurance for the benefit of ZVI which, ZVI asserts, would
have protected ZVI against Siden’s claim.
H. Carr, which specifically denies that it agreed to obtain
insurance coverage for ZVI, has asserted a cross-claim against The
Hartford.
In its cross-claim, H. Carr states that, if the Court
finds that H. Carr was obligated to procure insurance coverage for
ZVI, “then the Hartford is responsible for the damages alleged by
ZVI.”
H. Carr Answer and Cross-Claim ¶ 8.
In
addition,
complaint
against
H.
Carr
Willis
has
of
recently
New
York,
filed
Inc.
a
three-count
f/k/a
Willis
Construction Services Corporation of Connecticut (“Willis”), an
authorized agent of The Hartford and, at the time in question, H.
2
Carr’s insurance broker.2 H. Carr’s allegations against Willis
include: Count I - Breach of Contract, Count II - Negligent
Misrepresentation, and Count III - Negligence.
In the event ZVI
prevails in its claims against H. Carr, H. Carr seeks a judgment
against Willis for all sums that are found due ZVI from H. Carr,
plus interest, costs and attorneys’ fees.
From the submissions
presented to this Court, it is evident that the parties have
engaged in extensive discovery.
The case is now before the Court (1) on cross-motions for
summary judgment by ZVI, The Hartford, and H. Carr, with respect to
ZVI’s complaint, and (2) on cross-motions for summary judgment by
H. Carr and Willis with respect to H. Carr’s third party complaint.
The Court has had the benefit of extensive briefing by all parties,
supplemented by numerous exhibits and deposition transcripts.
The
parties have submitted a statement of agreed facts (“SOF”) with
respect to all parties’ motions for summary judgment. In addition,
each party has submitted an individual statement of undisputed
material facts, in response to which several of the parties have
filed statements of disputed facts (“SDFs”).3
2
It is undisputed that The Hartford is paying for H. Carr’s
defense against the claims raised in this litigation. SVI SOF 6.
3
The Court notes that H. Carr is the only party in this
litigation requesting a hearing on its motion for summary judgment.
In light of the extensive memoranda and numerous exhibits submitted
3
I. Factual Background and Procedural History
In 1999, ZVI was hired by the IMAX Corporation as general
contractor to construct the IMAX Theater at the Providence Place
Mall in Rhode Island (the “Project”). SOF 1, 2.
ZVI, by an
“Invitation to Bid” dated September 24, 1999, invited H. Carr to
“bid on the interior construction package for [the Project].”
Carr SOF 34, Ex. 14.
H.
H. Carr indicated that it would bid on the
Project and requested copies of the plans and specifications. Id.
According
to
H.
Carr,
ZVI
provided
it
with
the
plans
and
specifications, but sent no other materials to H. Carr at that
time.
H. Carr SOF 35.
On October 25, 1999, H. Carr submitted a bid to ZVI to perform
the work for a lump sum of $683,000. H. Carr SOF 37, H. Carr Ex.
15.
On October 28, 1999, representatives of ZVI and H. Carr
discussed
the
work;
they
agreed
that
H.
Carr
would
provide
additional work; and they increased the price for H. Carr’s work to
$720,000.
H. Carr SOF 38, H. Carr, Ex. 15.
Subsequently, H. Carr
began performing work as a subcontractor for ZVI by installing
drywall and soundproofing material for the IMAX theater pursuant to
the October 25, 1999 bid. SOF 4, H. Carr SOF 5, 38.
by all parties, the Court deems a hearing unnecessary and will
decide the parties’ motions on briefs. See Fed. R. Civ. P. 78 (b);
CIA. Petrolera Caribe Inc. v. Arco Caribbean, Inc., 754 F.2d 404,
411 (1st Cir. 1985)(explaining that trial court has “wide latitude”
in determining whether oral argument is necessary before rendering
summary judgment).
4
Shortly before January 7, 2000, H. Carr submitted to ZVI a
request for payment for work that H. Carr had performed.4 SOF 8, H.
Carr SOF 52.
ZVI informed H. Carr that no payment would be issued
until H. Carr provided a certificate of insurance.
SOF 9. On
January 7, 2000, ZVI submitted to H. Carr three copies of a written
document entitled “Standard Form of Agreement Between Contractor
and Subcontractor” (the “AIA Form”), together with a written
document
entitled
Construction.”
“General
Conditions
ZVI SOF 1, ZVI Ex. A.
of
the
Contract
for
The transmittal letter
describes the copies as “Subcontracts” and indicates that they have
been submitted “For Signature.”
Willis SOF 15, Willis Ex. 5.
The
letter also contains a request to “sign and return all copies to
our office for further execution.”
Willis Ex. 5. It is undisputed
that this was the first time ZVI sent any AIA contract form to H.
Carr and that the parties did not discuss any of the specific terms
in the AIA Form before ZVI sent the form to H. Carr. H. Carr SOF
41, 44.
The AIA Form is a form contractor-subcontractor agreement
developed by the American Institute of Architects (“AIA”) to
delineate the rights and responsibilities of a subcontractor and
contractor in connection with a construction project.
ZVI Ex. A.
4
According to Richard Hogan, then project manager for ZVI, this
was the first requisition H. Carr made to ZVI for work H. Carr had
performed. Hogan Tr. 99:24-100:4 (Dec. 21, 2010).
5
The AIA Form ZVI sent to H. Carr had been filled in to, inter alia,
describe the scope of the work H. Carr was to perform on the
Project, see Article 8; it specified a Subcontract sum of $720,000
for performance of the scope of work, see Article 10.1; and it
provided a schedule and conditions for progress payments by ZVI to
H. Carr, see Article 11.2.
Certain provisions of the AIA Form were modified by ZVI,
including Article 4.6.1 on indemnification; other provisions had
been
eliminated
in
their
entirety,
Arbitration. ZVI Ex. A at 4, 5.
subcontractor
to
purchase
and
including
Article
6
on
Article 13.1 required the
maintain
liability
insurance
coverage. The modified provision states that “[s]ubcontractors are
restricted from working on-site until a valid original Certificate
of Insurance is received . . . The Subcontractor must add the
Contractor and the Owner as primary additional insureds.”
ZVI Ex.
A at 9.
It is undisputed that the AIA Form was never signed by the
parties.
Hartford
SOF
2.
H.
Carr
employee
James
Anderson
(“Anderson”), who was responsible for negotiating and signing the
AIA Form, refused to sign it because he objected to certain terms
contained
therein,
particularly
the
amendments
made
to
the
indemnification and arbitration provisions, as well as to certain
language concerning the scope of work.
SOF 3.
H. Carr SOF 49, Hartford
According to Anderson, he called ZVI to communicate his
6
objections.
Anderson
contacted
ZVI
employee
Mellisa
Pastore
(“Pastore”), and told her that he had a problem with the proposed
AIA Form, and asked to speak to someone with authority.
Pastore
took a message, but Anderson’s call was not returned and he did not
follow up.
H. Carr SOF 50, 51.
On January 7, 2000, Pastore sent a fax to H. Carr employee
David Nowak, who performed billing and collections work. SOF 10, H.
Carr SOF 58.
The fax cover sheet, which is marked “urgent,”
references “IMAX - Providence Cert. of Ins.” SOF Ex. A at 1.
Notes/Comments,
Pastore
wrote
“Please
get
to
me
as
Under
soon
as
possible, so I can mail your check.” SOF 10, SOF Ex. A at 1.
Attached to the fax cover sheet are pages 9 through 11 from an
unidentified agreement that contains, inter alia, a provision for
“TENANT’S INSURANCE COVERAGE DURING CONSTRUCTION,” which requires
that the “Tenant” not permit its contractors to commence any work
until certain minimum insurance coverage has been obtained for
general contractors and subcontractors.
SOF Ex. A at 2-4.
The
final page of Pastore’s fax is a partially filled-in form ACORD
CERTIFICATE OF LIABILITY INSURANCE.
On
January
10,
2000,
H.
Id. at 5.
Carr
(“Siddall”) forwarded, also by fax,
employee
Joseph
Siddall
Pastore’s entire fax to
Beverly A. Adamick (“Adamick”) at Willis, with which H. Carr had a
standard
broker/client
relationship.
Although
Willis
had
previously submitted a written proposal to H. Carr to provide
7
insurance services, no formal written contract existed between the
parties.
Willis SOF 2, H. Carr SDF 1.
Willis, an authorized
insurance agent for The Hartford, was authorized by The Hartford to
issue certificates of insurance on behalf of The Hartford insureds.
SOF
13-14, Willis SOF 3, 4.
Siddall’s fax cover sheet references
“Insurance Cert Per Attached (ZVI Construction - IMAX Theatre)” and
states: “Bev I need this one to be faxed to me today.
to discuss language.”
Can you call
SOF 11, SOF Ex. B at 1.
In response, Adamick sent a letter to ZVI, stating: “Enclosed
is the Certificate of Insurance issued on behalf of H. Carr & Sons,
Inc.
Should you have any questions please feel free to call.”
12, SOF Ex. C at 1.
SOF
Attached to Adamick’s letter is a two-page
ACORD CERTIFICATE OF LIABILITY INSURANCE (the “Certificate”), which
provides, inter alia:
THIS CERTIFICATE IS ISSUED AS A MATTER OF
INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE
CERTIFICATE HOLDER.
THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
BELOW.
The Certificate lists H. Carr as the insured, The Hartford,
Federal
Hartford
Insurance
Fire
Company,
Insurance
Beacon
Company
Mutual
as
the
Insurance
Co.,
companies
affording
coverage, and ZVI as the Certificate holder.
With respect to
coverage, the Certificate provides:
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED
BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE
POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,
8
and
TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH
RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY
PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED
HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICES. LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.
Page 2 of the Certificate provides that “[t]he interest of the
ZVI Construction, the Landlord and the Landlord’s Constrcution
[sic] Manager are included as Additional Insured for all coverages
except Workers’ Compensation for the project listed above . . . All
liability policies are on a primary and non-contributory basis.”
According to the cover letter, copies were sent to Siddall at H.
Carr and the insurance companies listed on the Certificate as
SOF Ex. C at 1.5
affording coverage.
Once ZVI received the Certificate, it processed payment to H.
Carr.
Willis SOF 23.
According to Anderson’s testimony at his
deposition, he requested that the Certificate of Insurance be
issued “[b]ecause I wanted to make sure we got paid.”
ZVI SOF 5,
ZVI Ex. D, Anderson Depo. Tr. at 36:1.
To perform its work on the Project, ZVI entered into a
subcontract
with
(“Brand”),
which
“Scaffold”)
for
Brand
was
to
various
Scaffold
provide
Rental
a
and
Erection,
multi-trade
subcontractors
to
Inc.
scaffold
(the
use
during
the
5
There is nothing to indicate that Willis either requested a
copy of any construction agreement to which H. Carr was a party, or
that Willis discussed the matter with H. Carr or any other party
before issuing the Certificate.
9
construction.
H. Carr SOF 2. Brand erected the Scaffold and ZVI
was responsible to have a qualified person inspect it daily. H.
Carr SOF 3. H. Carr employees, along with other subcontractors for
ZVI, used the Scaffold during their work. H. Carr SOF 6.
On March 23, 2000, H. Carr employee Siden was working on top
of the Scaffold when the Scaffold collapsed. Siden was seriously
injured.
SOF ¶¶ 5-7.
Siden and his family filed a civil action in
Rhode Island state court (the “Siden Claim”) against Brand, ZVI,
IMAX, the Providence Place Mall, and various other named and
unnamed defendants.6 SOF 16, SOF Ex. E.
Siden’s second amended
complaint alleges, inter alia, that (1) Brand was negligent “in
that it failed to properly select and erect the scaffolding, and
further failed to properly inspect or recognize deficient or
defective components and in failing to have a person competent to
perform such duties sign off on said scaffolding thereby creating
a dangerous and unsafe condition,” Siden Complaint ¶25; and (2) ZVI
breached its duty to Siden by “negligently supervising, failing to
supervise or improperly supervising various subcontractors and/or
traded contractors and failing to provide a safe work site.”
Id.
6
Siden did not file a claim against H. Carr, his employer. H.
Carr SOF 11. It is undisputed that Siden collected workers’
compensation benefits for his injuries from H. Carr’s worker’s
compensation insurer. H. Carr SOF 8. Pursuant to the exclusivity
provisions of Rhode Island workers compensation laws, an employee
who receives such compensation for a personal injury in the course
of employment waives his common-law rights to sue his employer. R.
I. Gen. Laws § 28-29-17.
Cianci v. Nationwide Ins. Co., 659 A.2d
662, 668 (R.I. 1995).
10
at ¶ 32.
On May 14, 2002, Travelers, on behalf of ZVI, its insured,
sent a written demand for contractual indemnification to The
Hartford.
ZVI SOF 2, ZVI Ex. B., Willis SOF 28.
The demand letter
asserts that ZVI had a contractual relationship with H. Carr.
Travelers enclosed a copy of the unsigned AIA Form and referred to
the indemnification provision of paragraph 4.6.1. and the insurance
provisions in Article 13.
ZVI Ex. B at 1. Travelers also enclosed
a copy of the Certificate issued by Willis, “which supports the
additional insured coverage requirements of [H. Carr] as outlined
in the contract” and the CGL [Commercial General Liability] Form of
ZVI’s Policy with Travelers.
Id. at 1-2.
Travelers requested a
copy of H. Carr’s CGL policy issued by The Hartford.
According to
Travelers, an OSHA [Occupational Safety and Health Administration]
investigation into Siden’s accident determined that H. Carr had
violated numerous safety regulations and was fined more than
$60,000. The letter also notes that Reliance, Brand’s CGL insurer,
was bankrupt.
ZVI Ex. A.
The Hartford did not provide a defense or indemnity to ZVI
under the H. Carr Policy.
SOF 17.
According to The Hartford’s
Rule 30(b)(6) designee, Jacques Georges (“Georges”),
ZVI’s claim
for coverage was denied solely because there was no executed
agreement between ZVI and H. Carr, as the AIA Form that ZVI
provided to H. Carr was not signed.
11
ZVI SOF 3, ZVI Ex. C, Georges
Depo. Tr. of Jan 3, 2011 at 86:12-22, Willis SOF 30.
Georges
explained that The Hartford’s determination whether H. Carr agreed
to provide additional insurance for the benefit of ZVI was based on
the conclusion “that there was no written contract, therefore, no
additional insured status could be afforded.”7
at 16:9-20.
Georges Depo. Tr.
Georges also clarified that an agreement to obtain
additional insurance had to be executed prior to a bodily injury to
prevent a party from claiming coverage for an accident that had
already occurred.
ZVI SOF 7, Georges Depo. Tr. at 72:17-73:3.
Georges acknowledged that he did not ask anyone at H. Carr whether
it had agreed to provide additional insurance protection for ZVI.
ZVI SOF 9, George Depo. Tr. at 15:9-16:3.
On January 13, 2003, ZVI filed a third-party indemnity claim
against H. Carr in the state court action.
SOF 12 H. Carr Ex.4.
Willis SOF 32, H. Carr
H. Carr denied responsibility for the
collapse and denied that it had an obligation to indemnify or
defend ZVI.
H. Carr SOF 12.
Specifically, H. Carr “affirmatively
assert[ed] that there was no executed and/or signed contract
between
H.
Carr
&
Sons,
Inc.
and
therefore this action is barred.”
ZVI
Construction
Co.,
and
H. Carr Ex. 5.
On October 17, 2008, ZVI’s insurance company, Travelers, paid
7
According to Georges, his understanding is that “a written
contract and an agreement is the same.” Georges Depo. Tr. 49:2450:3, ZVI SOF 8.
12
$1.5 million8 toward a $3.2 million settlement to settle Siden’s
claim against ZVI.
SOF 18.
AIG [American International Group,
Inc.], on behalf of Brand, paid $1.7 million, the remainder of
Siden’s claim.
ZVI then dismissed the indemnity claim against H.
Carr in lieu of the present action.
H. Carr SOF 15.
On January 21, 2009, ZVI sued H. Carr and The Hartford in the
United States District Court for the District of Massachusetts.
Willis SOF 34. By letter dated January 30, 2009, The Hartford
informed H. Carr that it would participate in the defense of H.
Carr subject to a reservation of rights under the CGL Policy it had
previously issued to H. Carr.
H. Carr. Ex. C.
filed
for
a
motion
to
dismiss
improper
After The Hartford
venue
or,
in
the
alternative, to transfer the case to the United States District
Court for the District of Rhode Island, the case was transferred to
this Court with the assent of ZVI.9
On March 23, 2009, H. Carr filed, together with its answer to
ZVI’s
complaint,
a
cross-claim
against
The
Hartford,
seeking
damages in the event H. Carr should be found obligated to procure
insurance coverage for ZVI.
A year later, on March 29, 2010, H.
8
According to Travelers’ claims handler, Travelers determined
that the $1.5 million it paid to Siden “was attributable to the
negligence of ZVI.”
H. Carr SOF 20. ZVI does not dispute that
“[t]he $ 1.5 million that ZVI/Travelers paid to Mr. Siden was not
attributable to any wrongdoing by H. Carr.” H. Carr SOF ¶¶ 21, 23;
ZVI’s Response ¶¶ 21, 23 to H. Carr’s SOF.
9
H. Carr took no position on The Hartford’s motion.
13
Carr filed a third-party complaint against Willis in this Court.
Willis SOF 35.
breached
a
H. Carr asserts, inter alia, (1) that Willis
contract
with
H.
Carr
by
failing
to
obtain
and
communicate accurate information with respect to coverage afforded
under the Policy;
and (2) that issuance of the Certificate by
Willis constituted a misrepresentation.
H. Carr’s claims against
Willis are conditioned upon (as are H. Carr’s claims against The
Hartford)
a
determination
that
H.
Carr
is
liable
to
ZVI
in
connection with “additional insured” coverage under the Policy.
Following a Rule 16 conference, the parties submitted cross-motions
for summary judgment with respect to ZVI’s complaint and H. Carr’s
third party complaint.
II. Standard of Review
Summary
judgment
is
appropriate
“if
the
pleadings,
the
discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law.”
P. 56(c)(2).
Fed. R. Civ.
“A dispute is genuine if the evidence about the fact
is such that a reasonable jury could resolve the point in the favor
of the non-moving party.” Prescott v. Higgins, 538 F.3d 32, 40 (1st
Cir. 2008) (citations omitted).
“A fact is material if it has the
potential of determining the outcome of the litigation.”
Id.
(quoting Maymi v. Puerto Rico Ports Auth., 515 F.3d 20, 25 (1st Cir.
2008).
14
The
party
seeking
summary
judgment
bears
the
burden
of
establishing the lack of a genuine issue of material fact.
Merchants Ins. Co. of New Hampshire, Inc. v. U.S. Fidelity and
Guar. Co., 143 F.3d 5, 7 (1st Cir. 1998).
Once such requisite
showing has been made, “an opposing party may not rely merely on
allegations or denials in its own pleading; rather, its response
must - by affidavits or as otherwise provided in [Rule 56 of the
Federal Rules of Civil Procedures] - set out specific facts showing
a genuine issue for trial.”
Fed. R. Civ. P. 56(e)(2). The Court,
in considering a motion for summary judgment, “read[s] the record
in the light most favorable to the non-moving party, drawing all
reasonable inferences in its favor.”
Merchants Ins. Co. of New
Hampshire, Inc. v. U.S. Fidelity and Guar. Co., 143 F3d. at 7
(citing Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir.
1997)).
“The presence of cross-motions ‘neither dilutes nor distorts
this standard of review.”
Scottsdale Ins. Co. v. Torres, 561 F.3d
74, 77 (1st Cir. 2009)(quoting Specialty Nat’l Ins. Co. v. OneBeacon
Ins. Co., 486 F.3d 727, 732 (1st Cir. 2007)). Rather, “‘[c]ross
motions simply require [the court] to determine whether either of
the parties deserves judgment as a matter of law on facts that are
not disputed.’”
Scottsdale Ins. Co. v. Torres, 561 F.3d at 77
(quoting Littlefield v. Acadia Ins. Co., 392 F.3d 1, 6 (1st Cir.
2004));
Reich v. John Alden Life Ins. Co., 126 F.3d at 6 (“When
15
deciding
cross-motions
for
summary
judgment,
the
court
must
consider each motion separately, drawing inferences against each
movant in turn.”).
III.
A.
The Motions for Summary Judgment
ZVI’s Motion
Generally, ZVI seeks a declaratory judgment establishing that
it is covered as an “additional insured” under the Policy issued by
The Hartford to H. Carr.10
ZVI argues that H. Carr provided the
Certificate to ZVI as a “condition precedent” to payment for H.
Carr’s work on the IMAX project.
Because H. Carr agreed to obtain
insurance for ZVI, ZVI is entitled to coverage under the Policy.
In the alternative, if the Court determines that ZVI is not
entitled to such coverage, ZVI seeks to establish that H. Carr is
liable to ZVI for breach of the agreement to provide coverage.
ZVI also asserts that Willis was acting as an agent when it
issued the Certificate representing that ZVI was included under the
Policy
and
that,
therefore,
The
Hartford
is
precluded
declining coverage to ZVI as an additional insured.
from
Regarding the
Policy, ZVI asserts that the “additional insured” provision therein
includes, as an insured, anyone H. Carr agreed to provide with
insurance coverage “because of a written contract or agreement or
10
As an “additional insured,” ZVI seeks to recover the
$1,500,000 paid on its behalf by Travelers to settle Siden’s claim,
plus $259,991.50 incurred in attorneys fees and expenses related
thereto.
16
permit”, provided the “written contract or agreement [was] executed
. . . prior to the “bodily injury...”.
Although ZVI agrees that
the AIA form ZVI submitted to H. Carr was never
signed, it
maintains that (1) the Policy does not require a signed or written
agreement to provide coverage to an “additional insured;” and (2)
by H. Carr’s performance of the work and ZVI’s payment rendered
therefor, the agreement between the parties had been “executed”
prior to Siden’s accident.
The Hartford responds that “[t]he context in which Mr. Georges
testified made it abundantly clear that the term ‘executed,’ as
that term is used in the [Policy], is synonymous with ‘signed.’”
The Hartford’s Opp. Mem. to ZVI’s Motion 1.
Therefore, The
Hartford rejects ZVI’s interpretation that “the term ‘executed’
should mean ‘performed’ in this particular instance.” Id.
The
Hartford suggests that, if “executed” were to be deemed identical
to “performed,” Siden’s accident occurred before the contract was
“executed” or “performed” because H. Carr’s work had not yet been
completed at that time.
Id. at 1-2.
Further, The Hartford states that ZVI has failed to assert any
damages in this case because (1) Travelers paid $1,500,000 to
settle
Siden’s
claim
based
on
its
consideration
of
ZVI’s
negligence; and (2) there is no evidence before the Court regarding
17
the origin11 and/or reasonableness of the $259,991 in attorneys fees
for which ZVI seeks reimbursement.
Id. at 1-2.
H. Carr, also in opposition to ZVI’s motion for summary
judgment, asserts that “the undisputed facts demonstrate that H.
Carr did not agree to procure insurance coverage for ZVI, as it
never agreed to ZVI’s proposed contract form that would have
established such an obligation.”
H. Carr. Opp. Mem. 1. With
respect to H. Carr’s procurement of the Certificate prior to
receiving payment from ZVI, H. Carr maintains that “[s]uch evidence
. . . does not demonstrate that H. Carr agreed to obtain liability
insurance for ZVI.”
Id. at 2.
Instead, H. Carr suggests that
“[a]n H. Carr employee (who was uninvolved with the contract
negotiations
and
unaware
of
the
proposed
contract’s
alleged
requirements) simply forwarded ZVI’s request for a certificate to
its insurance broker for handling - as a ministerial task in order
to receive payment for work that H. Carr had already performed.”
Id.
Like The Hartford, H. Carr takes the position that ZVI has
failed to demonstrate damages.
In response to both objections, ZVI (1) rejects The Hartford’s
suggestion that “executed” is synonymous with “completed;” (2)
11
Specifically, The Hartford states that it is unclear whether
the requested attorneys fees “were incurred in defending the Siden
case, as opposed to the Anderson claim.” Hartford Opp. Mem. at 2.
From ZVI’s demand for contractual indemnification from H. Carr and
The Hartford, it appears that, in addition to Siden, two other
individuals were also hurt when the scaffolding collapsed. One of
them is identified as Ernest Anderson. (Document 40-3 at 2).
18
maintains that H. Carr’s efforts to obtain the Certificate upon
ZVI’s request amounts to an agreement to procure coverage for ZVI
as an “additional insured;” and (3) contends that “a genuine issue
of fact exists with respect to ‘the matter of proof as it relates
to [ZVI’s] damages.’” ZVI Reply 2-6.
Regarding the reasonableness
of ZVI’s claimed attorneys fees, ZVI offers a declaration by its
counsel that ZVI made available 10 boxes of documents generated by
the law firm that defended ZVI in the Siden litigation.
According
to ZVI’s counsel, Hartford did not inspect the files.
Decl. of
Anthony Zelle.
B.
The Hartford’s Motion
According to The Hartford, in order for ZVI to be covered
under the Policy as an “additional insured,” H. Carr had to agree
“because of a written contract or agreement or permit,” to provide
such insurance.
Policy Subsection 9(a); Hartford Mem. 4.
The
Hartford rejects ZVI’s contention that “written” only applies to
“contract” and that a non-written agreement is sufficient to impose
an obligation on H. Carr to provide insurance to ZVI.
The Hartford
also suggests that the term “executed” in Policy Subsection 9(b),
(which provides coverage of the “additional insured” only when “the
written contract or agreement has been executed . . . prior to the
‘bodily injury”) cannot be interpreted as completion of the work
undertaken.
The Hartford argues that such an interpretation would
preclude any additional coverage “because a bodily injury would,
19
obviously, occur during the course of the work undertaken and not
after its completion.”
The Hartford Mem. 5.
Finally, The Hartford suggests that, even if ZVI is deemed an
additional
insured
under
the
Policy,
ZVI
is
not
entitled
indemnification or defense with respect to Siden’s claim.
to
Id. 5.
The Hartford points out that, in his complaint, Siden alleges that
ZVI
was
negligent
improperly
in
supervising
“supervising,
various
failing
to
subcontractors
supervise
and/or
contractors and failing to provide a safe work site.”
Complaint ¶¶ 31, 32.
or
trade
Siden
Coverage for an “additional insured” under
Section 9 of the Policy, however, is “only with respect to your [H.
Carr’s] operations, ‘your work’ or facilities owned or used by
you.”
Based on that language, The Hartford concludes, relying
primarily on A.F. Lusi Constr. Inc. v. Peerless Ins. Co., 847 A.2d
254 (R.I. 2004), that Section 9 precludes coverage for ZVI’s own
negligence, to which the allegations in Siden’s complaint are
limited.
Id. at 6-8. In other words, Section 9 only provides
protection against H. Carr’s negligence, it does not provide a
basis for vicarious liability arising from ZVI’s negligence.
ZVI, in opposing The Hartford’s motion, maintains that (1)
notwithstanding the absence of a written contract, H. Carr agreed
to obtain insurance for the benefit of ZVI “because of ZVI’s
agreement to hire H. Carr on the IMAX Project,” ZVI Mem. Opp. 2-5;
and (2) because Siden’s claims “relate to” and “involve” H. Carr’s
20
work, they are covered as claims “with respect to” H. Carr’s work.
Id. at 5-12.
Regarding the second issue, ZVI argues that several
courts (from jurisdictions other than Rhode Island) have given the
term “with respect to” a broader meaning which provides a basis for
coverage of the “additional insured’s” own negligence.
C.
Id.
H. Carr’s Motion
H. Carr argues that, because it never agreed to ZVI’s proposed
AIA form contract, ZVI cannot prove that H. Carr ever agreed to
procure insurance for ZVI.
H. Carr. Mem. 1.
H. Carr states that
it “specifically refused to bind itself to the AIA Form and its
accompanying obligation to procure insurance for ZVI,” id. at 7,
and that H. Carr “started working on the Project pursuant to the
agreement reached on October 28," id. at 8.
In other words, H.
Carr takes the position that it had a contract with ZVI “because
the work had already started and the parties had an agreed-upon
amount, scope of work and price,” but that the terms in the AIA
form were not part of any agreement between the parties.
Id. at
10.
Further,
H.
Carr
argues
that,
if
it
had
procured
such
insurance for ZVI, such insurance would not have provided coverage
for ZVI’s own negligence, which provided the basis for Siden’s
claim.
H. Carr Mem. 1-2.
Specifically, H. Carr asserts that (1)
the AIA Form did not require H. Carr to procure insurance coverage
for
ZVI’s
own
negligence;
and
(2)
the
“additional
insured”
provision in the Policy did not include coverage for ZVI’s own
21
negligence.
Id. at 17.
With respect to the second issue, H. Carr
points to the statutory prohibition, as a matter of public policy,
against any agreement “in which a party seeks indemnification from
another for the consequences of its own or its agent’s negligence.”
Id. at 18 (quoting Cosentino v. A.F. Lusi Constr. Co., Inc., 485
A.2d 105, 107 (R.I. 1984); citing R.I. Gen. Laws § 6-34-1).
ZVI, on its part, states unequivocally that it “does not
contend that H. Carr was bound to obtain insurance for its benefit
by the AIA Subcontract.”
ZVI Mem. Opp. 2.
Instead, ZVI proposes
that H. Carr accepted procurement of liability insurance protection
as a “condition precedent” to receiving payment for work H. Carr
had already performed on the IMAX project.
Id. at 2-4.
Because H.
Carr, upon demand by ZVI, provided proof of the requested insurance
coverage by obtaining the Certificate from Willis, “H. Carr agreed
to add ZVI as an additional insured.”
Id. at 4.
ZVI explains
that, “[t]here is no indemnification claim by ZVI against H. Carr
in this case.
Rather, ZVI’s primary claim is that it is entitled
to insurance coverage under the Hartford insurance policy as an
additional insured.” Id. at 7.
In the event it is determined that
the Policy does not provide coverage to ZVI in this matter, ZVI
proposes that “H. Carr is liable in contract to ZVI because it
failed to obtain the agreed-upon insurance coverage for ZVI.” Id.
H. Carr takes the position that the obligation to procure
insurance coverage for ZVI constitutes a modification of contract
without consideration, H. Carr Reply 2, and that H. Carr’s conduct
22
after receiving the fax requesting the Certificate did not create
a binding contractual obligation.
Id. at 3.
Primarily, however,
H. Carr maintains that, even if it had incurred an obligation to
include ZVI on the Policy as an “additional insured,” it was not
obligated to procure insurance to cover ZVI’s own negligence.
Id.
at 5.
D. Willis’s Motion
Willis takes the position that (1) H. Carr “expressly directed
Willis to issue the certificate so Carr could be paid;” (2) “Willis
relied upon information supplied by Carr concerning the required
certificate;” and (3) Carr’s third-party complaint is time-barred.
Willis Mem. 2. According to Willis, it issued the Certificate with
the understanding that H. Carr had agreed to provide insurance for
ZVI under the Policy.
Subsequently, The Hartford rejected ZVI’s
claim for insurance on the ground that no written agreement existed
between H. Carr and ZVI.
Id. at 4.
H. Carr, in opposition to Willis’s motion, asserts “that there
are genuine disputes as to material facts.”
H. Carr. Mem. Opp. 1.
H. Carr rejects Willis’ contention that H. Carr’s claims against it
are time-barred and maintains that Willis is liable to H. Carr for
breach of contract.
H. Carr also points out that its claims
against Willis are contingent upon the success of ZVI’s claims
against H. Carr, id. at 1-2 and that, upon success of H. Carr’s
motion to dismiss the complaint, H. Carr’s claims against Willis
become moot.
Id. at 2.
23
IV.
A.
Discussion
Principles of Policy Interpretation
To determine whether, and to what extent, a plaintiff is
covered by an insurance policy, the Court is required to perform
“judicial construction of the policy language as a matter of law.”
Mallane v. Holyoke Mutual Ins. Co., 658 A.2d 18, 20 (R.I. 1995).
“It is well settled under Rhode Island law12 that when the terms of
an insurance policy are found to be clear and unambiguous, judicial
construction is at an end.”
550, 551 (R.I. 1990).
Amica Mut. Ins. v. Streicker, 583 A.2d
In the absence of an ambiguity in the
policy, “[t]he contract terms must be applied as written and the
parties bound by them.”
Id.
To determine whether an ambiguity
exists, the Court reads the insurance policy in its entirety,
giving words their “plain, ordinary, and usual meaning.”
West v.
Commercial Ins. Co. of Newark, 528 A.2d 339, 341 (R.I. 1987).
Absent a finding that the language is ambiguous, the Court “will
not depart from the literal language of the policy.”
Medeiros v.
12
Jurisdiction in this case is based on diversity; therefore, a
determination of the parties’ rights under the Policy, which was
apparently entered and intended to be performed in Rhode Island,
involves the application of Rhode Island choice of law doctrines.
See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822,
82 L.Ed. 1188 (1938). The parties do not address this issue in
their memoranda; however, they cite to Rhode Island case law in
support of their respective positions. See Bird v. Centennial Ins.
Co., 11 F.3d 228, 231 n.5 (1st Cir. 1993)(foregoing independent
analysis of choice-of-law issue where parties agreed on which law
governed their dispute and where there was “at least a ‘reasonable
relation’ between the dispute and the forum whose law has been
selected by the parties.”).
24
Anthem Cas. Ins. Group, 796 A.2d 1078, 1080 (R.I. 2002)(citing
Aetna Cas. & Surety Co. v. Sullivan, 633 A.2d 684, 686 (R.I.
1993)). However, “[i]n situations in which ambiguity does exist in
an insurance policy or the terms are subject to more than one
reasonable interpretation, the contract will be strictly construed
against the insurer.”
Amica Mut. Ins. v. Streicker, 583 A.2d at
552 (listing cases); Merrimack Mut. Fire Ins. Co. v. Dufault, 958
A.2d 620, 625 (R.I. 2008)(“[I]f an ambiguity is found in the
insurance contract, the policy must be construed strictly against
the insurer.”).
B.
The Policy
Section
II
¶
9.
a.
of
the
Commercial
General
Liability
Endorsement to the Policy provides, in pertinent part:
Who Is An Insured is amended to include as an
insured any person or organization with whom you agreed
because of a written contract or agreement or permit, to
provide insurance such as is afforded under this policy,
but only with respect to your operations, “your work” or
facilities owned or used by you. Policy Endorsement Page
3 of 7 (emphases added).
“Your work” is defined as:
a.
b.
Work or operations performed by you or on your
behalf; and
Materials,
parts
or
equipment
furnished in
connection with such work or operations.
“Your work” includes:
a.
b.
Warranties or representations made at any time with
respect to the fitness quality, durability,
performance or use of “your work”; and
The providing of or failure to provide warnings or
instructions.
Policy Section V ¶ 21, Page 13 of
13.
25
The Policy further states:
Provision 9 does not apply: (1) Unless the written
contract or agreement has been executed or permit has
been issued prior to the “bodily injury”,”property
damage” or “personal and advertising injury.”
Policy
Section II ¶ 9. b.(1) , Page 3 of 7.
C.
Employer Immunity under Worker’s Compensation Act
Generally, under Rhode Island law, an injured employee is
precluded from filing a personal injury action against his employer
if he has collected workers compensation benefits.
Laws § 28-29-20.
13
See R.I. Gen.
Likewise, an employer who has provided such
benefits to its employee is protected against related third party
indemnity or contribution claims, even if it appears that the
employer was negligent.
A and B Constr., Inc, v. Atlas Roofing and
Skylight Co., 867 F.Supp. 100, 106 (D.R.I. 1994)(“[E]mployer who
has paid workers’ compensation benefits cannot be sued as a joint
tortfeasor
for
contribution
by
a
third party even
where
its
concurring negligence has contributed to an employee’s injury.”);
13
Section 28-29-20 provides:
Rights in lieu of other rights and remedies
The right to compensation for an injury under chapters 29--38
of this title, and the remedy for an injury granted by those
chapters, shall be in lieu of all rights and remedies as to that
injury now existing, either at common law or otherwise against an
employer, or its directors, officers, agents, or employees; and
those rights and remedies shall not accrue to employees entitled to
compensation under those chapters while they are in effect, except
as otherwise provided in §§ 28-36-10 and 28-36-15.
26
see Rushworth v. Manitowoc Eng’g Co., 2008 WL 5048208 *1 (D.R.I.
Nov. 25, 2008).
Notwithstanding an employer’s immunity against such third
party claims, an employer may be contractually obligated to provide
indemnification or contribution related to its employee’s personal
injury claims.
Cosentino v A.F. Lusi Constr. Co., Inc., 485 A.2d
at 108. “[A] third-party action for contract indemnification from
the employer is not an action based upon the employee’s injury but
rather is an action for reimbursement based upon an expressed
contractual obligation between the employer and a third-party
plaintiff.”
Id. (listing cases).
However, “a general contractor
can obtain indemnification from a negligent subcontractor only if
the contract so provides.”
Cosimini v. Atkinson-Kiewit Joint
Venture, 877 F.Supp. 68, (D.R.I. 1995)(holding that parties can
create the right to indemnification by contract).
In
addition,
the
Rhode
Island
Supreme
Court
has
upheld
“exculpatory-indemnification clauses that negate liability for an
individual’s
specific.”
own
negligence
if
the
clause
is
sufficiently
Rhode Island Hosp. Trust Nat’l Bank v. Dudley Serv.
Corp., 605 A.2d 1325, 1327 (R.I. 1992). Accordingly, “[a] contract
will not be construed to indemnify the indemnitee against losses
resulting from his or her own negligent acts unless the parties’
intention to hold harmless is clearly and unequivocally expressed
in the contract.”
Id.; Di Lonardo v. Gilbane Bldg. Co., 334 A.2d
422 (R.I. 1975)(holding that exculpatory-indemnification contract
27
shifted the liability of purchasing insurance coverage to the
subcontractor).
This Court has previously recognized that “[t]he principle of
statutory immunity embodied in the workers’ compensation scheme is
equally
applicable
to
procurement clauses.”
877 F.Supp. at 72;
(1st
Cir.
indemnity,
contribution
and
insurance
Cosimini v. Atkinson-Kiewit Joint Venture,
Fowler v. Boise Cascade Corp., 948 F.2d 49, 55
1991)(“[A]lthough
there
is
a
distinction
between
procurement, indemnity, and contribution clauses, the principle of
statutory immunity embodied in the Workers’ Compensation Act is
equally applicable to these separate insurance provisions.”).
Therefore, to the extent that Rhode Island law requires that
indemnity provisions are to be strictly construed if they are
claimed to waive an employer’s immunity or to indemnify a party
against
that
party’s
own
negligence,
such
principles
of
construction are applicable to insurance procurement clauses as
well.
As the First Circuit has explained, “[t]he purpose of an
insurance procurement clause is to contractually allocate the
burden of potential loss to one of the contracting parties.”
Fowler v. Boise Cascade Corp., 948 F.2d at 55 (holding that, in
absence of specific provision in procurement clause stating that
employer intended to waive its statutory immunity from suit by one
of its employees, employer was not responsible for third party’s
28
own negligence).
D.
14
This Case
The undisputed facts of this litigation reveal that the case
is far less complicated than has been presented by the parties and
that the
practices.
dispute
is primarily
the
result of
casual
business
ZVI engaged H. Carr to perform certain work on the IMAX
Project, for which ZVI served as the general contractor.
It is
undisputed that the parties did not enter a written subcontract,
nor did ZVI require proof of any type of insurance coverage before
it allowed H. Carr access to the Project site.
Nevertheless, both
parties agree that there was a binding contract between them,
pursuant to which H. Carr would perform the specified work, and ZVI
would pay to H. Carr the amount of $720,000.
H. Carr proceeded
accordingly and began to perform work on the Project.
Once H. Carr
submitted an initial demand to be paid for work it had already
performed, ZVI quickly forwarded a modified AIA form to H. Carr for
signature.
the owner
The modified AIA form required H. Carr to add ZVI and
of
the
project
as
“primary
additional
insureds.”
Although the AIA form specified the amount of insurance coverage
required, it did not,
explicitly or impliedly, require H. Carr to
14
Although Fowler was based on Maine law, the Court notes that,
like Maine, Rhode Island requires strict construction of provisions
that purport to impose liability on an employer for a third party’s
own negligence.
29
purchase insurance to cover ZVI’s own negligence.15
In addition to requesting H. Carr to sign the AIA form, ZVI
faxed a request to H. Carr for proof of insurance, together with a
section from an unidentified document that relates to “Tenant’s
Insurance Coverage During Construction,” and a partially filled in
insurance certificate form.
Neither the faxed communication,
the
purported back-up document, nor the certificate form explicitly
request insurance coverage for ZVI’s own negligence.
H. Carr, eager to receive payment from ZVI, and without
verifying or disputing that it was obligated to procure such
coverage, simply forwarded the request to Willis, its insurance
broker.
Willis, apparently also without verifying that H. Carr
was, indeed, obligated to include ZVI on its Policy pursuant to a
“written contract or agreement or permit,” issued the Certificate
as proof that “ZVI Construction, the Landlord and the Landlord’s
Constrcution [sic] Manager” were included as “Additional Insured”
under the Policy.
Apparently satisfied with H. Carr’s production
of the Certificate, ZVI rendered payment for the work performed and
H. Carr continued to work on the Project without ever signing the
proposed AIA form.
15
The modified AIA form also states that “Subcontractors are
restricted from working on-site until a valid original Certificate
of Insurance is received.” Policy ¶ 31.1. It is undisputed that
no such restriction was enforced and that H. Carr commenced work on
the Project before ever being presented with the AIA form or a
request for a certificate of insurance.
30
After H. Carr’s employee Siden was injured on the Project, he
filed claims against ZVI and various other parties.
Under Rhode
Island law, Siden was precluded from filing a claim against his
employer
because
Siden
collected
workers’
compensation
in
connection with the accident. Eventually, ZVI reached a settlement
with Siden pursuant to which ZVI’s insurer paid $1,500,000 for
ZVI’s share in the negligent conduct.
As ZVI concedes, that
payment was entirely attributable to negligence by ZVI, not by H.
Carr.
ZVI and/or its insurer now seek to recover this amount from
H. Carr and/or its insurer on the theory that (1) ZVI was covered
as an additional insured under H. Carr’s policy with The Hartford;16
or, if that is determined not to be the case, (2) H. Carr breached
its contractual obligations to procure insurance coverage for ZVI.
H. Carr, initiating suit almost ten years after commencement
of the underlying personal injury litigation, seeks to protect
itself against ZVI’s claims by pointing the finger at its insurance
broker, Willis. It is undisputed that Willis, apparently in taking
an unrelated document submitted to it by H. Carr at face value,
issued the Certificate without verifying whether H. Carr was
contractually obligated to procure such insurance for ZVI.
On its part, The Hartford relies on the language in the
Policy, which affords coverage to an additional insured only
16
The Travelers, apparently taking a page from ZVI’s book,
supported its initial demand for contractual indemnification by
presenting a copy of the unsigned AIA form to The Hartford.
31
“because of a written contract or agreement or permit . . . but
only with respect to your operations, ‘your work’ or facilities
owned or used by you.”
E.
Policy Page 3 of 7.
Coverage as an “Additional Insured” under the Policy
In order to prevail on its claim against the Hartford, ZVI
must show that (1) H. Carr agreed to procure insurance coverage to
ZVI “because of a written contract or agreement or permit. . . such
as is afforded under this policy;” and (2) qualifying as an
“additional insured” under the Policy affords insurance coverage to
ZVI for its own negligence.
Even if it is assumed that ZVI can
meet the first requirement, construction of the Policy language at
issue under Rhode Island law precludes ZVI from meeting the second
requirement.
The Policy provides coverage to an additional insured “only
with respect to your [referring to the primary policy holder]
operations, ‘your work’ or facilities owned or used by you.”
Policy Endorsement Section 9. a., Page 3 of 7.
previously
recognized,
although
other
As this Court has
jurisdictions
have
interpreted such language to include coverage for an additional
insured’s own negligence, the Rhode Island Supreme Court adopted a
decidedly narrower construction in A. F. Lusi Constr., Inc. v.
Peerless Ins. Co., 847 A.2d at 263-265. See
MacArthur v. O’Connor
Corp., 635 F.Supp.2d 112, 117 (D.R.I. 2009)(noting that the Rhode
Island
Supreme
Court
determined
that
an
additional
insured
provision similar to the one in the instant case “did not cover a
32
general contractor for its own negligence.”)
Similar to the case before this Court, the general contractor
(“Lusi”) in A.F. Lusi brought a declaratory judgment action against
its subcontractor’s (“Pasquazzi”) insurer (“Peerless”), asserting
that the subcontractor had breached its contractual duty to secure
insurance for the general contractor and to provide it with a
defense in a personal injury claim brought by the subcontractor’s
employee.
A. F. Lusi Constr., Inc. v. Peerless Ins. Co., 847 A.2d
at 256-257.
The injured employee collected workers compensation
benefits; consequently, his complaint was limited to assertion of
negligence against Lusi.
Unlike in the instant case, Lusi and
Pasquazzi had a signed subcontract agreement.
However, the Rhode
Island
relevant
Supreme
Court
determined
that
“the
contract
language does not evidence a clear intent by Peerless and Pasquazzi
to designate Lusi as an additional insured under the terms of the
Peerless insurance policy - at least not with respect to claims
alleging that Lusi’s negligence caused an employee of Pasquazzi to
suffer personal injuries while working at the job site.”
Lusi, 847 A.2d at 258.
A.F.
Likewise, the Court rejected Lusi’s
suggestion that the insurance certificate provided such coverage.
Id. at 259.
Pasquazzi’s
CGL
policy
contained
two
prerequisites
for
designating Lusi as an “additional insured,” which are identical to
those in the Policy issued by The Hartford to H. Carr.
First, the
insurance Peerless agreed to provide to Pasquazzi “was limited by
33
that policy’s terms to include as additional insured only ‘any
person or organization with whom [Pasquazzi] agreed, because of a
written contract or agreement or permit, to provide insurance such
as is afforded under the policy.”
Second, an additional insured
was covered “only with respect to your [Pasquazzi’s] operations,
‘your work’ or facilities owned or used by you.” Id. at 259.
With respect to the first prerequisite, the Court determined
that Lusi had failed to procure such an agreement from Pasquazzi.
Id. at 259-263. With respect to the second prerequisite, the Court
stated that, given the restricted language of the “additional
insured” provision, “even if the Peerless insurance policy covered
Lusi as an additional insured, it does not appear to us that
Peerless agreed to indemnify or defend Lusi in connection with
claims asserting Lusi’s own negligence.”
Id. at 264.
In arriving
at this conclusion, the Court surveyed a number of cases from other
jurisdictions which had put a broader construction on similar
“additional insured” provisions.
Id. (listing cases).
The Court
noted, however, that those cases “are distinguishable from this one
because, for the most part, they interpreted different policy
language than the language used in the Peerless policy.”
Id.
Specifically, the provisions which were deemed to provide coverage
for an additional insured’s own negligence “used the term ‘arising
out of’ or ‘arising from’ work or operations of the insured.”
(listing cases).
Id.
The A. F. Lusi Court rejected the plaintiff’s
34
reliance on the cases because the policy at issue used “the more
limited language that Peerless insurance will extend to additional
insureds ‘only with respect to’ Pasquazzi’s operations, work, or
facilities that Pasquazzi owned or used.” Id. Regarding two other
courts which had interpreted the “with respect to” language as
including coverage for the additional insured’s own negligence, the
A.F. Lusi Court pointed out that those courts “relied upon the
reasoning used in the cases involving the language “arising out of”
and failed to acknowledge any distinction between the scope of
these two different phrases.”
Based
on
the
narrow
Id.
construction
in
A.F.
Lusi
of
the
“additional insured” provision identical to that in this case, this
Court is of the opinion that, under Rhode Island law, the Policy
provides no coverage to ZVI for ZVI’s own negligence. Although ZVI
suggests that the Certificate does not explicitly limit coverage to
claims involving H. Carr’s negligence, the Certificate clearly
states that it “confers no rights upon the certificate holder” and
does not “alter the coverage afforded by the policies.” Therefore,
the Certificate cannot serve to broaden the Policy coverage, which,
as stated above, does not extend to ZVI’s own negligence. In other
words, even assuming that ZVI had procured an agreement from H.
Carr to provide it with coverage under the Policy, the policy
language
itself
limits
coverage
negligence.
35
to
instances
of
H.
Carr’s
F.
Breach of Duty to Procure Insurance
With respect to ZVI’s second claim, that H. Carr breached its
agreement to procure insurance, the claim fails because ZVI is
unable to show how it was damaged thereby.
Assuming, for the sake
of argument, that H. Carr’s conduct in asking Willis to issue the
requested
Certificate
insurance
coverage
constitutes
for
ZVI
as
an
an
agreement17
“additional
to
procure
insured,”
such
agreement falls far short in demonstrating H. Carr’s intent to
protect ZVI against ZVI’s own negligence.
While H. Carr may have
agreed to add ZVI to its Policy, there is no evidence that H. Carr
intended to waive its immunity to damages for which it was not
legally responsible. Any insurance that H. Carr would have been
able to procure for ZVI as an “additional insured” under the Policy
(as requested by ZVI) would only have provided protection to ZVI
“with respect to [H. Carr’s] operations, ‘[H. Carr’s] work’ or
facilities
owned
or
used
by
[H.
Carr].”
Under
the
narrow
interpretation that Rhode Island law has imposed on such language
in an insurance policy, ZVI would not have been covered for any
damage it incurred as a result of its own negligence, to which its
17
H. Carr suggests that its conduct amounted, at most, to a
modification of contract for which no additional consideration was
received, as H. Carr had already performed the work for which it
sought payment.
However, given the lack of specified terms
regarding the parties’ performance, it is clear that, while H. Carr
was entitled to payment for its work, nothing obligated ZVI to pay
H. Carr at that particular time. Therefore, an immediate interim
payment for H. Carr’s work could well be construed to serve as
additional consideration.
36
claims in this litigation are limited, i.e. the settlement payment
to Siden for ZVI’s negligence.
Because Siden was precluded from
bringing suit against H. Carr, which had provided him with workers
compensation benefits, nothing in the underlying personal injury
complaint addressed any negligence by H. Carr.
Therefore, even if
H. Carr were successful in obtaining coverage for ZVI as an
“additional insured” under the Policy, ZVI would not be eligible to
collect thereunder.
G.
Third Party Complaint
Because this Court has determined that (1) H. Carr was not
obligated to obtain insurance coverage to protect ZVI against its
own negligence; and (2) coverage under the Policy, if any, is
limited to injuries that arose because of negligence on H. Carr’s
part, there is no need to discuss the cross motions asserted by
Willis and H. Carr with respect to the third-party complaint
because they have been rendered moot.
V.
Conclusion
For
the
complaint,
reasons
ZVI’s
stated
motion
for
herein,
summary
with
respect
judgment
is
to
ZVI’s
DENIED;
The
Hartford’s motion for summary judgment is GRANTED; and H. Carr’s
motion for summary judgment is GRANTED.
Further, for the reasons
stated herein, Willis’s motion for summary judgment is DENIED
37
because it is moot.
SO ORDERED.
/s/ Mary M. Lisi
Mary M. Lisi
Chief United States District Judge
July 18, 2011
38
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?