Policy only Applies to Risks Taken by Insurer
Barry Zalma
Dec 29, 2023
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In multiple consolidated actions appealed the Judgment granting the Motion for Summary Judgment in favor of defendant, The Burlington Insurance Company ("TBIC" ) based upon a clear and unambiguous exclusion.
In Cameron Soule v. Woodward Design + Build, LLC, et. al., Nos. 2022-CA-0352, 2022-CA-0353, 2022-CA-0354, 2022-CA-0355, 2022-CA-0356, Court of Appeals of Louisiana, Fourth Circuit (December 21, 2023) Louisiana resolved the dispute.
STATEMENT OF FACTS
After a July 28, 2017, accident at the Standard Condominium construction project ("Project" ), when a construction elevator/hoist fell, injuring several workers, including multiple plaintiffs. As required by the owner of the Project, Woodward obtained a Contractor Controlled Insurance Program ("CCIP" ) policy or "Wrap-Up" policy from Houston Casualty Company ("HCC" ) for the insurance on the Project.
Eagle's Subcontract with Woodward provided that Eagle agreed to "furnish all labor, equipment, miscellaneous materials, and supervision for MAN/MATERIAL HOIST ERECTION & DISMANTLE," including "[p]reventative maintenance for 12-month rental period." Regarding insurance, Eagle's Subcontract stated, in pertinent part, that Woodward "has arranged for the Project to be insured under a controlled insurance program (the "CCIP" or "Wrap-Up" )."
In connection with the accident, plaintiffs filed suit against various parties and TBIC, Eagle's own commercial general liability ("CGL" ) insurer.
TBIC denied coverage for Eagle, maintaining that its CGL policy contained a"Wrap-Up Exclusion" which precluded coverage to Eagle for all claims arising from the Project. The Wrap-Up Exclusion provided, in pertinent part, that coverage is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrap-up) insurance program as described below." (Emphasis added).
On April 24, 2017, the Administrator sent a letter advising Eagle that it was not covered "under the General Liability Contractor Controlled Insurance Program for the trade of Hoist Rental and Service - the Standard Project."
TBIC maintained that the CCIP policy was intended to cover Eagle under two distinct provisions: 1) as a lessor of equipment under the above mentioned "Additional Insured" endorsement; and 2) as an enrolled contractor, (for Eagle's work pursuant to the Subcontract to erect, dismantle, and provide preventative maintenance for the hoist) under the Wrap-Up endorsement. The latter endorsement provided that Woodward's "enrolled contractors" are insured "only while performing duties related to the project."
Interpretation of Insurance Contracts
An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Civil Code. The judicial responsibility in interpreting insurance contracts is to determine the parties' common intent.
An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion.
If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer and in favor of coverage. Under this rule of strict construction, equivocal provisions seeking to narrow an insurer's obligation are strictly construed against the insurer.
ANALYSIS
Woodward's Subcontract with Eagle specifically provides that Woodward arranged for the Project to be insured under the CCIP policy to provide coverage for Eagle's work at the Project site. The CCIP policy was issued by HCC. Notwithstanding the reason why Eagle was ultimately not enrolled, the record demonstrates that Eagle was clearly performing work on the Project that was to be insured under the CCIP policy. Moreover, the plain language of the Wrap-Up Exclusion stated that coverage for Eagle is excluded in "[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrap-up) insurance program . . ."
The TBIC policy Wrap-Up Exclusion clearly and unambiguously precludes coverage for Eagle's work on the Project. Accordingly, the Wrap-Up Exclusion must be enforced as written.
ZALMA OPINION
Courts are required to read the entire policy at issue and interpret the policy as its wording relates to the facts of the incident that resulted in bodily injury to the plaintiffs. The court did so and ignored the creative, yet unconvincing, arguments made by the plaintiffs. The policy excluded the incident.
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