Insurers Dispute Who Must Defend Additional Insured
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Post 4806
Other Insurance Clauses Control who Defends Whom
The Travelers and Defendant Ohio Security Insurance Company (“Ohio Security”) moved for summary judgment. In The Travelers v. Ohio Security No. 23-cv-3451 (AS), United States District Court, S.D. New York (May 10, 2024) the USDC resolved the disputes.
BACKGROUND
Ohio Security issued an insurance policy to Sutega USA Corp. (“Sutega”). Travelers sued seeking a declaratory judgment that, under the policy, Ohio Security has a duty to defend and indemnify Shawmut Design and Construction (“Shawmut”), Zara USA, Inc. (“Zara”), Eklecco Newco LLC (“Eklecco”), and Pyramid Management Group, LLC (“Pyramid”) in a state court lawsuit.
Construction Contracts
In 2015, Zara, Shawmut, and Sutega entered into several contracts related to the construction of a new Zara store in Palisades, New York. The contract states that Shawmut “shall supervise and direct the Work” and all parties included additional insured provisions and other insurance provisions.
Insurance Policies
The Travelers policy provided commercial general liability coverage subject to certain terms, conditions, and exclusions. The Travelers policy contains an amendment to the “other insurance” provision stating: “This insurance is excess over any of the other insurance, whether primary, excess, contingent or on any other basis, that is available to the insured when the insured is added as an additional insured under any other policy, including umbrella or excess policy.”
The Travelers Policy provides coverage to Zara, Eklecco, and Pyramid as additional insureds subject to certain terms and conditions. Ohio Security issued a commercial general liability policy to Sutega. The Ohio Security policy applied Sutega’s place of business is listed as an address in Miami, Florida. As relevant here, the policy states that Ohio Security has “the right and duty to defend the insured against any ‘suit’ seeking” damages for bodily injury.
The policy contains a Commercial General Liability Extension Endorsement that defines “insured” to include: “any person or organization whom you have agreed to add as an additional insured in a written contract.
The Ohio Security policy also contains an “other insurance” provision.
Underlying State Court Lawsuit
John Autenrieth was injured while using a table saw during the construction. Autenrieth sued Eklecco, Shawmut, Apollo, Pyramid, Zara, and Palisades Center, LLC in New York state court. Autenrieth alleges that the defendants breached their non-delegable duties under New York law to maintain a safe work environment.
Shawmut’s insurer, Travelers, alleged that Sutega’s insurer, Ohio Security, has a duty to defend and to indemnify Shawmut, Zara, Eklecco, and Pyramid in the state court action. Ohio Security denied that its policy covers these entities. The only disputed issue for the Court is whether Shawmut is covered by the Ohio Security policy. The answer is yes, at least as to Ohio Security’s duty to defend Shawmut.
DISCUSSION
For purposes of these motions, the Court found that no actual conflict exists. The only disputed issue is whether the Ohio Security policy covers Shawmut. Under both Florida and New York law, an insurer’s duty to defend is broad. The parties do not dispute that there is a written contract between Sutega and Shawmut. Therefore, Ohio Security has a duty to defend Shawmut in the underlying state court action pursuant to the policy issued to Sutega.
Primary Coverage
Shawmut is an additional insured under the Ohio Security policy in the underlying state court litigation. Neither party disputes that Shawmut also has insurance coverage as the named insured under the Travelers policy. The Travelers argued that Ohio Security is required to provide Shawmut coverage on a primary and non-contributory basis. Given the plain language of the insurance contracts and Ohio Security’s failure to respond, the Court agrees with Travelers.
ZALMA OPINION
The “other insurance” clauses in insurance policies often results in unnecessary disputes between insurers as to who, between multiple insurers who insure against the same risk of loss, must be first in line to defend or indemnify an insured. The court resolved one of those disputes in this case and told the various insurers and insureds to resolve any remaining issued. To answer the question as to Shawmut, Ohio is on first.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
