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Insurance Corp. of New York v. United States Fire Ins. Co., BFC Const. Corp.

Other Lower Courts

February 5, 2008

The Insurance Corporation of New York, Plaintiff,
v.
United States Fire Insurance Company and BFC Construction Corp., Defendants.

Editorial Note:

This case is not published in a printed volume and its disposition appears in a table in the reporter.

OPINION

Carol Robinson Edmead, J.

This declaratory action by plaintiff, The Insurance Company of New York ("Inscorp") arises out of a dispute over insurance coverage in connection with three personal injury suits commenced against defendant BFC Construction Corp. ("BFC"), entitled Dagati v BFC Construction, et al. (the "Dagati Action"), Torres v BFC Construction, et al. (the "Torres Action"), and Regolodo v BFC Construction et al. (the "Regolodo Action") (collectively, the "underlying actions"). The plaintiffs in the underlying actions allege that they were injured at a construction site where defendant BFC was performing work. [1]

Background

Inscorp issued a Commercial General Liability policy to defendant BFC for the period of January 1, 2001 to January 1, 2002, with coverage limits of $1,000,000 for each occurrence subject to a $2,000,000 General Aggregate Limit (the "Inscorp Policy"). Defendant United States Fire Insurance Company ("US Fire") provided excess liability coverage to BFC under a policy which covers the period of January 1, 2001 through January 1, 2002 (the "US Fire Policy"). The U.S. Fire Policy provides coverage with limits of $5,000,000 for each occurrence and $5,000,000 in the aggregate, in excess of coverage provided by Inscorp.

By letter dated March 8, 2006, Inscorp's claim's representative, Nova ProRisk Solutions LP f/k/a Ward North America LP ("Ward"), advised BFC that the general aggregate limit in the Inscorp Policy was "likely to be used up in the payment or judgments or settlements" in the Torres Action.

By email dated March 9, 2006, Ward advised U.S. Fire's claim representative, Crum and Foster ("C & F") that the trial in the Dagati Action had commenced, and of the Torres and Regolodo claims. Ward's email also informed C & F that "To date" $1,200,000 of the $2,000,000 general aggregate had been paid "as indemnity, leaving $800,000 as the remainder of the aggregate."

Thereafter, by email dated March 14, 2006 U.S. Fire advised Ward that U.S. Fire intended to attend the trial and asked for the date and location for any upcoming pre-trial settlement discussions.

On March 16, 2006, Ward faxed to C & F the summons and complaint in the Regolodo Action, and correspondence, again advising that the general aggregate limit in the Inscorp Policy was "likely to be used up in the payment or judgments or settlements" in the Torres Action.

On April 20, 2006, after a $600,000 settlement in the Dagati Action, Ward sent two letters to C & F advising that only $200,000 of the $2,000,000 general aggregate limit remained for the Torres and Regolodo Actions, which would be "insufficient to settle the two claims which are open and in suit under this policy." Ward also advised that it was tendering to C & F $100,000 of the $200,000 remaining in the general aggregate, and that if C & F agreed to accept such tender, C & F would "become responsible for all defense costs and legal fees incurred in connection with this suit."

In response, on April 28, 2006, C & F notified BFC that it was disclaiming coverage for the Torres and Regolodo claims based on late notice. C & F also referred to a "Schedule of Underlying Insurance attached to the policy," raising a "question as to the application of these underlying policies, including whether there are multiple primary policies that respond to" the Torres and Regolodo claims.

Thereafter, by letter dated May 16, 2006, C & F reiterated its denial of coverage, and advised Ward that the March 9, 2006 "exchange" from Ward regarding the Dagati Action did not constitute "notice" of such claim; that Ward's March 15, 2006 letter did not request any action by U.S. Fire or advise that it is to serve as a tender to U.S. Fire; and that U.S. Fire's denial of coverage was not untimely. [2]

In January 2007, Torres was settled for $650,000 as follows: (1) Inscorp agreed to contribute $575,000, without prejudice to its position that the Inscorp Policy had only $200,000 in remaining aggregate limits; and (2) U.S. Fire agreed to contribute $75,000, without prejudice to its disclaimer for late notice and its claim that the Inscorp Policy had not been exhausted.

On January 31, 2007, counsel for Inscorp notified BFC and C & F that the Inscorp Policy had been exhausted as a result of the settlement in Torres, and that as a result, Inscorp was tendering to U.S. Fire and BFC the defense of the Regolodo Action. U.S. Fire has refused to fulfill its coverage obligations under the U.S. Fire Policy.

Inscorp's Motion

Inscorp argues that its Policy clearly provides that the coverage provided therein is subject to a $2,000,000 General Aggregate limit. It is undisputed that Inscorp made indemnity payments under the Inscorp Policy totaling in excess of $2,000,000. The Inscorp Policy has been exhausted because the $2,000,000 general aggregate limit has bee used up. Further, the "Designated Construction Project General Aggregate Limit Endorsement" providing for a separate $2,000,000 per project aggregate limit of liability does not apply to the settled claims, because there are no construction projects listed on the Endorsement or in the declarations to the Inscorp Policy as being applicable to this ...


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