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Liberty Insurance Underwriters, Inc. v. Great American Insurance Co.

September 17, 2010

LIBERTY INSURANCE UNDERWRITERS INC. AND ARROW RESTORATION, INC., PLAINTIFFS,
v.
GREAT AMERICAN INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

This insurance coverage dispute arises out of a personal injury lawsuit pending in the New York Supreme Court, Luis Garcia v. Plaza 400 Owners Corp. et al., Index Number 107425/06 (N.Y. Sup. Ct.) (the "Underlying Action"). Plaintiff Arrow Restoration, Inc. ("Arrow"), and its insurer, Liberty Insurance Underwriters, Inc. ("Liberty," and with Arrow, the "Plaintiffs"), now move for an order pursuant to Rule 56, Fed. R. Civ. P., declaring that (1) defendant Great American Insurance Company ("Great American") owes Arrow a duty to defend and indemnify for the claims alleged in the Underlying Action; (2) declaring that Great American's coverage of Arrow is primary to both the insurance coverage under Liberty's policy and Arrow's $50,000 self-insured retention; (3) directing Great American to assume immediately a duty to defend Arrow in the Underlying Action; and (4) awarding Liberty and Arrow the costs and disbursements of this action.

Great American insured a subcontractor that was performing work for Arrow and whose employee was injured on April 4, 2006 during that work. Arrow asserts coverage under the subcontractor's insurance policy with Great American as an additional insured, but failed to provide Great American with proper notice of the accident or claim against Arrow until over three years after the accident occurred, and more than two years after Arrow was sued by the injured employee.

Great American cross-moves pursuant to Rule 56 for an order dismissing Plaintiffs' claims on the grounds that Arrow had an independent duty to give timely notice of its request for additional insured coverage to Great American, but failed to do so. For the reasons stated below, Great American's motion is granted.

BACKGROUND

1. The Underlying Action

The following facts are undisputed unless otherwise indicated. On June 15, 2005, Plaza 400 Owners Corporation ("Plaza") entered into a contract with Arrow pursuant to which Arrow was to act as the general contractor for a construction project involving balcony restoration (the "Project") at 401 East 55th Street, New York, New York (the "Premises"). On June 13, 2005, Arrow entered into an agreement with Diamond Waterproofing Corporation ("Diamond") to subcontract certain work for the Project to Diamond. Arrow also subcontracted the design and erection of a sidewalk scaffold bridge for the Project to Rockledge Scaffold ("Rockledge").

On April 4, 2006, Luis Garcia ("Garcia"), an employee of Diamond, allegedly suffered serious physical injuries when he fell from an unprotected sidewalk bridge at the Premises (the "Garcia Accident"). On June 30, 2006, Garcia commenced the Underlying Action against Plaza and Rockledge seeking monetary damages. On January 8, 2007, Garcia filed an amended complaint to add Arrow as a defendant in the Underlying Action. The Underlying Action is ongoing.

2. The Liberty Policy

At the time of the Garcia Accident, Arrow maintained primary general liability insurance with Liberty in the amount of $1,000,000 per occurrence, with a $2,000,000 per project aggregate and a $10,000,000 policy aggregate, subject to a $50,000 per occurrence self-insured retention ("SIR"), for the period February 28, 2006 to February 28, 2007 (the "Liberty Policy"). The SIR obligated Arrow to pay the first $50,000 associated with any given occurrence regardless of whether that amount was due and owing because of defense costs, indemnity, or both. Arrow retained GAB Robins ("GAB") to act as a third-party claims administrator on its behalf.

3. The Great American Policy

At the time of the Garcia Accident, Diamond maintained primary general liability insurance coverage with Great American in the amount of $1,000,000 per occurrence, subject to a $2,000,000 aggregate, for the period November 27, 2005 through November 27, 2006 (the "Great American Policy"). The Great American policy contained an "Additional Insured Endorsement" which conferred additional insured coverage 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. Such person or organization is an additional insured only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused in whole or in part, by:

1. Your acts or omissions;

2. The acts or omissions of those acting on your behalf;

3. In the performance of your ongoing operations for the additional insured.

For purposes of this motion, Great American does not dispute that Arrow qualifies as an additional insured under the Great American Policy.

The Great American Policy also contained a provision requiring timely notice of "occurrences," "claims," or "suits" (the "Notice Provision"). The Notice Provision provides in pertinent part:

2. Duties In The Event Of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claims or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as ...


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