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Certain Underwriters v. Illinois National Insurance Order Company

March 3, 2011


The opinion of the court was delivered by: Richard J. Holwell, District Judge:


Plaintiff Certain Underwriters at Lloyds of London ("Lloyds") commenced this declaratory judgment action to determine liability among various insurance companies that issued policies that pertained to a construction job site. Six defendant insurance companies, Illinois National Insurance Company ("Illinois National"), the Insurance Company of the State of Pennsylvania ("ICSOP"), Continental Casualty Company ("Continental"), the Hartford Fire Insurance Company ("Hartford"), Travelers Property Casualty Company of America ("Travelers"), and Arch Insurance Company ("Arch") filed motions for summary judgment. Lloyds filed a cross-motion for partial summary judgment against ICSOP, Travelers, Continental, and Hartford. For the reasons stated below, the motion of Illinois National is granted; the motion of ICSOP is denied; the motion of Continental is granted in part and denied in part; the motion of Hartford is granted; the motion of Travelers is granted; the motion of Arch is granted; and the motion of Lloyds is granted in part and denied in part.


This action stems from a construction accident that occurred on December 14, 2007. The accident occurred at the construction site for Goldman Sachs's new world headquarters. Goldman Sachs hired Adamson Associates Architects ("Adamson") as architects and Tishman Construction Corp. of New York ("Tishman") to be its general contractor. Tishman in turn hired DCM Erectors, Inc. ("DCM") and Component Assembly Systems, Inc. ("CAS") as subcontractors. On the date in question, Norbet Trucking Corporation ("Norbet") was delivering a truckload of metal studs to the construction site. DCM was unloading the truck with a crane. Usually, DCM brought its own slings to attach to the crane for unloading, but on the day in question, it had not. Instead, it borrowed a sling from CAS. DCM tested the sling, then began to unload the studs. After DCM had unloaded several studs, the sling broke and studs fell to the ground. Robert Woo ("Woo"), an architect employed by Admanson, and Wilbert Rocco ("Rocco"), the Norbet truck driver, were injured. Both Woo and Rocco have brought suits in New York state court. Woo has settled, but the Rocco suit is still pending.


Summary judgment is appropriate where there are no genuine issues of material fact. See Fed. R. Civ. P. 56(c). The burden to show the absence of a genuine factual dispute falls on the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). A dispute regarding a fact is genuine if the evidence is such that a reasonable finder of fact could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material when it "might affect the outcome of the suit under the governing law." Elec.

Inspectors, Inc. v. Vill. of E. Hills, 320 F.3d 110, 117 (2d Cir. 2003). In evaluating a motion for summary judgment, the court is required to "view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments . . . ." Wevant v. Okst, 101 F.3d 845, 854 (2d Cir. 1996) (citations omitted).


I. The Illinois National Policy

Illinois National issued an Owner Controlled Insurance Policy to Goldman Sachs. (Gratt Aff., Ex. 1.) This policy had a per occurrence limit of $2 million. (Id., Ex. 1, 6.) Illinois National claims that it paid $2 million to Woo under this policy (Illinois National/ICSOP Rule 56.1 Stmt, ¶ 22), and Lloyds does not appear to dispute this fact (Lloyds Rule 56.1 Resp. to Illinois National/ICSOP, ¶ 22). Because Illinois National has already paid out the policy limit for the Goldman Sachs policy, it is not obligated to provide further payment on this policy. Illiniois National's unopposed motion for summary judgment is granted.

II.The ICSOP Policy

ICSOP insured the trucking company, Norbet, under an auto insurance policy. The policy contains two exclusions, one that limits the liability relating to the loading and unloading of vehicles that is performed by mechanical devices not attached to the vehicle (the "mechanical device exception") (Illinois National/ICSOP Rule 56.1 Stmt, ¶ 10) and one that excludes liability for the conduct of third parties (id., ¶ 9). Lloyds argues that this contract is to be governed by New Jersey law and that these exclusions are void as a matter of New Jersey law. ICSOP argues that New York law should govern the interpretation of the policy. The first issue the Court therefore must determine is which state's laws govern the policy at issue.

"Federal courts sitting in diversity look to the choice-of-law rules of the forum state." Int'l Bus. Machs. Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004). Under New York choice-of-law rules, "the first step" is to determine "whether there is an actual conflict between the laws invoked by the parties." Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 419 (2d Cir. 2001) (citation omitted). It is settled New Jersey law that "the obligation to provide coverage in a 'loading and unloading' accident arises from statute and therefore cannot be limited by contract." Kennedy v. Jefferson Smurfit Co., 688 A.2d 89, 91 (N.J. 1997) (quoting Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Co., 575 A.2d 416, 419 (N.J. 1990)). Pursuant to this requirement, auto insurers must also cover unloading accidents caused by third parties. Bellafronte v. Gen. Motors Corp., 376 A.2d 1294, 1297 (N.J. Super. Ct. App. Div. 1977). In New York, however, an automobile insurance policy "need not cover the liability of a third party for accidents occurring in the loading or unloading of the vehicle." Argentina v. Emery World Wide Delivery Corp., 715 N.E.2d 495, 497 (N.Y. 1999) (citing 11 NYCRR § 60-1.1(c)(3)(iii)). Accordingly, a conflict exists.

When there is a conflict between the relevant states' laws, it is necessary to analyze what the "center of gravity" is for the contract. Allstate Ins. Co. v. Stolarz, 613 N.E. 2d 936, 939 (N.Y. 1993). "Under this approach, the spectrum of significant contacts-rather than a single possibly fortuitous event-may be considered." Id. There are five generally significant contacts that guide this analysis: the place of contracting, negotiation and performance; the location of the subject matter of the contract; and the domicile of the contracting parties. Id. at 940. In considering insurance contracts in particular, however, "[t]his approach generally dictates that a contract of liability insurance be governed by the law of the state which the parties understood was to be ...

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