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Western Heritage Insurance Co. v. Century Surety Co.

United States District Court, S.D. New York

July 3, 2014


Page 444

For Plaintiff: Andrew Hal Lesnever, Esq., Carroll McNulty & Kull LLC, Basking Ridge, NJ.

For Defendant: Dan David Kohane, Esq., Cassandra Anne Kazukenus, Esq., Hurwitz & Fine, P.C, Buffalo, NY.

Page 445


Shira A. Scheindlin, U.S.D.J.


Western Heritage Insurance Company (" Western" ) brings this diversity action against Century Surety Company (" Century" ) in connection with a settlement paid by Western in an underlying personal injury suit (" Underlying Action" ). Both Century's insured and Western's insured were named as defendants in the Underlying Action. Western seeks a declaration (1) that Century breached its obligations under the Century Commercial Lines Policy (" Century Policy" ), (2) that Century must contribute toward the settlement of the Underlying Action, and (3) that Century must pay Western five hundred thousand dollars, representing Century's pro-rata share of the settlement. In addition, Western asks the Court to dismiss Century's counterclaims.

Now before the Court is Western's motion for summary judgment on the grounds that certain provisions in both the Century Policy and the Western Heritage Commercial Policy (" Western Policy" ) require Century to contribute its pro-rata share of the settlement in the Underlying Action.[1] Century responds that those provisions do not entitle Western to contribution because Century and Western do not share an insured.[2] For the following reasons, Western's motion for summary judgment is DENIED.


A. The Underlying Action

On October 24, 2006, NSBP Realty, LLC (" NSBP" ), the owner of a construction project in Brooklyn, New York (the " Project" ) entered into a contract with Empire Builders and Developers, Inc. (" Empire" ).[4] Under the contract, Empire agreed to serve as a consultant for the Project by helping NSBP select subcontractors.[5] The contract also included an indemnification provision, stating:

[NSBP] shall indemnify and hold harmless [Empire] and its employees from and against all claims, damages, loss or expense caused by any negligent or intentional act or omission of [NSBP] or sub-contractors, anyone directly or indirectly employed by any of them or anyone whose acts [make] any of the[m] liable.[6]

Page 446

Upon Empire's recommendation, NSBP hired LJ Ironworks, Inc. (" LJ" ) as a subcontractor for the Project.[7]

On March 10, 2008, Wilmer Castaneda, an employee of LJ, was injured in an elevator shaft while working on construction at the Project.[8] On April 8, 2008, Castaneda sued NSBP and Empire in New York Supreme Court.[9] On May 2, 2008, NSBP informed its insurer, Western, of the Underlying Action, and Western assumed the defense of NSBP.[10] On May 6, 2008, Empire also informed its insurer, Century, of the Underlying Action.[11] On September 22, 2008, Empire's defense counsel tendered Empire's defense to Western.[12] Western accepted Empire's tender of defense.[13]

On January 23, 2013, the parties entered mediation.[14] On January 30, 2013, they settled all of Castaneda's claims for two million dollars.[15] Because NSBP and Century were entitled to contractual indemnity from LJ, LJ's insurer, Scottsdale Insurance Company, contributed its one million dollar policy limit toward the settlement.[16] Western also contributed its one million dollar policy limit toward the settlement on behalf of NSBP and Empire.[17] Century did not contribute anything toward the settlement.[18] At both the mediation and the settlement, Western reserved its right to seek reimbursement from Century.[19]

B. The Century Policy

1. Overview

In October 2007, Century issued a Commercial Lines Policy to Empire, effective October 29, 2007 to October 29, 2008.[20] The Century Policy lists Empire as the only named insured and 2114 Bedford LLC, an unrelated non-party, as the only additional insured.[21] Under the policy, Century agreed to pay " those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." [22] The Century Policy is limited to one million dollars per occurrence and two million dollars in the aggregate.[23]

2. Other Insurance Provision

In addition, the Century Policy contains the following Other Insurance provision:

If other valid and collectible insurance is available to the insured for a loss we cover . . . our obligations are limited as follows:
a. This insurance is excess over any other insurance whether the other insurance is stated to be primary, pro rata, contributory, excess, contingent,

Page 447

b. When this insurance is excess, we will have no duty . . . to defend the insured against any " suit" if any other insurer has a duty to defend the insured against that " suit" . . . .

c. When the insurance is excess over other insurance, we will pay only our share of the amount of loss, if any, that exceeds the sum of:

(1) The total amount that all such ...

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