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Endurance American Specialty Ins. Co. v. Century Surety Co.

United States District Court, S.D. New York

September 15, 2014

ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY and HAYDEN BUILDING MAINTENANCE CORPORATION, Plaintiffs,
v.
CENTURY SURETY COMPANY, Defendant

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[Copyrighted Material Omitted]

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For Endurance American Specialty Insurance Company, Hayden Building Maintenance Corporation, Plaintiffs: Sharon Beth Kaufman, LEAD ATTORNEY, Schoenfeld, Moreland & Reiter, P.C., New York, NY; Jennifer Freda Mindlin, White Fleischner & Fino, LLP(NYC), New York, NY.

For Century Surety Company, Defendant, Counter Claimant: Cassandra Anne Kazukenus, Hurwitz & Fine, P.C., Buffalo, NY; Dan David Kohane, Hurwitz & Fine, P.C, Melville, NY.

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OPINION & ORDER

Andrew J. Peck, United States Magistrate Judge.

Plaintiffs Endurance American Specialty Insurance Company and Hayden Building Maintenance Corporation bring this diversity action against defendant Century Surety Company seeking a declaratory judgment that Century is obligated to defend and indemnify Hayden in an underlying state court action. (Dkt. No. 15: Am. Compl. ¶ ¶ 24-36.) Century counter-claims for a declaratory judgment that it is not obligated to defend and indemnify Hayden (Dkt. No. 2: Ans. & Countercl. ¶ ¶ 24-39), or in the alternative, that Century's coverage of Hayden is excess over Endurance's coverage (Ans. & Countercl. ¶ 40).

Presently before the Court are the parties' cross-motions for summary judgment.

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(Dkt. No. 18: Pls. Notice of Motion; Dkt. No. 22: Century Notice of Cross-Motion.) The parties have consented to decision of these motions by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 10: 11/15/13 Consent Notice.)

For the reasons set forth below, plaintiffs' motion (Dkt. No. 18) is GRANTED with respect to Endurance's claim for a declaratory judgment that Century is obligated to defend and indemnify Hayden in the underlying action and that the Endurance and Century policies share ratably. Century's motion (Dkt. No. 22) is DENIED with respect to its counter-claim for a declaratory judgment that its policy coverage is excess to Endurance's.

FACTS

The Parties

Hayden is a contractor who contracted to perform construction services on a project at 400 Columbus Avenue in Manhattan (" Columbus Ave. project" ). (Dkt. No. 19: Rule 56.1 Stmt. ¶ ¶ 15-16 & Ex. I: Seaboard-Hayden Purchase Order.)[1] Pinnacle contracted with Hayden to perform roofing work on the Columbus Ave. project. (Rule 56.1 Stmt. ¶ ¶ 12, 17 & Ex. J: Hayden-Pinnacle Sub-Purchase Order; see Rule 56.1 Stmt. Ex. G: Hayden-Pinnacle Master Sub-Contract.)[2] Artur Sleszynski, the plaintiff in the underlying state court action, was a Pinnacle employee who sustained personal injuries while working on the roof at the Columbus Ave. project on September 10, 2011. (Rule 56.1 Stmt. ¶ ¶ 3, 7-11.)

Endurance issued a commercial general liability policy to Hayden for the period of September 1, 2011 to September 1, 2012. (Rule 56.1 Stmt. ¶ 18 & Ex. K: Endurance Policy.) Century issued a commercial general liability policy to Pinnacle for the period of May 18, 2011 to May 18, 2012. (Rule 56.1 Stmt. ¶ 20 & Ex. L: Century Policy.)

The Agreements

Hayden and Pinnacle Sub-Contracts

On January 24, 2011, Hayden and Pinnacle entered into an Independent Contractor Agreement that applied to all Hayden job sites. (Dkt. No. 19: Rule 56.1 Stmt. ¶ 12 & Ex. G: Hayden-Pinnacle Master Sub-Contract.) The Agreement contains an Insurance Indemnification Rider, which states as follows:

Prior to commencement of any work under any contract with Hayden Building Maintenance Corporation (" Contractor" ) and until completion and final acceptance of the work, Pinnacle Cons. & Renov. Corp. (" Subcontractor" ) shall, at its sole expense, maintain the following insurance on its own behalf. The Subcontractor will also furnish to Hayden Building Maintenance Certificates of Insurance evidencing it and reflecting the effective date of such coverage as follows:
. . . .
A. Workers' Compensation and Occupations Disease Insurance in accordance with the applicable law or laws. . . .
B. Commercial General Liability with a combined bodily injury and Property Damage limit of not less then One Million ($1,000,000) Dollars per occurrence and TWO Million ($2,000,000)

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Dollars in the aggregate. The aggregate must be applicable on a per project basis. Coverage must include the following perils:
1. Broad form Blanket Contractual Liability for liability assumed under all written contracts with Contractor.
2. Completed Operations / Products Liability
3. Broad Form Property Damage
4. Personal Injury Liability
5. Independent Contractors
6. A copy of the blanket additional insured endorsement should be attached. In the absence of such, endorsements must be furnished reflecting the inclusion of the interests of the Owner, Construction Manager, General Contractor, Contractor, their officers, directors, partners, representatives, agents and employees, and naming each as an additional insured.
7. Coverage is to be endorsed to reflect that the Owner, General Contractor, and Contractor are to be named as additional insureds.
8. Coverage is to be provided on an " occurrence" ; basis with carriers Arated by A.M. Best.
9. A copy of policy and/or endorsement(s) and any other documents required to verify such insurance are to be submitted with the appropriate certificate(s), or upon request of Contractor. Failure to provide these documents is not to be construed as a waiver of the requirements to provide such insurance.
. . . .
HOLD HARMLESS:
To the fullest extent permitted by law, Subcontractor will indemnify and hold harmless Contractor and Owners, their officers, directors, partners, representatives, agents and employees from and against any and all claims, suits, liens, judgments, damages, losses and expenses, including legal fees and all court costs and liability (including statutory liability) arising in whole or in part and in any manner from injury and/or death of person or damage to or loss of any property resulting from the acts, omissions, breach or default of Subcontractor pursuant to any contract Purchase Order and/or related Proceed Order, except those claims, suits, liens, judgments, damages, losses and expenses caused by the negligence of Contractor. Subcontractor will defend and bear all costs of defending any actions or proceedings brought against Contractor and/or Owners, their officers, directors, agents, and employees, arising in whole or part out of any such acts, omission, breach, or default. The foregoing indemnity shall include injury or death of any employee of the Contractor or Subcontractor and shall not be limited in any way by and amount or type of damage, compensation or benefits payable under any applicable Workers Compensation, Disability Benefits or other similar employees benefit act.
The Subcontractor hereby expressly permits the General Contractor to pursue and assert claims against the Subcontractor for indemnity, contribution and common law negligence arising out of claims for damages for death and personal injury.

( Ex. G: Hayden-Pinnacle Master Sub-Contract, Ins. Indemnification Rider, emphasis added to Hold Harmless clause.)

On August 16, 2011, Pinnacle contracted with Hayden to perform the roofing work on the Columbus Ave. project. (Rule 56.1 Stmt. ¶ 17 & Ex. J: Hayden-Pinnacle Sub-Purchase Order.) The contract

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states: " The terms and conditions of this Purchase Order are the terms and conditions set forth in the Master Subcontract Agreement -- All States executed by Hayden Building Maintenance Corp. and Subcontractor. Those terms and conditions are incorporated by reference as if fully set forth herein." (Ex. J: Hayden-Pinnacle Sub-Purchase Order.)

Century's Commercial General Liability Policy

Century issued a Commercial General Liability Policy to Pinnacle for the period of May 18, 2011 to May 18, 2012. (Dkt. No. 19: Rule 56.1 Stmt. ¶ 20 & Ex. L: Century Policy.) Section I of the Commercial General Liability Coverage Form describes Century's obligations under the policy for " bodily injury" claims. (Ex. L: Century Policy at 19-20.)[3] Section I also contains a list of exclusions--categories of bodily injury that are not covered by Century's insurance policy--including an " Employer's Liability" exclusion (id.) as modified by an " Action Over Exclusion" endorsement, which states:

It is agreed that the following change is made to Coverage A. 2. Exclusions:
Exclusion e. Employer's Liability is deleted in its entirety and replaced with the following:
e. Employer's Liability
" Bodily injury" to:
An " employee" of the named insured arising out of and in the course of:
(a) Employment by the named insured; or
(b) Performing duties related to the conduct of the named insured's business; or
The spouse, child, parent, brother or sister of that " employee" as a consequence of Paragraph above.
This exclusion applies:
Whether the named insured may be liable as an employer or in any other capacity; and
To any obligation to share damages with or repay someone else who must pay damages because of the injury.

(Ex. L: Century Policy, Employer's Liability Exclusion Endorsement at 65, emphasis added.)

In relevant part, the preamble provides the meaning of select words as used throughout Century's policy:

Throughout this policy the words " you" and " your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words " we", " us" and " our" refer to the company providing this insurance.
The word " insured" means any person or organization qualifying as such under Section II -- Who Is An Insured.
Other words and phrases that appear in quotation marks have special meaning. Refer to Section V -- Definitions.

( Ex. L: Century Policy at 19.) The policy's Declarations indicate as follows: " NAMED INSURED: Pinnacle Construction & Renovation Corp." (Ex. L: Century Policy at 17-18.)

Section II of the policy, " Who Is An Insured," is modified by the following endorsement:

ADDITIONAL INSURED -- OWNERS, LESSEES OR CONTRACTORS -- AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU

This endorsement modifies insurance provided under the following:

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COMMERCIAL GENERAL LIABILITY COVERAGE PART

A. Section II -- Who Is An Insured is amended to include as an additional insured 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; or
2. The acts or omissions of those acting on your behalf;
in the performance of your ongoing operations for the additional insured.
A person's or organization's status as an additional insured under this endorsement ends when your operations for that ...

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