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Arch Specialty Insurance Co. v. Farm Family Insurance Co.

United States District Court, S.D. New York

March 3, 2017

ARCH SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
FARM FAMILY CASUALTY INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          LAURA TAYLOR SWAIN United States District Judge

         On December 28, 2015, Plaintiff Arch Specialty Insurance Company (“Plaintiff” or “Arch”) brought this action, seeking a judgment declaring that: (1) Mega Contracting Group, LLC (“Mega”), East 138th Street Owners LLC (“East 138th Street”), and Barrier Free Living Housing Development Fund Corporation (“Barrier Free Living”) (collectively, the “Tendering Parties”) qualify as additional insureds on a general liability insurance policy issued by Defendant Farm Family Casualty Insurance Company (“Defendant” or “Farm Family”) to Mastercraft Masonry I, Inc. (“Mastercraft”), with respect to an underlying personal injury action pending in New York State Supreme Court, Joseph A. Giampa v. Barrier Free Living Housing Development Fund Corp. et al., Index No. 22943/2015E (the “Underlying Action”); (2) Farm Family has an obligation to defend and indemnify the Tendering Parties in the Underlying Action; and (3) Farm Family must reimburse Arch for the defense costs that it has incurred in the Underlying Action. (See docket entry no. 5.) Plaintiff also seeks a monetary judgment in the amount of $29, 744.02 for attorneys' fees and defense costs incurred in the Underlying Action. (Id.) Plaintiff later filed an amended complaint on April 13, 2016, seeking the same relief. (See docket entry no. 15.) The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1332.

         On July 20, 2016, Plaintiff moved for summary judgment against Farm Family on all three of its causes of action, pursuant to Fed.R.Civ.P. 56, and to stay all discovery and relevant deadlines set forth in the Court's March 11, 2016, Pre-Trial Scheduling Order, pursuant to Fed.R.Civ.P. 26. (See docket entry no. 17.)

         The Court has reviewed thoroughly all of the parties' submissions. For the reasons stated below, Plaintiff's motion for summary judgment is granted, Plaintiff's motion to stay proceedings is denied as moot, and the case is referred to Magistrate Judge Gorenstein for an inquest as to the defense cost reimbursement to which Arch is entitled.

         Background

         The following summary of relevant facts is drawn primarily from Plaintiff's Statement of Undisputed Material Facts (“PSUF”) (Docket entry no. 21) and affidavits submitted in connection with the instant motion. References to the PSUF are inclusive of the evidence cited therein. Except as indicated otherwise, the facts summarized below are undisputed.

         The Mastercraft Contract

         On or about May 31, 2013, Mastercraft entered into a contract (the “Mastercraft Contract”) with Mega, a general contractor, pursuant to which Mastercraft agreed to serve as the masonry subcontractor at a construction site located at 616 East 139th Street, Bronx, New York (the “Project Site”). (PSUF ¶ 1; see also Vinciguerra Decl., Ex. 3, Docket entry no. 19-3.) East 138th Street and Barrier Free Living owned the Project Site. (PSUF ¶ 2.)

         Pursuant to Paragraph 34 of the Mastercraft Contract, “Liability for Damage & Personal Injury”:

The Subcontractor [Mastercraft] hereby assumes entire responsibility and liability for any and all damages or injury of any kind or nature whatever (including death resulting therefrom) to all persons, whether employees of the Subcontractor or otherwise, and to all property caused by, resulting from, arising out of, or occurring in connection with the execution of the Work [defined as all masonry work as per the attached Scope of Work: Masonry dated 5/31/13 and all work to be done according to the drawing and specifications listed on the attached Exhibit A and Exhibit B, except for any changes agreed upon between General Contractor and Subcontractor during bid review and buyout]. Except to the extent, if any, expressly prohibited by statute, should any claims for such damage or injury (including death resulting therefrom) be made or asserted, whether or not such claims are based upon [Mega's] alleged active or passive negligence or participation in the wrong or upon any alleged breach of any statutory duty or obligation on the part of [Mega], the Subcontractor agrees to indemnify and save harmless [Mega], its members, officers, agents, servants and employees, the Owner [East 138th Street and Barrier Free Living], the Funding Agency and all other persons or entities required to be indemnified under the provisions of the General Contract (hereinafter collectively referred to as “the Indemnitees”) from and against any and all such claims, and further from and against any and all loss, cost, expense, liability, damage or injury, including legal fees and disbursements, that the Indemnitees may directly or indirectly sustain, suffer or incur as a result thereof and the Subcontractor agrees to and does hereby assume, on behalf of the Indemnitees, the defense of any action at law or in equity which may be brought against the Indemnitees upon or by reason of such claims and to pay on behalf of the Indemnitees, upon demand, the amount of any judgment that may be entered against the Indemnitees in any such action. In the event that any such claims, loss, cost, expense, liability, damage or injury arise or are made, asserted or threatened against the Indemnitees, [Mega] shall have the right to withhold from any payments due or to become due to the Subcontractor an amount sufficient in the judgment of [Mega] to protect and indemnify the Indemnitees from and against any and all such claim, loss, cost, expense, liability, damage or injury, including legal fees and disbursements, or [Mega] in its discretion, may require the Subcontractor, to furnish a surety bond or letter of credit satisfactory to [Mega] guaranteeing such protection, which bond of letter of credit shall be furnished by the Subcontractor within five (5) days after written demand has been made therefor.

(Vinciguerra Decl., Ex. 3 at 1, 17.)

         Paragraph 35 of the Mastercraft Contract required Mastercraft “to procure and maintain, at its own expense, until completion and final acceptance of the work . . . [insurance for] Comprehensive General Liability, including contingent, contractual products, and completed operations . . . with a minimum limit of $1, 000, 000.00 combined single limit for bodily injury and property damage, and $2, 000, 000.00 Annual Aggregate, ” along with additional umbrella insurance coverage. (Id. at 18.)

         Paragraph 35(D) of the Mastercraft Contract provided that Mega “and the other Indemnitees shall be named as additional insureds on a primary basis to [Mastercraft's] Comprehensive General Liability using appropriate ISO forms that include Premises Operations Liability, Contractual Liability, Advertising and Personal Injury Liability and Products/Completed Operations Liability, or by using a company specific endorsement that provide equivalent protection.” (Id. at 19 (emphasis added).)

         The Insurance Policies

         Arch issued “Commercial General Liability Policy Number GAP0009932-08” to Mega for the policy period September 27, 2013 to September 27, 2014 (the “Arch Policy”). (Vinciguerra Decl., Ex. 2, Docket entry no. 19-2.) Pursuant to the Arch Policy, Arch provided “commercial general liability coverage” to Mega with a $1, 000, 000 per-occurrence limit and $2, 000, 000 aggregate limit. (Id. at 2.)

         Farm Family issued a general liability insurance policy to Mastercraft for the policy period October 22, 2013 to October 22, 2014, with a $2, 000, 000 per-occurrence limit and $4, 000, 000 aggregate limit (the “Farm Family Policy”). (Vinciguerra Decl., Ex. 4, Docket entry no. 19-4.) The Farm Family Policy specifically identifies Barrier Free Living, East 138th Street, and Mega as “additional insureds” in the “Additional Insured Schedule.” (Id.at 7, 8.) In endorsements to the Farm Family Policy, Barrier Free Living is designated as an “Additional Insured - Designated Person or Organization, ” and East 138th Street and Mega are both designated as “Additional Insured[s] - Owners, Lessees or Contractors - Scheduled Person or Organization.” (Id. at 16, 21, 22.) These endorsements provide that Barrier Free Living, East 138th Street, and Mega are additional insureds under the Farm Family Policy “with respect to liability for ‘bodily injury', ‘property damage' or ‘personal and advertising injury' caused, in whole or in part, by [Mastercraft's] acts or omissions or the acts or omissions of those acting on [Mastercraft's] behalf in the performance of [its] ongoing operations.” (Id.)

         The Farm Family Policy includes a “Primary and Noncontributory Insurance Condition, ” which provides that:

1. Where required by written contract or agreement executed by the parties to that contract or agreement, this insurance is primary and/or noncontributory with respect to any other insurance policy issued to the additional insured, and such other insurance policy issued to the additional insured as a named insured shall be excess and/or noncontributing, whichever applies, with this insurance; and
2. Any insurance provided by this insurance shall be primary to other valid and collectible insurance available to the additional insured except:
a. As otherwise provided in the COMMON POLICY CONDITIONS, H. OTHER INSURANCE; or
b. For any other valid and collectible insurance available to the additional insured as an additional insured by attachment of an endorsement to another insurance policy. In such case, the coverage provided under this insurance shall also be excess.

(Vinciguerra Decl., Ex. 6 at 6 (emphasis added).)

         The Underlying Action

         Joseph A. Giampa (“Giampa”) was an employee of Mastercraft. (PSUF ¶ 16.) On or about May 28, 2015, Giampa commenced the Underlying Action, Joseph A. Giampa v. Barrier Free Living Housing Development Fund Corp. et al., Index No. 22943/2015E, a personal injury action against the Tendering ...


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