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National Grid Corporation Services, LLC v. Brand Energy Services, LLC

United States District Court, E.D. New York

March 30, 2017

NATIONAL GRID CORPORATION SERVICES, LLC, and ERICK LLAGUNO, Plaintiffs,
v.
BRAND ENERGY SERVICES, LLC, and, ACE AMERICAN INSURANCE COMPANY, Defendants.

          Hammill, O'Brien, Croutier, Dempsey, Pender & Koehler, P.C. Rebecca J. Moulton, Esq. For Plaintiff National Grid

          Sweeney and Sheehan, Elizabeth Dalberth, Esq. Tribler Orpett & Meyer, P.C. David E. Schroeder, Esq. For the Defendants

          MEMORANDUM & ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

          Denis R. Hurley Senior District Court Judge

         I. Introduction

         The present case is a declaratory judgment action. It relates to an underlying New York state court action brought by Plaintiff Erick Llaguno (“Llaguno”)(hereafter, the “Llaguno Action”) regarding claims for damages as a result of personal injuries he allegedly sustained on September 24, 2010, while working as an employee of Defendant Brand Energy Services, LLC (“Brand”) pursuant to an agreement between Plaintiff National Grid Corporate Services, LLC (“Grid”) and Brand (hereafter, the “Agreement”).

         Grid seeks declarations from this Court that Brand has breached its contractual duty to Grid by failing to secure “additional insured” coverage for Grid's benefit and that Ace American Insurance Company (“Ace”; and, collectively with Brand, the “Defendants”) is in breach of contract for failing to defend and indemnify Grid in the underlying Llaguno Action. Brand counters that pursuant to the Agreement, it was not required to name Grid as an additional insured under Brand's liability insurance policy with Ace (hereafter, the “Policy”). Nor can Grid rely on the doctrine of “incorporation by reference” since there are no documents which will support such a showing beyond all reasonable doubt as required under applicable New York law.

         Grid and the Defendants have cross-moved for summary judgment. (See ECF No. 63 (“Defendants' Summary Judgment Motion”); ECF No. 65 (“Grid's Summary Judgment Motion”).) For the reasons that follow, Grid's Summary Judgment Motion is granted and the Defendants' Summary Judgment is denied.

         II. Background

         A. Factual Background

         1. Generally

         Grid is an electricity and gas utility company, which operates, inter alia, on Long Island.

         2. The Bidding Process

         In Spring 2012, Grid sought bids for two components of an asbestos removal project at its Northport Power Station (hereafter, the “Project”); one component was securing a contractor to provide scaffolding and the other component was hiring a contractor to remove asbestos. Grid disseminated an e-mail announcement automatically generated by an electronic bidding system, known as “Ariba”, seeking bids for the scaffolding component of the Project. The subject line of the e-mail read: “National Grid has invited you to participate in an event: AVS051710 INSULATION REMOVAL - MAIN STEAM AND HOT REHEAT PIPING AND SCAFFOLDING.” (Exhibit D, attached to Moulton Decl., hereafter, “E-Mail Invitation”).) Grid contends the E-Mail Invitation was its “Notice of Solicitation” (see Moulton Decl. at ¶6), despite that phraseology not being included anywhere withing the E-Mail Invitation. (See E-Mail Invitation, Exhibit D, attached to Moulton Decl.) Brand was one of the companies which received the E-Mail Invitation to bid or participate in event AVS051710.[1]

         By clicking onto a link in the E-Mail Invitation, a participant could log into Ariba, review the specifications of event AVS051710, and submit a bid. Scrolling down the computer screen to review the specifications of the job, one comes to Item 3, entitled “Purpose Scope”. It states:

“Contractor to provide all labor, material, tools, equipment, supervision and insurance to perform. All activities shall be performed in accordance with this RFP and it's [sic] associated documentation.”

(Id. (emphasis added).)

         Further down, one finds Item 8, entitled “Insurance Requirements”. (Id.) This section contains the statement: “Attached are the insurance requirements and levels required for the scope indicated. Any exceptions to these requirements must be clearly identified.” (Id.) Under this statement is a document icon, labeled “References”, which is a hyperlink[2] to two different documents; there is no other text or statement in this section. When clicked, the “References” hyperlink brought up two documents, labeled as follows:

NATIONAL GRID
and its affiliates
INSURANCE REQUIREMENTS
FOR
ASBESTOS REMOVAL
HAZARDOUS WASTE REMOVAL & NON-HAZARDOUS WASTE REMOVAL
(Exhibit F, attached to Moulton Decl. (hereafter, “Asbestos Insurance Requirements”)); and
NATIONAL GRID
and its affiliates
INSURANCE REQUIREMENTS
FOR
DESIGN & CONSTRUCT

(Exhibit G, attached to Moulton Decl. (hereafter, “Construct Insurance Requirements”, and collectively with the Asbestos Insurance Requirements, the “Insurance Requirements Documents”).)

         Each Insurance Requirements Document is separated into three sections: (I) General Requirements; (II) Required Coverage; and (III) Bonding. (See Exhibits F & G.) Section II.B, entitled “Commercial General Liability Insurance”, was identical in both Documents. The contractor was to procure commercial general liability insurance, including personal injury, with minimum limits of liability of “$1, 000, 000 per occurrence Combined Single Limit” and “$2, 000, 000 General Aggregate”. (Id. at Part II.B.) The Documents also identically state: “The Commercial General Liability policy shall include an endorsement stating the [sic] National Grid is an additional insured as respects operations relating to this contract or purchase order.” (Id. at Part II.B.2 (emphasis added).) Section II.D, entitled “Umbrella Liability”, required the procurement of an umbrella liability policy with a “$5, 000, 000 per occurrence/aggregate” policy limit. (Id. at Part II.D.)

         In making its bid, Brand uploaded a “Certificate of Liability Insurance” (dated June 11, 2010) from insurer Ace to Brand with Grid being identified as the “Certificate Holder” and a description which stated:

Project Name: Northport Station; National Grid Corporate Services LLC is listed as additional insured regarding the above General Liability and Auto Liability policies pursuant to the terms and conditions of the written contract. Excess Liability follows form.

(Exhibit H, attached to Moulton Decl. (emphasis added; hereafter, “Certificate of Insurance”).)

         However, at the top of the Certificate was the statement:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE ...

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