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Buckingham Properties, LLC v. Atlantic Casualty Insurance Co.

United States District Court, W.D. New York

January 8, 2020





         This is an action seeking a declaratory judgment concerning the parties' rights under an insurance policy. Now before the Court are cross-motions for summary judgment. Defendant's application is granted, and this action is dismissed.


         The reader is presumed to be familiar with the record on summary judgment, accordingly the Court will only set forth the facts relevant to its decision. In or about July 2015, Buckingham Properties, LLC (“Buckingham”) hired Christopher Haitz d/b/a Real Renovations (“Haitz”) to perform roofing work on a building owned by Buckingham in Rochester, New York. As part of that agreement, Haitz added Buckingham as an additional insured on a Commercial General Liability Insurance Policy (“the policy”) issued to Haitz by Atlantic Casualty Insurance Company (“Atlantic”). Some time later in July 2015, one of Haitz's employees, Kristopher Hanson (“Hanson”), claimed that he was injured in a fall from the roof. Hanson subsequently commenced an action against Buckingham in New York State Supreme Court, Genesee County, asserting inter alia claims under New York Labor Law § § 240(1) & 241(6). Buckingham notified Atlantic of the lawsuit and requested that Atlantic defend and indemnify Buckingham. However, Atlantic disclaimed any duty to defend or indemnify Buckingham pursuant to several provisions of the policy. Buckingham's own insurer, Massachusetts Bay, then undertook to defend Buckingham in the state-court action.

         On June 23, 2016, while the state-court action was still pending, Buckingham and Massachusetts Bay commenced the subject diversity action seeking a declaration that, under the policy and New York State law, Atlantic was required to defend and indemnify Buckingham in the state-court action.

         On or about October 27, 2017, Buckingham and Hanson settled the state-court action. The settlement amount ($950, 000.00) and the costs of defending the state-court action were paid entirely by Massachusetts Bay. Buckingham paid nothing toward the settlement or the defense of the action. Buckingham subsequently assigned “all” of its rights as an additional insured under the Atlantic policy to Massachusetts Bay.[1]

         On June 13, 2019, Atlantic filed the subject motion for summary judgment (Docket No. [#55]). Atlantic primarily maintains that it had no duty to defend or indemnify Buckingham under the policy's “employee exclusion.” In this regard, the policy contains an exclusion entitled “Exclusion of Injury to Employees, Contractors and Employees of Contractors, ” which states in pertinent part:

         This insurance does not apply to: (i) “bodily injury” to any “employee” of any insured arising out of or in the course of: (a) Employment by any insured; or (b) Performing duties related to the conduct of any insured's business; or (ii) “bodily injury” to any “contractor” for which any insured may become liable in any capacity. Docket No. [#55-6] at p. 60. Atlantic contends that this exclusion applies since Hanson was an employee of Haitz, who was an insured under the policy. Atlantic also maintains that there is no actual case or controversy involving Buckingham in this action, since Buckingham did not pay any money out of its own pocket to defend or settle the underlying state-court action.

         On September 30, 2019, Buckingham and Massachusetts Bay filed the subject cross-motion for summary judgment (Docket No. [#74]). Cross-movants primarily contend that the “employee exclusion” does not apply to Buckingham, due to the policy's “Separation of Insureds” provision, which states in pertinent part:

Separation of Insureds. . . . [T]his insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or “suit” is brought.

Docket No. [#55-6] at p. 38. Cross-movants essentially contend that this “separation of insureds” provision negates the “any insured” language in the “employee exclusion, ” such that the latter provision applies only to an insured who actually employs the injured employee, and not to other insureds.[2] Cross-movants further maintain that a justiciable case or controversy exists with regard to Buckingham, since, for example, “Buckingham has been denied the defense and indemnity it was owed” under the policy, and since a determination here in Buckingham's favor “has real potential to materially affect Buckingham's loss history and general liability premium going forward.”[3]

         On December 5, 2019, counsel for the parties appeared before the undersigned for oral argument. The Court has considered the ...

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