The Travelers Indem. Co. of Am. v. Sw. Marine & Gen. Ins. Co.

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THE TRAVELERS INDEMNITY COMPANY OF AMERICA, Plaintiff, v. SOUTHWEST MARINE AND GENERAL INSURANCE COMPANY Defendant.

No. 21-CV-01828 (JMA)(JMW)

United States District Court, E.D. New York

February 10, 2023

Amy C Gross Usery & Associates For Plaintiff The Travelers Indemnity Company of America

Michael Frank Panayotou Melito & Adolfsen P.C. For Defendant Southwest Marine and General Insurance Company

REPORT AND RECOMMENDATION

James M. Wick United States Magistrate Judge

This is an insurance coverage dispute. Plaintiff, The Travelers Indemnity Company of America (“Travelers”) seeks a declaration that Defendant Southwest Marine and General Insurance Company (“Southwest”) has a duty to defend VRD Contracting, Inc. (“VRD”) Shoreham-Wading River Central School District (the “District”), and Park East Construction Corp. (“Park East”) in the underlying personal injury action (the “Underlying Action”).

Travelers alleges, and Southwest does not dispute, that Southwest issued a policy of insurance providing general liability coverage to Donninger Construction, Inc. (“Donninger”), which was performing spackling work for Certified Interiors, Inc. (“Certified Interiors”), a nonparty subcontractor, at the project site where an alleged injury occurred. Travelers alleges that the project site was owned by the District, VRD was the general contractor, and Park East was the construction manager. The parties do not dispute that this policy contained an additional insured endorsement, which provides coverage for additional insureds with respect to bodily injury “caused, in whole or in part, by” the acts or omissions of Donninger or those acting on its behalf in the performance of its ongoing operations for the additional insureds. It is also undisputed that the claimant in the Underlying Action alleges that he was injured by a bucket of spackle that fell off a scaffold and hit him.

What the parties do dispute is whether, pursuant to the policy issued by Southwest and a purchase order providing for Donninger's work at the project, Southwest has a duty to defend VRD, the District, and Park East as additional insureds. To date, Travelers has been defending VRD, the District, and Park East in the Underlying Action.

Before the Court on referral from the Hon. Joan M. Azrack is Traveler's motion for partial summary judgment and Southwest's cross-motion for summary judgment. (Electronic Order, dated Nov. 23, 2022.) Travelers seeks an Order declaring that: (i) Southwest is obligated to defend VRD, the District, and Park East in connection with the Underlying Action; (ii) Southwest's duty to defend VRD the District, and Park East in connection with the Underlying Action is primary and non-contributory to any defense available to VRD, the District, and Park East from Travelers with respect to the Underlying Action; (iii) Travelers' defense obligations toward VRD, the District, and Park East are excess to those of Southwest with respect to the Underlying Action; and (iv) further granting an award in favor of Travelers against Southwest for all sums Travelers has paid in defending VRD, the District, and Park East as to the Underlying Action. (DE 20; DE 21.)

On the other hand, Southwest seeks an Order declaring simply that Southwest owes no duty to defend the District, VRD, and Park East in the Underlying Action. (DE 21.)

For the reasons that follow, the undersigned respectfully recommends that Traveler's motion be GRANTED, and Southwest's cross-motion be DENIED.

I. UNDISPUTED MATERIAL FACTS^[1]

The Travelers Policy

Travelers issued a policy providing VRD Contracting, Inc. (“VRD”) with Commercial General Liability and Employee Benefits Liability coverage bearing policy number DT-CO-9395R097 TIA-16 for the policy period of October 18, 2016, to October 18, 2017 (the “Travelers Policy”). (DE 20-26 at ¶ 1.) Subject to certain terms, conditions, and exclusions, the Travelers Policy provides coverage for bodily injury that takes place during the policy period and is caused by an accident. (Id. at ¶ 2.) The Travelers Policy also contains an “other insurance” provision that provides that coverage under the Travelers Policy is “excess over any of the other insurance, whether primary, excess, contingent or on any other basis, that is available to the insured when the insured is added as an additional insured under any other policy, including any umbrella or excess policy” (“Other Insurance Provision”). (Id. at ¶ 3.)

The Travelers Policy also contains a provision that states that, with respect to coverage provided to additional insureds pursuant to a written contract or agreement, “the insurance provided by this endorsement . . . is excess over any valid and collectible ‘other insurance', whether primary, excess, contingent or on any other basis, that is available to the additional insured when that person or organization is an additional insured under such ‘other insurance'” (“Excess Provision”). (Id. at ¶ 4.)

The Southwest Policy

Southwest issued policy number GL2016STC00037 to Donninger providing commercial general liability coverage for the policy period of September 14, 2016, to September 14, 2017 (the “Southwest Policy”). (Id. at ¶ 5.) Subject to certain terms, conditions, and exclusions, the Southwest Policy provides coverage for bodily injury that takes place during the policy period and is caused by an accident. (Id. at ¶ 6.) The Southwest Policy contains an ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - SCHEDULED PERSON OR ORGANIZATION endorsement (form CG 20 10 04 13) (the “Southwest AI Endorsement”) listing, under Name Of Additional Insured Person(s) Or Organization(s), “BLANKET”. (Id. at ¶ 7.) The “Location(s) of Covered Operations” portion of the Schedule of the AI Endorsement of the Southwest Policy is blank. (DE 21-3 at ¶ 37.) It appears as follows:

SCHEDULE

Name Of Additional Insured Person(s) Or Organizations

Location(s) Of Covered Operations

BLANKET

            
              Information required to complete this Schedule, if
              not shown above, will be shown in the Declarations.
            
          

(DE 20-5 at DEF-000025.) The Declarations of the Southwest Policy do not contain additional information required to complete the Schedule. (DE 21-3 at ¶ 38.)

The Southwest AI Endorsement further provides, in relevant part, that:

A. Section II - Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but 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(s) at the location(s) designated above. However:

1. The insurance afforded to such additional insured only applies to the extent permitted by law; and

2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

(DE 20-26 at ¶ 8.)

The Southwest Policy also provides, with respect to “other insurance,” in relevant part, that:

a. Primary Insurance

This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below.

b. Excess Insurance

1) This insurance is excess over:

a) Any of the other insurance, whether primary, excess, contingent or on any other basis:

i) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for “your work”;

ii) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner;

iii) That is insurance purchased by you to cover your liability as a tenant for “property damage” to premises rented to you or temporarily occupied by you with permission of the owner; or

iv) If the loss arises out of the maintenance or use of aircraft, “autos” or watercraft to the extent not subject to Exclusion g. of Section I -Coverage A - Bodily Injury And property Damage Liability.

b) Any other primary insurance available to you [Donninger] covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured.

(DE 20-26 at ¶ 11.)

The Underlying Project and Purchase Order

The Amended Complaint in the Underlying Action alleges that VRD was the general contractor at a construction project at Miller Avenue Elementary School in Suffolk County, New York (the “Project”). (Id. at ¶ 12.) The record in the Underlying Action shows that VRD was the general contractor at the Project. (Id. at ¶ 13.) The Amended Complaint in the Underlying Action further alleges that Park East was the construction manager on the Project, and the District was the owner of the Project site. (Id. at ¶ 14.) In the Underlying Action Clinton Mellas testified that as the project superintendent of Park East he was responsible for reporting “back to the owner, which is the school district, in the progression of the project.” (DE 20-20 at 10:22-11:19, 12:12-16, 13:17-20.) Further, the Standard Form of Agreement Between Owner and Contractor, AIA Document A132-2009, as between VRD and the District, that Travelers received during the course of its investigation of the underlying claim identifies the District as Owner and VRD as the Contractor. (DE 20-16 at ¶ 6; DE 20-18 at 1.)

Testimony in the...