Allied World Natl. Assur. Co. v Peerless Ins. Co. - A Stock Co.
Annotate this CaseDecided on October 23, 2017
Supreme Court, Niagara County
Allied World National Assurance Company, Plaintiff,
against
Peerless Insurance Company - A Stock Company, Defendant.
E158295/2016
PATRICK M. TOMOVIC, ESQ.
Harter Secrest & Emery, LLP
Attorneys for Plaintiff
50 Fountain Plaza, Suite 1000
Buffalo, New York 14202-2293
MARSHALL T. POTASHNER, ESQ.
Jaffe & Asher, LLP
Attorneys for Defendant
600 Third Avenue, 9th Floor
New York, New York 10016
Ralph A. Boniello III, J.
By Notice of Motion, the Defendant, Peerless Insurance Company - A Stock Company, (hereinafter, "Peerless"), seeks summary judgment in its favor determining and declaring that Peerless does not owe non-parties Globe Metallurgical, Inc., (hereinafter, "Globe"), and Globe Specialty Metals, Inc., (hereinafter, "Globe Speciality" and collectively the "Globe Entities"), a duty to defend or indemnify the Globe Entities in claims asserted in the underlying action entitled Creedon M. Clause and Lisa Clause v. Globe Speciality Metals, Inc. and Globe Metallurgical, Inc. (Supreme Court, Niagara County, Index No. 147233/2012) (hereinafter, "Underlying Action"). In response, the Plaintiff, Allied World National Assurance Company (hereinafter, "Allied"), has cross moved for a partial summary judgment declaring that: One, the Globe Entities met the conditions to qualify as an additional insured under the applicable insurance policy at issue and are entitled to defense and indemnification from Defendant Peerless in the Underlying Action; Two, Peerless is estopped from denying additional-insured coverage to the Globe Entities under the applicable insurance policy based on a written Certificate of Insurance issued by a Peerless authorized agent; and Three, denying the motion for summary judgment by Defendant Peerless.
The record reflects that Globe is a manufacturer of metals and Globe Speciality owns and operates a factory at 3807 Highland Avenue, Niagara Falls, New York. Allied issued a commercial General Liability Policy No. 0306-0792, (hereinafter, "Allied Policy"), to Globe Speciality for the policy period of November 1, 2011 to November 1, 2012 (see, Plaintiff's Reply Affirmation, Exhibit E). The Allied Policy included a broad form endorsement that amends the policy to include as a Named Insured "any entity in which Globe Speciality owns more than a 50% interest. Globe qualifies as an insured under the Allied Policy by operation of this endorsement. Defendant Peerless issued a Commercial General Liability Policy No. CBP 7496341, (hereinafter, "Peerless Policy"), to Morgan Mechanical, Inc., (hereinafter, "Morgan Mechanical") for the policy period of September 14, 2011 to September 14, 2012 (see, Defendant's Notion of Motion, Exhibit 2). Specifically, coverage under the Peerless Policy is applicable to sums the insured becomes obligated to pay as damages for bodily injury. The Peerless Policy also requires Peerless to defend any suit against an insured seeking damages for bodily injury. Further, the Peerless Policy contains an endorsement to include as an additional insured any organization that its insured, Morgan Mechanical, had agreed to add as an additional insured by way of a signed written contract or agreement (see, Defendant's Notion of Motion, Exhibit 3).
Initially, the Court notes that a review of the Allied Policy and Peerless Policy reveals that both contain "other insurance" clauses and thus, under New York law such clauses are held to cancel out each other and each insurer must contribute in proportion to its policy limit (see, Lumbermens Mut. Casualty Co. v. Allstate Ins. Co., 51 NY2d 651 [1980]; Utica Mut. Ins. Co. v Erie Ins. Co., 107 AD3d 1522 [4th Dept 2013]).
In the present case, Globe allegedly entered into a master Independent Contractor [*2]Agreement (hereinafter, "ICA") with Morgan Mechanical on February 9, 2010 (see, Defendant's Notion of Motion, Exhibit 10). The ICA required Morgan Mechanical to name Globe as an additional insured under the Peerless Policy Id. On or about September 16, 2011, Morgan Mechanical provided Globe with a Certificate of Liability Insurance (see, Plaintiff's Attorney Affirmation, Exhibit J). The ICA was used as the governing contract for the issuance of a purchase order from Globe to Morgan Mechanical dated November 1, 2011 for work to be conducted on a furnace (see, Plaintiff's Attorney Affirmation, Exhibit C). Subsequently, an employee of Morgan Mechanical, Creedon Clause, was injured while working at Globe's Niagara Falls plant on or about November 2011 and commenced the Underlying Action on or about June 2012.
It is well settled that "in determining a dispute over insurance coverage, we first look to the language of the policy" (Consol. Edison Co. of NY v Allstate Ins. Co., 98 NY2d 208 [2002]). Further, extrinsic evidence of the intent of the parties may only be considered if the agreement is ambiguous, which is an issue of law for the courts to decide (W.W.W. Assocs. v Giancontieri, 77 NY2d 157 [1990]). However, words and phrases, unless otherwise defined by an insurance policy, are to be understood in their plain, ordinary, and popularly understood sense, rather than in a forced or technical sense (Oot v Home Ins. Co., 244 AD2d 62 [4th Dept 1998]). The law is clear that unambiguous provisions of an insurance contract must be given their plain and ordinary meaning and be enforced as written (White v Continental Cas. Co., 9 NY3d 264 [2007]; Lattimore Rd. Surgicenter, Inc. v Merchants Group, Inc., 71 AD3d 1379 [4th Dept 2010]). A party seeking coverage has the burden of showing that the insurance contract covers the loss for which the claim is made (National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 570 [1st Dept 2006]; Kidalso Gas Corp. v Lancer Ins. Co., 21 AD3d 779 [1st Dept 2005]).
Defendant Peerless asserts that the Globe Entities do not qualify as an additional insured for the claims alleged in the Underlying Action. Specifically, to qualify as an additional insured under the Peerless Policy, there must be evidence of a written contract or written agreement requiring a Named Insured to include the entity as an additional insured; the claim for liability must be caused, in whole or in part by the acts or omissions of the additional insured; and the injury must occur subsequent to the signing of such agreement (see, Defendant's Notion of Motion, Exhibit 3). Since the ICA was never signed by either of the Globe Entities, Defendant Peerless argues that the Globe Entities do not qualify as an additional insured under its policy for the claims alleged in the Underlying Action. Further, Defendant Peerless asserts that the Complaint in the Underlying Action fails to allege any acts or omissions by Morgan Mechanical as a proximate cause of the accident and/or contributing cause to the accident.
In response, Plaintiff Allied asserts that to qualify as an additional insured under the Peerless Policy requires only that there be a written agreement in which the signing must occur before the injury for which coverage is sought. The Plaintiff points to the ICA which was signed on February 9, 2010, by the President of Morgan Mechanical and to the extensive course of dealing between Morgan Mechanical and Globe. Specifically, the issuance of the purchase order dated November 1, 2011, from Globe to Morgan Mechanical for work to be conducted on a furnace (see, Plaintiff's Attorney Affirmation, Exhibit C).
In support of its position, Plaintiff Allied relies primarily on a case from the Appellate [*3]Division, Fourth Department to show that a letter agreement was sufficient to satisfy the "written contract" obligation to cover an additional insured under the policy (Liberty Mut. Ins. Co. v Old Republic Commercial Gen. Ins. Co., 23 AD3d 1007 [4th Dept. 2005]). In Liberty Mut. Ins. Co., a subcontractor was notified by letter stating that it had been selected for a project and that a formal agreement would be executed at a later time. The letter was initialed and returned by the subcontractor but there was an accident before the final agreement had been executed by the parties. The Appellate Division, Fourth Department held that the letter satisfied the subcontractor's policy requirement that in order to provide additional insurance coverage to another entity there must be evidence of a "written contract" between such parties Id. Though the final agreement was executed after the accident, the Appellate Division, Fourth Department concluded that the parties intended the indemnification provision in the subcontract would apply to the accident Id. Like the dispute in Liberty Mut. Ins. Co., the Plaintiff argues that the ICA signed by the party to be charged, Morgan Mechanical, along with the purchase order signed by a representative of Globe and the parties' full performance therein demonstrates that there was a written agreement to confer additional insured status under the Peerless Policy. Further, the Peerless Policy indicates that it provided coverage for "bodily injury," "property damage" or "personal and advertising injury" subsequent to the signing of such agreement (see, Defendant's Notion of Motion, Exhibit 3).
The Plaintiff also points to the pleadings filed by Globe in the Underlying Action including the Answer asserting several affirmative defenses including alleging Mr. Clause's injuries, if any, were "caused in whole or part by a person or persons who were not within the control of the answering defendants" (see, Plaintiff's Reply Affirmation, Exhibit A). As a result, the Plaintiff claims that the evidence in the record establishes that the Globe Entities met all the requirements to qualify as an additional insured under the Peerless Policy.
In addition, Plaintiff Allied cites the fact that an authorized agent of Peerless issued to Morgan Mechanical a Certificate of Liability Insurance citing Globe's additional insured status under the Peerless Policy which Globe allegedly relied thereon (see, Plaintiff's Attorney Affirmation, Exhibit J). The Plaintiff claims that Globe relied on the Certificate of Liability Insurance and that Defendant Peerless should be estopped from denying coverage. According to Frank Valente who is the Engineering and Maintenance Manager at Globe's facility in Niagara Falls, it was the customary and usual course of business dealings between Globe and Morgan Mechanical to perform its obligations under the ICA without exchanging a fully-signed copy with Globe once Morgan Mechanical provided updated certificates of insurance (see, Affidavit of Frank Valente).
It is well established that a certificate of insurance, by itself, does not confer insurance coverage, such a certificate is evidence of a carrier's intent to provide coverage (see, Landsman Dev. Corp. v RLI Ins. Co., 149 AD3d 1489 [4th Dept 2017]; Hunt v Ciminelli-Cowper Co., Inc., 93 AD3d 1152 [4th Dept 2012]). Significantly, an insurance company that issues a certificate of insurance naming a particular party as an additional insured may be estopped from denying coverage to that party where the party reasonably relies on the certificate of insurance to its detriment, where as here, the certificate was issued by an agent of the insurer (Sevenson Envtl. Servs., Inc. v Sirius Am. Ins. Co., 74 AD3d 1751 [4th Dept 2010]). However, Defendant Peerless claims such reliance is not reasonable in light of the fact that the Certificate of Liability Insurance [*4]expressly stated at the top of the document that "it is issued as a matter of information only and confers no rights upon the certificate holder" and that "it does not affirmatively or negatively amend, extend or alter the coverage afforded by the policies below" (see, Plaintiff's Attorney Affirmation, Exhibit J).
Based upon the unique facts and totality of circumstances, including but not limited to, the ICA, the November 1, 2011 purchase order and the full performance thereunder, the Court concludes that there are questions of fact as to whether the Globe Entities qualify as an additional insured under the Peerless Policy and if not, whether Defendant Peerless is estopped from denying coverage based upon Globe's reliance on the issuance of the Certificate of Liability Insurance by Peerless's authorized agent (see, Zurich Am. Ins. Co. v Endurance Am. Speciality Ins. Co., 145 AD3d 502 [1st Dept 2016]; LMIII Realty, LLC v Gemini Ins. Co., 90 AD3d 1520 [4th Dept 2011]; Sevenson Envtl. Servs., Inc. v Sirius Am. Ins. Co., supra; Penske Truck Leasing Co., L.P., v Home Ins. Co., 251 AD2d 478 [2nd Dept 1998]). Further, with respect to the claims regarding the sole negligence exclusion and the other criteria required in the Peerless Policy to establish the Globe Entities additional insured status that the loss at issue be "caused, in whole or part, by" acts or omissions by Morgan Mechanical, the Court notes that there has not been a final determination as to the respective fault, if any, attributed to either Morgan Mechanical and/or Globe in the Underlying Action. Therefore, summary determination on such basis is not ripe for consideration herein.
Accordingly, the motions for summary judgment by Defendant Peerless and cross motion by Plaintiff Allied are denied.
The signing of this Decision and Order shall not constitute notice of entry under CPLR 2220. Counsel is not relieved from the applicable provisions of this rule with regard to service of notice of entry.
This Decision shall constitute the Order of this Court and shall be filed as such.
_________________________________
RALPH A. BONIELLO, III.
Supreme Court Justice
Dated: October 23, 2017
Niagara Falls, New York
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