10 Ellicott Square Court Corp.. v. Mountain Valley Indem. Co.

• Citation: 634 F.3d 112
• Decision Date: 31 January 2011
• Docket Number: Docket No. 10–0799–CV.
• Parties: 10 ELLICOTT SQUARE COURT CORPORATION and 5182 Group, LLC, Plaintiffs–Appellees,v.MOUNTAIN VALLEY INDEMNITY COMPANY, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

634 F.3d 112

10 ELLICOTT SQUARE COURT CORPORATION and 5182 Group, LLC, Plaintiffs–Appellees,

v.MOUNTAIN VALLEY INDEMNITY COMPANY, Defendant–Appellant.

Docket No. 10–0799–CV.

United States Court of Appeals, Second Circuit.

Argued: Oct. 8, 2010.Decided: Dec. 23, 2010.Amended: Dec. 28, 2010.Amended: Jan. 31, 2011.

Max Gershweir, Hurwitz & Fine, P.C. (Katherine A. Fijal, Esq., of counsel), Buffalo, NY, for Defendant–Appellant.Judith Treger Shelton, Kenney Shelton Liptak Nowak LLP, Buffalo, NY, for Plaintiffs–Appellees.

Before: SACK and RAGGI, Circuit Judges, and KOELTL, District Judge.^*

SACK, Circuit Judge:

The plaintiffs in this action, 5182 Group, LLC, and 10 Ellicott Square Court Corporation, were, respectively, the owner of and construction manager for a commercial building in Buffalo, New York. They contracted with a third firm, Ellicott Maintenance, Inc., for the building's partial interior demolition.

The construction agreement between the plaintiffs and Ellicott Maintenance required the latter to secure insurance to cover the former for any legal liability arising out of the demolition project. Ellicott Maintenance therefore purchased two policies—one primary, the other “umbrella”—from the defendant Mountain Valley Indemnity Company. The defendant, by its agent LRMP, Inc., issued a certificate of insurance evidencing the policies and the status of the plaintiffs as additional insureds, after receipt of which Ellicott Maintenance began the demolition work.

The primary insurance policy required that the underlying written construction agreement between the named insured, Ellicott Maintenance, and the additional insureds, the plaintiffs in this action, be “executed” in order for any injury for which the plaintiffs sought defense and indemnification to be covered by the policy. Before anyone on behalf of either Ellicott Maintenance or the plaintiffs signed the construction agreement, a worker on the demolition project was injured. When the worker brought suit in New York State court in an attempt to recover for his injuries, the plaintiffs sought defense and indemnification from the defendant insurance company. The defendant declined coverage, arguing that because the construction agreement was neither signed on behalf of the parties nor fully performed prior to the worker's injury, it had not been “executed” under the primary insurance policy issued by the defendant to Ellicott Maintenance, and therefore the plaintiffs did not qualify as additional insureds under either of the policies. The plaintiffs then brought this action in the United States District Court for the Western District of New York seeking a declaratory judgment to the contrary.

The district court (William M. Skretny, Chief Judge ) agreed with the plaintiffs, concluding that the construction agreement was “executed” even though it had not been signed or fully performed, and that the plaintiffs therefore were entitled to coverage under both the primary and the umbrella policies. The court also decided that even if the plaintiffs were not entitled to coverage under the terms of the policies, the defendant was estopped from denying coverage because its agent had issued a certificate of insurance to Ellicott Maintenance that listed the plaintiffs as additional insureds. The defendant appeals.

We disagree with the district court's view that under New York law, a contract has been “executed” despite the absence of either a signature by or on behalf of both parties or full performance. Therefore, under its terms, the primary insurance policy's additional insured coverage did not become effective prior to the accident in question. We conclude, however, that the plaintiffs nonetheless were covered under the terms of the umbrella policy because that policy did not require “execution” of an underlying written agreement to take effect.

New York's intermediate appellate courts are divided as to whether, despite the fact that an insurance policy's additional-insured coverage is not in effect under its express terms, a certificate of insurance issued by an agent of the insurer nonetheless may estop the insurer from denying coverage to a party identified as an additional insured on the certificate, even where the certificate contains various disclaimers, such as that it is “for informational purposes only.” We therefore certify the following question to the New York Court of Appeals:

In a case brought against an insurer in which a plaintiff seeks a declaration that it is covered under an insurance policy issued by that insurer, does a certificate of insurance issued by an agent of the insurer that states that the policy is in force but also bears language that the certificate is not evidence of coverage, is for informational purposes only, or other similar disclaimers, estop the insurer from denying coverage under the policy? ¹

BACKGROUND

The defendant Mountain Valley Indemnity Company (“Mountain Valley”) issued a commercial general liability insurance policy, effective March 15, 2003 to March 15, 2004, (the “Primary Policy”) to non-party Ellicott Maintenance, Inc., a general contractor in Buffalo, New York.² As amended by an additional-insured endorsement, the Primary Policy covered not only Ellicott Maintenance but also any “person or organization with whom [Ellicott Maintenance] agreed, because of a written contract[,] ... to provide insurance such as is afforded under [the Primary Policy], but only with respect to liability arising out of [Ellicott Maintenance's] operations,” and only when “the written contract or agreement [between Ellicott Maintenance and the additional insured] ha[d] been executed ... prior to the ‘bodily injury.’ ” Mountain Valley Indemnity Co. Commercial Policy No. 331–0013567, Issued to Ellicott Maintenance, Inc., Gen. Liability Extension Endorsement ¶ 11, Decl. of Katherine A. Fijal in Supp. of Mountain Valley's Mot. for Summ. J. (“Fijal Decl.”) Ex. J., 10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co., No. 07–CV–0053 (W.D.N.Y. June 13, 2008). The Primary Policy limited Mountain Valley's liability to one million dollars “per occurrence” of bodily injury, and defined “occurrence” to “mean[ ] an accident....”

In addition to the Primary Policy, Mountain Valley issued to Ellicott Maintenance an umbrella policy (the “Umbrella Policy”) bearing the same effective dates as the Primary Policy. The Umbrella Policy limited Mountain Valley's liability per occurrence to two million dollars “in excess of” the coverage provided by the Primary Policy and stipulated that the Umbrella Policy's general aggregate limit for each annual period was two million dollars. Like the Primary Policy, the Umbrella Policy guaranteed coverage for bodily injury resulting from an occurrence, which it defined as “an accident ...,” and extended coverage to additional insureds with whom Ellicott Maintenance had “agreed in writing prior to any [injury] ... to provide insurance such as is afforded” by the Umbrella Policy. Mountain Valley Indem. Co. Commercial Umbrella Policy No. X31–0013568, Issued to Ellicott Maintenance, Inc. at 8, Fijal Decl. Ex. K (the “Umbrella Policy”). Unlike the Primary Policy, the Umbrella Policy did not provide that its coverage of additional insureds was effective only if the written agreement between Ellicott Maintenance and any additional insureds had been “executed.”

On or about August 14, 2003, Ellicott Maintenance contracted with plaintiffs 5182 Group, LLC, and 10 Ellicott Square Court Corporation d/b/a Ellicott Development Company (“EDC”), to perform interior demolition work at the Graystone Building in Buffalo, New York, owned by plaintiff 5182 Group, and managed by EDC. The agreement between Ellicott Maintenance and the plaintiffs (the “Construction Agreement”) obligated Ellicott Maintenance to procure insurance coverage protecting both itself and the plaintiffs against claims by employees or subcontractors for, inter alia, damages resulting from bodily injury. The Construction Agreement required that the insurance be “primary, rather than concurrent with or secondary to [the] Owner's own liability insurance,” that it provide coverage of no less than five million dollars, ³ and that Ellicott Maintenance obtain, prior to the commencement of work, “Certificates of Insurance naming [the plaintiffs] as additional insureds.” Agreement for Construction, dated Sept. 12, 2003, at 10–11, Fijal Decl. Ex. G. No one signed the Construction Agreement on behalf of either the plaintiffs or Ellicott Maintenance until September 12, 2003.

Some three weeks earlier, on August 19, 2003, Mountain Valley's agent, LRMP, Inc., had issued a certificate of insurance (the “COI”) identifying Mountain Valley as the issuer of the Primary Policy and the Umbrella Policy, Ellicott Maintenance as the named insured, and the plaintiffs as “additional insured with respect to project: Graystone.” Certificate of Liability Insurance, dated August 19, 2003, Fijal Decl. Ex. L. The COI listed the limits of liability described above—one million dollars per occurrence under the Primary Policy and two million dollars under the Umbrella Policy. The following language appeared in the upper right-hand quadrant of the front of the COI: “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 COVERAGE AFFORDED BY THE POLICIES BELOW.” Id. (capitalization in original). The COI also provided that “THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.” Id. (capitalization in original). The reverse side of the COI bore similar language under the heading “DISCLAIMER”: “The Certificate of Insurance ... does not constitute a contract between the issuing insurer ... and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded...