Charter Oak Fire Ins. Co. v. Zurich Am. Ins. Co.

• Decision Date: 27 April 2020
• Docket Number: 19-cv-4212 (LJL)
• Citation: 462 F.Supp.3d 317
• Parties: The CHARTER OAK FIRE INSURANCE COMPANY, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY and Slade Industries, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

462 F.Supp.3d 317

The CHARTER OAK FIRE INSURANCE COMPANY, Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY and Slade Industries, Inc., Defendants.

19-cv-4212 (LJL)

United States District Court, S.D. New York.

Signed April 27, 2020

Meg R. Reid, Keane and Associates, Hartford, CT, for Plaintiff.

Alexandra Elizabeth Rigney, White Plains, NY, Jennifer Freda Mindlin, Fleischner Potash Cardali Chernow Coogler Greisman Stark Stewart LLP, Mineola, NY, for Defendant Zurich American Insurance Company.

Alexandra Elizabeth Rigney, Fleischner Potash, White Plains, NY, for Defendant Slade Industries, Inc.

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Plaintiff, The Charter Oak Fire Insurance Company ("Charter Oak") moves, pursuant to Federal Rule of Civil Procedure 56, for summary judgment on its claim that defendant Zurich American Insurance Company ("Zurich") has a duty to defend one of Charter Oak's insured entities in an underlying personal injury action and to reimburse Charter Oak for past defense costs and attorney's fees. (Dkt. No. 26.)

BACKGROUND

This case is about insurance coverage for a slip-and-fall accident. The undisputed facts are as follows. In December 2016, Josue Bulnes ("Bulnes" or "Claimant") slipped and injured himself while he was working on an elevator project at an apartment building in Manhattan. (Dkt. No. 28–8 ("Bulnes Compl.") ¶¶ 5–9). At the time, he was employed by Slade Industries, Inc. ("Slade" or "Contractor"), which was under contract with the owner of the apartment building, ASB L3 72–76 Greene Street, LLC ("ASB" or "Owner"). Specifically, in June 2016, ASB entered into a contract with Slade for Slade to modernize one elevator. (Dkt. No. 28–7 (the "Contract").)

After Bulnes was injured, he filed a lawsuit against ASB in New York State Supreme Court, Bronx County (the "Underlying Action"). (Dkt. No. 28–8.) He did not name Slade as a defendant. (See id. ¶ 7 (referencing Slade as a "non-party").) The Bulnes Complaint alleged that ASB's negligence had caused Bulnes to fall and sustain injuries. (Id. ¶¶ 9–10.) The Underlying Action is ongoing.

At issue in this Court is which insurer—Charter Oak or Zurich—should bear the cost of defending ASB in the Underlying Action.

Plaintiff Charter Oak insures ASB for commercial general liability. (See Dkt. Nos. 28–2, 28–3, 28–4, 28–5 (the "Charter Oak Policy").) But the Charter Oak Policy contains an "Excess Insurance" clause providing that coverage under the Charter Oak Policy "is excess over ... [a]ny other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement." (Dkt. No. 28–2 at 46.)

Defendant Zurich insures Slade, as a named insured, for commercial general liability. (Dkt. No. 28–6 (the "Zurich Policy"); Dkt. No. 31 ¶ 3.) The Zurich Policy includes two Additional Insured Endorsements.¹ (Dkt. No. 28–6 at 75, 80.) They name, as Additional Insureds: "only those persons or organizations where required by written contract." (Id. at 80.) Under the Endorsements, Additional Insured coverage applies "only with respect to liability for [injury] caused, in whole or in part, by [Slade's] acts or omissions or the acts or omissions of those acting on [Slade's] behalf." (Id. at 80.) The Additional Insured Endorsements further provide: "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 [Slade is] required by the contract or agreement to provide for such additional insured." (Id. )

Section 17.1 of the Contract (between Slade and ASB) required Slade to purchase insurance coverage for ASB. (Dkt. No. 28–7 at 15.) Specifically, the Contract stated as follows:

The Contractor shall cause the commercial liability coverage required by the Contract Documents to include: (1) the Owner ... as [an] additional insured[ ] for claims caused in whole or in part by the Contractor's negligent acts or omissions during the Contractor's operations; and (2) the Owner as an additional insured for claims caused in whole or in part by the Contractor's negligent acts or omissions during the Contractor's completed operations.

(Id. )

Charter Oak argues that the Zurich Policy provides primary commercial liability coverage to ASB for the Underlying Action and that, therefore, Zurich has a duty to defend ASB.

By correspondence dated November 1, 2017, Charter Oak timely notified Zurich of the Underlying Action and demanded that Zurich defend ASB (as an Additional Insured) pursuant to the Zurich Policy.² (Dkt. No. 28–11.) Charter Oak repeated its demand in correspondences dated January 24, 2018, November 28, 2018, and February 8, 2019. (Dkt. Nos. 28–12, 28–13, 28–14.) By letter dated February 7, 2019, Zurich disclaimed coverage and refused to defend ASB in the Underlying Action. (Dkt. No. 28–15.)

Charter Oak filed this lawsuit on May 10, 2019. (Dkt. No. 2.) Zurich answered on July 10, 2019. (Dkt. No. 14.) On January 6, 2020, Charter Oak moved for summary judgment. (Dkt. No. 27.) Zurich filed its memorandum of law in opposition to summary judgment on February 6, 2020, and Charter Oak filed a reply memorandum of law on February 20, 2020. (Dkt. Nos. 30, 32.) The Court heard oral argument on the motion, telephonically, on April 22, 2020. For the following reasons, Charter Oak's motion for summary judgment is granted.

DISCUSSION

A. The Relevant Legal Standards

The standards applicable to this case are well settled and have been applied numerous times in the insurance context. Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact." Fed. R. Civ. P. 56(a). "A genuine issue of material fact exists if ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Nick's Garage, Inc. v. Progressive Cas. Ins. Co. , 875 F.3d 107, 113–14 (2d Cir. 2017) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "The movant bears the burden of ‘demonstrat[ing] the absence of a genuine issue of material fact.’ " Id. at 114 (quoting Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). In deciding a motion for summary judgment, the Court must "construe the evidence in the light most favorable to the non-moving party, and draw all reasonable inferences in its favor." Gilman v. Marsh & McLennan Cos., Inc. , 826 F.3d 69, 73 (2d Cir. 2016).

"An insurance agreement is subject to principles of contract interpretation." Burlington Ins. Co. v. NYC Transit Auth. , 29 N.Y.3d 313, 57 N.Y.S.3d 85, 79 N.E.3d 477, 481 (2017) (quoting Universal Am. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. , 25 N.Y.3d 675, 16 N.Y.S.3d 21, 37 N.E.3d 78, 80 (2015) ). "As with the construction of contracts generally, ‘unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court.’ " Vigilant Ins. Co. v. Bear Stearns Cos., Inc. , 10 N.Y.3d 170, 855 N.Y.S.2d 45, 884 N.E.2d 1044, 1047 (2008) (quoting White v. Continental Cas. Co. , 9 N.Y.3d 264, 848 N.Y.S.2d 603, 878 N.E.2d 1019, 1021 (2007) ). "[C]ourts should read a contract as a harmonious and integrated whole to determine and give effect to its purpose and intent." Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc. , 30 N.Y.3d 572, 69 N.Y.S.3d 520, 92 N.E.3d 743, 747 (2017) (quotations omitted). "Courts may not, through their interpretation of a contract, add or excise terms or distort the meaning of any particular words or phrases, thereby creating a new contract under the guise of interpreting the parties’ own agreements." Id. 69 N.Y.S.3d 520, 92 N.E.3d at 748. "In that regard, a contract must be construed in a manner which gives effect to each and every part, so as not to render any provision ‘meaningless or without force or effect.’ " Id. (quoting Ronnen v. Ajax Elec. Motor Corp. , 88 N.Y.2d 582, 648 N.Y.S.2d 422, 671 N.E.2d 534, 536 (1996)).

B. Whether Zurich Has A Duty To Defend

The dispute between the parties is whether Zurich has a duty to defend ASB in the Underlying Action. The parties agree that the language of the Contract and the Zurich Policy are clear and unambiguous but not surprisingly disagree on the interpretation of that language and its application to the Underlying Action.

Charter Oak argues that Zurich has a duty to defend because the Zurich Policy requires Zurich to indemnify ASB against any bodily injury claim "caused in whole or in part by Slade's acts or omissions." (Dkt. No. 27 at 8.) Charter Oak rejects Zurich's suggestion that the Zurich Policy incorporates any of the limitations on that coverage contained within the Contract. (Oral Arg. Trans. at 4–5.) Alternatively, Charter Oak argues that even if the Contract limits Zurich's defense obligation to claims caused in whole or in part by Slade's "negligent acts or omissions," Zurich would still have an obligation to defend because the Claimant's claims meet that description. (Id. at 5.)

Zurich insists that its obligation to defend is limited to the Contract's obligation to cover claims "caused, in whole or in part, by Slade's negligent acts or omissions." (Dkt. No. 30 at 6.) And Zurich argues that the Claimant's claims do not meet that description.

The Court concludes that Zurich is right that the terms of the Contract are incorporated into the Zurich Policy but that Charter Oak is right that Zurich has a duty to defend the Underlying Action under the Zurich Policy. To explain why Charter Oak is entitled to summary judgment, the Court addresses New York principles regarding the duty to defend, the language of the insurance contracts as filled in by the Contract, the language of the Bulnes Complaint, and the known facts relevant to the Underlying...