Old Republic Ins. Co. v. Concast, Inc., 83 Civ. 986 (RLC).
| Decision Date | 22 March 1984 |
| Docket Number | No. 83 Civ. 986 (RLC).,83 Civ. 986 (RLC). |
| Citation | 588 F. Supp. 616 |
| Parties | OLD REPUBLIC INSURANCE CO., Plaintiff, v. CONCAST, INC., Sumitomo Heavy Industries, Ltd., and Federal Insurance Company, Defendants. CONCAST, INC., and Sumitomo Heavy Industries, Ltd., Third-Party Plaintiffs, v. FRED S. JAMES & CO. OF NEW YORK, Third-Party Defendants. |
| Court | U.S. District Court — Southern District of New York |
Sheft and Wright, New York City, for plaintiff; Norman J. Golub, John R. Wright, New York City, of counsel.
Donovan Leisure Newton & Irvine, New York City, for defendant Concast, Inc.; Paul A. Crotty, John Casaly, New York City, of counsel.
Acito & Klein, P.C., New York City, for defendant Federal Ins. Co.; Elinore B. Klein, New York City, of counsel.
Reid & Priest, New York City, for defendant Sumitomo Heavy Industries, Ltd.; Charles Schirmeister, John Noonan, New York City, of counsel.
Old Republic Insurance Co. ("Old Republic"), has sued Concast, Inc. ("Concast"), Sumitomo Heavy Industries ("SHI"), and Federal Insurance Co. ("Federal"), for a declaratory judgment that its Umbrella Policy with Concast does not afford coverage to SHI. Old Republic provides excess liability insurance to Concast. Federal is Concast's primary insurer. The issue of SHI's coverage under Concast's insurance policy with Old Republic arises out of a subcontract between Concast and SHI. The question here is whether, under the terms of Old Republic's policy with Concast, Old Republic is obligated to provide coverage to SHI because of a provision in the subcontract which obligates Concast to provide products liability coverage to SHI.
The question is presented by two motions for summary judgment pursuant to F.R. Civ.P. 56, one filed by Concast against Old Republic, in which SHI joins,1 the other, a cross-motion by Old Republic against Concast, SHI and Federal. Concast argues that if the language of Old Republic's insurance policy is construed literally, it is apparent that, under either one of two provisions, SHI is covered by that policy. Old Republic, relying on the same tack, maintains that the policy prohibits the addition of SHI as an assured. Under one provision, it claims, the addition is precluded entirely; under the other, the addition cannot be effected unless Old Republic receives notice of the addition, which it maintains Concast neglected to provide.
Because Old Republic's reading of the policy's relevant provisions is not one the Court shares, summary judgment is granted to Concast and SHI. In addition, summary judgment is awarded to Federal due to the absence of any actual controversy between it and Old Republic.
Concast is in the business of engineering and selling steel-making equipment, including continuous casting complexes made by other manufacturers. On March 2, 1979, it entered into a subcontract with SHI for the design, manufacture and shipment of certain elements of a continuous casting complex; Concast had contracted to deliver and install such a casting complex at National Steel Corporation's Granite City Steel Division ("Granite City"), in Illinois. SHI carried no products liability insurance and § 7.5 of the subcontract between SHI and Concast provided that SHI was to be included as "an additional named insured under Concast's own insurance policy."2
In 1979 Concast had a $500,000 primary comprehensive liability insurance policy with Federal, which it renewed through its insurance broker, third-party defendant Fred S. James & Co. of New York, Inc. ("James").3 On Concast's behalf, James also arranged through Baccala & Shoop Insurance Services ("Baccala"), a general agent for several insurance companies, for a $10,000,000 excess liability insurance policy with Puritan Insurance Company ("Puritan"), to begin April 30, 1979. Both policies were renewed with the same carriers for the year commencing April 30, 1980. On April 30, 1981, the Federal policy was again renewed, but James transferred the excess coverage from Puritan to Old Republic, which was also represented by Baccala. The coverage provided by Old Republic was identical to that which Puritan had offered.
In compliance with the terms of the subcontract between SHI and Concast, Concast claims that it instructed James to secure coverage for SHI under all of the former's primary and excess liability policies for claims that could arise in connection with the continuous casting complex. In December, 1980, at Concast's request, James obtained a certificate of insurance from Federal, which Concast forwarded to SHI confirming that SHI had been added as an additional named insured on the primary policy. No such certificate was obtained from Old Republic.
On July 7, 1981, three employees of Granite City were injured and they brought personal injury actions against Concast, SHI, and others. Their injuries, they claimed, resulted from defects in the continuous casting complex. Federal defended and indemnified SHI with regard to these actions. Old Republic refused to do so, denying that SHI was an insured under the terms and conditions of its excess policy with Concast. Shortly thereafter, Old Republic brought its declaratory judgment action.4
The terms of the policy set out below over which the parties center their disagreement concern the definition of "assured".
The Court finds that SHI is an assured under the first provision above ("definition (c)"). No opinion is expressed on whether or not notice was provided in connection with the second provision ("definition (d)"), which is an issue disputed only with respect to SHI's coverage thereunder.
With respect to definition (c), it is Concast's contention that SHI is automatically covered by the Old Republic policy to the same extent as Concast itself because the policy covers parties with which Concast has a contractual obligation to provide liability insurance and § 7.5 of the subcontract evidences Concast's obligation to SHI in this regard.5 Old Republic resists this reading of definition (c) by arguing, for one, that § 7.5 is not an obligation on Concast's part "to provide insurance such as is afforded by this policy." That phrase, according to Old Republic, communicates the requirement that definition (c) will be activated only if the contractual agreement between Concast and SHI provides that SHI is to be included in Concast's excess liability insurance policy.
This puts at issue the meaning of definition (c)'s "insurance ... afforded by this policy." More specifically, the question is whether the above phrase was intended to encompass only the fact that excess liability insurance was being provided by Old Republic's policy with Concast, or whether it referred to a policy which provided coverage broad enough to make definition (c) operative in respect of a contractual agreement to provide products liability insurance in general. In this context, the Court is required to give the provision in question its plainest and most ordinary meaning. H.S. Equities, Inc. v. Hartford Accident & Indemnity Co., 609 F.2d 669, 673-74 (2d Cir.1979); St. Vincent's Hosp. & Medical Center v. Insurance Co. of North America, 117 Misc.2d 665, 457 N.Y.S.2d 670 (N.Y. Sup.Ct.1982).
In common parlance, Concast's policy with Old Republic is adequately described as a liability insurance policy, more specifically, a products liability policy. The title of the policy itself, Umbrella Liability Insurance, reflects this. With no indication that the phrase in definition (c) was to convey any more exacting description of the Old Republic policy, definition (c) is to be given its full effect by virtue of the subcontract between Concast and SHI, which clearly provides that Concast will include SHI in its products liability policy. In reaching this conclusion, the Court also notes that in general, if doubt exists as to the person or persons covered by an insurance agreement, "the language of the policy must be construed in the inclusive sense for the benefit of the insured." American Casualty Co. of Reading Pa. v. Simpson, 413 F.2d 1042, 1043 (9th Cir.1969). To formulate narrowly the phrase at issue, as Old Republic advocates, would undoubtedly achieve the opposite result.
Old Republic's corollary argument is also not convincing. Old Republic contends, despite the language in § 7.5 of the subcontract specifying that "Concast shall ... provide and maintain product liability insurance," that Concast intended to include SHI in its primary liability policy alone. Evidence of this intention, Old Republic claims, is the use of the singular, rather than the plural in Concast's promise to include "SHI as an additional named insured under Concast's own insurance policy." (emphasis supplied). Such evidence, as it were, is, however, completely undermined by the...
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