Regal Const. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA

• Decision Date: 03 June 2010
• Parties: REGAL CONSTRUCTION CORPORATION et al., Appellants, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Respondent, et al., Defendant.
• Court: New York Court of Appeals Court of Appeals

904 N.Y.S.2d 338
15 N.Y.3d 34
930 N.E.2d 259

REGAL CONSTRUCTION CORPORATION et al., Appellants,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Respondent, et al., Defendant.

Court of Appeals of New York.

June 3, 2010.

904 N.Y.S.2d 339

Melito & Adolfsen P.C., New York City (Louis G. Adolfsen, S. Dwight Stephens and Steven G. Adams of counsel), and New York Liquidation Bureau (Andrew J. Lorin, James E. d'Auguste and Judy H. Kim of counsel) for appellants.

Law Offices of Beth Zaro Green, Brooklyn (William J. Cleary of counsel), for respondent.

*36

930 N.E.2d 260

OPINION OF THE COURT

CIPARICK, J.

Once again, we are asked to determine the obligation of an insurer to defend and indemnify an additional insured for potential liability arising out of the operations of the primary insured ( see e.g. Worth Constr. Co., Inc. v. Admiral Ins. Co., 10 N.Y.3d 411, 859 N.Y.S.2d 101, 888 N.E.2d 1043 [2008] ). The City of New York engaged URS Corporation (URS) as the construction manager for a renovation project at Rikers Island. By written agreement dated March 22, 1999, URS hired plaintiff Regal Construction Corporation (Regal) to serve as a prime contractor

930 N.E.2d 261, 904 N.Y.S.2d 340

for general construction at the project, including demolition and renovation. The written agreement between Regal and URS required Regal to procure a commercial general liability (CGL) insurance policy naming URS as an additional insured. Accordingly, Regal obtained a CGL insurance policy from plaintiff Insurance Corporation of New York (INSCORP), which named URS as an "additional insured." The policy provided that Regal's insurance covered URS "only with respect to liability arising out of [Regal's] ongoing operations performed for [URS]" (emphasis added).

In March 2001, Regal's project manager, Ronald LeClair, was walking through the facility with Regal's superintendent and an employee of Regal's demolition subcontractor. Because the area was in the process of demolition, the flooring consisted of temporary sheets of plywood spread over steel floor joists. LeClair stepped from the plywood onto a floor joist to indicate a wall that needed to be demolished. According to LeClair, the *37 joist on which he stepped had been recently painted and the paint caused him to slip, resulting in a back injury. LeClair claimed that an unnamed person from URS told him that URS employees had painted the joist.

In 2003, LeClair commenced a personal injury action against the City and URS. While LeClair did not name his employer, Regal, as a defendant, URS forwarded a copy of the complaint to Regal and its insurer, INSCORP demanding a defense and indemnification based on the additional insured clause of the CGL policy. In April 2003, INSCORP informed URS by letter that it was reviewing the incident, and reserved its right to disclaim coverage at a later date if it determined that URS was not entitled to coverage under the policy. INSCORP thereafter accepted URS's tender of its defense.¹ Subsequently, however, Regal and INSCORP commenced this declaratory judgment action against URS and its insurer, National Union Fire Insurance Company, seeking a declaration that URS was not entitled to coverage as an additional insured under the INSCORP policy.

Supreme Court granted judgment in favor of URS and its insurer, concluding that LeClair's injury arose out of Regal's work (19 Misc.3d 1122[A], 2008 N.Y. Slip Op. 50816[U], 2008 WL 1809650). Regal and INSCORP appealed. ² The Appellate...