October 13, 2021
NEW YORK FEDERAL COURT AWARDS LONDON FISCHER
PARTIAL SUMMARY JUDGMENT ON ADDITIONAL
INSURED COVERAGE AND DUTY TO DEFEND
Attorneys Spiro Bantis and Jan Duffalo of London Fischer LLP recently obtained partial summary judgment in the Southern District of New York in a case involving additional insured (“AI”) coverage and the duty to defend.
The insurance coverage dispute arose out of an underlying action in which a pedestrian alleged she slipped and fell due to broken and missing concrete on the sidewalk and curb outside Our Lady of Angelus Catholic Academy (the “Academy”). The underlying plaintiff sued the Academy, the Academy’s contractor Cow Bay, Cow Bay’s subcontractor Grace, and the City of New York. With respect to Grace, the Complaint alleged that Grace did work at the site of the accident and was negligent.
London Fischer’s client Houston Casualty Company insured Cow Bay. The subcontract between Cow Bay and Grace required that Grace obtain insurance naming Cow Bay as an AI. Grace’s policy provided AI coverage to entities “as required by contract.” Grace’s insurer denied AI coverage to Cow Bay on the grounds that Grace did not actually work at the site of the accident, so there was no contract requiring Cow Bay to be added as an AI.
The subcontract’s description of the location of Grace’s work was vague, so Grace’s insurer submitted a declaration from Grace’s principal stating that Grace never performed work at the stie of the accident. The Court found that the declaration did not relieve Grace’s insurer from its duty to defend because an insurer has a duty to defend even though facts outside the four corners of the complaint indicate that the claim may be meritless or not covered. Further, since the declaration was extrinsic evidence which raised issues relevant to the merits of the underlying action, Grace’s insurer could not rely on it to avoid its duty to defend.
The Court’s opinion reaffirms New York law on an insurer’s duty to defend, including the duty to defend additional insureds. Extrinsic evidence indicating that the underlying action is groundless, or the defendant is not liable, goes to the merits of the underlying action and therefore cannot be used to by an insurer to deny a duty to defend.