New York Insurance Coverage Law Update

October 28, 2020 | Insurance Coverage

Court Holds Employee Of Contractor Exclusion Precluded Coverage For Accident That Would Not Have Occurred “But For” Contractor’s Work

Pierce Management, a general contractor, subcontracted with RJK Electric for electrical work on a drive-thru at a Starbucks.  Pierce’s project manager was allegedly injured while walking to his car in the parking lot by a grinder being used by an RJK employee in connection with the project.   The project manager sued RJK, and RJK’s insurer disclaimed coverage based on an exclusion in RJK’s policy for bodily injury to any employee of any contractor “arising out of” the contractor or its employees performing services.   RJK argued that the exclusion did not apply because the injured project manager was not actually working at the time of the accident.  The New York State Supreme Court, Suffolk County, disagreed, reasoning that New York courts have applied a “but for” test to determine whether the accident falls within such an exclusion.  The court concluded that the exclusion precluded coverage because “but for” the project manager performing work at the job site, his alleged injury would not have occurred.  [RJK Elec. Corp. v. American Eur. Ins. Co., 2020 N.Y. Misc. LEXIS 3503 (Sup. Ct., Suffolk Cnty. May 29, 2020).]

Lawsuit Against Town Did Not Trigger Its Public Official Liability Or Public Risk General Liability Insurance

In 2006, S&R Properties purchased a parcel of land in the Town of Greenburgh, that was zoned for multi-family residential com-plexes.  In 2007, the parcel was rezoned for one-family use. From 2007 to 2016, S&R filed seven lawsuits challenging the rezoning.  In the seventh lawsuit, S&R sued the Town and others alleging that it suffered nearly a decade of ongoing harm due to the Town’s efforts to block the development of the land.  The Town sought insurance coverage for this lawsuit under a policy issued by Argonaut Insurance which provided Public Risk General Liability (“PRGL”) Insurance and Public Official Liability (“POL”) Insurance for the policy period from December 31, 2015 to December 31, 2016.  The United States District Court for the Southern District of New York held that the Town was not covered under the POL coverage because it only applied to a claim “first made against the [insured] during the policy period,” and provided that “all claims arising out of a ‘public officials wrongful act’ will be deemed to have been made at the time the first of such ‘claims’ is made ….” The court reasoned that the claims in the 2016 action arose out of the same alleged effort to block and delay S&R’s development of the property as the prior actions/claims before the policy period.  The court also found no coverage under the PRGL insurance which covered liability for “property damage.”  While the court found the suit arguably alleged covered “property damage” in the form of “loss of use”, the court explained that the coverage applied only if prior to the policy period, no insured knew or had reason to know” that “property damage occurred”.  The court found that the Town knew about the alleged loss of use from the earlier lawsuits before the policy period.  [Argonaut Ins. Co. v. Town of Greenburgh, 2020 U.S. Dist. LEXIS 174909 (S.D.N.Y. Sept. 23, 2020).]

Assault and Battery Exclusion Bars Coverage Because No Cause Of Action Would Exist “But For” The Assault, Fourth Department Declares

NHJB, Inc., doing business as Molly’s Pub, was sued in a wrongful death action after a bar manager at the pub shoved the decedent, causing him to fall down a flight of stairs.  NHJB’s insurer, Utica First, disclaimed coverage based upon an assault and battery exclusion.  NHJB filed a declaratory judgment action against Utica First, and the trial court held that Utica First owed a duty to defend NHJB because one of the causes of action in the complaint was based upon premises liability, not an assault or battery.  The Appellate Division, Fourth Department, reversed and granted summary judgment to Utica First. The Fourth Department stressed that the application of the exclusion “depends on the facts which are pleaded, not the conclusory assertions” or theory in the complaint about premises liability.  The court concluded that based upon the alleged facts, “no cause of action would exist but for the assault” and, therefore, the assault and battery exclusion precluded coverage.  [NHJB, Inc. v. Utica First Ins. Co., 2020 N.Y. App. Div. LEXIS 5444 (4th Dep’t October 2, 2020).]

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