HNRK Coverage Corner

On May 17, 2018, Justice Lebovits of the New York County Supreme Court issued a decision in Tishman Constr. Corp. of N.Y. v Scottsdale Ins. Co., 2018 NY Slip Op 30991(U), reconsidering a prior order in light of the Court of Appeals’ decision in Burlington Ins. Co. v. NYC Transit Auth., 29 N.Y.3d 313 (2017), and holding that a construction manager was not entitled to indemnity coverage, under a subcontractor's liability policy, for the settlement of a personal injury lawsuit, where the subcontractor did not proximately cause the underlying injuries.

The subcontractor’s liability policy had a Blanket Additional Insureds Endorsement (see our previous posts on this type of endorsement here and here) which provided coverage to “any person or organization” that the subcontractor was “required to add as an additional insured on this policy under a written contract, written agreement or written permit,” but “only with respect to liability for ‘bodily injury’ . . . caused in whole or in part by” the subcontractor’s acts or omissions.

Relying on First Department precedent, Justice Lebovits initially held that the fact that the employee was injured in the course of his employment with the subcontractor was sufficient to trigger the additional insured coverage.  Subsequently, the Court of Appeals ruled in Burlington that the “caused in whole or in part” language used in the endorsement required a showing that the named insured proximately caused the injury.  Accordingly, on reargument, Justice Lebovits reversed course, explaining:

Scottsdale has demonstrated that Burlington represents a "change in the law that would change the prior determination" in part (CPLR 2221 [e] [2]). In the court's July 12, 2016, decision, order, and judgment, the court found that Tishman had satisfied the "caused by" language of the endorsement because Cantelmo was working for Ornamental when he was injured. In so holding, the court relied on W & W Glass Sys., Inc. v Admiral Ins. Co., (91 AD3d 530, 530 [1st Dept 2012]), a First Department case pre-dating Burlington, holding that the phrase "caused by" "does not materially differ from the general phrase, 'arising out of" – an approach that the Court of Appeals rejected in Burlington (see Burlington, 29 NY3d at 324 ['"caused, in whole or in part,' as used in the endorsement requires the insured to be the proximate cause of the injury giving rise to liability, not merely the 'but for' cause"]). Although Tishman argues that Burlington is distinguishable, Burlington considered the same additional insured endorsement wording as in Scottsdale's policy (liability for bodily injury "caused, in whole or in part, by" the ''acts or omissions" of the named insured) (see id. at 318). Contrary to Tishman 's contention, the Court of Appeals did not indicate that its holding was limited to cases where there was a determination that the named insured did not cause the accident (see id. at 321).