HNRK Coverage Corner

On December 4, 2018, the Second Circuit issued a decision in American Empire Surplus Ins. Lines v. Colony Ins. Co., Case No. 17‐3799, holding that a city agency’s CGL policy did not cover a claim for injuries sustained by employees of a contractor hired by the agency. American Empire arose from a personal injury lawsuit filed against the New York City Housing Authority (NYCHA) by employees of a contractor (Technico) hired to remodel certain buildings owned by NYCHA. Technico’s insurance carrier (American Empire) defended NYCHA in the lawsuit and then filed a lawsuit seeking ...

On November 1, 2018, the Third Department issued a decision in Lafarge Bldg. Materials Inc. v Harleysville Ins. Co. of N.Y., 2018 NY Slip Op 07385, holding that a property owner was not entitled to additional insured coverage under a contractor’s CGL policy because it gave late notice of the claim.

The coverage dispute at issue in Lafarge arose from an injury sustained by a contractor’s employee in the course of a project at a cement plant owned by LaFarge Building Materials, Inc.  As required by the terms of the purchase order for the project, the contractor procure a general liability ...

On October 5, 2018, the Fourth Department issued a decision in Pioneer Cent. Sch. Dist. v. Preferred Mut. Ins. Co., 2018 NY Slip Op 06682, holding that a school district was not entitled to coverage under a cleaning company’s CGL policy – either as an additional insured or as the named insured’s contractual indemnitee – because the underlying injuries were not proximately caused by the named insured.

In Pioneer Central, a school sought coverage under a cleaning company’s CGL policy for a personal injury action by an employee of the cleaning company who was injured “when she ...

On September 20, 2018, the First Department issued a decision in J.P. Morgan Sec., Inc. v. Vigilant Ins. Co., 2018 NY Slip Op 06146, holding that a disgorgement payment made as part of the settlement of an SEC enforcement action was a “penalty” and therefore did not qualify as a covered “loss” under a CGL policy.

At issue in J.P. Morgan v. Vigilant was a settlement the SEC reached with Bear Stearns, resulting from allegations that “Bear Stearns violated securities laws between 1999 and September 2003 by knowingly facilitating ‘late trading’and deceptive ‘market ...

On September 21, 2018, the Second Circuit issued a decision in SPARTA Ins. Co. v. Technology Ins. Co., Inc., Case No. 17‐3441, holding that a liability insurer that assumed the defense of a claim was estopped from disclaiming coverage based on a nine-month delay in asserting coverage defenses and resulting prejudice to the insured. In SPARTA Ins. Co., a subcontractor’s liability carrier (SPARTA) assumed the defense of a property owner and general contractor in an injury lawsuit brought by the subcontractor’s employee, without a reservation of rights.  In later ...