HNRK Coverage Corner
On November 20, 2019, Judge Ramos of the SDNY issued a decision in United Specialty Ins. Co. v. Lux Maintenance & Ren. Corp., Case No. 18-cv-3083 (ER), holding that property owners were entitled to additional insured coverage under a subcontractor’s CGL policy even though the subcontractor agreement misidentified the corporate names of the owners.
Lux Maintenance arose from injuries sustained by a worker in the course of performing balcony and façade repairs to a building collectively owned by Cornell and Rockefeller Universities, New York Hospital, Manhattan Eye Ear & Throat Hospital and other parties (referred to in the decision as the “Hospital Defendants”). The subcontractor (Lux) had a CGL policy with a standard additional-insureds clause, providing defense and indemnity coverage to third parties “when required by written contract” with Lux. The subcontractor agreement required Lux to procure insurance for the Owner, but misidentified the corporate name of the owner. Judge Ramos held that the owners were entitled to additional insurance coverage under Lux’s CGL policy notwithstanding this error, explaining:
New York state courts have long held that the name of the insured as stated in the policy is not the sole factor to be considered in determining who was the intended insured. When the parties clearly intended to cover a risk, but one side inadvertently lists a nonentity as the additional insured, New York courts have held that it is appropriate to view that mistake as a “mutual mistake,” and to reform the insurance agreement in accordance with the intent of the parties. On the record, it is undisputed that the Policy provides coverage for additional insureds, “when required by a written contract,” for risks that arise out of the Lux’s work. Further, USIC acknowledges that the Subcontractor Agreement Rider requires Lux to procure insurance for, inter alia, “the Owner.” The Rider also specifically provides that Lux’s insurance shall include contractual liability coverage for the benefit of the Contractor, the Owner and anyone else the Owner is required to name and shall specifically include coverage for completed operations. As such, it is clear that the Policy, at minimum, affords coverage to either “Sutton House Associated” or “Sutton Terrace Associates, Inc” as the Owner, and intends to cover risks associated with the ownership of the Property arising out of Lux’s work.
Additionally, the Hospital Defendants have offered evidence . . . that they have been doing business as “Sutton House Associated” over the years in connection with the Property that is named “Sutton Terrace.” The mistake in naming “Sutton House Associate d” or “Sutton Terrace Associates, Inc” as the Owner of the Property appears innocent, especially in light of the Hospital Defendants’ legal ownership of the Property. For its part, USIC has proffered no evidence that there exists a separate business entity named either “Sutton House Associated” or “Sutton Terrace Associates, Inc.” that could own the Property or claim coverage. Indeed, a search of the New York State Division of Corporations Business Entity database conducted by USIC returned no result for “Sutton Terrace Associates,” “Sutton House Associated” or “Sutton Terrace Associates, Inc.” USIC contends that this shows that these are legal nonentities that cannot have affiliates. Even assuming arguendo that is true, USIC’s contention fails to raise a triable issue of fact as to: (1) whether the Policy clearly covers the risks associated with ownership of the Property arising out of Lux’s work; (2) that the Hospital Defendants have been doing business as “Sutton House Associated” or “Sutton Terrace Associates, Inc.,” which are plainly identified as the owners of the Property in the Contractor and Subcontractor Agreements; or (3) that the mistake in identifying them as the owners of the Property was not innocent. Accordingly, the mistake of listing “Sutton House 11 Associated” or “Sutton Terrace Associates, Inc.” on the Contractor and Subcontractor Agreements should be regarded as mutual. Therefore, USIC must be required to provide coverage to the Hospital Defendants as additional insureds under the Policy.
The New York courts recognize the reality that an insurance company does not insure “a corporate name, but rather a business and its employees.” Rothstein v. Provident Life and Cas. Ins. Co., 177 A.D.2d 93, 95 (1st Dep’t 1992). Thus, it has long been the law that “the name of the insured listed on the policy is not important if the intent to cover the risk is clear.” McCarthy v. Alling Personnel Corp., 39 A.D.2d 782, 783 (3d Dep’t 1972) (dissenting opinion adopted by the Court of Appeals, 33 N.Y.2d 953). This case extends this principle a step further, as the error in question was not in the text of the insurance policy itself, but rather in the underlying subcontract that triggered the additional insured coverage.
- Partner
Bradley Nash represents policyholders in insurance disputes and other parties in complex commercial litigation in state and federal courts in New York and across the country. Brad focuses his practice on insurance recovery for ...
Search Blog
Recent Posts
- Is Carbon a “Pollutant”? — The Supreme Courts of Alaska and Hawaii Receive Certified Questions Regarding Scope of Pollution Exclusions in Liability Policies
- Court Rules That D&O Policy’s “Bump-Up” Exclusion Does Not Apply to Merger Transaction
- Eleventh Circuit Rules Insurer Cannot Recoup Defense Costs Under Duty to Defend Policy
- Federal Court Declines to Exercise Jurisdiction Over Insurer’s Declaratory Judgment Action That Raised “Novel Issue of Ohio Insurance Law”
- Bankruptcy Court Lifts Automatic Stay to Permit Officers of Silicon Valley Bank to Access D&O Coverage
- E&O Policy Exclusion Bars Coverage for Negligence Claim Against Law Firm Arising from Third Party’s Misappropriation of Client’s Funds
- New Jersey Appellate Court Holds That Policy’s War Exclusion Did Not Apply to State-Sponsored Cyberattack
- New York Court Discusses Appellate Division Split Over Recoupment of Defense Costs Under a Duty to Defend Policy
- Delaware Law Governs D&O Policy Issued to Delaware Corporation Doing Business Outside the State
- Ohio Supreme Court Rules Computer Software Cannot Be Subject To “Physical Loss” Or “Physical Damage” Under Insured’s Property Insurance Policy
Popular Categories
- Occurrence/Accident
- Duty to Defend
- Insurance Coverage
- D&O Policies
- Pollution Exclusion
- Policy Exclusions
- CGL Policies
- E&O Policies
- Cyber Coverage
- Additional Insured Endorsement
- Business Interruption Coverage
- Construction
- Bad Faith Claims Handling
- COVID-19
- Indemnification and Advancement
- Damages
- Excess Insurance
- Duty to Cooperate
- Advertising Injury
- Rules of Interpretation
- Related Claims
- Personal and Advertising Injury
- Covered Loss
- Insurance Brokers
- Confict of Laws
- Discovery/Disclosure
- Appraisal
- Attorney Fees
- Assignment of Claims
- Disability discrimination
- Implied Covenant of Good Faith and Fair Dealing
- Notice
- Privilege/Work Product
- Priority of Coverage
- Intellectual Property
- Contracts
- Professional Malpractice
- Rescission
- Intervention/Joinder
- Subrogation
- Settlements
- General Business Law
- Unfair Claims Settlement Practices
Archives
- September 2023
- August 2023
- June 2023
- May 2023
- April 2023
- March 2023
- January 2023
- December 2022
- September 2022
- May 2022
- April 2022
- March 2022
- November 2021
- June 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018