The First Appellate Department recently determined that the language of an additional-insured endorsement of a commercial general liability insurance policy required a direct written contract between the named insured and the company claiming to be an additional insured, despite the insured naming the other company as an additional insured on its policy.
The Dormitory Authority of the State of New York (“DASNY”) entered into a contract with Gilbane Building Co./TDX Construction Corp (“Gilbane/TDX”) to serve as the construction manager for a 15-story building. DASNY entered into a separate contract with Samson Construction Co. (“Samson”), whereby Samson would be the primary contractor responsible for the foundation and excavation work. Under the contract, Samson agreed to procure commercial general liability insurance with an endorsement naming DASNY, Gilbane/TDX, and a number of other parties, as additional insureds. Samson obtained a policy from Liberty Insurance Underwriters (“Liberty”), which stated that an insured under the policy was “any person or organization with whom [Samson] agreed to add as an additional insured by written contract.”
In 2006, DASNY sued Samson and the Architect on the project, alleging negligent foundation and excavation work which caused significant structural damage to adjacent buildings. In 2010, the Architect filed a third-party action against Gilbane/TDX. Gilbane/TDX sought defense and indemnification from Liberty, which denied coverage arguing that Gilbane /TDX did not qualify as an additional insured under Samson’s policy. Gilbane/TDX filed a declaratory action in New York County Supreme Court and Liberty moved for summary judgment. The trial court denied Liberty’s motion and recognized Gilbane/TDX as an additional insured under the policy. The Supreme Court found that Liberty’s “written contract” requirement was met by Samson’s contract with DASNY, which obligated Samson to procure coverage for Gilbane/TDX.
The Appellate Court reversed holding that Gilbane/TDX was not an additional insured under Liberty’s policy. In a 4-1 decision, the Appellate Division reasoned that the language of the Liberty policy clearly and unambiguously required the named insured to execute a contract with the party seeking coverage as an additional insured. The Court reasoned that coverage extended only to those “with whom” the insured agreed and not “for whom” the insured may have agreed to provide coverage. The Court mentioned that Samson’s agreement with DASNY to provide coverage for Gilbane/TDX may provide Gilbane/TDX with a claim against Samson for breach of the contract’s insurance provision. The Court cited to two prior decisions in support of its interpretation: AB Green Gansevoort, LLC v. Peter Scalamandre & Sons, Inc., 102 AD3d 425 (1st Dep’t 2013) and Linarello v. City Univ. of N.Y., 6 AD3d 192 (1st Dep’t 2004).