Suit By Subcontractor's Employee Against General Contractor Not Covered Under Language of "Action Over Exclusion"

Endurance American Specialty Insurance Company v. Century Surety Company, No. 14-4184cv 2015 WL 6717686 (2d Cir. Nov. 4, 2015). In a Summary Order, the Second Circuit Court of Appeals, applying New York law, held that a subcontractor's insurer was not required to defend the general contractor in an action for bodily injury brought by the subcontractor's employee against the general contractor, because coverage for claims by the subcontractor's employees specifically fell within an Action Over Exclusion, excluding coverage for injury to certain employees. A CGL insurer, Endurance American Specialty Insurance Company, on behalf of its insured general contractor, Hayden Building Maintenance Corporation, commenced an action seeking a declaratory judgment that its subcontractor's insurer, Century Surety Company, had a duty to defend and indemnify the general contractor in an action that had been brought by the subcontractor’s employee. The Action Over Exclusion barred coverage for bodily injury to "an employee of the named insured arising out of and in the course of...employment by the named insured." The general contractor made a complex argument that the Separation of Insureds clause required the Court to read the Action Over Exclusion from the perspective of the particular insured seeking coverage. It argued that it should be treated as a Named Insured under the Action Over Exclusion, and that because the injured employee was not its employee, the Action Over Exclusion would not prohibit coverage. The Second Circuit agreed with the subcontractor's insurer, finding that by its express terms, the Action Over Exclusion barred claims for bodily injuries to employees of the Named Insured (the subcontractor), and that the general contractor could not be considered to be a Named Insured, when in fact it was an Additional Insured.