A New York appellate court recently held that factual issues should have precluded summary judgment for a subcontractor and its insurer concerning whether they were obligated to provide defense and indemnification to a general contractor pursuant to the subcontract entered into between the general contractor and subcontractor. Ins. Co. of New York v. Central Mutual Ins. Co., 2008 Slip Op. 00204 (N.Y. App. Ct., Jan. 15, 2008).

An employee of a general contractor brought a personal injury action for injuries sustained during the course of his employment at a construction site owned by a third party. The lawsuit named as defendants the general contractor, the property owner, and a subcontractor working on the site.

The property owner, the general contractor, and the general contractor’s liability insurer filed suit seeking a declaration that the subcontractor’s liability insurer was obligated to defend and indemnify the owner and general contractor in connection with the personal injury action. In support of this position, the plaintiffs argued that (1) the contract between the general contractor and the subcontractor required the subcontractor to obtain insurance naming the property owner and general contractor as additional insureds; and (2) the insurance contract between the subcontractor and its liability insurer contained an endorsement that automatically added other contract parties to the policy as additional insureds if required by the subcontractor’s construction contract.

The trial court granted summary judgment in favor of the subcontractor and its insurer. In doing so, the trial court declared that the insurance contract between the subcontractor and its insurer did not obligate the insurer to defend or indemnify the general contractor in the underlying personal injury action. The court further declared that the contract entered into between the general contractor and the subcontractor did not obligate the subcontractor to procure additional insurance for the general contractor. The court did find, however, that an issue of fact existed as to whether the subcontractor was obligated to have the property owner named as an additional insured on its policy.

On appeal, the appellate court concluded that an issue of fact existed as to the intent of the parties concerning which entities should have been included as additional insureds. Because there was an issue of fact as to whether the contract between the general contractor and the subcontractor required the subcontractor to name the general contractor and the property owner as additional insureds, the subcontractor’s motion for summary judgment should have been denied in its entirety.

A full copy of the decision can be found here.