Under a “Trade Contractor Agreement,” Gilbane Building Company (Gilbane) was to be protected as an additional insured under coverage by general contractor, Empire Steel Erectors, L.P. (Empire). Empire was insured under a Commercial General Liability policy issued by Admiral Insurance Company (Admiral) when a loss occurred, revolving around the agreement.
Michael Parr was an Empire employee, working at a construction site. He was seriously injured when he fell while using a ladder that had been installed by a subcontractor that was hired by Gilbane. Parr’s suit alleged that the ladders were negligently installed and maintained. Prior to going to trial, where Parr sought $1 million in damages, the suit was settled for $165,000.
At the time the suit was filed, Gilbane notified both Empire and Admiral. Gilbane also requested a legal defense and coverage for the claim. The insurer, citing its policy language, denied the claim. Gilbane then filed a motion for summary judgment, requesting a finding that, in denying its status as an additional insured, the other parties were guilty of contract breach. The various parties then filed additional motions, essentially countering whether any duty of defense and indemnification were owed in light of policy language and the assertion that Parr’s injury triggered those duties.
Note: The case DID NOT consider whether coverage was owed under the trade contract itself. While the defendants argued that no coverage was due under Texas law, Gilbane pointed out that it did not file for coverage under that specific agreement. The court ruled the point moot.
The court spent considerable time on a key issue. The CGL Policy included an additional insured endorsement that granted additional insured status to parties that are created under the policy’s definition of an “insured contract.” The defendants argued that, besides the policy language, the policy should be interpreted to include consideration of Texas law that, in its opinion, would find the TCA unenforceable; therefore, it would be ineligible as an insured contract, eliminating the possibility of additional insured status for Gilbane. The court rejected this argument. It decided that reliance on the policy language controls the issue and the insurer should have written such consideration into its policy language. Therefore, according to the policy’s plain language, Gilbane qualifies as an additional insured.
Another issue considered by the court was the argument that Parr’s injury did not trigger a duty to defend. The gist of the argument was that the policy language requires the named insured (Empire) to have to bear some level of direct or indirect responsibility for causing the loss. The defendants pointed out that Parr did not make allegations against Empire, nor did he name Empire as a party to the suit. Gilbane countered that state law barred Parr from doing so since a Worker’s Compensation policy was in force.
The court studied several other cases it considered relevant to this issue. After investigating, it concluded that, while Parr’s action of using a ladder while wearing muddy boots may indicate that he bore some responsibility for the loss, it did not eliminate a cause of action against the defendants. Parr’s complaint included a negligence allegation that Gilbane failed to maintain working elevators, forcing Parr to use a ladder and the injury arose from that circumstance. However, the court also recognized that, under the loss circumstances, Texas law may find that one or more of the defendants may be immune from suit; however, that was a separate question that did not affect a duty to defend.
While the court recognized that a finding of a need to indemnify was affected by policy language that required a ruling of fault on the part of an insured (including a party acting on the insured’s behalf, such as a subcontractor) in causing a loss, those considerations did not affect the broader duty to defend. The court denied all party motions with regard to ruling on a duty to provide coverage for the loss (as it found that to be a matter for trial); it found in favor of Gilbane’s summary motion that “additional insured” status existed and that it was owed a legal defense against Parr’s underlying claim.
Gilbane Building Company, Plaintiff, v. Empire Steel Erectors, L.P. and Admiral Insurance Company, Defendants. No. H-08-1707. USDISTCT, Southern District of Texas, Houston Division. February 23, 2010.Defendants’ Motion Denied, Plaintiff’s Motion Denied in part, and Affirmed in part.
