|
Commercial General
Liability |
Obligation To Defend And
Indemnify |
|
Primary Versus Excess Or
Contributory |
Other Insurance |
Pizza-Del, Inc. (Pizza-Del),
doing business as Eurostar Café, leased premises owned by Madison 45 Company
(Madison). Pursuant to the lease, Pizza-Del agreed to indemnify, hold harmless
and defend Madison against all claims arising from work performed or negligent
acts occurring on the premises. Pizza-Del also agreed to secure insurance and
to name Madison as an additional insured. Pizza-Del's insurer was Tower
Insurance Company (Tower). Madison's insurer was American National Fire
Insurance Company (ANFIC).
Angel Osorio was injured while
working at the Pizza-Del leased premises. When a lawsuit followed and Tower
refused to defend Madison, ANFIC and Madison filed an action alleging that
Tower was obligated to defend and indemnify them. The lower court found that
Tower was obligated to defend and indemnify Madison. It also found that since
both policies contained "other insurance" clauses and each policy
purported to be excess to the other, the clauses "cancel[ed] each other
out." As a result, the court found the insurers were obligated to share
equally, "on a primary basis," in the defending and indemnifying
Madison in the underlying action. ANFIC appealed.
On appeal, Madison and ANFIC
argued that the ANFIC policy was excess to that provided by Tower and that
Tower must fully reimburse ANFIC for all defense costs incurred. The Supreme
Court, Appellate Division, Second Department, New York agreed. According to the
court, the ANFIC policy and the Tower policy covered the same risk. In
addition, both policies had "other insurance" clauses specifying when
their coverage was primary as opposed to excess.
Paragraph 10 of the Tower
policy, titled "Insurance Under More than One Policy," stated, in
relevant part: "(a) Insurance under this General Liability Coverage is
primary except as provided under paragraph 10c below, or unless otherwise
stated. The amount of our liability is not reduced because of other insurance
which applies to the loss on other than a primary basis. (c) Insurance under
this General Liability Coverage is excess over any other insurance: (1) if the
other insurance, whether primary, excess, contingent or on any other basis,
provides: (a) fire, extended coverage, builders' risk, installation risk or
similar coverage for your work; or (b) fire insurance for premises rented to you;
or (2) if the other insurance applies to any loss arising out of the
maintenance or use of aircraft, autos or watercraft which may be covered by
this policy." The court took this language to mean that the Tower policy
was excess only in the limited circumstances that the language addressed.
Because these particular circumstances did not exist in the Osorio case,
Tower's insurance was primary, and ANFIC was entitled to full reimbursement.
The court reversed the
decision of the lower court and remanded the case to it to enter a judgment
declaring that ANFIC's coverage was excess to that provided by Tower and that
Tower must fully reimburse ANFIC for all defense costs incurred.
Osorio vs. Kenart Realty,
Inc.-Supreme Court, Appellate Division, 2nd Department, New York-February 19,
2008-48 Atlantic Reporter 3d 650