Court Finds That Named Insured “Executed” Contract With Additional Insured, Triggering Duty To Defend

Stoncor, a flooring systems manufacturer, sent Surfacesys a proposed Master Installation Agreement to become an exclusive floor installation contractor. The Agreement required that Surfacesys list Stoncor as an insured on its insurance.   The Agreement was returned to Stoncor via fax purportedly signed by “Jeffrey Caswell.”  In turn, Surfacesys became an approved Stoncor installer and performed 300 installation projects, including the in-stallation of a kitchen floor at the Grand Hyatt Hotel in Manhattan.  A Grand Hyatt employee slipped and fell on the floor, and he sued both Stoncor and Surfacesys.  Surfacesys’s insurance policy with Peerless Insurance Company provided additional insured coverage to anyone Surfacesys agreed to add as an insured “in writing in a contract [or] agreement” that is “executed prior to the [injury].”  Peerless would not defend Stoncor as an additional insured because the “Jeffrey Caswell” signature was not personally affixed by Mr. Caswell.  The United States District Court for the Southern District of New York held a trial and found that the policy requirements were satisfied.  The court stressed that Stoncor received a signature-bearing copy of the Agreement via fax, and Mr. Caswell testified that he could not recall whether he had authorized someone else to sign on his behalf.  In addition, Surfacesys identified the Agreement as the contract governing its relationship with Stoncor in connection with the Grand Hyatt project and did not deny the validity of the signature.  The court also rejected Peerless’s argument that it had no duty to defend Surfacesys because the policy only extended additional insured coverage to “ongoing operations,” finding that the allegations of the underlying complaint gave rise to at least the possibility of coverage.   [Stoncor Grp., Inc. v. Peerless Ins. Co., 2022 U.S. Dist. LEXIS 154184 (S.D.N.Y. Aug. 26, 2022).]

Southern District Finds Insurer Not Entitled To Discovery As To Duty To Defend

The City of New York filed a coverage action in the United States District Court for the Southern District of New York, seeking a declaration that Harleysville Insurance Company is obligated to defend the City in two underlying personal injury actions.  Harleysville sought and the City objected to certain discovery related to the underlying actions.  The Magistrate Judge assigned to the dispute found that the issue in the case was whether Harleysville’s duty to defend was triggered by the allegations in the complaints filed in the underlying actions, not by the discovery that has been produced in those cases.  The Magistrate Judge concluded that the discovery is extrinsic evidence that overlaps with the merits of the underlying actions, which the court will not consider in deciding this declaratory judgment action as to the duty to defend.   [City of New York v. Harleysville Ins. Co., 2022 U.S. Dist. LEXIS 143039 (S.D.N.Y. Aug. 10, 2022).]

Court Holds That Denial Of No-Fault Claim Based Upon Misrepresentation Is Subject To 30-Day Denial Rule

Liberty Mutual filed a no-fault coverage action against the eligible injured person and his medical provider assignees, seeking a declaration that Liberty Mutual was not obligated to pay no-fault benefits because the eligible person made a material misrepresentation as to where he lived when applying for the insurance.  One of the assignees moved for summary judgment, contending that it was entitled to payment of its bills for medical treatment because Liberty Mutual did not timely deny or pay them within 30 days after receiving proof of the assignee’s claim, as required by 11 NYCRR 65-3.8 (a) and (c).  The Supreme Court, New York County, noted that a narrow exception exists to the preclusion rule for an untimely denial where the ground for denying the claim is based upon a lack of coverage, and that there are strong arguments as to why a material misrepresentation denial should be treated as based on a lack of coverage.  Nonetheless, the court concluded that it was bound by Second Department authority holding that the time limits applied to a material misrepresentation denial. [Liberty Mut. Ins. Co. v. Brutus, 2022 N.Y. Misc. Lexis 4154 (Sup Ct. N.Y. Cnty Aug. 16, 2022).]