Additional Insured Coverage Analyzed in PA
February 4, 2022
<p style="text-align: justify;">Earlier this week, on January 31, 2022, in <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/02/Cincinnati.pdf">Cincinnati</a> Insurance Company v. Colony Insurance Company</em>, the U.S. District Court for the Eastern District of Pennsylvania analyzed whether a general contractor constituted an additional insured on its subcontractor’s insurance policy.</p>
<p style="text-align: justify;">By way of brief background, Cincinnati Insurance Company (“Cincinnati”) commenced a declaratory judgment action (“DJ”) against Colony Insurance Company (“Colony”) alleging Colony is obligated to defend and indemnify Cincinnati’s named insured, Lobar, Inc. (“Lobar”) in connection with an underlying personal injury lawsuit commenced by Robert Sokoloff (“Sokoloff”). Sokoloff commenced the underlying lawsuit against Lobar alleging he sustained injuries when he slipped and fell on ice at a construction site controlled by Lobar. As the general contractor and/or construction manager, Sokoloff alleges Lobar was responsible for the dangerous condition created by the accumulation of ice that caused his fall. At the time of Sokoloff’s accident, Architectural Steel, Colony’s named insured, was a subcontractor to Lobar at the construction site. Lobar joined Architectural Steel to the underlying lawsuit. As Lobar and Architectural Steel entered a subcontract requiring Architectural steel to include Lobar as an additional insured for ongoing and completed operations, Cincinnati commenced the instant declaratory action.</p>
<p style="text-align: justify;">Applying well-established Pennsylvania case law, the Court determined Lobar was not an additional insured under the Colony Policy. Looking to the plain language of the policy, the court analyzed the Additional Insured – Owners, Lessees or Contractors – Scheduled Person or Organization endorsement, which modified the Who Is An Insured section to include additional insured coverage with respect to liability “caused, in whole or in part, by “[y]our actions or omissions” or “[t]he acts or omissions of those acting on your behalf; in the performance of your ongoing operations…”. As there was no Pennsylvania case law on point, the Court looked to federal court opinions decided under Pennsylvania law. Citing Dale Corporation v. Cumberland Mutual Fire Insurance Company, the Court determined Sokoloff was not an employee of Architectural Steel at the time of the accident. This, coupled with the fact that the only mention of Architectural Steel was in the joinder complaint filed by Lobar, the Court determined Lobar did not constitute additional insured. Further, although Cincinnati included a certificate of insurance naming Lobar as an additional insured on the Colony policy, the Court rejected that argument as certificates of liability insurance do not constitute insurance contracts and do not, on their own, confer additional insured status.</p>
<p style="text-align: justify;">The Court also noted Architectural Steel was not responsible for the snow and ice removal. The Court held the subcontract between Lobar and Architectural Steel did not require Architectural Steel to remove snow and ice from the accident site. In doing so, the Court reasoned there is no basis to find Sokoloff’s injuries were “caused in whole or in part of” by Architectural Steel as required to confer coverage to Lobar under the Colony policy. This ruling is significant because the Court looked beyond the four corners of the complaint to consider extrinsic evidence, such as the deposition testimony from the Underlying action. Ultimately, the Court denied Cincinnati’s motion for summary judgment and ruled in favor of Colony, therefore holding Lobar was not an additional insured under the Colony policy.</p>
<p style="text-align: justify;">This case is significant as it reaffirms the principle set forth in Dale that a third party complaint cannot be used to bolster allegations in the original complaint to support coverage as doing so would violate the rule that “the obligation of a casualty insurance company to defend an action against the insured is to be determined solely by the allegations of the complaint in the action."</p>
Thanks to Lauren Berenbaum for her contribution to this post. Please contact <a href="mailto:Haquino@wcmlaw.com">Heather Aquin</a>o with any questions.