Assignor Contract May Create Additional Insured Status
November 10, 2023 at 4:00:00 PM
In Catlin Insurance Company v. Colony Insurance Company, the Supreme Court of New York County considered whether plaintiffs, Sandy Clarkson LLC (“Sandy Clarkson”) and McAlpine Contracting Company (“McAlpine”), were entitled to coverage from Colony Insurance Company (“Colony”), as Additional Insureds. 80 Misc. 3d 1227(A) (N.Y. Sup. Ct. 2023).
The dispute arose out of a series of contracts and insurance agreements entered into by the parties. First, Sandy Clarkson and McAlpine entered a construction contract. Id. at 1. Next, McAlpine and Kingspan entered into a subcontract, which required Kingspan to procure liability insurance. Id. Thereafter, Kingspan assigned the subcontract to Kingstone, which purchased a commercial general liability policy from Colony (the “Policy”). Id. at 2.
In 2017, a personal injury action was commenced against Sandy Clarkson and McAlpine by an employee of a McAlpine subcontractor for injuries sustained at the construction site. Id. at *3. Kingstone and its assignor were thereafter joined to the case through a third-party action. Id.
Sandy Clarkson and McAlpine argued that the underlying personal injury action entitled them to a defense from Colony as Additional Insureds pursuant to the Policy. Id.at *5. Colony disagreed because its insured, Kingstone, never entered a written contract with either party. Id.
The Court held that McAlpine qualified as an Additional Insured pursuant to the Policy because it entered into a written contract with Kingstone’s assignor regarding coverage. Id. at 6. The Court noted that the Policy defined Additional Insureds as “[a]ll persons or organizations as required by written contract with the Named Insured.” Id. Thus, the Court reasoned, the provision implicitly extended coverage to any party with whom Kingstone contracted—including McAlpine through Kingstone’s assignor, Kingspan. Id. Conversely, Sandy Clarkson was not entitled to coverage as an Additional Insured because neither Kingstone nor Kingspan entered into a contract with it. Id.
The Court next considered whether McAlpine was entitled to indemnification or defense in the lawsuit. Ultimately, the Court found that McAlpine was entitled to defense because the allegations in the lawsuit “suggested a reasonable possibility of coverage,” but could not obtain indemnification due to limiting language in the Policies. Id. at *6-7.
One key takeaway from the Catlin decision is that New York insurers should be wary of policy provisions and definitions implicating contracts made by an insured’s assignor or predecessor in interest. As Catlin reflects, these prior contractual agreements may ultimately trigger Additional Insured coverage and additional duties of the insured to defend or indemnify.
Catlin Insurance Company v. Colony Insurance Company