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Coverage Issues Determined In Multi-Claim Matter (NY)

November 7, 2019

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The Southern District of New York, in<em> <a href="">James River Ins. v. Indian Harbor Ins.,</a></em>recently granted partial summary judgment to an insurer who sought a declaration that it did not owe coverage in a number of underlying lawsuits.  In so doing, the court reaffirmed various principles of insurance coverage law, while simultaneously making clear that factual disputes generally preclude an insurer from winning on summary judgment.
<p style="text-align: justify;">As background, a January 2016 fire at a Texas petroleum refinery operated by Marathon Petroleum resulted in numerous personal injury lawsuits.  Marathon  hired Certified Safety, Inc. to staff the facility with safety attendant workers.  Certified sought coverage from its insurers, James River Insurance Company and Indian Harbor Insurance Company .  James River picked up Certified’s defense in the underlying lawsuits, while Indian Harbor disclaimed coverage based on Certified’s failure to timely notify them of the lawsuits.  Indian Harbor further argued that there was no coverage under with the professional liability or pollution coverage grants in their policy.  James River and Certified then filed the current lawsuit against Indian Harbor, seeking a declaration that they owed Certified a defense and indemnification in the underlying lawsuits.</p>
<p style="text-align: justify;">As to the first point, the court held that, while Certified did not timely notify Indian Harbor, there was an issue of fact as to whether Certified gave timely notice to Indian Harbor’s agents.  The court recognized that under New York law, timely notice to a broker constitutes notice to the carrier if it is established that the broker was acting as the carrier’s agent.  Yet because there was an issue of fact on this point, the court denied the parties’ motions for summary judgment.</p>
<p style="text-align: justify;">Regarding the coverage issues, the court first held that there were issues of fact regarding the professional liability coverage.  Specifically, while Indian Harbor argued that Certified’s role only including basic monitoring of the facility, James River and Certified argued that Certified trained its employees to use the fire suppression equipment and look for specific fire hazards.  Thus, the court denied summary judgment, finding that there were factual issues as to whether Certified’s role involved “the special acumen and training of professionals” such that it would be considered a “professional service” under New York law.</p>
<p style="text-align: justify;">However, the court granted summary judgment to Indian Harbor under the pollution liability section of its policy.  This section provided coverage for loss as a result of a “pollution condition,” which included smoke and soot, provided that the “pollution condition” “results from contracting services.”  Because Plaintiffs were unable to demonstrate that Certified’s services played a role in causing the initial fire, there was no coverage under this section.</p>
<p style="text-align: justify;">Thank you to Doug Giombarrese for his contribution to this post.  Please email <a href="">Georgia Coats</a> with any questions.</p>


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