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Trial Court Upholds Employer’s Liability Exclusion in CGL Policy (PA)

June 30, 2020

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<p style="text-align: justify;">In<em> <a href="">Nationwide Mutual Fire Ins. Co. v. Lee Benjamin, Jr. et al</a>,</em> the Pennsylvania Court of Common Pleas, Columbia County, analyzed whether, inter alia, an employer’s liability exclusion barred coverage to Nationwide Mutual Fire Ins. Co.’s insured, Lee Benjamin, Jr. (“Benjamin”) for personal injuries Mark Davenport (“Davenport”) sustained while conducting roof work for Benjamin, who was initially retained by Jamie Dietterick (“Dietterick”) to perform work at Dietterick’s home. After suffering these injuries, Davenport commenced a claim against Benjamin, who subsequently sought coverage for the incident under a commercial general liability policy Benjamin obtained from Nationwide. In response, Nationwide disclaimed coverage to Benjamin citing the policy’s Worker’s Compensation And Similar Laws and Employer’s Liability exclusions.</p>
<p style="text-align: justify;">Ultimately, Nationwide filed a motion for summary judgment in the trial court asserting Davenport constituted an employee of Benjamin at the time of the incident and therefore, the Policy’s Employer’s Liability exclusion applied to bar coverage to Benjamin. In making this determination, the Court first considered whether Davenport constituted Benjamin’s employee, as Benjamin alleged Davenport merely volunteered to help him with the construction work. Relying on the factors set forth by the Pennsylvania Supreme Court in Hammermill Paper Co. v. Rust Eng’g. Co., the Court considered testimony that Benjamin provided instructions to Davenport regarding the work to be performed, supplied the work tools necessary for the job and paid Benjamin in the form of cash and meals for work. Although Benjamin testified that he is a solo proprietor with no employees and argued there was no contractual agreement between Benjamin and Davenport, the Court weighed the Hammermill factors in favor of finding the existence of an employee-employer relationship.</p>
<p style="text-align: justify;">As the Court determined Davenport constituted an employee of Benjamin, the Court next analyzed the applicability of the Employer’s Liability exclusion, which precludes coverage for an employee’s bodily injuries when performing duties related to the conduct of an insured’s business. Ultimately, the Court ruled in Nationwide’s favor and held the Employer’s Liability exclusion applied, as the facts conclusively established that Davenport was injured while repairing the roof and his work furthered Benjamin’s business interest.</p>
Thanks to Lauren J. Berenbaum for her contribution to this post.  Please contact <a href="">Vincent Terrasi</a> with any questions.

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