First Department Discusses Scope of Arising Out Of Lanaguage In Additional Insured Endorsement

Regal Const. Corp. v. National Union Fire Ins. Co. of Pittsburgh
--- N.Y.S.2d ----, 2009 WL 2015419
N.Y.A.D. 1 Dept.,2009.
This First Department case nicely illustrated the breadth of the language in additional insured endorsements requiring that the property or bodily injury claim “arise out of” the work of the named insured for the additional insured. In Regal, the plaintiff, an employee of the general contractor (“GC”), slipped on plywood that he claimed was recently painted by an employee of the construction manager (“CM”). The CM sought additional insured coverage from the GC’s carrier, who took over the defense under a reservation of rights, but then instituted a declaratory judgment action seeking to disclaim on the grounds that the injury did not arise out of the work of the GC, since the complaint alleged the CM was negligent. Not surprisingly, the complaint did not allege any negligence against the employer GC.

The First Department held for the CM and its carrier, finding that notwithstanding the specific allegations of the complaint, the accident arose out of the work of the GC. To support its conclusion the Court noted that the GC “had responsibilities that encompassed all of the demolition and construction work to be done.” It noted that the plaintiff had “testified that it would have been [the GC’s] responsibility to paint the floor…if instructed to do so by [the CM].” Therefore, the Court found a causal connection between the injury and the GC’s work as the prime contractor, the risk for which coverage was provided.

The Court distinguished the the Court of Appeals’ decision in Worth Constr. Co., Inc. v. Admiral Ins. Co. (10 NY3d 411 [2008]), relied upon by the dissent, where involved a plaintiff who was injured on a staircase that had been erected by the defendant’s insured. The Court found that the defendant’s policy did not provide additional insured coverage, because the injury was due to the alleged negligence of another contractor who had applied fireproofing to the stairs. The Court held that the staircase was “merely the situs of the accident,” and ruled that there was no connection between the accident itself and [staircase erector’s] work. (id. at 416).