Crane Lessor Obtains $11 Million in Coverage for 2008 Crane Accident

New York Crane & Equipment v. Zurich American Insurance Co., Index No: 603218/09 (J. Feinman, 11/11/11).
In a recent decision by Judge Paul G. Feinman, New York Supreme Court, this writer recently obtained a declaratory judgment that the owner of a tower crane that collapsed in 2008, was entitled to $11 million of insurance coverage from the insurance carrier of the crane lessee/operator with respect to the various wrongful death, personal injury and property damage claims.

Zurich American Insurance Co. (“Zurich”), the carrier for the crane lessee Sorbara Construction (“Sorbara”), disclaimed coverage on the grounds that the additional insured coverage for NY Crane only existed to the extent that the accident occurred as a result of Sorbara’s work for NY Crane. Zurich argued that Sorbara was operating the crane for the general contractor, not NY Crane and thus, there was no coverage for NY Crane. Zurich relied on a 2011 First Department decision, Admiral v. East 51st Street, which involved an identical situation involving another Manhattan crane collapse in 2008. Notwithstanding, this decision appeared to be exactly on point, I was able to distinguish it on the grounds that the “working for” requirement in the Zurich endorsement only applied where the accident arose out of the work of an entity working for the named insured. Here, because Sorbara itself was operating the crane, the “working for” condition was inapplicable. The argument involved a comparative analysis of the Zurich additional insured endorsement and the Admiral endorsement and turned on the precise punctuation and indentation in the Zurich endorsement.

The Court also granted NY Crane’s motion to strike Zurich’s attempted reservation of rights based on the expected/intended acts exclusion that was set forth as an affirmative defense in an amended answer served after the District Attorney secured an indictment based on the collapse. I argued that the amended answer was procedurally defective since it was served without leave of court. I also argued that the assertion of the exclusion was untimely as a matter of law based on Insurance Law Section 3420(d).

Finally, the court agreed that the $11 million of Zurich’s excess coverage would contribute on a pro-rata basis with NY Crane’s own excess coverage even though the lease only required the lessee to provide $5 million in coverage.

Unfortunately, the court would not declare that NY Crane was entitled to be indemnified under the Zurich policy, holding this was an issue that required resolution by the trier of fact. The court found it was pre-mature to determine that the accident occurred, in part, due to the acts or omissions of Sorbara, notwithstanding that Sorbara was operating the crane at the time of the incident. I anticipate the the matter will go up on appeal and if so, NY Crane may cross appeal this finding.