Case Briefs

The court reserved decision, pending further argument, on whether the method of sharing between the two policies was to be by equal shares or in proportion to their respective limits. Id. at *9-10. The outcome of this question depended on the specific provisions regarding the method of sharing in the respective policies. Whereas the Indian Harbor policy contained a method of sharing based on proration by limits, “'if any other insurance does not permit contribution by equal shares,'” the parties failed to present any evidence on method of sharing under the Central policy. Id. at 10. Thus, while deferring a decision on this issue, the court nevertheless indicated that it was likely that the allocation would be prorated by limits, based on the decision in Jefferson Insurance Co. of New York v. Travelers Indemnity Co., 92 N.Y.2d 363, 372, 681 N.Y.S.2d 208, 703 N.E.2d 1221 (1998) (holding that where provisions in multiple policies conflict on priority of coverage then insurers should contribute based on proration of their policies' respective limits). Id.

Additional Insured Status

In Briarwoods Farm, Inc. v. Central Mutual Insurance Company , 866 N.Y.S.2d 847, 2008 N.Y. Slip Op. 28435 (Sup. Ct. Oct. 29, 2008), the New York Supreme Court (Orange County) held that although a general contractor's additional insured coverage under a subcontractor's policy provided primary coverage (unless otherwise agreed to by the parties), a court could still determine that the general contractor's own direct liability carrier should also provide primary coverage, thus “rendering both policies equally obligated to cover the costs associated with” the underlying action. Id. at *2.

In Briarwoods Farm, a general contractor sought coverage from its subcontractor's insurer, Central Mutual Insurance Company (“Central”), for a personal injury/wrongful death action. See Rosado v. Briarwoods Farm, Inc. , 19 A.D.3d 396, 796 N.Y.S.2d 394 (App. Div. [2d Dep't] 2005). Briarwoods Farm, 2008 N.Y. Slip Op. 28435, at *2-3. The general contractor was also insured by its own liability carrier, Indian Harbor Insurance Company (“Indian Harbor”). Id. at *3-4.

In a Feb. 13, 2007 decision and order on the parties' cross-motions for summary judgment, the Supreme Court ruled that the general contractor was an additional insured under the Central policy. Subsequently, pursuant to the decision in BP Air Conditioning Corp. v. OneBeacon Insurance Group , 8 N.Y.3d 708, 716, 840 N.Y.S.2d 302, 307, 871 N.E.2d 1128 (2007), the court concluded that it was required to “review and consider all of the relevant policies at issue” in order to determine the priority of coverage vis-'-vis the Central and Indian Harbor policies ' i.e. , whether additional insured coverage under the Central policy was primary or excess to the coverage provided by the Indian Harbor policy. Briarwoods Farm, 2008 N.Y. Slip Op. 28435, at *2-3. The parties then sought, and were granted, permission for renewal to decide the issue of priority of coverage. Id. at *3.

On the renewal motion, Central maintained that its coverage was excess to the general contractor's Indian Harbor policy. Id. The general contractor disagreed, and took the position that under the Court of Appeals' decision in Pecker Iron Works of New York, Inc. v. Travelers Insurance Co., 99 N.Y.2d 391, 756 N.Y.S.2d 822, 786 N.E.2d 863 (2003), it was entitled to primary coverage under the Central policy. See Id. The court split the proverbial baby, agreeing with the general contractor that its additional insured coverage was primary, but also holding that, under the circumstances, its own liability policy responded as a primary co-insurer for the claim at issue. Id. at *1-2.

As to the first prong of its holding, the Briarwoods Farm court followed the Court of Appeals 2003 decision in Pecker Iron Works, namely, that “'[a]dditional insured is a recognized term in insurance contracts, ' [and that] the well-understood meaning of the term is an entity enjoying the same protection as the named insured,' i.e., that the term 'additional insured' as used in construction contracts means additional insured on a primary basis.” Id. at *5 (quoting Pecker Iron Works, 99 N.Y.2d at 393 (alterations in Briarwoods opinion)). In the Briarwoods case, as in Pecker, the subcontractor's policy provided that additional insured coverage was “'excess over any other valid and collectible insurance ' unless a contract specifically requires that the insurance be primary or [the insured] request[s] that it apply on a primary basis.'” Id. at *5 (quoting Central policy Amendment 14-2696 07 97). The construction contract between the parties required that the subcontractor name the general contractor as an additional insured in its liability policies, and the court therefore determined, following Pecker, that the general contractor had “the same rights ' under the Central policy” as the subcontractor; i.e., that the general contractor was entitled to primary coverage under the policy. Id. The court held that “there is no difference between a 'specific' requirement that the insurance be primary or a[n] 'express' designation of primary coverage in connection with a determination of whether coverage is primary or excess in this case.” Id.

The court, however, did not stop there. “The fact that one policy may be primary insurance does not preclude a determination that another policy also provides primary coverage.” Id. at *6. The Briarwoods court reasoned that the Court of Appeals' assertion in BP Air Conditioning ' that a court must examine all policies before determining priority of coverage ' meant that the Pecker decision could not stand for the proposition that all additional insured coverage was primary, regardless of the terms of the policies, which is how it had been construed by the Appellate Division in BP Air Conditioning Corp. v. OneBeacon Insurance Group , 33 A.D.3d 116, 821 N.Y.S.2d 1 (App. Div. [1st Dep't] 2006), modified by 8 N.Y.3d 708, 840 N.Y.S.2d 302, 871 N.E.2d 1128. Thus, while Pecker controlled whether the Central policy was primary or excess, it did not control the same question as to the Indian Harbor policy, which was a “separate and distinct issue[ ].” Briarwoods Farm, 2008 N.Y. Slip Op. 28435, at *7.

The court then examined both the Central and the Indian Harbor policies, and particularly each policy's “other insurance” clause. Id. at *8 (citing Osorio v. Kenart Realty, Inc. , 48 A.D.3d 650, 653, 852 N.Y.S.2d 317 (App. Div. [2d Dep't] 2008). The Indian Harbor policy, specifically, provided that it was primary unless certain conditions existed, in which case it was excess; in particular, the Indian Harbor policy was excess when there was coverage for the loss under “Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for 'your work'” or under fire insurance coverage for premises rented or occupied by the insured, or if the loss arose out of the use of certain vehicles. Id. at *8-9. Since none of these conditions or other coverages existed, the court concluded that the Indian Harbor policy was primary, “along with the Central Policy,” by its own terms. See Id. at *8-10.

The court reserved decision, pending further argument, on whether the method of sharing between the two policies was to be by equal shares or in proportion to their respective limits. Id. at *9-10. The outcome of this question depended on the specific provisions regarding the method of sharing in the respective policies. Whereas the Indian Harbor policy contained a method of sharing based on proration by limits, “'if any other insurance does not permit contribution by equal shares,'” the parties failed to present any evidence on method of sharing under the Central policy. Id. at 10. Thus, while deferring a decision on this issue, the court nevertheless indicated that it was likely that the allocation would be prorated by limits, based on the decision in Jefferson Insurance Co. of New York v. Travelers Indemnity Co. , 92 N.Y.2d 363, 372, 681 N.Y.S.2d 208, 703 N.E.2d 1221 (1998) (holding that where provisions in multiple policies conflict on priority of coverage then insurers should contribute based on proration of their policies' respective limits). Id.