48 F. Supp. 3d 158
D. Conn.2014Background
- Fast Trek Steel obtained First Mercury general liability insurance for ongoing operations at Yale project; Shawmut was general contractor and Shepard was its steel subcontractor.
- Injuries and death occurred when steel web structure collapsed; underlying state court complaints allege Shawmut/Shepard negligence through their agents and employees; Fast Trek is not named as a defendant in those suits.
- Shawmut and Shepard seek defense/indemnity as additional insureds under Fast Trek’s First Mercury policy; Liberty Mutual defends Shepard/Shawmut under a reservation of rights.
- Additional Insured Endorsement provides coverage to those named as additional insureds for bodily injury, property damage, or personal injury caused in part by the insured’s acts or those acting on its behalf.
- Court must determine if the endorsement requires privity or direct contract between Fast Trek and Shawmut; court also considers whether the acts of Fast Trek could cause the injuries and thus trigger defense.
- Court discusses whether coverage extends beyond vicarious liability to injuries caused in part by Fast Trek’s acts, and whether a professional services exclusion applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Shawmut an additional insured under Fast Trek's policy? | First Mercury: no direct contractual privity; Shawmut not named. | Liberty Mutual/Shawmut: endorsement allows coverage where written agreement exists, not requiring privity; two-contract chain suffices. | Yes; two-contract chain satisfies written-agreement requirement; Shawmut qualifies as additional insured. |
| Does First Mercury have a duty to defend Shawmut and Shepard as additional insureds? | Duty limited to vicarious liability; no Fast Trek-defendant claims. | Under broad interpretation and factual possibilities, duty to defend extends to potential coverage. | Yes; duty to defend triggered given allegations and potential causation by Fast Trek. |
| What is the scope of 'liability' for an additional insured - proximate causation vs. vicarious liability? | Liability limited to vicarious liability for Fast Trek’s acts. | Liability includes acts causing injury by Fast Trek, not only vicarious liability. | Liability means liability caused, in whole or in part, by Fast Trek’s acts or omissions; broader than mere vicarious liability. |
| Does the 'in whole or in part' qualifier require independent acts by the additional insured to trigger coverage? | Coverage would be limited if the primary acts are by the insured; otherwise no coverage. | The qualifier allows coverage where both parties contribute to the injury; not limited to sole acts of Fast Trek. | Includes partial causation by the named insured or its agents; not restricted to sole acts of Fast Trek. |
| Does the Professional Services Exclusion bar coverage for Shawmut/Shepard? | Exclusion precludes coverage for professional engineering/architectural services. | Underlying claims include design negligence; exclusion does not blanketly bar coverage since not all allegations are professional. | Exclusion does not apply to all allegations; still duty to defend. |
Key Cases Cited
- Merchants Ins. Co. of New Hampshire v. U.S. Fid. & Guar. Co., 143 F.3d 5 (1st Cir. 1998) (arising-out/causation approach to additional insureds, not limited to direct privity)
- Hartford Cas. Ins. Co. v. Litchfield Mut. Fire Ins. Co., 274 Conn. 457 (2005) (duty to defend based on potential coverage; look beyond four corners of complaint)
- Westfield Ins. Co. v. FCL Builders, Inc., 407 Ill.App.3d 730 (2011) (interpreting identical language requiring direct written agreement not strictly necessary)