Gallagher-Kaiser Corporation v. Liberty Duct, LLC, 2:14-cv-00869

This case involves a dispute regarding insurance coverage related to construction defects at Harry Reid International Airport (formerly McCarran International Airport).
Gallagher-Kaiser Corp. (GK), the mechanical subcontractor, subcontracted Liberty Duct, LLC to supply HVAC ductwork, including an antimicrobial coating, for the project.
Defective ductwork—including issues with the antimicrobial coating—was provided by Liberty, leading to demands by the Federal Aviation Administration (FAA) for removal and replacement and a subsequent dispute resolution process.
Liberty was required to add GK as an additional insured on its policy from NGM Insurance Company (NGM); the policy was cancelled prior to the end of the intended policy term due to Liberty’s non-payment.
GK replaced the ductwork at significant cost and later initiated legal proceedings, seeking coverage as an additional insured under the NGM policy after the FAA resolution.
NGM denied coverage, arguing exclusions, lack of timely notice, and no damages during the policy period; GK asserts breach of contract and related claims against NGM.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty to Defend	GK argues ODRA proceeding was a "suit" requiring a defense under NGM policy.	NGM claims no "suit" existed requiring defense, and GK initiated process.	Court found sufficient alleged facts; motion to dismiss denied.
Duty to Indemnify	ODRA decision made GK "legally obligated" to pay; thus, NGM must indemnify.	No suit or settlement against GK; no obligation to indemnify.	Sufficient facts pled for indemnification; motion denied.
Notice Requirement	NGM had actual knowledge via Liberty; strict notice compliance would have been futile.	GK failed to provide timely notice, prejudicing NGM.	On pleadings, NGM did not show prejudice or lack of notice; motion denied.
Timing of Damages	Complaint alleges defective work and damages possibly within policy period.	Damages occurred after the policy was cancelled; no coverage.	On face of complaint, timing not clearly outside policy; motion denied.

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (setting the pleading standard for Rule 12(b)(6) motions)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (elaborating on plausibility standard for pleadings)
Zurich Am. Ins. Co. v. Ironshore Specialty Ins. Co., 497 P.3d 625 (Nev. 2021) (duty to defend and indemnify under Nevada law)
United Nat’l Ins. Co. v. Frontier Ins. Co., 99 P.3d 1153 (Nev. 2004) (explains duty to indemnify and defend)
Gray v. Zurich Ins. Co., 419 P.2d 168 (Cal. 1966) (duty to defend arises with potential of liability under policy)
Century Sur. Co. v. Andrew, 432 P.3d 180 (Nev. 2018) (insurer liability for costs if defense duty breached)
Las Vegas Metro. Police Dep’t v. Coregis Ins. Co., 256 P.3d 958 (Nev. 2011) (insurer must show prejudice to deny coverage for late notice)