JEANNE FINNEGAN VS. INDUCTOTHERM CORPORATION VS. GREENTREE FOOD MANAGEMENT INC. VS. FRED DUNHOUR (L-2886-12, CAMDEN COUNTY AND STATEWIDE), A-4267-15T1

Background

Jeanne Finnegan, an employee of Greentree Food Management, slipped and fell in a cafeteria at Inductotherm's building; she sued Inductotherm for negligence.
Greentree provided cafeteria services to Inductotherm under a written Agreement that required Greentree to list Inductotherm as an additional insured on Greentree's commercial general liability (CGL) policy; Greentree never did so.
Greentree's CGL policy with Harleysville named Greentree as the insured and contained an employee exclusion; Harleysville refused Inductotherm's tender because Inductotherm was not an additional insured.
Inductotherm filed third-party claims against Greentree (breach of contract and breach of implied covenant) and later added claims against Greentree’s broker, Dunhour; Greentree asserted it had no liability because of the workers' compensation bar.
The trial court granted summary judgment dismissing Inductotherm's third-party claims; the Appellate Division reversed, finding issues of coverage and damages requiring remand.

Issues

Issue	Inductotherm's Argument	Greentree's Argument	Held
Whether Greentree breached the Agreement by failing to add Inductotherm as an additional insured	Agreement required adding Inductotherm; failure was a breach	Denied liability exposure due to workers' compensation bar and policy limitations	Breach established as matter of contract law (failure to add was a breach)
Whether Inductotherm would have had coverage (defense/indemnity) under the CGL if added as additional insured	Additional insured status would permit defense/indemnity because employee-exclusion applies only to insured’s own employees	Relied on Pennsville to argue additional-insured coverage would be coextensive with Greentree’s liability and thus barred by employee-exclusion/workers' comp	Court held additional-insured status likely would provide a defense, but remanded because actual endorsement terms are unknown and could limit coverage
Whether Pennsville controls to limit additional-insured coverage here	Argues Pennsville is distinguishable; no indemnity clause or cross-allocation in Agreement	Relies on Pennsville to restrict additional-insured coverage to scope of tenant’s liability	Court ruled Pennsville was misconstrued and not controlling; extrinsic contract terms matter but Pennsville’s lease-based reasoning did not apply
Whether Inductotherm is entitled to summary judgment on breach damages now	Seeks judgment that damages equal what policy would have paid (defense/indemnity)	Opposes entry of summary judgment without proof of actual endorsement and damages	Court refused to enter summary judgment; remanded for proof whether endorsement would have provided coverage and for damages determination

Key Cases Cited

Pennsville Shopping Ctr. Corp. v. American Motorist Ins. Co., 315 N.J. Super. 519 (App. Div. 1998) (interpreting additional-insured coverage coextensive with tenant’s liability under lease)
Kieffer v. Best Buy, 205 N.J. 213 (2011) (contract interpretation is de novo review)
Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231 (2008) (plain language controls insurance-contract interpretation; avoid strained constructions)
Erdo v. Torcon Constr. Co., 275 N.J. Super. 117 (App. Div. 1994) (employee-exclusion does not bar coverage for claims against one insured by another insured’s employee)
Maryland Cas. Co. v. N.J. Mfrs. Cas. Ins. Co., 48 N.J. Super. 314 (App. Div.) (similar treatment of employee-exclusion and additional-insured coverage)
ArcelorMittal Plate, LLC v. Joule Technical Servs., Inc., [citation="558 F. App'x. 205"] (3d Cir. 2014) (summarizing New Jersey precedent that employee-exclusion does not bar cross-insured coverage)
Robinson v. Janay, 105 N.J. Super. 585 (App. Div.) (damages for breach to procure insurance equal amount that would have been due under policy)