QBE Insurance v. Adjo Contracting Corp.
976 N.Y.S.2d 534
N.Y. App. Div.2013Background
- Archstone Westbury complex construction by Archstone and Tocci; Tocci as general contractor with subcontractors; mold and water intrusion led to tenant damages and terminations in 2008; tenants’ consolidated action and Hunter action; Archstone sought defense/indemnification from insurers for Tocci and Archstone; various insurers filed cross-claims/defenses, and the parties moved for declaratory judgments on duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which insurers owe a duty to defend Archstone in the tenant and Hunter actions? | QBE and Travelers contend insurers must defend Archstone. | Some insurers deny duty based on policy terms and exclusions. | Pennsylvania law governs; Erie and Penn National have no duty to defend; others’ duties depend on fact-specific analysis. |
| What law governs the interpretation of the policies (choice of law) for multi-state risks? | Archstone argues for New York law; Travelers argues for others. | Some insurers argue Texas or other law; disputed. | Because insureds were domiciled in Pennsylvania, PA law applies; NY law governs choice-of-law only if appropriate. |
| May extrinsic evidence be used to determine duty to defend despite the eight-corners rule? | Some insurers rely on policy language and pleadings only. | Exceptions to eight-corners may allow extrinsic evidence in limited scope. | PA/NJ choice allows limited extrinsic evidence; Crewdson letter not dispositive. |
| Is late notice a bar to coverage for the insurers? | Insurers timely disclaimed based on late notice; estoppel arguments. | Delays in disclaimers were timely in some respects; some insurers never disclaimed for late notice. | Notices deemed untimely; insurers barred from relying on late notice defenses; disclaimers too late. |
Key Cases Cited
- BP A.C. Corp. v One Beacon Ins. Group, 8 N.Y.3d 208 (N.Y. 2007) (duty to defend broad; allegations within protection purchased)
- Fitzpatrick v American Honda Motor Co., 78 N.Y.2d 61 (N.Y. 1991) (extrinsic evidence to determine coverage possible)
- Ooida Risk Retention Group, Inc. v Williams, 579 F.3d 469 (5th Cir. 2009) (limited Texas eight-corners exception recognized)
- Seaboard Sur. Co. v Gillette Co., 64 N.Y.2d 304 (N.Y. 1984) (ambiguity in exclusions construed against insurer)
- Kvaerner Metals Div. of Kvaerner U.S., Inc. v Commercial Union Ins. Co., 589 Pa. 317 (Pa. 2006) (fortuity and occurrence under PA law; relevant for conflict analysis)