The Burlington Insurance Company v. NYC Transit Authority
29 N.Y.3d 313
| NY | 2017

Background

  • Burlington issued CGL coverage to subcontractor Breaking Solutions, Inc. (BSI) with an endorsement naming NYCTA, MTA, and NYC as additional insureds “only with respect to liability for ‘bodily injury’ . . . caused, in whole or in part, by: (1) Your acts or omissions; or (2) The acts or omissions of those acting on your behalf.”
  • An NYCTA employee was injured when a BSI machine contacted a buried live cable, producing an explosion; discovery showed NYCTA failed to mark/deenergize the cable and acknowledged NYCTA’s sole responsibility.
  • Burlington defended and later disclaimed coverage for NYCTA/MTA as additional insureds on the ground that BSI’s acts were not a legal (proximate) cause of the injury because BSI was not negligent.
  • The district (trial) court granted Burlington summary judgment and allowed Burlington to pursue subrogation as the City’s subrogee; Burlington later settled the underlying claims for $950,000.
  • The Appellate Division reversed, holding the endorsement’s “caused by” language covers any causal link (a but‑for standard), so additional insured status exists even if the named insured was not negligent.
  • The Court of Appeals granted leave and reversed the Appellate Division, holding the endorsement requires proximate (legal) causation attributable to the named insured.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the endorsement’s phrase “caused, in whole or in part, by [BSI’s] acts or omissions” requires proximate (legal) causation or mere but‑for causation Burlington: endorsement requires injuries to be proximately caused by BSI (i.e., BSI must bear legal fault) NYCTA/MTA: phrase covers any causal connection; but‑for causation suffices, regardless of BSI’s negligence Court: endorsement requires proximate causation and coverage is limited to injuries for which the named insured’s acts are a legal cause (BSI must be at fault or otherwise legally liable)
Whether the endorsement’s reference to “liability” imports a negligence/ fault requirement Burlington: reference to “liability” confirms coverage only where BSI’s acts give rise to legal liability NYCTA/MTA: “liability” simply identifies covered risk; does not add a fault requirement Court: “liability” combined with “caused, in whole or in part” indicates proximate‑cause/legal‑liability limitation
Whether the ISO form change (replacing “arising out of” with “caused, in whole or in part”) demonstrates intent to preclude coverage for additional insured’s sole negligence Burlington: ISO amended form to preclude coverage for additional insured’s sole negligence; this supports proximate‑cause reading NYCTA/MTA: drafter’s intent immaterial; plain wording controls and supports broad causation reading Court: industry history supports proximate‑cause interpretation but decision rests on plain language read to require proximate causation
Whether Burlington may obtain subrogation against NYCTA as the City’s subrogee given denial of additional insured status Burlington: entitled to subrogation because NYCTA was not an additional insured under the policy NYCTA/MTA: if additional insured status attaches, anti‑subrogation bars recovery Court: because no additional insured coverage (BSI not a proximate cause), Burlington’s summary judgment on coverage affirmed and subrogation claim may proceed per remand

Key Cases Cited

  • Universal Am. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 25 N.Y.3d 675 (contract interpretation principles govern insurance policies)
  • Vigilant Ins. Co. v. Bear Stearns Cos., Inc., 10 N.Y.3d 170 (unambiguous policy language given plain and ordinary meaning)
  • White v. Continental Cas. Co., 9 N.Y.3d 264 (interpretation of insurance provisions is question of law)
  • Derdiarian v. Felix Contr. Corp., 51 N.Y.2d 308 (distinguishing proximate/legal cause from factual causation)
  • Hain v. Jamison, 28 N.Y.3d 524 (proximate cause involves policy considerations and manageable limits on liability)
  • Palsgraf v. Long Island R.R. Co., 248 N.Y. 339 (limitations on tracing causation — foundational proximate‑cause discussion)
  • Cragg v. Allstate Indem. Corp., 17 N.Y.3d 118 (avoid rendering contractual language meaningless)
  • Maroney v. New York Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467 (distinguishing “arising out of” from proximately caused language)
  • Worth Constr. Co., Inc. v. Admiral Ins. Co., 10 N.Y.3d 411 (interpretive guidance on causal phrases in insurance endorsements)
  • Regal Constr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 15 N.Y.3d 34 (analysis of additional insured endorsements and causation)
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