THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY VS. RLI INSURANCE COMPANY (L-0797-18, HUDSON COUNTY AND STATEWIDE), A-4862-18

Background

Port Authority contracted Techno Consult for professional construction management and inspection; Techno's contract required procuring a CGL policy naming Port Authority as an additional insured.
RLI issued a CGL policy to Techno (1/10/2015–1/10/2016). A Halmar employee, Michael Fiume, slipped and fell at the site on 4/21/2015 and sued Port Authority and Techno alleging failures in supervision, inspection, job-site safety, and warnings.
RLI agreed to defend Techno but denied Port Authority’s tender, asserting (1) Port Authority did not qualify as an additional insured because Techno’s liability was not shown and (2) a Professional Services Exclusion barred coverage.
Port Authority sued for declaratory relief and reimbursement of defense costs; the trial court dismissed, finding no record proof Techno caused Fiume’s injury and the Professional Services Exclusion applied.
On appeal, the Appellate Division affirmed: the policy requires that an additional insured’s liability be caused in whole or in part by Techno, and the underlying complaint alleged conduct that falls within the defined professional services exclusion, so RLI had no duty to defend or reimburse.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Is Port Authority an additional insured under the Blanket Additional Insured Endorsement?	Techno contract required naming Port Authority as additional insured; therefore Port Authority qualifies.	The endorsement conditions additional-insured status on liability "caused in whole or in part by" Techno; no proof Techno caused the injury.	Port Authority is not an additional insured because there is no record proof Techno caused Fiume’s injury as required by the endorsement.
2) Does the Professional Services Exclusion bar coverage for the asserted claims?	The exclusion must be applied with a causal link to professional services and should not automatically deny coverage for all allegations.	The exclusion expressly bars injury "arising out of" rendering or failure to render defined professional services (inspection, supervision, safety, construction management), and the complaint alleges those services.	The exclusion applies because the complaint alleges negligence in supervision, inspection, job-site safety, and related professional services alleged against both defendants.
3) Must RLI evaluate Port Authority’s coverage separately under the Separation of Insureds clause?	Separation of Insureds requires assessing coverage/exclusions as to Port Authority independently of Techno, avoiding "illusory" additional-insured status.	Even applying separation, the underlying complaint alleges professional-services negligence by Port Authority as well as Techno, so exclusion still bars coverage.	Separation of Insureds does not save coverage here; evaluated separately Port Authority’s alleged conduct still falls within the Professional Services Exclusion.
4) Is RLI liable to reimburse Port Authority for defense costs and litigation expenses?	RLI improperly denied the tender and must reimburse Port Authority’s defense and coverage litigation costs.	If exclusion removes coverage, RLI had no duty to defend or reimburse.	No reimbursement: the Professional Services Exclusion eliminates coverage, so RLI had no duty to defend or reimburse.

Key Cases Cited

Kieffer v. Best Buy, 205 N.J. 213 (de novo review of contract interpretation)
Cypress Point Condo. Ass'n v. Adria Towers, L.L.C., 226 N.J. 403 (contracts construed by plain terms, context, and purpose)
Flomerfelt v. Cardiello, 202 N.J. 432 (ambiguous policy terms construed for insured; reasonable expectations)
Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins., 98 N.J. 18 (duty to defend derives from policy language)
Voorhees v. Preferred Mut. Ins., 128 N.J. 165 (ambiguities resolved for insured re duty to defend)
Wear v. Selective Ins. Co., 455 N.J. Super. 440 (App. Div.) (side‑by‑side comparison of policy and complaint for duty-to-defend analysis)
SL Indus., Inc. v. Am. Motorists Ins., 128 N.J. 188 (extrinsic facts may trigger duty to defend)