UNITED RENTALS (NORTH AMERICA), INC. v. LIBERTY MUTUAL FIRE INSURANCE COMPANY
2:19-cv-17169
D.N.J.Apr 28, 2022Background
- United Rentals (United) leased a boom lift to Conti Enterprises; Conti signed United’s Rental Agreement containing Section 18 requiring Conti to name United as an additional insured on Conti’s liability policy.
- Liberty Mutual (Liberty) issued a CGL policy to Conti with an endorsement making lessors additional insureds when the lease agreement requires it and for liability “caused, in whole or in part, by your maintenance, operation or use of equipment leased to you.”
- Two Conti employees sued in New York alleging injuries while using the rented boom lift (the New York Actions); United tendered its defense to Liberty.
- Liberty disclaimed coverage and refused to defend United; United sued Liberty in federal court (D.N.J.) seeking declaratory relief and defense/indemnity.
- Cross-motions for partial summary judgment focused on (a) whether United satisfied the endorsement’s requirements to be an additional insured and (b) whether Liberty has a duty to defend under New Jersey law.
Issues
| Issue | Plaintiff's Argument (United) | Defendant's Argument (Liberty) | Held |
|---|---|---|---|
| 1. Written-agreement requirement for additional insured status | Rental Agreement (Section 18) is a signed written contract requiring Conti to add United as additional insured | Liberty questioned relevance/contents of a separate 2009 National Account Agreement but did not dispute the signed Rental Agreement | Held: United met the written-agreement requirement; Rental Agreement satisfies the endorsement |
| 2. "Caused, in whole or in part, by your operation or use" language satisfied | Underlying complaints allege Conti employees injured while using the boom lift—sufficient to meet the plain-language causation phrase | Argued "caused" requires a negligence/proximate-causation showing or claims of Conti negligence; relied on unpublished decisions | Held: Plain language is unambiguous and broad; allegations that injury occurred while Conti employees used the equipment satisfy the phrase without a separate negligence/proximate-causation requirement |
| 3. Duty to defend under New Jersey law | When complaint alleges a risk covered by the policy and United qualifies as additional insured, Liberty must defend; doubts resolved for insured | Liberty contends it may reserve rights or refuse to defend pending coverage resolution and later reimburse defense costs | Held: Duty to defend arises; court declares Liberty obliged to defend United in the New York Actions and reimburse defense costs |
| 4. Applicability of Burd exception (insurer may delay defense pending factual coverage dispute) | No genuine factual dispute central to coverage; court can resolve coverage now | Argued Burd permits insured to initially bear defense costs subject to later reimbursement if coverage dispute requires factual resolution | Held: Burd inapplicable—court resolved coverage on the merits; no unresolved factual dispute requiring insurer to decline defense now |
Key Cases Cited
- Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231 (N.J. 2008) (plain—unambiguous insurance policy language governs interpretation)
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (N.J. 1992) (duty to defend arises when complaint alleges a risk insured against)
- Flomerfelt v. Cardiello, 202 N.J. 432 (N.J. 2010) (ambiguities in underlying complaint resolved in favor of insured; duty to defend continues while any covered claim remains)
- Passaic Valley Sewerage Com'rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596 (N.J. 2011) (discussing Burd rule: insured may initially bear defense costs subject to reimbursement when coverage dispute requires factual resolution)
- Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504 (N.J. 1965) (establishing comparison of complaint allegations to policy language for duty-to-defend analysis)
- Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18 (N.J. 1983) (duty to defend extends only to claims that would require indemnity if judgment entered)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standard)