Uvino v. Harleysville Worcester Insurance Company
1:13-cv-04004
| S.D.N.Y. | Mar 4, 2015Background
- J. Barrows, Inc. (JBI) was insured under Harleysville's commercial general liability policy (May 1, 2005–May 1, 2008). Harleysville defended JBI under a reservation of rights and later disclaimed coverage after a jury verdict.
- The Uvinos hired JBI as a "Construction Manager" under a written Construction Management Agreement (CMA); the CMA expressly left the Uvinos as general contractor and required the Uvinos to engage subcontractors and hold JBI harmless as general contractor.
- The Uvinos terminated JBI and sued for damages alleging improper modification/installation (e.g., a custom glass stair tower), interference with subcontractors' work, and other acts that caused leaks and damage; the jury awarded the Uvinos general and consequential damages totaling originally $401,628 (later increased with interest/costs).
- Harleysville moved to intervene pretrial to ask the court to submit special interrogatories to allocate covered vs. noncovered damages; the court denied intervention and disqualified Harleysville-provided counsel; Harleysville did not appeal.
- Harleysville contends the policy's work-product exclusions (exclusions j(6), l, m) bar coverage because damages are to JBI's own work or amount to contractual economic loss; the Uvinos contend some jury claims sought recovery for damage to others' work (covered under the policy).
- The district court entertained cross-motions for summary judgment on whether any of the underlying jury claims could be covered, and whether the general verdict is allocable between covered and noncovered claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether any of the underlying claims submitted to the jury can give rise to coverage under the policy | Uvinos: some claims (e.g., damage to other contractors' work caused by JBI’s improper acts) seek recovery for physical damage to others' property/work and therefore fall within coverage | Harleysville: JBI acted effectively as general contractor or its work comprises the whole project, so damages are to JBI's own work and excluded by work-product exclusions | Held: Some jury-submitted claims may be covered. Court finds JBI was not the general contractor as to all work; coverage analysis turns on scope of JBI’s contracted work and exclusions, so damages caused by unauthorized acts outside JBI’s contracted scope could be covered |
| Proper analytical framework: occurrence vs. exclusion | Uvinos: coverage depends on whether damage is to others' property/work, not labels of claims | Harleysville: frames dispute as whether an "occurrence" occurred (i.e., defective work is not an occurrence) | Held: Following Scottsdale, the question is controlled by policy exclusions rather than by treating defective work as non-occurrence; court analyzes exclusions l, j(6), m to determine coverage |
| Whether the jury's general verdict can be allocated between covered and noncovered damages | Uvinos: general verdict can be apportioned and they should be permitted to attempt allocation in a follow-on proceeding; Harleysville's intervention efforts showed awareness of allocation issues | Harleysville: the general verdict is incapable of reasonable allocation, so insurer has no duty to indemnify | Held: Denies Harleysville summary judgment. Court permits Uvinos one final opportunity to prove allocation at an allocation proceeding but requires advance written demonstration of how they will identify covered portions; burden remains heavy on Uvinos |
| Whether Harleysville’s pretrial conduct (seeking special interrogatories) shifts burden of allocation to Harleysville | Uvinos: Harleysville sought interrogatories and thus cannot now evade allocation | Harleysville: moving to intervene was appropriate and does not shift burden | Held: Court finds Harleysville did not fail fundamental responsibilities so as to shift the burden, but given the specific history (motion to intervene denied, disqualification of counsel, expectation of allocation), Harleysville is not entitled to summary judgment and Uvinos get a limited allocation opportunity |
Key Cases Cited
- MBIA Inc. v. Federal Ins. Co., 652 F.3d 152 (2d Cir. 2011) (insurance contracts interpreted by ordinary contract principles; insured bears burden to show coverage)
- Scottsdale Ins. Co. v. R.I. Pools, Inc., 710 F.3d 488 (2d Cir. 2013) (policy language can include defects in insured's work as an 'occurrence'; analysis must focus on exclusions)
- George A. Fuller Co. v. U.S. Fidelity & Guar. Co., 613 N.Y.S.2d 152 (N.Y. App. Div.) (repair/replacement of faulty workmanship generally not covered absent injury to other property)
- Nova Cas. Co. v. Central Mut. Ins. Co., 872 N.Y.S.2d 603 (N.Y. App. Div.) (distinguishing contractual economic loss from physical injury to others' property)
- Pavarini Constr. Co. v. Continental Ins. Co., 759 N.Y.S.2d 56 (N.Y. App. Div.) (general contractor status can render entire project insured's work for exclusion purposes)
- Bogardus v. U.S. Fid. & Guar. Co., 58 N.Y.S.2d 217 (N.Y. App. Div.) (insured generally bears burden to apportion covered vs. noncovered damages in mixed verdict)