Philadelphia’s Commerce Court Finds Additional Insured Endorsement Not Triggered Where No Allegations The Named Insured Caused The Harm At Issue
In this case, a contractor contractually required that its subcontractor make the contractor and owner additional insureds under the subcontractor’s insurance policy. The policy’s additional insured endorsement conditioned insured status on the requirement that any bodily injury or property damage be caused in whole or in part by the named insured’s acts or omissions, or acts or omissions by some person or entity acting on the named insured’s behalf.
One of the subcontractor’s employees was injured on the job, and sued the owner, contractor and others, though not the subcontractor. [Note: Though not mentioned by the court, it is likely any such claim would be barred by workers’ compensation law. The court did state that it would not speculate why the subcontractor was not named as a defendant.]
The contractor demanded defense and indemnification from the subcontractor’s insurer as an additional insured. The insurer declined on the basis that the underlying personal injury complaint did not allege the injury was caused in whole or in part by the named insured (the subcontractor). The contractor sought a declaratory judgment that the additional insured endorsement did apply, and the insurer should provide a defense. The court disagreed.
The court applied the four corners rule, i.e., that the allegations in the complaint itself be compared to the policy language to determine the potential for covered claims. The court found no suggestion in the complaint, or any other pleading, that the underlying plaintiff’s injuries were caused by the subcontractor’s acts or omissions.
The court stated that, at most, the complaint vaguely alleged that the plaintiff was employed by an unnamed company that may have somehow been responsible for a dangerous condition, but this was not enough to invoke coverage. The complaint never identifies the subcontractor, or alleges anything specific about its conduct.
In arguing its case, the contractor focused on the complaint’s allegation that “defendants … had a duty to protect workers [of the subcontractor] from unreasonably dangerous conditions caused by its conduct and/or failure to act.” The court recognized that this allegation referred to the subcontractor’s conduct causing a danger, however, “palpably missing is any allegation that [the subcontractor] caused any dangerous conditions in the first place.”
The court contrasted two Third Circuit opinions where the complaints had adequately pleaded the identity of the named employer-insured as causing the harm at issue.
Thus, summary judgment was granted in the insurer’s favor that it had no duty to defend or indemnify under the additional insured endorsement.