Certain Underwriters At Lloyds, London v. Travelers Casualty Insurance Company of America

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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CERTAIN UNDERWRITERS AT

LLOYD’S, LONDON, and AG GREEN

INC.,

Plaintiffs, MEMORANDUM AND ORDER

Case No. 21-CV-4125-FB-LB

-against-

TRAVELERS CASUALTY

INSURANCE COMPANY OF

AMERICA,

Defendant.

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Appearances:

For the Plaintiffs: For Defendant:

RYAN P. MAXWELL LISA SZCZEPANSKI

Hurwitz Fine, P.C. Usery & Associates

424 Main Street Post Office Box 2996

Buffalo, New York 14202 Hartford, Connecticut 06104

BLOCK, Senior District Judge:

In this diversity action, Certain Underwriters at Lloyd’s, London (“Lloyd’s”)

and its insured, AG Green Inc. (“AG Green”) seek a declaration that Travelers

Casualty Insurance Company of America (“Travelers”) has a duty to defend AG

Green in a tort action currently pending in state court. Both parties move for

summary judgment pursuant to Federal Rule of Civil Procedure 56. For the

following reasons, Lloyd’s and AG Green’s motion is granted and Travelers’

motion is denied.

I

The following facts are taken from the parties’ Rule 56.1 statements and

supporting documents. They are taken as true for present purposes.

A. The Policy

Roman Posiko is the owner and president of KB Restoration NY Corp. (“KB

Restoration”), which maintained a commercial general liability policy with

Travelers. In that policy, Travelers promised to pay “those sums that the insured

becomes legally obligated to pay as damages because of ‘bodily injury’ or

‘property damage’ to which this insurance applies.” Decl. of Ryan P. Maxwell

(June 3, 2022), Ex. H at 44. In additional, Travelers assumed a “duty to defend the

insured against any ‘suit’ seeking those damages even if the allegations of the

‘suit’ are groundless, false or fraudulent.” Id.

The policy defined “you” to mean the named insured—that is, KB

Restoration. A “Blanket Additional Insured (Contractor Operations)” endorsement

broadened the definition of “insured” to include

any person or organization that you agree in a “written contract

requiring insurance” to include as an additional insured on this

Coverage Part, but:

a) Only with respect to liability for “bodily injury”, “property

damage” or “personal injury”; and

b) If, and only to the extent that, the injury or damage is caused by

acts or omissions of you or your subcontractor in the performance of

“your work” to which the “written contract requiring insurance”

applies. The person or organization does not qualify as an additional

insured with respect to the independent acts or omissions of such

person or organization.

Id., Ex. H at 47. A “written contract requiring insurance” is defined as “that part of

any written contract or agreement under which you are required to include a

person or organization as an additional insured on this Coverage Part,” provided

that the injury and act causing it occurs “a. [a]fter the signing and execution of the

contract or agreement by you; b. [w]hile that part of the contract or agreement is in

effect; and c. [b]efore the end of the policy period.” Id., Ex. H at 48. “Your work”

includes “[w]ork or operations performed by you or on your behalf.” Id. at 34.

B. The Accident

Talmud Torah Ohel Yochanan (“Talmud Torah”) owns and operates a

private school in Borough Park, Brooklyn. At some point prior to September

2015, the school contracted with AG Green to serve as general contractor for a

renovation project. AG Green, in turn, subcontracted with KB Restoration to

perform and supervise stucco work on the project. The only part of the subcontract

reduced to writing was an agreement dated September 1, 2015, regarding

indemnification and insurance. With respect to the latter, the agreement requires

KB Restoration to maintain a commercial general liability policy in specified

amounts, and to name AG Green “as an additional insured on a primary basis” on

that policy. Id., Ex. G at 4. The agreement refers to “construction at the location

of 1327 38,” id., Ex. G at 3, but does not otherwise define the scope of work.

On March 8, 2017, Posiko was at the construction site performing work for

KB Restoration. He fell off a second-story roof at the site and was injured. He

was not wearing a safety harness at the time of the fall.

C. The Underlying Litigation

Posiko filed suit against Talmud Torah and AG Green in New York

Supreme Court, Kings County, on May 5, 2017. He asserted causes of action for

common-law negligence, as well as statutory liability under New York Labor Law

§§ 200, 240, and 241(6). A later bill of particulars specified that Posiko claimed

that the defendants were liable for failing to provide a safety harness and/or

protective railing around the roof.

Posiko did not name KB Restoration as a defendant. After answering the

complaint, however, AG Green filed a third-party complaint seeking

indemnification and/or contribution from KB Restoration. The third-party

complaint alleged that the work performed by Posiko “was under the direct

supervision and control of” KB Restoration and that KB Restoration “was

responsible for [his] safety in the performance of the work.” Id., Ex. E at 7. It

concluded, therefore, that KB Restoration “constituted, caused, or contributed to”

the accident. Id., Ex. E. at 10. AG Green asserted similar third-party claims

against Rainbow Fencing, Inc. (“Rainbow Fencing”), a subcontractor hired to

provide a protective fence on the roof. Posiko later added Rainbow Fencing as a

defendant.

The parties cross-moved for summary judgment on Posiko’s claims under

New York Labor Law §§ 240 and 241(6). On May 18, 2022, the Supreme Court

granted summary judgment to Posiko on his § 240 claims against Talmud Torah

and AG Green, holding that those defendants violated the statute by failing to

provide “an anchor or securement system on the rooftop where [Posiko] was

working in order to secure a safety harness.” Id., Ex. P at 5. By contrast, it denied

summary judgment on the § 240 claim against Rainbow Fencing and on the

§ 241(6) claims against all defendants. It did not address either Posiko’s

negligence claims or AG Green’s third-party claims. Thus, the state-court action

remains pending.

D. The Coverage Dispute

AG Green first tendered the defense to Travelers on July 11, 2017, after

answering Posiko’s complaint but before asserting its third-party complaint against

KB Restoration. Travelers denied coverage on the ground that “this loss did not

arise to due [KB Restoration]’s acts or omissions.” Id., Ex. K at 3.1 The letter

noted that the denial was based on “the information presently available to us” and

invited AG Green to forward “any further information that you feel would be

relevant to our coverage determination.” Id.

AG Green made a second tender on October 30, 2019, more than two years

after Travelers denied coverage. It argued that “[c]overage is triggered simply

[when] an employee of the named insured is injured while performing work under

the named insured’s contract,” id., Ex. L at 2, and cited Posiko’s deposition as

proof “that he was actively performing work under the subject contract

(performing Stucco work) and was actively supervising his employees (as KB’s

owner/supervisor) at the time of the incident.” Id. It further argued that Posiko

“was contributorily negligent as he put his body weight on a metal railing at the

edge of the roof.” Id.

AG Green made a third tender a year later. The third tender repeats the

reasoning of the second but cites additional deposition testimony in support of its

claim of contributory negligence:

1. Plaintiff, KB’s owner and supervisor, chose to work on the roof of the

building without a harness.

2. While on the roof, instead of calling him on his cell phone or walking

1The denial letter actually refers to “AG’s acts or omissions.” Id., Ex. K at

3. All parties agree that the intended reference was to KB Restoration.

downstairs, Plaintiff chose to provide instructions to one of his

employees by walking towards the edge of the roof.

3. The edge of the roof was only partially secured by a fence that appeared

to be very obviously incomplete and under construction.

4. Despite this, Plaintiff leaned on this railing and placed his body weight

on it, causing the railing to fall off and causing Plaintiff to fall to the

ground.

Id., Ex. M at 3.

Travelers did not respond to the second or third tender. On July 22, 2021,

AG Green and Lloyd’s—which has provided AG Green’s defense in state court—

filed the present action.

II

Like all commercial general liability policies, Travelers’ policy with KB

Restoration creates two main duties: (1) a duty to indemnify the insured for sums it

is legally obligated to pay a third party as damages and (2) a duty to provide the

insured a defense in any suit seeking such damages. An additional injured is

entitled to exactly the same coverage as a named insured. See BP Air Conditioning

Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708, 714-15 (2007) (“[T]he well

understood meaning of the term [additional insured] is an entity enjoying the same

protection as the named insured.” (internal quotation marks omitted)).

To qualify as an additional insured, AG Green must establish that KB

Restoration agreed to name it as such in a written contract, that the contract was

executed before the accident and in effect at the time of the accident, that the

accident occurred before the end of the policy period, and that the accident resulted

in bodily injury, property damage, or personal injury. It is undisputed that AG

Green has satisfied those criteria.

Next, AG Green must establish that the injury occurred in the performance

of work by or on behalf of KB Restoration to which the subcontract applied.

Based on Posiko’s deposition testimony, KB Restoration argues that the

subcontract applied to work on the “new building,” while Posiko was injured

working on the “old building.” That testimony is not borne out by the written

subcontract, however, which does not define or limit the scope of work at all.

Finally, AG Green is an additional insured only “if, and only to the extent

that, the injury or damage is caused by acts or omissions of [KB or its]

subcontractor.” Ex. H at 47. This provision forms the crux of the parties’ dispute

and warrants a detailed discussion of the governing law.

A. Legal Background

All agree that New York substantive law governs. The New York Court of

Appeals has held that “caused by” in this context “describes proximate causation

and legal liability based on the insured's negligence or other actionable deed.”

Burlington Ins. Co. v. NYC Transit Auth., 29 N.Y.3d 313, 321 (2017). Thus, the

language “was intended to provide coverage for an additional insured’s vicarious

or contributory negligence, and to prevent coverage for the additional insured’s

sole negligence.” Id. at 326.2

Applying that definition in the context of the duty to indemnify is a

relatively straightforward matter. AG Green would have to establish that KB

Restoration acts or omissions were a legal cause of Posiko’s injury. It would be

entitled to additional injured status “to the extent that” it did so, see id. at 321

(“‘[P]roximate cause’ refers to a ‘legal cause’ to which the Court has assigned

liability.”), and therefore, to at least partial indemnification if Posiko prevails in the

tort action. This is true even if AG Green does not prevail on its indemnification

and contribution claims in that action. See WDF Inc. v. Harleysville Ins. Co. of

N.Y., 146 N.Y.S.3d 128, 129 (1st Dep’t 2021) (explaining that named insured’s

indemnification obligations are “separate and distinct” from insurer’s duty to

defend and indemnify additional insured).

This case, however, involves the duty to defend, which complicates the issue

because it is necessarily broader than the duty to indemnify. Technicon Elecs.

2 Travelers points out that the language in Burlington was “caused, in whole

or in part, by.” Id. at 321. The policy language here is “only to the extent that.”

Ex. H at 47. Thus, the language in Burlington would presumably grant the

additional insured coverage even if the named insured was only partially liable,

while the language here would grant it “only to the extent that” KB Restoration is

liable. That difference, however, does not imply that “caused by” means

something other than proximate cause. See Burlington, 29 N.Y.3d at 325 (citing,

with approval, federal decisions construing “caused by”).

Corp. v. Am. Home Assur. Co., 74 N.Y.2d 66, 73 (1989). Indeed, the duty to

defend is regularly described as “exceedingly broad,” requiring the insurer to

provide a defense if there is even a “reasonable possibility of coverage.” BP, 8

N.Y.3d at 714 (internal quotation marks omitted).

Moreover, the duty to defend precedes the duty to indemnify and, therefore,

does not depend on an underlying judicial determination of liability. “Thus, an

insurer may be required to defend under the contract even though it may not be

required to pay once the litigation has run its course.” Auto. Ins. Co. of Hartford v.

Cook, 7 N.Y.3d 131, 137 (2006). In BP, the New York Court of Appeals held that

the same rule applies to the duty to defend an additional insured, squarely rejecting

the argument that “liability must be determined before an additional insured is

entitled to a defense.” 8 N.Y.3d at 715.

Instead, the duty to defend is assessed based on the allegations of the

complaint in the tort action. “If the complaint contains any facts or allegations

which bring the claim even potentially within the protection purchased, the insurer

is obligated to defend. Technicon, 74 N.Y.2d at 73. The merits of the complaint

are irrelevant; if the allegations suggest coverage, “the insurer must come forward

to defend its insured no matter how groundless, false or baseless the suit may be.”

Ruder & Finn Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 670 (1981). Likewise, if

even one claim is potentially covered, the insurer must defend the entire action; “it

is immaterial that the complaint against the insured asserts additional claims which

fall outside the policy’s general coverage or within its exclusionary provisions.”

Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 444

(2002) (alteration and internal quotation marks omitted).

Although the allegations of the underlying complaint are sufficient to trigger

a duty to defend, they are not the only consideration. Even if the complaint does

not suggest coverage, an insurer must provide a defense “when it has actual

knowledge of facts establishing a reasonable possibility of coverage.” Fitzpatrick

v. Am. Honda Motor Co., 78 N.Y.2d 61, 68 (1991). The reason for the rule is that,

in some circumstances, “inaccuracies in the plaintiff’s pleadings are likely to

become apparent when the true facts are developed on the record and the role of

the insured in the incident is fully exposed.” Id. It is of particular relevance in the

additional insured context because the tort complaint might not mention the named

insured. Indeed, a tort plaintiff who is an employee of the named insured cannot

even bring a claim against the named insured because of the exclusive remedy of

New York’s Workers’ Compensation Law. See N.Y. Workers’ Comp. L. § 11.

In sum, the Court must decide whether the allegations of tort complaint

and/or other facts known to Travelers created a reasonable possibility that the acts

or omissions of KB Restoration were a proximate cause of Posiko’s accident. An

analysis of that issue follows.

B. Application

As an initial matter, the parties dispute what sources of information the

Court should consider. They agree—as they must—that the Court can consider the

allegations of Posiko’s complaint. They also seemingly agree that the Court can

consider the facts adduced during depositions. They dispute, however, the extent

to which the Court should consider the allegations of AG Green’s third-party

complaint against KB Restoration.

The principal New York cases addressing the issue were concisely

summarized by Judge Hurley in Axis Construction Corp. v. Travelers Indemnity

Co. of America, 2021 WL 3912563 (E.D.N.Y. Sept. 1, 2021):

In each [case], an employer’s insurer had to defend an additional

insured in an underlying personal injury action brought by an

employee in which the additional insured’s third-party complaint

alleged the employer created the condition proximately causing the

employee's injury. Where that third-party complaint did not allege the

employer created the condition, however, the employer’s insurer had

no duty to defend the additional insured.

Id. at *7. This dichotomy accords with the general rule that the duty to defend

“depends on the facts which are pleaded, not the conclusory assertions.” Allstate

Ins. Co. v. Mugavero, 79 N.Y.2d 153, 162 (1992).

It also assuages a concern that the cited cases do not address. It makes sense

to consider even the most dubious allegations of the underlying complaint because

“a complaint subject to defeat because of debatable theories must nevertheless be

defended by the insured.” Fitzpatrick, 78 N.Y.2d at 66 (alterations and internal

quotation marks omitted). Moreover, the insured has no control over what the tort

plaintiff will allege. By contrast, a potential additional insured is obviously not

calling upon the insurer to defeat its own third-party complaint and has complete

control over what is alleged in it, as well as an incentive to make allegations that

trigger coverage.

In sum, the Court’s responsibility is to consider anything that can shed light

on the issues that might arise in litigating Posiko’s claims, but not AG Green’s

third-party claims. To that end, the Court will consider the allegations of Posiko’s

complaint and bill of particulars, facts taken from depositions, and the non-

conclusory allegation of the third-party complaint. The Court limits its

consideration to items of which Travelers had actual knowledge.

Those sources of information reveal the following:

 KB Restoration was a subtractor on the construction project.

 Posiko was employed by KB Restoration and “was performing his

work at the construction site” at the time of the accident. Maxwell

Decl., Ex. C at 7.

 KB Restoration was required to “furnish and install material, labor,

equipment, and supervision for all demolition.” Id., Ex. E at 6.

 Posiko’s work was “under the direct supervision and control” of KB

Restoration. Id., Ex. E at 7.

 KB Restoration “was responsible for the safety of their employees in

the performance of the work at the Premises.” Id., Ex. E at 7.

 Posiko worked on the roof without a harness.

 Posiko walked to the edge of the roof to give instructions to another

employee, instead of calling him or walking downstairs.

 Posiko leaned and placed his body weight on an obviously incomplete

railing.

The Court agrees with Travelers that KB Restoration’s status as Posiko’s

employer is, standing alone, insufficient to raise a reasonable possibility of

coverage because it says nothing about whose “acts or omissions” proximately

caused the accident. Compare Pioneer Cent. Sch. Dist. v. Preferred Mut. Ins. Co.,

86 N.Y.S.3d 364, 366 (4th Dep’t 2018) (no duty to defend where plaintiff’s

employer was not responsible for dangerous condition) and Hanover Ins. Co. v.

Phila. Indem. Ins. Co., 73 N.Y.S.3d 549, 550 (1st Dep’t 2018), with All State

Interior Demolition Inc. v. Scottsdale Ins. Co., 92 N.Y.S.3d 256, 257 (1st Dep’t

2019) (duty to defend where tort complaint “implicate[d]” employer’s actions).

That KB Restoration also supervised and controlled Posiko’s work does not change

that conclusion because the right to control and supervise does not equate to active

negligence. See McCarthy v. Turner Constr., Inc., 17 N.Y.3d 369, 378 (2011).

That KB Restoration was allegedly responsible for Posiko’s safety presents a

closer question. See Ohio Sec. Ins. Co v. Travelers Indem. Co. of Conn., 2021 WL

797670, at *5 (S.D.N.Y. Mar. 1, 2021) (noting but rejecting as unsupported

additional insured’s contention that named insured had assumed responsibility for

plaintiff’s safety). The Court need not decide it, however, because it is undisputed

that Posiko was not wearing a harness, chose to communicate with an employee by

walking to the edge of the roof, and leaned against the railing (although the

condition of the railing is a matter of dispute).

Overall, the facts—both alleged and otherwise established—satisfy the

Court that a key issue on Posiko’s tort claim against AG Green is whether, and to

what extent, Posiko is liable for his own injuries.3 His simultaneous role as

employee and owner of KB Restoration somewhat blurs the concepts of

contributory negligence and third-party liability, but the policy applies to acts and

omissions in the performance of work “by [KB Restoration] or on [its] behalf.”

Ex. H at 34. Whether Posiko’s work is viewed as that of an employee or that of a

supervisor, he was clearly performing his tasks on behalf of KB Restoration.

Thus, AG Green is entitled to a defense as an additional insured under KB

Restoration’s policy with Travelers. AG Green and Lloyd’s further argue that

3 Contributory negligence is not a defense to a § 240(1) claim, but the

plaintiff’s conduct is relevant to an assessment of proximate cause. Blake v.

Neighborhood Housing Servs. of N.Y.C., Inc., 1 N.Y.3d 280, 287 (2003). In any

event, it is a defense to Posiko’s other claims. See id. (citing N.Y.C.P.L.R.

§ 1411). As noted, potential coverage for one claim means that the insurer must

defend the entire action. See Town of Massena, 98 N.Y.2d at 444.

Travelers owes that duty to defend on a primary basis. KB Restorations offers no

response to that argument, which is, in any event, clearly borne out by the policy

language.

III

For the foregoing reasons, Lloyd’s and AG Green’s motion for summary

judgment is granted and Travelers’ motion is denied. Lloyd’s and AG Green shall,

within ten days of this Memorandum and Order, submit an appropriate declaratory

judgment for the Court’s signature.

SO ORDERED.

_/S/ Frederic Block___________

FREDERIC BLOCK

Senior United States District Judge

Brooklyn, New York

March 27, 2023