General Contractor Named Additional Insured and Not "Solely Negligent" Entitled to Defense and Indemnity
In A-1 Roofing Co. v. Navigators Ins. Co., the First District reversed the trial court’s entry of summary judgment on behalf of the defendant insurer in a declaratory judgment action in which A-1 sought a finding that the insurer owed a duty to defend and indemnify it in an underlying wrongful death suit.
A-1 was the general contractor for a roof resurfacing job at a high school. Jack Frost Iron Works Inc. ("Frost") was one of A-1's subcontractors. Frost had a CGL policy with Navigators Insurance Company under which A-1 was an additional insured. An employee of Frost's subcontractor Midwest Sheet Metal Inc. was killed at the job site when a boom-lift he was operating flipped over. The boom-lift had been leased by another Frost subcontractor, Bakes Steel Erectors, Inc. (BSE). The deceased's estate filed suit against A-1, BSE and two other defendants.
A-1 then filed a declaratory judgment action against Navigators, seeking a judgment that the insurer had a duty to defend and indemnify A-1. The trial court found Navigators had no duty to defend or indemnify A-1 because the underlying complaint did not state a cause of action against the insured, Frost.
On appeal, the court noted that the policy stated that an additional insured was covered "with respect to liability arising out of 'your work' for that insured by or for you." "Your work" was defined as "work or operations performed by you or on your behalf." The underlying complaint alleged the decedent's death occurred while BSE was performing its work on Frost's behalf, in furtherance of work Frost was contractually obligated to perform for A-1. A-1's liability in the underlying suit arose out of work performed for A-1 on behalf of Frost by BSE. Therefore, the court found that the claim against A-1 was within the scope of the additional insured endorsement.
Next, the court considered whether the policy's "sole negligence clause" negated Navigator's obligation to provide coverage to A-1. The sole negligence provision stated coverage did not apply "to any claim arising out of the sole negligence of any additional insured or any of their agents/employees." Finding that the underlying complaint did not allege that the decedent's injuries arose solely from A-1's negligence, but rather negligence on the part of BSE and two other parties as well, the sole negligence exclusion was not triggered to negate coverage as to A-1.
This case represents another example of the variety of coverage issues which arise out of multi party construction projects and the distribution of risk between the participants and their insurers. It emphasizes the importance to not only review the contracts for indemnity, insurance and other risk allocation provisions but also the importance of reviewing not only contracts, but any applicable insurance policies when involved in construction projects.