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Westchester Surplus Lines Insurance Co. v. Stonitsch Construction

August 21, 2008

WESTCHESTER SURPLUS LINES INSURANCE COMPANY, PLAINTIFF,
v.
STONITSCH CONSTRUCTION, INC., AND JOHN ACKERET, DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

This is an insurance dispute. Plaintiff and Defendants have filed cross motions for summary judgment seeking declaratory judgment as to the existence or non-existence of a contract for insurance between Plaintiff insurance carrier and Defendant Stonitsch Construction, Inc. ("Stonitsch").

BACKGROUND

I. Relevant Facts

John Ackeret filed a lawsuit in state court against his employer A&D Erectors, Inc. ("A&D"), claiming he was injured on December 6, 2004, while performing work building an aircraft hanger. (R. 68-1, at ¶¶ 4, 8; R. 59-1, Ex. 1A, Ackeret Compl.) In his state court lawsuit, Ackeret seeks to recover both from A&D and from Stonitsch, who had subcontracted the hanger project to A&D. (R. 68-1, at ¶ 4; R. 59-10, p. 1-2; R. 69-1, at ¶ 24.) At the time of Ackeret's alleged injuries, Westchester Surplus Lines Insurance Company ("Westchester") insured A&D, pursuant to a general liability insurance policy between those two parties ("the Westchester Policy" or "the Policy"). (R. 68-1, at ¶ 1.)

No party has questioned, at least in this lawsuit, whether Westchester has a duty to defend A&D.*fn1 Rather, with this lawsuit, the parties have cross-sought judgments declaring that Westchester either does or does not owe Stonitsch a duty to defend against Ackeret's lawsuit.

A. Westchester Policy

Westchester issued a general liability insurance policy to A&D, effective December 1, 2004 through December 1, 2005. (R. 67-1, at ¶ 14.) The Westchester Policy named A&D as the insured, but also contained a provision by which Westchester would insure an additional party named by A&D. (R. 59-10, Westchester Policy, p. 23, FORM B.) Under this provision (referred to as an "endorsement"), the Policy could include as an additional insured any persons or organizations listed in the endorsement who acquire liability in the course of performing work on behalf of A&D. (Id.) The endorsement does not list any persons or organizations by name. Instead, in the place where one would expect such names to be listed, the endorsement states: "As required by contract, provided contract executed prior to loss." (Id.) The crux of the present lawsuit is whether Westchester was "required by contract" to insure Stonitsch as an additional party.

B. Subcontract Agreement

Prior to Mr. Ackeret's injury, on May 20, 2004, Stonistch and A&D had entered into a subcontract agreement for work on a project involving the erecting of aircraft hangers ("the Subcontract Agreement"). (R. 69-1, at ¶ 25; R. 67-1, at ¶ 8.) Under the Subcontract Agreement, the only contract at issue in this litigation between Stonitsch and A&D, Stonitsch (as a general contractor) employed A&D as a subcontractor for the hanger project. (R. 69-1, at ¶ 25; R. 59-10, p. 1-2.) The Agreement, according to its terms, "has important legal and insurance consequences..." (R. 59-10, p. 1.) The Subcontract Agreement also states that "[p]rior to starting Work the Subcontractor shall procure and maintain in force" various types of liability insurance. (Id. at ¶¶ 5.1, 5.2.) Stonitsch admits that the Subcontract Agreement "does not contain a requirement that A&D name Stonitsch as an additional insured on A&D's insurance policy." (R. 68-1, at ¶ 10.) Stonitsch, however, argues that it was the intention of the parties to the Subcontract Agreement to name Stonitsch as an additional insured on the Westchester Policy. (Id.)

C. Certificates

On November 30, 2004, Union Insurance Group, A&D's "up front" insurance company, issued two certificates stating that Stonitsch "is added as additional insured" on a number of insurance policies -- including the Westchester Policy -- for work performed on the aircraft hangers project. (R. 68-1, at ¶ 45; R. 67-1, at ¶¶ 20-21; R. 15-5, 6.) The certificates state that they were "issued as a matter of information only, and confer[] no rights upon the certificate holder." (R. 15-5, 6.) Westchester has no contract or agreement with the Union Insurance Group. (R. 68-1, at ¶ 48.)

LEGAL ...


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