McMANN v. MACK CONSTRUCTION CO INC (2004)

Plaintiffs commenced this action seeking damages for injuries sustained by plaintiff John McMann, an employee of third-party defendant Pagan Construction, Inc. (Pagan), at a construction site.   Defendant A.R. Mack Construction Co., Inc. (Mack), the general contractor, commenced a third-party action against subcontractor Apple Roofing (Apple) and Pagan, Apple's subcontractor.   In its answer to the third-party complaint, Pagan interposed a cross claim against Apple in the event Pagan is determined to be liable to plaintiffs.

 Supreme Court properly granted the motion of Mack and defendant Church of the Holy Family for leave to amend the third-party complaint by, inter alia, “dropp[ing]” Apple as a party and to dismiss the cross claim of Pagan against Apple.   Apple is an “additional insured” under Pagan's policy of insurance, and Pagan's maintenance of a cross claim against Apple is violative of the antisubrogation rule, under which “[a]n insurer ․ has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered” (North Star Reins. Corp. v. Continental Ins. Co., 82 N.Y.2d 281, 294, 604 N.Y.S.2d 510, 624 N.E.2d 647;  see Pennsylvania Gen. Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465, 468, 510 N.Y.S.2d 67, 502 N.E.2d 982). Pagan contends that an exclusion in its policy for bodily injury to an employee extends to an employee of an additional insured such as Apple and that the antisubrogation rule thus does not apply (see Franklin v. Stillwater Hydro Partners, 255 A.D.2d 998, 998-999, 679 N.Y.S.2d 494).   However, Pagan's policy expressly states that “[t]his [bodily injury to an employee] exclusion does not apply to liability assumed by the insured under an ‘insured contract.’ ” The antisubrogation rule therefore applies, so as to “prevent the insurer from passing the incidence of loss to its own insured and to guard against the potential for conflict of interest that may affect the insurer's incentive to provide a vigorous defense for its insured” (North Star Reins. Corp., 82 N.Y.2d at 294, 604 N.Y.S.2d 510, 624 N.E.2d 647).

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously affirmed without costs.

MEMORANDUM: