MAIN STREET AMERICA ASSURANCE COMPANY XL LLC v. MERCHANTS MUTUAL INSURANCE COMPANY (2022)

MEMORANDUM AND ORDER

It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by granting judgment in favor of plaintiffs as follows:

It is ADJUDGED and DECLARED that defendant Merchants Mutual Insurance Company is obligated to provide a defense to plaintiff Phillip J. Geiger d/b/a XL Construction Services, LLC, in the underlying action,

and as modified the judgment is affirmed without costs.

Memorandum: Plaintiff Main Street America Assurance Company and its insured, plaintiff Phillip J. Geiger d/b/a XL Construction Services, LLC (XL Construction), commenced this action seeking, inter alia, a declaration that defendant Merchants Mutual Insurance Company (defendant) is obligated to provide a defense and indemnification for XL Construction, as an additional insured, in an underlying personal injury action. Defendant appeals from a judgment that granted plaintiffs’ motion for partial summary judgment seeking a declaration that defendant has a duty to defend XL Construction in the underlying action.

Defendant Timothy J. O'Connor (O'Connor) commenced the underlying action against, inter alia, XL Construction pursuant to Labor Law §§ 200, 240 (1), and 241 (6), seeking damages for injuries he sustained during the course of his work as a self-employed drywall finishing subcontractor on a construction project. XL Construction had subcontracted that drywall work to O'Connor and, as part of a written indemnification and insurance agreement between those two parties, O'Connor was obligated to obtain insurance for the benefit of XL Construction. O'Connor was insured by defendant under a policy containing an additional insureds endorsement that, as relevant here, provided coverage to a party where required by a written agreement, but “only with respect to liability for ‘bodily injury’ ․ caused, in whole or in part, by ․ [O'Connor's] acts or omissions.”

Contrary to defendant's contention, Supreme Court properly granted the motion. “[T]he duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest ․ a reasonable possibility of coverage” (Automobile Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131, 137, 818 N.Y.S.2d 176, 850 N.E.2d 1152 [2006] [internal quotation marks omitted]). Defendant is correct that the endorsement language utilized here only “applies to injury proximately caused by the named insured” (Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d 313, 317, 57 N.Y.S.3d 85, 79 N.E.3d 477 [2017]). Nonetheless, there may be more than one proximate cause of an injury (see Leon-Rodriguez v. Roman Catholic Church of Sts. Cyril & Methodius, 192 A.D.3d 883, 885, 144 N.Y.S.3d 709 [2d Dept. 2021]; see generally Farnham v. MIC Wholesale Ltd., 176 A.D.3d 1605, 1607, 110 N.Y.S.3d 175 [4th Dept. 2019]) and here the complaint in the underlying action, submitted in support of the motion, suggests a reasonable possibility that O'Connor's own negligence was a proximate cause of his injuries (see Regal Constr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34, 37, 904 N.Y.S.2d 338, 930 N.E.2d 259 [2010]; Automobile Ins. Co. of Hartford, 7 N.Y.3d at 137, 818 N.Y.S.2d 176, 850 N.E.2d 1152). We conclude that “[t]he fact that the ․ complaint in the underlying action alleged [Labor Law violations] on the part of [XL Construction], and not [negligence by O'Connor himself], is of no consequence inasmuch as the allegations in the ․ complaint ‘[brought] the claim potentially within the protection purchased’ and triggered [defendant's] duty to defend [XL Construction] as an additional insured” (ZRAJ Olean, LLC v. Erie Ins. Co. of N.Y., 134 A.D.3d 1557, 1561, 22 N.Y.S.3d 779 [4th Dept. 2015], lv denied 29 N.Y.3d 915, 2017 WL 2802507 [2017]; see Regal Constr. Corp., 15 N.Y.3d at 37, 904 N.Y.S.2d 338, 930 N.E.2d 259).

Defendant further contends that its duty to defend was not triggered because “it may be concluded, as a matter of law, that there is no possible factual or legal basis upon which [it] might eventually be held to be obligated to indemnify [XL Construction] under any provision of the insurance policy” (Bruckner Realty, LLC v. County Oil Co., Inc., 40 A.D.3d 898, 900, 838 N.Y.S.2d 87 [2d Dept. 2007]; see Dumblewski v. ITT Hartford Ins. Group, 213 A.D.2d 823, 824, 623 N.Y.S.2d 374 [3d Dept. 1995]). Defendant raised that contention for the first time on appeal in its reply brief, and thus that argument is not properly before us (see Ford v. Annucci, 189 A.D.3d 2070, 2071, 134 N.Y.S.3d 853 [4th Dept. 2020]). In any event, it is without merit. Here, XL Construction “might eventually be held” (Bruckner, 40 A.D.3d at 900, 838 N.Y.S.2d 87) partially or wholly liable for O'Connor's bodily injuries if they were proximately caused in part by O'Connor's acts or omissions (see generally St. Louis v. Town of N. Elba, 16 N.Y.3d 411, 414, 923 N.Y.S.2d 391, 947 N.E.2d 1169 [2011]; Blake v. Neighborhood Hous. Servs. of N.Y. City, Inc., 1 N.Y.3d 280, 289-290, 771 N.Y.S.2d 484, 803 N.E.2d 757 [2003]; Siragusa v. State of New York, 117 A.D.2d 986, 986-987, 499 N.Y.S.2d 533 [4th Dept. 1986], lv denied 68 N.Y.2d 602, 505 N.Y.S.2d 1026, 496 N.E.2d 239 [1986]).

Although the court properly granted the motion, it failed to declare the rights of the parties in connection with the duty to defend (see Marine Buffalo Assoc. v. Town of Amherst Indus. Dev. Agency, 5 A.D.3d 1014, 1015, 773 N.Y.S.2d 667 [4th Dept. 2004]). We therefore modify the judgment accordingly. In light of our determination, the parties’ remaining contentions are academic.