WDF INC v. HARLEYSVILLE INSURANCE COMPANY OF NEW YORK (2021)

Order, Supreme Court, New York County (Margaret A. Chan, J.), entered October 4, 2019, which, to the extent appeal from as limited by the briefs, denied the motion of plaintiff WDF Inc. (WDF) for summary judgment, and upon a search of the record, dismissed the complaint, unanimously reversed, on the law, with costs, plaintiff's motion granted, and it is declared that defendant Harleysville Insurance Company of New York (Harleysville) has a duty to defend and indemnify WDF in the underlying personal injury action as an additional insured, and that the Harleysville policy is primary to WDF's separate policy.

The dismissal of WDF's indemnification claims against Harleysville's named insured, Vamco Sheet Metal Inc., in the underlying personal injury action did not necessarily determine whether the Harleysville policy covered WDF as an additional insured.  Vamco's contractual indemnification obligation was separate and distinct from Harleysville's duty to defend and indemnify under the additional insured endorsement of its policy (see Lexington Ins. Co. v. Kiska Dev. Group LLC, 182 A.D.3d 462, 463, 122 N.Y.S.3d 590 [1st Dept. 2020];  Singh v. New York City Tr. Auth., 17 A.D.3d 262, 263, 793 N.Y.S.2d 408 [1st Dept. 2005]).

Harleysville had a duty to defend WDF even though the underlying personal injury complaint contained no allegations that Vamco was negligent, because Harleysville had actual knowledge of facts establishing a reasonable possibility of coverage (see City of New York v. Wausau Underwriters Ins. Co., 145 A.D.3d 614, 618, 45 N.Y.S.3d 3 [1st Dept. 2016]).

Where, as here, there has been no determination of negligence in the underlying action, and therefore no adjudication whether the loss falls within the policy, the motion court was required to resolve the issue through further proceedings in this declaratory action (see Servidone Constr. Corp. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 425, 488 N.Y.S.2d 139, 477 N.E.2d 441 [1985]).  Here, WDF submitted evidence that demonstrates that the acts or omissions of Vamco, which directed and controlled the underlying injured plaintiff's work, were a proximate cause of the plaintiff's injuries (see Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d 313, 321–322, 57 N.Y.S.3d 85, 79 N.E.3d 477 [2017]).

Furthermore, the policy issued to Vamco by Harleysville, and including WDF as an additional insured, was primary to WDF's other insurance (see QBE Ins. Corp. v. Public Serv. Mut. Ins. Co., 102 A.D.3d 442, 443, 958 N.Y.S.2d 103 [1st Dept. 2013]).