Recent New York Court of Appeals' Insurance Coverage Decision

The New York Court of Appeals decided Worth Contr. Co. v. Admiral Ins. Co. last week.  The issue on appeal addresses the interpretation of an additional insured endorsement, stating:

The additional insured endorsement of the Farm Family/Pacific policy provides in relevant part as follows: "WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you." Under paragraph 21 of the policy, the term "Your work" is defined to mean "(a) Work or operations performed by you or on your behalf; and (b) Materials, parts or equipment furnished in connection with such work or operations."

The plaintiff Worth Construction was general contractor on a construction site in White Plains.  Defendant Farm Family insured subcontractor Pacific Steel, hired by Worth to build a staircase.  Farm Family's insurance policy contains the already referenced additional insured endorsement covering Worth for liability arising out of its insured's operations at the White Plains project.

An injured worker, who was employed by a sub-subcontractor brought an underlying action against Worth in Westchester County for injuries allegedly sustained when he slipped on the stairs built by Pacific. At the time of the accident, Pacific had finished installing the metal pans on the stairs and was not scheduled to come back to the site to put up handrails until other trades had filled in the metal pans with concrete.  In the underlying Westchester action, Worth formally admitted that no negligence on Pacific's part contributed to the accident, resulting in Pacific's dismissal from the underlying action.

The Court of appeals reversed the Appellate Division's Order and reinstated the order of Supreme Court granting summary judgment to Farm Family.  Notably, the Court stated:

The allegation in the complaint that the stairway was negligently constructed was the only basis for asserting any significant connection between Pacific's work and
the accident. Once Worth admitted that its claims of negligence against Pacific were without factual merit, it conceded that the staircase was merely the situs of the accident. Therefore, it could no longer be argued that there was any connection between Murphy's accident and the risk for which coverage was intended.