SACS Appellate Group Prevails On Declaratory Judgment Coverage Appeal in First Department Involving Dispute Over Application Of Burlington Decision 

In a decision handed down yesterday, Breeze Natl., Inc., v. Century Sur. Co., __ A.D.3d __, 2019 NY Slip Op 02290 (1st Dep’t 2019), the Appellate Division, First Department unanimously affirmed a declaratory judgment decision dated March 29, 2018 by the Supreme Court (Silver, J.), which denied Century’s cross-motion for summary judgment and granted our client Breeze’s motion for a declaration that Century is obligated to provide coverage to Breeze in the underlying action pursuant to an additional insured endorsement contained in the Century policy.

Specifically, the First Department affirmed that Justice Silver had correctly reasoned that Century’s named insured ACT’s work proximately caused the personal injury plaintiff (Mr. Jozef Wilk’s) fall and wrongful death: “[t]he act of window removal, combined with the failure to guard the windows, was sufficient to establish proximate causation.”  With proximate cause established, Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d 313 (2017) was of no moment, regardless of whether ACT was actually negligent, because Burlington does not impose a negligence trigger, but a causal trigger.  This was the express position we had advocated for in our brief.

The Court also noted that the record evidence indicated an issue of fact as to whether Breeze was solely responsible for the accident, and therefore, it was premature to determine whether Century must ultimately indemnify Breeze. This was a point we had touched upon in our respondent's brief, namely, that indemnification could not yet be determined.  The issue will ultimately be moot if ACT is precluded from maintaining a lawsuit against Breeze on the basis of the antisubrogation rule (which seems fairly certain), because Breeze, not being out-of-pocket, will have no losses to indemnify. All in all, this ultimately means that our client, Breeze, will face no exposure for this loss.

This decision continues the trend we had identified of the First Department applying Burlington in a limited manner.  Century’s maximalist reading was that, under Burlington, the an additional insured endorsement that applies to losses “arising from” the work of the named insured no longer provides coverage when the named insured claims that the additional insured’s negligence was a cause of the loss.  The First Department has here re-affirmed the stance it took in Indian Harbor Ins. Co. v. Alma Tower, LLC, 165 A.D.3d 549 (1st Dep’t 2018), which is that the duty to defend arises under such an endorsement if there is even an issue of fact as to whether the loss will ultimately be covered under the policy.

Kudos to new partner John Watkins, who principally drafted and argued, along with assistance from Tim and Gerard Rath.

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