The Third Circuit reversed the district court and held that the additional insured was covered for injury to the subcontractor's employee despite an employee's exclusion in the policy. ArcelorMittal Plate, LLC v. Joule Technical Serv, Inc., 2014 U.S. App. LEXIS 2905 (3d Cir. Feb. 18, 2014).
ArcelorMittal Plate, LLC (AMP) owned a steel production facility. AMP contracted with Joule, an industrial staffing and engineering firm, for regular performance of maintenance and repair work at its plant. Joule was obligated to provide a CGL policy adding AMP as an additional insured "for all claims including, but not limited to, claims by Joule's employees."
Joule added AMP as an additional insured to its policy with Liberty Surplus Ins. Corp. The policy had an "employee exclusion" which stated,
This insurance does not apply to bodily injury to (1) an employee of the insured arising out of and in the course of (a) employment by the insured or (b) performing duties related to the conduct of the insured's business.
The policy also contained a severability clause, stating that,
This insurance applies: a. As if each Named Insured were the only named Insured; and b. Separately to each insured against whom claim is made or suit is brought.
In January 2008, several Joule employees were performing maintenance at the plant. While climbing down a ladder, William Green fell and seriously injured himself. Green and his wife later sued AMP. AMP sent a demand to Joule for defense and indemnification. Joule notified Liberty, who denied the claim.
AMP then sued Liberty. The district court awarded summary judgment to Liberty and against AMP.
AMP appealed, arguing that the employee's exclusion did not bar coverage for a lawsuit brought by employees of a different insured on the same policy. In contrast, Liberty argued the employee exclusion barred coverage under the circumstances here.
The Third Circuit determined New Jersey law applied and found there was coverage despite the exclusion. The reference in the employee exclusion was to "the insured" - not to "an insured" or "any insured." This was a specific, exclusive reference to a particular insured, rather than a general, inclusive reference to all insureds. Further, the severability clause meant that the reference to "the insured" in the employee exclusion referred to the insured making the claim, i.e., AMP, and only to AMP. Thus, the exclusions served to preclude coverage for a claim against AMP by one of its own employees, but not by a Joule employee.