The New York Court of Appeals construed an additional insured endorsement as applying only to injury proximately caused by the named insured. Burlington Ins. Co. v. NYC Transit Auth., 2017 N.Y. LEXIS 1404 (N.Y. Ct. App. June 6, 2017).
Breaking Solutions, Inc. (BSI) contracted with the New York City Transit Authority (NYCTA) to provide equipment and personnel for BSI's tunnel excavation on a New York City subway construction project. BSI purchased commercial general liability insurance from Burlington with an endorsement that listed NYCTA and New York City as additional insureds. The ISO endorsement provided that NYCTA was an additional insured:
. . . only with respect to liability for 'bodily injury," "property damage" or "personal advertising injury" caused, in whole or in part, by:
- Your acts or omissions; or
- The acts or omissions of those acting on your behalf.
An NYCTA employee fell off an elevated platform as he tried to avoid an explosion after a BSI machine touched a live electrical cable buried in concrete at the excavation site. The employee and his wife sued. NYCTA tendered the defense to Burlington. The defense was accepted subject to a reservation that NYCTA qualified as an additional insured under the policy endorsement.
Discovery in the employee's suit revealed that NYCTA failed to identify, mark, or protect the electric cable, and that it also failed to turn off the cable power. Documents further established that BSI's machine operator could not have known about the location of the cable or the fact that it was electrified. Based on this knowledge, Burlington revoked its defense because BSI was not at fault for the injuries, and, consequently, NYCTA was not an additional insured under the policy.
Burlington commenced this coverage action, disclaiming coverage for NYCTA. The Supreme Court granted Burlington's motion for summary judgment, concluding that NYCTA was not an additional insured because the policy limited liability to instances where BSI, as the named insured, was negligent. The Appellate Division reversed, granting NYCTA's motion for summary judgment, declaring that NYCTA was entitled to coverage as an additional insured.
On appeal, Burlington argued that under the plain meaning of the endorsement, NYCTA was not an additional insured because the acts or omissions of the named insured, BSI, were not the proximate cause of the injury. NYTCA argued that by the express terms, the endorsement applied to any act or omission by BSI that resulted in injury, regardless of the additional insured's negligence. Further, BSI's operation of its excavation machine provided the requisite causal nexus between injury and acted to trigger coverage.
The court found that Burlington had the better argument. NYCTA argued that "caused, in whole or in part" means "but for" causation. If so, all that was necessary for an additional insured to be covered was that the insured's conduct be a causal link to the injury. The court found this was an incorrect interpretation of the policy language, which, by its terms. described proximate causation and legal liability based on the insured's negligence or other actionable deed.
The works "caused, in whole or in part" by BSI required proximate causation since "but for" causation could not be partial. The words "in whole or in part" could only modify "proximate cause."
Here, BSI was not at fault. The employee's injury was due to NYCTA's sole negligence in failing to identify mark, or de-energize the cable.
Accordingly, the judgment and order of the Appellate Division was reversed.