Whether an oral agreement to name a subcontractor as an additional insured under the policy provided coverage to the subcontractor was the issue in Palmer v. Martinez, 2010 La. App. LEXIS 1049 (La. Ct. App. July 21, 2010).
The plaintiff was employed by A.T. Martinez ("ATM") as a logging truck driver. ATM contracted with KLM Logging to cut and load timber on its truck. KLM was a logging operation owned by Kevin Martinez. His parents, A.T. and Nanette Martinez, owned ATM.
The plaintiff was injured while standing near the logging truck as it was being loaded. He collected worker's compensation benefits from ATM. ATM also held a CGL policy with Royal.
The plaintiff sued Kevin Martinez and KLM, alleging that Royal's policy covered KLM as an "uninsured contractor." Royal denied coverage to KLM based on an endorsement for additional insureds. The endorsement provided coverage for:
Any person or organization you are required by a written contract, agreement or permit to name as an insured but only with respect to liability arising out of . . . "Your work" performed for that insured . . . .
There was no written document requiring ATM to name KLM as an insured for the timber cutting and loading operations. Nevertheless, both ATM and KLM alleged they had a blanket oral agreement that ATM's liability insurance would insure KLM.
The trial court granted the plaintiff's motion for summary judgment, determining that ATM had an agreement with KLM to provide coverage for the latter as an uninsured subcontractor. In other words, the trial court reformed the contract to provide coverage.
The Louisiana Court of Appeal reversed. The court focused on whether the phrase, "you are required by a written contract, agreement or permit to name as an insured," required some form of a writing or whether the phrase contemplated an oral "agreement" as well. The plaintiff and KLM contended three alternatives were provided for by the provision: (1) written contract; (2) agreement (oral or written); or (3) permit.
The Court of Appeal disagreed. The additional insured provision required a written contract, written agreement, or written permit that called for ATM to name KLM as an additional insured under the Royal policy. There was no written document that met this requirement. The trial court erred in reforming the policy where there was no evidence that ATM and Royal intended that uninsured subcontractors be added as additional insureds absent a written agreement.
