The extent of coverage for a General Contractor as an additional insured was the issue in Kummer Enter., Inc. v. Valley Forge Ins. Co., 2011 U.S.Dist. LEXIS 17726 (W.D. Mich. Feb. 23, 2011).
The General Contractor contracted to build an addition to a medical center. One subcontractor, Total Foundations LLC., was required to drill three-foot diameter caisson holes, fill the holes with concrete to within two to three feet below the surface, and install rebar in each hole. Total also agreed to indemnify, defend, and save the General Contractor harmless from any loss resulting from Total's negligence or intentional acts. Finally, Total was required to obtain a CGL policy naming the General Contractor as an additional insured. Total secured a policy from Cincinnati.
An employee of another subcontractor was injured when he stepped into one of Total's caisson holes. He sued the General Contractor, Total and others in state court. The General Contractor filed a third-party claim for indemnification against Total. The state court dismissed Total as a direct defendant because Total did not owe a duty to the underlying plaintiff.
The General Contractor tendered its defense to Cincinnati, but Cincinnati rejected the tender. The General Contractor then sought a declaration from the federal district court that it was an additional insured under the policy. Cincinnati did not dispute that the General Contractor was an additional insured. Nevertheless, Cincinnati argued that the General Contractor was barred under the "sole negligence" exclusion which barred coverage for damages arising out of the sole negligence of the additional insured. Cincinnati argued that the state court determined that the other defendants in the underlying suit were not liable to plaintiff. Thus, the General Contractor had to be solely negligent, thereby barring coverage under both the policy and the subcontract.
The district court disagreed. Simply because Total had no duty to the underlying plaintiff did not mean that Total was not negligent or that its negligence did not contribute to the plaintiff's injury. There was a possibility that the jury could find any number of parities, including Total, to be at fault.
Consequently, the court granted the General Contractor's motion for summary judgment, declaring that it was an additional insured and that Cincinnati had breached its duty to defend. Cincinnati's motion to conduct further discovery under Rule 56 (f) was denied because the duty to defend was determined solely on the allegations in the underlying complaint. Thus, nothing beyond the underlying complaint was necessary to invoke the duty to defend.
