Wright-Ryan was hired as the general contractor to construct a building at the University of Southern Maine. Wright-Ryan Constr., Inc. v. AIG Ins. Co. of Canada, 2011 U.S. App. LEXIS 15502 (1st Cir. July 27, 2010). Wright-Ryan subcontracted with Norgate Metal, Inc. for the fabrication and erection of structural steel for the project. Norgate obtained a CGL policy from AIG which named Wright-Ryan as an additional insured.
An employee of a company hired by Norgate was seriously injured at the construction site. The employee sued Wright-Ryan and Norgate for negligence. Wright-Ryan tendered the suit to AIG. When AIG failed to respond, Wright-Ryan's insurer, Acadia, agreed to defend. The underlying case eventually settle for $150,000.
Wright-Ryan and Acadia sued AIG for a declaratory judgment. The parties each moved for summary judgment. A magistrate judge decided the AIG policy was excess to the Acadia policy and granted AIG's motion for summary judgment.
The First Circuit reversed. The court focused on the nearly identical "other insurance" provisions in both policies. Each policy said it was excess over "any other primary insurance available to you . . . ." Such provisions were a standard element of liability insurance policies, intended to govern the relationship between and obligations of insurers whose policies provide overlapping coverage for the same loss. Here, Wright-Ryan had coverage for the underlying claim under both the AIG and Acadia policies.
The meaning of "you" in each policy was critical. Wright-Ryan and Acadia argued that "you" meant only the "Named Insured" identified in each policy. Read in this manner, the Acadia policy would be excess to AIG's, and the AIG policy would be primary. AIG, on the other hand, argued "you" equated with the Named Insured as well as any Additional Insureds added to the respective policies.
Reviewing various provisions in the policies, the court determined that the definition of "you" was unambiguous. It referred solely to a person or organization listed as a Named Insured in the policy Declarations.
Accordingly, "you" meant solely Norgate in the AIG policy and Wright-Ryan in the Acadia policy. The Acadia policy could thus be read as follows: "This insurance is excess over . . . any other primary insurance available to [Wright-Ryan] . . . ." The AIG policy could be read as, "This insurance is excess over . . . any other primary insurance available to [Norgate] . . . ." The AIG provision had no application because Norgate was not an additional insured on the Acadia policy. Reading the two policies together, the AIG policy was treated as primary and the Acadia policy as excess.
