Opinion
C.A. No. 09C-04-147 FSS.
Submitted: December 6, 2010.
Decided: April 14, 2011.
Upon Plaintiff's Motion for Judgment on the Pleadings as to Declaratory Judgment — GRANTED.
MEMORANDUM OPINION AND ORDER
This dispute is about which of two insurers must defend a general contractor from a claim precipitated by one of two subcontractors' negligence. First, Archer, one of the subs, bought insurance from Crum Forster covering Benchmark, the general. Later, Rodriguez, the negligent sub, promised Archer he would defend and indemnify Archer and the "General Contractor." So, Rodriguez bought insurance from Ohio Casualty covering claims caused by his workers' negligence. Ohio added an endorsement contemplating coverage for parties Rodriguez promised to defend, such as Benchmark. Here, Crum Forster and Ohio each says the other is primary.
When Rodriguez's alleged negligence injured a worker, Victor Lopez, he sued Benchmark, Archer, and Rodriguez. That triggered disputes ostensibly between Archer and Ohio, and Archer and Benchmark. Ohio agreed to defend the subs but refused Archer's, i.e. Crum Forster's, demand that Ohio defend Benchmark, because, according to Ohio, "Rodriguez did not have any contractual relationship with Benchmark."
I.
More specificall y, Benchmark, Archer, and Rodriguez worked a job site. Benchmark contracted with Archer to provide roofing materials. Archer contracted with Rodriguez to install the roof. On a windy day, Rodriguez's workers allegedly left a roll of roofing felt paper unattended on a rooftop. The paper rolled off and fell on Lopez's head. Lopez, who worked for yet another subcontractor, sued Benchmark, Archer, and Rodriguez. As mentioned, Ohio refused to defend Benchmark because there was no privity between Benchmark and Rodriguez.
Before the felt hit Lopez, the subs — Archer and its sub, Rodriguez — had both promised to defend and indemnify Benchmark and buy insurance covering Benchmark for their negligence. So, when Benchmark hired Archer, Archer promised to buy insurance naming Benchmark as an insured, which it did from Crum Forster. The Crum Forster policy referred to Benchmark as an additional named insured. Then, Archer hired Rodriguez and Archer required that Rodriguez buy insurance covering Archer and Benchmark. So, Rodriguez bought an insurance policy from Ohio, including a "blanket additional insured" endorsement "to include as an insured any person or organization whom you are required to name as an additional insured on this policy in a written contract or written agreement." Again, significantly, when Rodriguez bought the Ohio coverage, he did so because he was required by his written contract with Archer to buy coverage naming Archer and Benchmark.
Before moving on, the following bears highlighting. First, the blanket additional insured endorsement Ohio added to Rodriguez's policy does not identify Benchmark as a named insured, but it nonetheless contemplates coverage to a party in Benchmark's position, even if Ohio was unaware of that party by name. The reason Rodriguez bought insurance after he was hired was because he was contractually obligated to buy upstream protection for the parties who were likely to be sued due to Rodriguez's negligence, and that clearly includes Rodriguez's general contractor. Second, it was Rodriguez's workers whose alleged negligence primarily caused Lopez's injury, which led to the secondary claims against Archer and Benchmark. The blanket endorsement shows that Ohio broadly anticipated this sort of situation when it sold this insurance to a sub-contractor about to start a job.
II.
Now, Archer moves for judgment on the pleadings against Ohio, Benchmark, and Rodriguez. The main dispute is between Archer and Ohio, over Ohio's duty to defend Benchmark. Archer wants a judgment that Ohio must "defend and provide insurance coverage for Archer (and any party that Archer must indemnify and defend) with regard to . . . the underlying litigation" and indemnity "for all amounts paid in connection with its defense." According to Ohio, "[t]his is a legally flawed position[,] because [Rodriguez and Ohio] and Benchmark are not in privity of contract."As mentioned, Benchmark moved for summary judgment arguing "Archer and Crum Forster's failure to provide primary coverage is a breach of the contract between Archer and Benchmark." That motion raises a question over which carrier is primary. In light of Ohio's duty to defend Benchmark, the answer is Ohio because its client's alleged negligence caused the injury.
A motion for judgment on the pleadings is similar to a motion to dismiss: "it admits, for purpose of the motion, the allegations of the opposing party's pleadings but contends that they are insufficient at law." The court may grant the motion when it presents a question of law, but not when it presents a material issue of fact. Here, there are no issues of material fact, and Ohio's pleadings, even if accepted as true, are insufficient.
Fagnani v. Integrity Fin. Corp., 167 A.2d 67, 76 (Del. Super. 1960); see also Super. Ct. Civ. R. 12(c).
Id.
III. A.
Benchmark is covered by the Ohio policy because, as discussed, the blanket additional insured endorsement contemplated coverage of a party in Benchmark's position. Insurance policies, like contracts, are read in their entirety to give effect to the parties' intentions. The court gives clear and unambiguous language its plain and ordinary meaning. A contract is unambiguous when "the court can determine the meaning of a contract `without any other guide than a knowledge of the simple facts on which, from the nature of the language in its meaning depends.'"
E.I. DuPont de Nemours and Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985).
Rhone-Poulenc Basic Co. v. Am. Motorist Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).
Id. citing Holland v. Hannan, 456 A.2d 807, 815 (D.C. 1983).
Ohio's focus on the lack of privity between Benchmark and Rodriguez largely ignores the blanket endorsement it added to Ro driguez's policy. Privity is less important than Ohio's promise under the endorsement to "to include as an insured any person or organization whom you are required to name as an additional insured on this policy in a written contract or written agreement." At the least, that suggests Benchmark is a third-party beneficiary of the Ohio/Rodriguez insurance contract.
Blair v. Anderson, 325 A.2d 94 (Del. 1974).
If the blanket additional insured endorsement were the only clause at issue, there would be nothing left for Ohio but to defend Benchmark. But, as discussed below, both Ohio and Crum Forster included language in their policies purporting to convert them to excess coverage if other primary insurance became available. That conundrum frames Benchmark's dispute with Archer, discussed next.
B.
Ohio does not argue that if its policy covers Benchmark as an additional insured, which the court has decided that it does, then its policy, nevertheless, is excess to Crum Forster's. Ohio seems to tacitly concede that if it covers Benchmark, which it does, its coverage for Benchmark is primary. Benchmark, not Ohio, originally took the position that Archer's carrier, Crum Forster had to respond first.
Now, it seems that to Benchmark, it no longer matters which policy is primary, so long as Benchmark is covered. Thus, because Benchmark is a named insured under the Crum Forster policy, Benchmark's initially turning to Crum Forster merely reflected the path of least resistence for Benchmark. Having decided that Benchmark is covered by Ohio, the court sees no lingering controversy between Archer and Crum Forster.
To be safe, however, the court observes that when Archer bought the Crum Forster policy, there was no sub below Archer and no other coverage was available for Crum Forster to turn to. When Rodriguez was brought in by Archer, Rodriguez bought the Ohio policy, which referred to itself as primary, even if it allowed for the possibility, as Crum Forster's policy also did, that another sub might come along and buy insurance that would convert the Ohio policy to excess coverage, just as Rodriguez's buying the Ohio policy did for Crum Forster. And, along the same line, as discussed above, it was Rodriguez's alleged negligence that primarily precipitated the claim against Benchmark. Accordingly, based on when the respective policies were purchased and the source of the damage claim, Ohio must provide primary coverage to Benchmark.