Steven Plitt, Expert Witness Steven Plitt, Expert Witness
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CALIFORNIA COURT FINDS THAT SPECULATION UPON HOW AN EMPLOYEE WAS INJURED DID NOT GIVE RISE TO A POTENTIAL FOR COVERAGE AS AN ADDITIONAL INSURED

The issue of whether a general contractor qualified as an additional insured under a sub contactor excess policy for a work related injury turned on whether there was evidence that the sub-contractor caused the claimants injuries according to the recent case of Advent Inc. v. National Union Fire Insurance Co. 6Cal AP 5th 443, 2016 WL7100489(6th Dist., December 6th 2016)

In Advent, the insurance company, National Union, issued both primary and excess liability insurance to Johnson Western Gunite, a subcontractor on the Aspen family village construction project in California. Topa Insurance Company (Topa) issued an excess policy to the project general contractor, Advent. A subcontractor employee, Jerry Kielty, was injured when he fell down an unguarded stairway shaft on the project sight. At the time of the fall, Kielty was retrieving a piece of plywood at the request of the sub-contractors' foreman. Kielty did not need to enter the building where the unguarded stairway shaft was in order to retrieve the plywood. No one knew why Kielty enter the building and Kielty could not remember, himself, how he was injured.

In the ensuing personal injury action Kielty sued the general contractor but did not name the subcontractor as a defendant. Kielty also sued the project owner. Both the owner and the GC cross claimed against the sub-contractor. Topa and National Union defended the GC, paying a portion of defense costs under the primary policy. The case was settled against the GC for 10 million dollars with Topa paying the full amount of its 5 million dollar excess policy and National Union paying 1 million dollars under the primary. Topa then brought an equitable contribution action against National Union for Topa's 5 Million dollar contribution to the settlement.

In the contribution action the trial court granted summary judgement in favor of National Union which was affirmed on appeal. The appellate court in Advent found that National Union's primary policy provided additional insurance coverage only in liability situations that were caused in whole or in part by the sub-contractor's acts or missions in the performance of the subcontractor's ongoing operations for additional insureds on the project. Because of this, even if the GC had additional insured status, the coverage that was afforded under the primary policy was limited to liability that the general contractor incurred because the subcontractor or someone (including Kielty) acting on behalf of the subcontractor acted negligently.

Under the facts of the case National Union established that neither the subcontractor nor someone acting on the subcontractor's behalf had caused Kielty injuries. Notwithstanding the fact that the subcontractor's foreman had directed Kielty to retrieve the plywood, the path to the plywood and back was entirely outside any of the buildings. Additionally, the subcontractor was not conducting work on the exterior of the building where Kielty fell. Thus, the mere fact the accident occurred at the job sight after the subcontractor's foreman had directed Kielty to retrieve the plywood, did not give rise to triable issues regarding the cause of the accident.

Topa argued that the general contractor's and project owner's cross complaint against the subcontractor in the main Kielty action wherein it was alleged that the subcontract was negligent, created a triable issue regarding the subcontractor's culpability. According, to the Advent Court the only action for which indemnity and coverage was sought was the Kielty lawsuit against the general contractor which was an action that did not seek recovery from the subcontractor or otherwise seek to assign fault to the subcontractor. Thus, the court refused to allow the general contractor to manufacture coverage by accusing the subcontractor of negligence. Speculation on how the employee was injured did not give rise to a potential for coverage.

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