The Court of Appeals’ April-May Session continues in Westchester County on Wednesday, April 26th with two cases on the argument docket today (the Court of Appeals’ case summaries can be found here). The Court will address the following issues: (1) whether additional insureds are covered for losses stemming from a personal injury suit where the named insured is not found to be negligent; and (2) whether and how social media evidence must be authenticated before it is admitted against a criminal defendant.
No. 57 The Burlington Insurance Company v NYC Transit Authority
During a Brooklyn subway project, the New York City Transit Authority and the MTA hired Breaking Solutions, Inc. to perform some excavation necessary for the project. Breaking Solutions obtained a general liability insurance policy from The Burlington Insurance Company, which named NYCTA, MTA, and New York City as additional insureds, but “only with respect to liability for ‘bodily injury,’ . . . caused, in whole or in part, by . . . acts or omissions” of Breaking Solutions. During the project, a Breaking Solutions excavating machine broke a buried electrical cable, which set off an explosion that injured a NYCTA employee.
The NYCTA employee brought a personal injury suit against the City, and the City third partied the NYCTA and MTA for indemnification. Burlington ultimately settled the suit, but disclaimed additional insured coverage for NYCTA and MTA because it was solely NYCTA’s responsibility to mark the buried electrical lines and turn off the power and its failure to do so was the sole cause of the explosion.
In this action brought by Burlington for a declaration that NYCTA and MTA were not additional insureds for the explosion because there was no evidence that the injury was caused by an act or omission of the named insured, Breaking Solutions, Supreme Court found in Burlington’s favor. The Court reasoned that because Breaking Solutions was determined to be not negligent, the losses suffered by NYCTA and MTA fell outside of the additional insured endorsement.
The Appellate Division, First Department, however, reversed and declared that NYCTA and MTA were entitled to coverage. Under its more recent precedent on the issue, it held, whether the named insured was negligent in the first instance is irrelevant. Instead, the Court reasoned, the act of Breaking Solutions breaking the electrical line caused the explosion, and the policy endorsement does not require that act to be negligent before coverage is available for the additional insureds. Because the policy must be construed against the insurer, and a negligent act of the named insured was not a precondition to coverage, NYCTA and MTA were covered.
The Court of Appeals will now decide whether coverage for an additional insured depends on the negligence of the named insured. Given how strictly insurance policies must be construed against the insurer, however, it seems unlikely to me that Burlington has much chance to avoid coverage in this case.
The Appellate Division, First Department’s order is here.