Antisubrogation Rule Inapplicable to Construction Accident
The Appellate Division, Third Department, recently considered an appeal involving the antisubrogation rule in the context of a work site personal injury action. Pesta v City of Johnstown, 2008 NY Slip Op 6328; AD (3d Dep’t. 2008).
Plaintiff, Robert Pesta, was seriously injured when struck by a dump truck while employed by Luizzi Brothers Contracting on a road paving project for the defendant, City of Johnstown. He brought suit against the City which impleaded Luizzi Brothers, owner of the dump truck. The City moved for summary judgment on its indemnification claim against Luizzi Brothers, and Luizzi Brothers cross-moved to partially dismiss the impleader action to the extent of Luizzi’s liability insurance coverage in effect at the time of the accident.
Luizzi Brothers was insured through Harleysville Insurance Company under three separate policies: a commercial general liability policy (CGL policy), a commercial automobile policy and a commercial liability umbrella policy. Additionally, pursuant to the construction contract, Luizzi Brothers had purchased an owners’ and contractors’ protective liability policy (OCP policy) naming the City of Johnstown as the insured.
The lower court held that the City of Johnstown was entitled to indemnification for damages that exceeded the amount of the CGL, automobile and umbrella policies. Following its decision, the Court granted re-argument and also commenced a jury trial during which the plaintiff’s personal injury action settled. The parties stipulated that the third-party action could proceed. Supreme Court then granted the defendant’s motion for indemnification in its entirety, holding that the antisubrogation rule did not apply since coverage for the underlying accident was excluded under the terms of the CGL, automobile and umbrella policies. The Court also held that the OCP policy, which named only the City of Johnstown as an insured, did not implicate the antisubrogation rule.
Luizzi Brothers appealed. The Third Department affirmed the findings of the lower court. The Court noted that under general insurance rules, an insurer has no right of subrogation against its own insured with respect to a claim arising from the risk covered by the policy and that “the antisubrogation rule does not apply, however, when an exclusion in a policy renders the policy inapplicable to the loss***”, citing Northstar Re-Insurance Corp. v Continental Insurance Company, 82 N.Y.2d 381 (1993).
The Court noted that the CGL policy contained an “Aircraft, Auto or Watercraft” exclusion which was applicable to “‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’ or watercraft owned or operated by or rented or loaned to any insured.” The Court rejected Luizzi Brothers’ contention that the exclusion did not apply to the dump truck which caused the plaintiff’s injuries since the dump truck fell within the definition of “mobile equipment” under the policy. The policy definition of auto included a “land motor vehicle…designed for travel on public roads, including any attached machinery or equipment”. “Mobile equipment” pertained to items such as bulldozers, farm machinery and vehicles on crawler treads, as well as “[v]ehichles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted…[r]oad construction or resurfacing equipment such as graders, scrapers or rollers.” The Court concluded that under these policy definitions, the dump truck, designed to travel on public roads, must be considered an “auto” and, therefore, within the CGL policy exclusion.
The Court also ruled that the automobile policy exclusion for injuries arising from acts of a co-employee occurring within the course of employment for which workers’ compensation benefits were available, applied and, therefore, there was no coverage under the auto policy.
Luizzi Brothers agreed that if coverage was excluded under both the CGL and auto policies, then the umbrella policy would not apply.
Finally, the Court held that since the OCP policy named only the City of Johnstown as an insured, the antisubrogation rule did not apply and the City could maintain its indemnity claim against Luizzi Brothers.
This case is an example of a liability insurer successfully asserting its subrogation rights against an insured under other policies issued by that company where no coverage for the occurrence exists under the other policies.
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