15‐1255‐cv(L) First Mercury Ins. Co. v. Shawmut Woodworking & Supply, Inc.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 29th day of August, two thousand sixteen.

PRESENT: PETER W. HALL, DENNY CHIN, RAYMOND J. LOHIER, JR., Circuit Judges. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

FIRST MERCURY INSURANCE COMPANY, Plaintiff‐Counter‐Defendant‐Appellant,

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Counter‐Defendant‐Appellant,

v. 15‐1255‐cv(L) 15‐1510‐cv(Con) SHAWMUT WOODWORKING & SUPPLY, INC., DBA Shawmut Design & Construction, Defendant‐Third‐Party‐Plaintiff‐Appellee,

SHEPARD STEEL COMPANY, Defendant‐Counter‐Claimant‐Appellee, AMANDA ADRIAN, Co‐Administrator of the Estate of Robert Adrian, ROBERT ENFIELD, ROBERT ELLIOT, SHENEANE RAGIN, LIBERTY MUTUAL INSURANCE COMPANY, FAST TREK STEEL, INC., Defendants‐Appellees.

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FOR PLAINTIFF‐COUNTER‐ R. CORNELIUS DANAHER, JR. (Michael R. DEFENDANT‐APPELLANT FIRST McPherson, Jonathan A. Kocienda, on the brief), MERCURY INSURANCE CO.: Danaher Lagnese, PC, Hartford, Connecticut.

FOR COUNTER‐DEFENDANT‐ AARON S. BAYER, Wiggin and Dana LLP, APPELLANT NATIONAL UNION Hartford, Connecticut. FIRE INSURANCE CO. OF PITTSBURGH, PENNSYLVANIA:

FOR DEFENDANT‐THIRD‐PARTY‐ ASHLEY A. NOEL (Timothy R. Scannell, PLAINTIFF‐APPELLEE SHAWMUT Kevin R. Kratzer, on the brief), Boyle, WOODWORKING & SUPPLY, INC.: Shaughnessy & Campo, P.C., Hartford, Connecticut.

FOR DEFENDANT‐COUNTER‐ PHILIP J. OʹCONNOR, Gordon Muir & Foley CLAIMANT APPELLEE SHEPARD LLP, Hartford, Connecticut. STEEL CO.:

FOR DEFENDANT‐APPELLEE JACK G. STEIGELFEST, Howard Kohn LIBERTY MUTUAL INSURANCE Sprague & FitzGerald, LLP, Hartford CO.: Connecticut.

Appeal from the United States District Court for the District of

Connecticut (Arterton, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Plaintiff‐counter‐defendant‐appellant First Mercury Insurance Company

(ʺFirst Mercuryʺ) and counter‐defendant‐appellant National Union Fire Insurance

‐ 2 ‐ Company of Pittsburgh, Pennsylvania (ʺNational Unionʺ) appeal an April 6, 2015

judgment of the United States District Court for the District of Connecticut, declaring

that First Mercury has a duty to defend Connecticut state court actions brought against

Shawmut Woodworking & Supply, Inc. (ʺShawmutʺ) and its subcontractor, Shepard

Steel Company (ʺShepardʺ).1 We assume the partiesʹ familiarity with the underlying

facts, procedural history, and issues on appeal.

Fast Trek Steel, Inc. (ʺFast Trekʺ) was a subcontractor under Shepard and

hence a sub‐subcontractor under Shawmut for a construction project at Yale University

in New Haven, Connecticut. Plaintiffs in state court actions are Fast Trek employees

who sued Shawmut and Shepard for injuries and a death that occurred when steel

beams collapsed at the site. Plaintiffs in those actions named as defendants Shawmut

and Shepard, but not Fast Trek.

At the time of the incident, a general commercial liability insurance policy

issued by First Mercury (the ʺPolicyʺ) covered Fast Trek. The Policy provided:

A. Section II ‐‐ Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for ʺbodily injuryʺ, ʺproperty damageʺ or ʺpersonal and advertising injuryʺ caused, in whole or in part, by:

1 National Union intervened below on the basis that if First Mercuryʹs policy limits were exhausted, then National Union could be required to provide excess coverage.

‐ 3 ‐ 1. Your acts or omissions; or

2. The acts or omissions of those acting on your behalf;

in the performance of your ongoing operations for the additional insured.

App. 27. An agreement between Shepard and Fast Trek required Fast Trek to purchase

insurance coverage that ʺmust name Shepard as additional insured and must also name

the Project owner and construction manager as additional insureds.ʺ Id. at 117.

The agreement also provided that Fast Trek ʺshall assume towards

Shepard all obligations and responsibilities that Shepard assumes contractually towards

General Contractorʺ and incorporated as ʺpart of the Subcontract Documentsʺ the

agreement between Shawmut and Shepard. Id. at 116‐17. The agreement between

Shawmut and Shepard required Shepard to purchase insurance naming Shawmut as an

additional insured and to ʺrequire each sub‐subcontractor . . . to be bound by all

Contract Documents to the same extent and with the same effect as if the subcontractor

. . . were [Shepard].ʺ Id. at 103, 107.

On July 27, 2012, First Mercury filed this lawsuit in the district court below

seeking a declaration that it did not have a duty to defend or indemnify Shawmut or

Shepard against claims in two of the state court actions. On September 23, 2014, the

district court denied First Mercuryʹs motion for summary judgment because there were

factual disputes as to the duty to indemnify that could not be resolved until the state

court claims were adjudicated. Further, it granted summary judgment to Shawmut and

‐ 4 ‐ Shepard, concluding that they were additional insureds under the Policy and that the

Policy obligated First Mercury to defend the two state court actions.2

On April 6, 2015, the district court granted First Mercuryʹs unopposed

motion for entry of a final judgment under Federal Rule of Civil Procedure 54(b),

concluding that judicial economy and equity favored entry of a final judgment on the

duty to defend issue because a ruling by this Court in favor of First Mercury would

moot the entire case. Accordingly, final judgment was entered and this appeal

followed.

On appeal, (1) First Mercury and National Union argue that Shawmut is

not an additional insured under the Policy, and (2) First Mercury argues that the Policy

covers only vicarious liability claims against Shawmut and Shepard, and that those

claims were not sufficiently alleged in the state court actions.

We review de novo the district courtʹs summary judgment ruling,

ʺconstruing the evidence in the light most favorable to the non‐moving party and

drawing all reasonable inferences in [its] favor.ʺ Mihalik v. Credit Agricole Cheuvreux N.

Am., Inc.,

(2d Cir. 2013). A movant is entitled to summary judgment if

ʺthere is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.ʺ Fed. R. Civ. P. 56(a). ʺBecause interpretation of an

2 The district court also granted a motion for summary judgment made by defendant‐appellee Liberty Mutual Insurance Company, which was defending Shawmut and Shepard in the state court actions and intervened below.

‐ 5 ‐ insurance agreement is a question of law, we review the district courtʹs construction of

the [Policy] de novo.ʺ U.S. Fid. & Guar. Co. v. Fendi Adele S.R.L.,

(2d

Cir. 2016) (quoting VAM Check Cashing Corp. v. Fed. Ins. Co.,

(2d Cir.

2012)). In this case, we interpret the Policy under Connecticut law.

Connecticut courts interpret an insurance policy ʺby the same general

rules that govern the construction of any written contract,ʺ ʺlook[ing] at the contract as a

whole, consider[ing] all relevant portions together and, if possible, giv[ing] operative

effect to every provision in order to reach a reasonable overall result.ʺ Lexington Ins. Co.

v. Lexington Healthcare Grp., Inc.,

, 37‐38 (2014) (quoting Johnson v. Conn. Ins.

Guar. Assʹn,

, 643 (2011)). If an insurance policy is ʺambiguousʺ ‐‐ that is,

ʺreasonably susceptible to more than one readingʺ ‐‐ ʺany ambiguity in the terms of

[the] insurance policy must be construed in favor of the insured because the insurance

company drafted the policy.ʺ Johnson, 302 Conn. at 643 (quoting Conn. Med. Ins. Co. v.

Kulikowski,

(2008)).

First, First Mercury and National Union contend that Shawmut does not

qualify as an additional insured under the Policy because the Policy requires that

Shawmut and Fast Trek ʺhave agreed in writing in a contract or agreement that

[Shawmut] be added as an additional insured on [the] [P]olicy.ʺ App. 27. This

requirement, however, was met. In its written agreement with Shepard, Fast Trek

agreed to name as an additional insured not only Shepard, but also ʺthe Project owner

‐ 6 ‐ and construction manager.ʺ

. Shawmut was the construction manager.

Moreover, Fast Trekʹs agreement with Shepard incorporated ʺas part of the Subcontract

Documentsʺ the agreement between Shawmut and Shepard, which included a

requirement that Shepard and ʺeach sub‐subcontractʺ name Shawmut as an additional

insured.

. Hence, Shawmut and Fast Trek clearly ʺagreed in writing in a

contract or agreementʺ to include Shawmut as an additional insured.

.

First Mercury and National Union respond that the Policy requires

Shawmut and Fast Trek to enter into a single agreement with each other. This

interpretation is unpersuasive, for no such language is found in the Policy. First

Mercury could have added language specifying the need for a single, direct agreement.

Moreover, even assuming this is a reasonable interpretation of the Policy, we construe

the Policy in favor of the insured, Shawmut. See Johnson, 302 Conn. at 643. Finally, even

if First Mercury and National Unionʹs interpretation were the only reasonable

interpretation, Fast Trek and Shepardʹs agreement clearly incorporates Shawmut and

Shepardʹs agreement, thereby forming a written contractual relationship between

Shawmut as general contractor and Fast Trek as sub‐subcontractor. See Allstate Life Ins.

Co. v. BFA Ltd. Pʹship,

(2008) (ʺWhere the signatories execute a

contract which refers to another instrument in such a manner as to establish that they

intended to make the terms and conditions of that other instrument a part of their

‐ 7 ‐ understanding, the two may be interpreted together as the agreement of the parties.ʺ

(internal quotation marks and alteration omitted)).

Second, First Mercury contends that the coverage under the Policy is

limited to vicarious liability claims, i.e., for injuries caused by Fast Trekʹs acts or

omissions, and that the state court actions do not spell out a theory of vicarious liability

because the complaints did not name Fast Trek as a defendant. As to whether the

Policy is so limited, we again find no language in the Policy supporting First Mercuryʹs

interpretation. See McIntosh v. Scottsdale Ins. Co.,

(10th Cir. 1993) (ʺ[I]f

the parties had intended coverage to be limited to vicarious liability, language clearly

embodying that intention was available.ʺ (internal quotation marks and alterations

omitted)). Indeed, as the district court explained, the Policy reads that First Mercury

has a duty to defend claims asserting ʺliability for [injury] caused, in whole or in part, byʺ

Fast Trek. App. 27 (emphasis added). This language clearly contemplates that

additional insureds might also be tortfeasors. See Pro Con, Inc. v. Interstate Fire & Cas.

Co.,

, 256‐57 (D. Me. 2011) (ʺDefendant, by including the language ʹin

whole or in partʹ in its [policy], specifically intended coverage for additional insureds to

extend to occurrences attributable in part to acts or omissions by both the named

insured and the additional insured.ʺ (emphasis omitted)). Further, two of the four

plaintiffs allege in their underlying state court complaints that they were employees of

Fast Trek, and all of the underlying complaints allege that all of the other relevant

‐ 8 ‐ architecture and construction firms approved the allegedly faulty plans that

proximately caused the plaintiffsʹ injuries and that the injured parties were injured on

the construction site at Yale, and were subject to work site conditions that did not

comply with applicable state and federal safety regulations. Therefore, read as a whole,

the complaintsʹ allegations fairly imply fault on the part of Fast Trek. Cf. Hartford Cas.

Ins. Co. v. Litchfield Mut. Fire Ins. Co.,

(2005) (ʺAn insurer . . . is not

excused from its duty to defend merely because the underlying complaint does not

specify the connection between the stated cause of action and the policy coverage.ʺ).

Moreover, the record, which included a report from the Occupational Safety and Health

Administration attributing at least some fault to Fast Trek, made clear that all four

injured employees were employed by Fast Trek and that Fast Trek was alleged to have

been responsible, at least in part, for the injuries. That report was made available to

First Mercury. See

(requiring ʺthe insurer to provide a defense when it has

actual knowledge of facts establishing a reasonable possibility of coverage,ʺ even if such

facts lie outside the ʺfour corners of the complaintʺ (citation and quotation marks

omitted)).

We have reviewed First Mercuryʹs and National Unionʹs remaining

arguments and conclude they are without merit. Accordingly, we AFFIRM the

judgment of the district court.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk

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