600 Associates LLC et al. v. Illinois Union Insurance Company
Attorneys and Parties
Brief Summary
Construction risk insurance—whether owners and a general contractor qualify as additional insureds (AI) under a subcontractor’s commercial general liability (CGL) policy when there is no direct written agreement with the named insured.
The Supreme Court, Bronx County denied the insurer’s motion for summary judgment seeking a declaration of no additional insured status and no duty to defend or indemnify.
The Appellate Division reversed, granted summary judgment to the insurer, and declared that the plaintiffs are not named insureds or additional insureds and are not entitled to a defense or indemnity; the separate appeal from the denial of renewal/reargument was dismissed as academic.
The policy’s additional insured endorsement required a written agreement between the named insured (Len & Mar Drywall Corp.) and the party seeking AI status. The plaintiffs had no such written agreement with Len & Mar, and the Len & Mar–Allen contract conferred AI status only on Allen. Controlling precedent—AB Green Gansevoort, LLC v Peter Scalamandre & Sons, Inc., 102 AD3d 425 (1st Dept 2013), and Gilbane Bldg. Co./TDX Constr. Corp. v St. Paul Fire & Mar. Ins. Co., 31 NY3d 131 (2018)—requires strict compliance with that written-agreement condition.
Background
Owners 600 Associates LLC, 600 East 156th Street Housing Development Fund Corporation, and 600 East 156th Street LIHTC, LLC (collectively, 600 Associates) hired Mega Contracting Group, LLC (Mega) for construction at 600 East 156th Street in the Bronx. Mega subcontracted to Allen Blvd Interiors (Allen), which sub-subcontracted to Len & Mar Drywall Corp. (Len & Mar). Len & Mar’s contract with Allen required Len & Mar to defend, indemnify, and procure insurance in favor of the “owner/contractor,” a term defined in that agreement to mean Allen; the contract did not reference 600 Associates or Mega. Illinois Union Insurance Company issued a commercial general liability (CGL) policy to Len & Mar with an additional insured (AI) endorsement extending AI status to any person or organization for whom Len & Mar was performing operations, but only if Len & Mar and that person or organization agreed in writing to include them as an AI on Len & Mar’s policy. Plaintiffs (600 Associates and Mega) sought a declaration that they were AIs entitled to defense and indemnity in the underlying injury action.
Lower Court Decision
Supreme Court, Bronx County (Lucindo Suarez, J.) denied Illinois Union Insurance Company’s motion for summary judgment seeking a declaration that plaintiffs were not named or additional insureds and that Illinois owed no defense or indemnity. In a separate order, Supreme Court (Myrna Socorro, J.) denied Illinois’s motion to renew and reargue.
Appellate Division Reversal
The Appellate Division, First Department unanimously reversed the July 26, 2023 order, granted Illinois’s motion, and declared that plaintiffs are not named insureds or additional insureds under the Illinois policy and are not entitled to a defense or indemnity. The appeal from the October 9, 2024 order denying renewal/reargument was dismissed as academic.
Legal Significance
The decision reinforces that additional insured (AI) coverage under a standard AI endorsement is contingent on a written contract directly between the named insured and the party seeking AI status. Absent such privity, upstream parties (owners/general contractors) are not AIs even if upstream contracts require downstream entities to procure AI coverage. The ruling aligns with AB Green Gansevoort and the Court of Appeals’ decision in Gilbane, demanding strict adherence to endorsement language.
Without a direct written agreement with the named insured satisfying the AI endorsement, owners and general contractors cannot claim additional insured coverage under a subcontractor’s CGL policy—even if upstream contracts contemplate such coverage.