Nationwide E&S/Specialty is not entitled to be reimbursed by Mt. Hawley Insurance and Lloyd’s for part of a $2.725 million payment it contributed as the excess/surplus insurer to settle a personal injury suit.
A New York appellate panel has found that a lower court correctly determined that Lloyd’s and Mt. Hawley were not obligated to contribute to the settlement payment made by Nationwide E&S/Specialty—formerly known as Scottsdale —in an underlying action involving a construction accident.
The case involved the owner of a property at 175 Broadway insured by Mt. Hawley and Lloyd’s and a contractor, Dome, hired by the building owner and insured by primary insurer First Mercury and Scottsdale on excess.
In the underlying suit, a Dome employee suffered personal injuries on site. Unable to sue Dome because of the workers’ compensation law exclusivity, he sued 175 Broadway in Supreme Court Kings County alleging violations of the scaffold law and negligence.
There was no finding that 175 Broadway was negligent in the accident. The injury case was settled for $3.725 million with First Mercury paying the first $1 million and Scottsdale paying the remaining $2.725 million. Lloyd’s and Mount Holly refused Scottsdale’s request to contribute to the settlement.
Scottsdale had claimed it was entitled to recover $1,000,000 from Lloyd’s and $398,076.80 from Mt. Hawley.
The court found that since the building owner 175 Broadway was entitled to contractual indemnification from the general contractor Dome due to a complete pass-through of liability, the excess policy issued to Dome must respond before the primary and excess policies issued to 175 Broadway.
“While New York’s horizontal exhaustion rule mandates that all primary policies be exhausted before excess coverage is triggered, the rules governing priority of coverage are inapplicable here,” the appeals court ruled.
Additionally, Scottsdale was not entitled to recovery because its right to subrogation had been waived, the court stated.
Topics Excess Surplus
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