Could You Be More Specific . . . About My Excess AI Coverage?

Are you a general contractor who is pretty sure that you have additional insured coverage for some stuff under your sub-subcontractor’s excess policy? Advent, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, Case No. H041934 (December 6, 2016) warns you to be a little more specific.

Johnson Western Gunite was the shotcrete sub-subcontractor on a job. One of its employees—specifically, Jerry Kielty—tumbled down a stairwell, sustaining severe bodily injury thereby.  Kielty filed suit against the general contractor in charge of the job—Advent, Inc.—amongst others. Kielty did not name his employer Johnson in the suit. In terms of insurance:

• Advent was insured under a primary insurance policy issued by Landmark American Insurance Company and an excess policy issued by Topa Insurance Company.

• Johnson was insured under primary and excess policies issued by National Union Fire Insurance Company of Pittsburgh, PA. After Advent lost its summary judgment motion against National and ended up dismissing its complaint against National with prejudice, National and Topa brought cross-motions for summary judgment against each other. National won its motion, and Topa lost its. The trial court ruled that because undisputed facts established that Johnson did not cause Kielty’s accident, Topa could not establish actual coverage under the National excess policy and, thus, was not entitled to obtain equitable contribution from National or a declaration that it was entitled to reimbursement from National for its settlement contribution.

Now, Kietly settled the suit for a $10 million package funded by Landmark, Topa, and National under its primary policy only. Advent took the position that it was an additional insured under both the National primary and excess policies, but National disagreed and did not contribute to the settlement under the excess policy. As a result, Advent sued National seeking declaratory relief that it was an additional insured under the National excess policy, and Topa intervened asserting claims for equitable contribution, subrogation, and declaratory relief.

After Advent lost its summary judgment motion against National and ended up dismissing its complaint against National with prejudice, National and Topa brought cross-motions for summary judgment against each other. National won its motion, and Topa lost its. The trial court ruled that because undisputed facts established that Johnson did not cause Kielty’s accident, Topa could not establish actual coverage under the National excess policy and, thus, was not entitled to obtain equitable contribution from National or a declaration that it was entitled to reimbursement from National for its settlement contribution.

The appeals court upheld the trial court’s ruling on the same basis. Moreover, the appeals court held that even if it had found that National’s excess policy did provide coverage to Advent as an additional insured, National would still be entitled to judgment in its favor because the Topa policy was a specific excess policy that attached prior to National’s general excess policy—in other words, the two excess policies did not provide the same level of coverage to Advent as an additional insured, which would be a prerequisite to any contribution or subrogation claim by Topa against National. Specifically, coverage under the Topa excess policy attached upon exhaustion of the scheduled underlying Landmark primary policy, whereas coverage under the National excess policy attached only upon exhaustion of the scheduled underlying National primary policy and other insurance, which was defined as “valid and collectible policy of insurance providing coverage for damage covered [by the National excess policy]”. Thus, National’s excess policy was second-level excess and coverage under it did not attach until exhaustion of the Topa excess policy.

So the moral of the story is, take a close look at that part of the policy where it says stuff about insurance so that you don’t find yourself without that other kind of coverage when bad things happen.