Certain Underwriters at Lloyd's, London v. Southwest Marine and General Insurance Company

Summary

The Appellate Division, First Department affirmed an order granting partial summary judgment requiring Southwest Marine and General Insurance Company to defend Arsenal Scaffold Inc. as an additional insured on a primary and noncontributory basis and reimburse defense costs. The court held that the insurer had actual knowledge of facts establishing a reasonable possibility of coverage, despite its named insured not being a defendant in the underlying action.

Holdings

1. The insurer had a duty to defend Arsenal because it had actual knowledge of facts establishing a reasonable possibility of coverage.
2. Plaintiff was entitled to partial summary judgment declaring that defendant must defend Arsenal on a primary and noncontributory basis and reimburse plaintiff for all costs incurred in defending Arsenal.

Questions Presented

1. Whether the insurer had a duty to defend Arsenal Scaffold Inc. as an additional insured in the underlying construction-injury action.
2. Whether the insurer could disregard facts known to it that created a reasonable possibility of coverage merely because its named insured was not a defendant in the underlying action.
3. Whether plaintiff was entitled to reimbursement of defense costs and a declaration that the defense obligation was primary and noncontributory.

Disposition

affirmed