Coverage Does Not Last Forever
August 13, 2013
A public utility filed a motion seeking indemnification from a contractor for damages for a bicyclist's personal injuries from an accident on the road where the contractor had performed road work. This case is LaMorte v. The City of New York, 107 A.D.3d 439 (2013).
LaMorte was injured in May 2002 while riding a bicycle in Manhattan. Roadway Contracting had performed road work in that area in January 2001. The contractor had a contract requiring Roadway to defend and indemnify Con Edison for any liability arising out of Roadway's work. The contractor also was to have Con Edison listed as an additional insured under a liability policy; the policy was issued by United National Insurance Company. And, Roadway was obligated to carry products/completed operations liability insurance for at least one year after completion of the road work.
In 2002, LaMorte commenced an action against Con Edison to recover damages for personal injuries. Con Ed took the position that Roadway's work had caused the accident. A jury trial rendered a verdict in LaMorte's favor, finding him 40 percent at fault, Con Ed 35 percent at fault, and Roadway 25 percent at fault. After the jury rendered its verdict, Con Ed moved for full indemnification from Roadway for the entire verdict amount and for Con Ed's legal fees.
Roadway argued that it did not breach any insurance contract because it had no obligation to maintain insurance past January 26, 2002, one year after it completed the injury-causing road work. The trial court ruled in favor of Con Ed and the contractor appealed.
The court noted that, under the circumstances, Roadway did not breach its duty to procure insurance naming Con Ed as an additional insured. Also, as to the obligation to maintain a products/completed operations insurance policy for at least one year after completion of the work, the court said that the work that caused the injury took place on January 26, 2001, and so, the duty to maintain insurance ended on January 26, 2002. The plaintiff was injured in May of 2002, approximately four months after that date.
Con Ed asserted that the contract between it and Roadway imposed a duty on Roadway to maintain insurance in favor of Con Ed until one year after the full contract term ended—that is, until December 17, 2003. The court rejected this argument after reviewing the contract. The court said that the contractual language strongly suggests that the terms “perform” or “performance” refer to the actual physical labor that Roadway was hired to do, not just to Roadway's theoretical availability to perform work for Con Ed.
The appeals court reversed the trial court's ruling and held that Con Ed was not entitled to indemnification for damages from an accident that occurred more than one year after work was completed.
Editor's Note: The Supreme Court, Appellate Division, New York ruled that the insured contractor was obligated to maintain products/completed operations coverage for at least one year after completion of the contracted performance. The facts of the situation showed that this is what the insured did. Moreover, the facts showed that the accident occurred months after the products/completed operations obligation ended. Insurance coverage does not last forever.