North River Ins. Co. v. United Nat’l Ins. Co., 81 N.Y.2d 812 (1993)
An insurance policy exclusion for “any obligation of the insured to indemnify another because of damages arising out of such injury” unambiguously excludes coverage for direct payments made by the insured to an injured party that operate as indemnification of a third party.
Summary
North River Insurance Company sought a declaratory judgment that United National Insurance Company was obligated to defend and indemnify Summit Hoisting, a subcontractor, in a third-party action. North River had worker’s compensation and a comprehensive general liability policy with Summit. United also had a comprehensive general liability policy with Summit. After an employee was injured and sued the general contractor, who then sued Summit, North River defended Summit and settled directly with the injured employee. The New York Court of Appeals held that United’s policy exclusion for obligations to indemnify another party unambiguously applied, relieving United of its duty to pay. The court found the term “indemnify” unambiguous and applicable to the direct payment made that operated as an indemnification.
Facts
Summit Hoisting was a subcontractor at a construction site. One of Summit’s employees was injured on the job. The injured employee sued the general contractor. The general contractor then brought a third-party action against Summit. North River Insurance Company, which had worker’s compensation and a comprehensive general liability policy with Summit, defended Summit in the third-party action. North River settled directly with the plaintiff employee, effectively indemnifying the general contractor.
Procedural History
North River sued United National Insurance Company, which also had a comprehensive general liability policy with Summit, seeking a judgment declaring that United, rather than North River, was obligated to defend and indemnify Summit. The lower courts’ decisions are not specified. The New York Court of Appeals reversed the lower court’s order, granted United’s cross-motion for summary judgment, and dismissed the complaint.
Issue(s)
Whether the second clause of the insurance policy exclusion, specifically “any obligation of the insured to indemnify another because of damages arising out of such injury,” excludes coverage for an indemnification claim where the insured made a direct payment to the injured party that functioned as indemnification of the general contractor.
Holding
Yes, because the plain terms of the provision expressly cover the liability United sought to exclude – an “obligation of the insured to indemnify another.”
Court’s Reasoning
The court relied on the plain language of the insurance policy exclusion, which stated the insurance does not apply to “any obligation of the insured to indemnify another because of damages arising out of such injury.” The court found this language unambiguous and directly applicable to North River’s settlement payment, which functioned as indemnification for the general contractor. The court distinguished this case from Insurance Co. v Dayton Tool & Die Works, 57 NY2d 489, where the term “indemnify” was ambiguous in the context of contribution claims. Here, the court found the term