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Second Circuit Holds that Company Can Be an Additional Insured Even If Not Specifically Named, as Long as It Is Designated By Description

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First Mercury Ins. Co. v. Shawmut Woodworking & Supply, Inc., 2016 WL 4507891 (2d Cir. Aug. 29, 2016). The Second Circuit held in a summary order that a construction manager of a project at Yale University was entitled to coverage as an additional insured under a sub-subcontractor’s insurance policy with First Mercury Insurance Co. Fast Trek Steel, Inc., was subcontracted by Shepard Steel Co., who in turn was subcontracted by the general project manager Shawmut Woodworking & Supply, Inc. Plaintiffs in the underlying suit were Fast Trek employees that sued Shawmut and Shepard after steel beams collapsed on site, causing multiple injuries and one death. Fast Trek had a general commercial liability policy with First Mercury that named as an additional insured “any person or organization for whom [Fast Trek] is performing operations when [Fast Trek] and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on [Fast Trek’s] policy.” The agreement between Fast Trek and Shepard required that Fast Trek name both Shepard and “the Project manager and construction manager” as additional insureds. Shawmut sought defense and indemnification from First Mercury. First Mercury sought a declaration that it did not have a duty to defend or indemnify Shawmut or Shepard. Applying Connecticut law, the district court denied First Mercury’s motion and held that Shepard and Shawmut were additional insureds under the Fast Trek policy.

On appeal, First Mercury argued that the Fast Trek policy required Shawmut and Fast Trek to agree, in writing, to name Shawmut as an additional insured. The court found that this requirement in fact was met when Fast Trek, in a written agreement with Shepard, agreed to name both Shepard and “the Project owner and construction manager” as additional insureds. Fast Trek’s agreement with Shepard further incorporated an agreement between Shawmut and Shepard that required Shepard and “each sub-subcontract” name Shawmut as an additional insured. The court then considered First Mercury’s argument that the policy required Shawmut and Fast Trek to enter into a single agreement with each other. It dismissed this argument as contrary to the policy language, and further found that Fast Trek and Shepard’s agreement explicitly incorporating Shawmut as an additional insured would have created the requisite contractual privity. The second issue on appeal was whether coverage under the First Mercury policy was limited to vicarious liability claims, or injuries caused by Fast Trek’s own acts or negligence. The court did not find any language specifying as much, so it held that if the parties had intended coverage to be limited to vicarious liability the policy language should have clearly manifested this intent.