Failure to Read Certificate of Insurance & No Indemnity Contract Defeats Claim
Most lawyers will tell you that seeking a summary judgment by a writ to an appellate court will usually result in a post card from the appellate court refusing to issue a writ. However, they keep trying, and are surprised when the writ succeeds.
ACE American Insurance Company (“ACE”) sought supervisory review (a writ of mandate) of a judgment of the trial court denying its motion for summary judgment seeking dismissal of third-party claims filed by Castleman, Donlea, and Associates, LLC (“Castleman”). Castleman sought coverage as an additional insured under a commercial general liability (“CGL”) policy issued by ACE to Sunbelt Rentals Scaffold Services, LLC (“Sunbelt”) claiming it was an additional insured. In Ioannis Maroulis v. Entergy Louisiana, LLC, et al, NO. 20-C-241, Fifth Circuit Court Of Appeal State Of Louisiana (February 10, 2021) the Louisiana Court of Appeal considered the writ request and wrote an opinion.
This complex, multiparty case arises from a work-related accident that occurred during the renovation of the Hampton Inn located in Metairie, Louisiana. Hotel Investors, LLC (“Hotel Investors”), the owner of the hotel, and its management company, Expotel Hospitality – HIM, LLC (“Expotel”), hired Sigur Construction, LLC (“Sigur”) and Castleman as the general contractors for the project. Castleman, in turn, hired Sunbelt as the scaffolding subcontractor for the project.
On April 19, 2018, Ioannis Maroulis, an employee of Sunbelt, suffered an electrical shock when a piece of scaffolding equipment came into contact with an overhead power line. Mr. Maroulis sued Hotel Investors and Expotel, and various other defendants, alleging various counts of negligence. Hotel Investors and Expotel then filed a third-party demand against Castleman and its insurer, Evanston Insurance Company (“Evanston”), alleging a breach of the construction contract between Hotel Investors and Castleman and seeking insurance coverage under the Evanston policy.
Castleman, in turn, sued Sunbelt and its insurer, ACE, seeking contractual indemnification and insurance coverage as an additional insured under the CGL policy issued by ACE. Castleman alleged that Sunbelt owes contractual indemnity to Castleman for the damages asserted by Hotel Investors and Expotel. Castleman further alleged that Sunbelt agreed to provide insurance coverage to Castleman to insure it against claims that arose in connection with Sunbelt’s work on the project and to add Castleman as an additional insured on its liability policy that was issued by ACE.
According to Castleman, Sunbelt provided it with a certificate of insurance to prove that it had sufficient coverage to insure Castleman against claims arising in connection with Sunbelt’s work. Castleman also alleged that Sunbelt is in breach of an oral obligation to insure Castleman. Castleman also filed claims against ACE, seeking insurance coverage under the CGL policy issued by ACE to Sunbelt.
Both Sunbelt and ACE filed motions for summary judgment seeking dismissal of Castleman’s claims. The trial court denied the motions for summary judgment on the basis that there existed genuine issues of material fact regarding whether an indemnity agreement existed between Castleman and Sunbelt.
Although Sunbelt did obtain CGL and workers’ compensation policies to protect itself against risks during the construction project, there was no evidence of a contractual indemnity agreement, written or oral, between Castleman and Sunbelt. In addition there was no evidence that Sunbelt agreed to procure insurance on Castleman’s behalf or name Castleman as an additional insured.
A review of the policy issued by ACE to Sunbelt shows that Castleman was not named as an additional insured. In the absence of any indemnity agreement between Sunbelt and Castleman, there is no legal basis for Castleman’s third-party demand seeking insurance coverage under the ACE policy.
The burden was on Castleman to produce factual support sufficient to establish a genuine issue of material fact or that ACE is not entitled to judgment as a matter of law. Castleman failed to meet its burden.
Castleman failed to produce factual support to establish a genuine issue of material fact or that ACE is not entitled to judgment as a matter of law. Accordingly, the court granted this writ application, reversed that portion of the trial court’s ruling that denied ACE’s motion for summary judgment, rendered judgment granting ACE’s motion for summary judgment, and dismissed Castleman’s third-party claims against ACE with prejudice.
Castleman relied on a Certificate of Insurance that only advised that the insured, Sunbelt, had insurance. Neither the Certificate nor the actual policy issued by ACE named Castleman as an additional insured and there was no contract between Castleman and Sunbelt promising to indemnify Castleman or name it as an additional insured. The lesson, read the whole Certificate of Insurance and never allow a subcontractor on a job without an additional insured endorsement or a contract promising to indemnify the insured.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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