Question of Insurance Company Estoppel Certified to State Court

10 Ellicott Square Court Corp. v. Mountain Valley Indemnity Co., 2010 WL 5295420 (2d Cir. Dec. 28, 2010)

In this case, the plaintiffs were, respectively, the owner and construction manager of a commercial building project in Buffalo.  They contracted with a third firm for interior demolition in the building; the construction agreement required the demolition company to secure insurance to cover legal liability resulting from the demolition project.  The company secured a primary policy and an umbrella policy from the defendant, which issued a certificate of insurance naming the plaintiffs as additional insureds.  The primary policy specifically required the underlying construction agreement to be “executed” for any injury to be covered by the policy, but before the agreement was signed, a worker was injured and sued.  The defendant declined coverage, arguing that the construction agreement had not been executed in time.
 

The Second Circuit held that, by its own terms, the primary insurance contract did not cover the injury since the construction agreement had not been executed.  The court also held that the umbrella policy nonetheless applied since it did not require execution of the underlying agreement.  The court then certified to the New York Court of Appeals the final question presented in the case: whether a certificate of insurance issued by an insurer’s agent may estop the insurer from denying coverage to a party identified as an additional insured on the certificate, even though the certificate contains disclaimers such as “for informational purposes only.”  The Third and Fourth Departments of New York’s Appellate Division have held that an insurer is estopped in such a situation, while the First Department has not addressed the issue, and the Second Department has rejected the doctrine.  The Second Circuit found that this was a significant matter of state law that remained unresolved, declining to issue a decision until the New York Court of Appeals has its say.  The New York Court of Appeals has not yet decided the issue.