Insurance: Continental Insurance Co. v. Atlantic Casualty Insurance Co.

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U.S. Court of Appeals, Second Circuit

Insurance

Continental Insurance Co. v. Atlantic Casualty Insurance Co.
09-2882-cv
Appealed from the Southern District of New York

Background: An insured party provided its insurer notice of a fire before the injured party provided notice. When the injured party sued the insurer under New York Insurance Law Section 3420(a) for satisfaction of a default judgment against the insured, the U.S. District Court for the Southern District of New York granted the insurer summary judgment, holding that the insured’s notice was untimely, and extinguished the injured party’s separate right to notify and sue the insurer. The injured party appealed. In 2004, employees of Wodraska Brothers Inc., a roofing contractor, had inadvertently started a fire while installing a new roof on a house. A week later, Continental Insurance Co., which insured the residence, paid the homeowners about $640,000 for the damage. Five months after the fire, Wodraska sent a claim to its liability insurer, Atlantic Casualty Insurance Co., and two days later, Continental sent Atlantic a separate notice of claim. Atlantic denied both claims.

Ruling: The court affirms, although it rejects the district court’s rationale. The affirmation is on the separate ground that an exclusionary provision in the liability insurance policy barred coverage of the fire. The endorsement effectively precludes coverage for “any operations involving … any torch” as well as for “any operations involving … membrane roofing,” and the “operations” that started the fire involved both a torch and membrane roofing, losses arising out of the fire were not within Wodraska’s liability coverage.

Erick Kirker of Cozen O’Connor for the appellant, and Aidan McCormack of Nixon Peabody LLP for the appellee