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Contractor Indemnified for Worker-Death Settlement

Deborah Elkins//August 27, 2012

Contractor Indemnified for Worker-Death Settlement

Deborah Elkins//August 27, 2012

On remand from the Supreme Court of Virginia of this dispute over insurance coverage in the wake of a construction-site accident that killed one employee and seriously injured another employee of an elevator subcontractor, a Fairfax Circuit Court grants partial summary judgment and says AIU Insurance, the commercial umbrella carrier for the elevator sub, is obligated to fully indemnify Uniwest Construction, the prime contractor on the project, for settlement related to the emloyees’ lawsuit, in the amount of $9.5 million.

On Jan. 15, 2001, Thomas Stinson and Robert Bruce, employees of Amtech Elevator Services Inc., were working on a scaffold in an elevator shaft at the building renovation site in Philadelphia for the owner, The Fountains at Loan Square LLC. The scaffolding collapsed and Stinson died and Bruce was seriously injured. Stinson’s estate and Bruce (Workers) sued Uniwest Construction, the prime contractor, among other defendants. Uniwest and its insurers ultimately settled the Workers’ claims against Uniwest for $9.5 million, without participation in settlement talks by AIU Insurance, the commercial umbrella carrier for Amtech.

In October 2006, Uniwest and its insurers sued Amtech and its insurers in Fairfax Circuit Court, alleging Amtech breached its duty to defend and indemnify Uniwest in the Workers’ action. The action was nonsuited. In May 2008, Amtech, ABM Insurance Services and AIU (Plaintiffs) filed a complaint for declaratory judgment against Uniwest and its insurers. They counterclaimed, alleging that both Amtech and AIU had contractual obligations to defend and indemnify Uniwest in the Workers’ lawsuit.
This court ruled that Uniwest and its insurers were entitled to $9.5 million in compensatory damages plus prejudgment interest, because this court found that Amtech breached its duty to procure insurance for Uniwest pursuant to specifications prepared by Zipf Associates Inc. This court also found that Amtech did not have a duty to indemnify Uniwest under Paragraph 3.18.1 of the Prime Contract’s general conditions, and that AIU did not have a duty to indemnify Uniwest under the AIU policy.

The Supreme Court of Virginia heard an appeal and issued a decision in Uniwest Constr. Inc. v. Amtech Elevator Servs. Inc., 280 Va. 428 (2010) (Uniwest I), but granted rehearing, withdrew that decision in part (Uniwest II, 281 Va. 509 (2011), and found that questions presented by the petitions for rehearing were not reached by the circuit court, and remanded the case to this court to consider 1) the extent of Amtech’s liability to Uniwest for its failure to defend and indemnify Uniwest and 2) whether and to what extent AIU is liable under Subdivision E-4 and Subdivision E-7, consistent with the Uniwest I opinion as amended by Uniwest II. The Supreme Court affirmed its holding in Uniwest I, stating the question of Amtech’s liability is settled.

The questions raised in the petitions for rehearing involve whether a finding of relative liability is required in order to determine liability under Subdivision E-7.

This court finds that Subdivision E-7’s additional insured endorsement should not be constrained by the indemnification provision of the subcontract. Further, the case law reflects that where unrestricted additional insured endorsements exist, the additional insured is covered without regard to whether the injury was caused by the named insured or the additional insured. This conclusion does not end the analysis, because the “arising out of” standard of Subdivision E-7 must still be analyzed in the context of this Motion. There still must be no material fact genuinely in dispute, such that this court cannot determine whether Uniwest’s liability “arose out of” Amtech’s operations.

This court will rely on the pleadings alone to rule on the summary judgment motion. The undisputed facts establish that Bruce and Stinson were injured while performing work on the project for Amtech pursuant to the Subcontract. The resulting injuries gave rise to the Bruce-Stinson Action. Uniwest subsequently settled that action. Accordingly, this court finds that the “minimal causation connection” has been established between Amtech’s operations and Uniwest’s liability. Uniwest’s liability with regard to the Bruce-Stinson Action arose out of operations conducted by Amtech’s workers on the project. Thus, the broad coverage afforded by Subdivision E-7 has been triggered and Uniwest is entitled to coverage under Subdivision E-7.

Amtech Elevator Services v. Uniwest (Williams) No. CL 2008-5909, May 11, 2012; Fairfax Cir.Ct.; John D. McGavin, John C. Bonnie for plaintiffs; Edward W. Cameron, Christopher Carroll for Uniwest; Jeffrey R. Schmieler for Federal Ins. Co.; Geoffrey S. Gavett for Pa. Mfr. Ass’n Ins. Co. VLW 012-8-124, 10 pp.

VLW 012-8-124

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