Plaintiffs were a Condominium Association and a Management Corporation responsible for a condominium property whose pool was maintained by Preferred Pool Management, Inc. (“PPM”). PPM employee James Visconti (“Visconti”) fell on Plaintiffs’ property while performing maintenance on the condominium’s pool in the course of his employment with PPM and allegedly suffered injuries. In a state court lawsuit, Visconti asserted various tort claims (personal injury claims) against Plaintiffs, claiming that he was injured because Plaintiffs failed to keep the pool’s premises in a safe condition. Plaintiffs joined PPM as a third-party defendant in the underlying tort action, seeking contribution and indemnification under the Pool Maintenance Contract. The dispute in the federal court case of Harmon Cove IV Condominium Association, Inc. v. Indian Harbor Insurance Company, 2023 U.S. Dist. LEXIS 71960 (D.N.J. Apr. 25, 2023) was who should be responsible for the cost of defending Plaintiffs and any damages that might be awarded in the underlying tort action.
Defendants Indian Harbor Insurance Company (“Indian Harbor”) and Ohio Security Insurance Company (“Ohio Security”) each issued a general liability policy to PPM which had a blanket additional insured endorsement providing coverage to parties with whom PPM agreed in writing to add as additional insureds and Scottsdale issued an excess liability policy to PPM for damages covered by, but in excess of limits of, the Indian Harbor policy. In the Pool Maintenance Contract, PPM agreed to add Plaintiffs as additional insureds to these policies. Thus, Plaintiffs claimed that they were additional insureds under both the Indian Harbor and Ohio Security policies, as well as Scottsdale’s excess liability policy.
The issue before the court was whether Scottsdale owed coverage for the underlying tort claims. Scottsdale filed a motion before the District Court claiming that its policy did not provide coverage and the complaint should be dismissed as to it.
The Scottsdale excess policy contained an “Injury to Worker Exclusion” which excluded coverage for an injury to an “employee . . . of any insured . . . if such injury arises out of and in the course of their employment.” This exclusion also expressly excluded from coverage any “obligation of any insured to defend, indemnify or contribute with another because of injury to . . . [an] employee . . . of any insured.” As for additional insured coverage, it noted that such coverage would not be broader than coverage provided by the controlling underlying policy which, would be the Indian Harbor policy.
The District Court found that the Injury to Worker Exclusion in the Scottsdale Excess Policy unambiguously barred Plaintiffs from seeking coverage for Visconti’s injuries and Plaintiffs’ defense in the underlying tort action. The complaint had alleged that Visconti was an employee of PPM and that, on the day he fell, PPM had directed him to perform pool service and maintenance work on the condominium’s pool. Specifically, it alleged that Visconti was carrying a heavy bucket and containers of liquid shock while walking up wooden steps to the pool house when he suffered his injuries.
The District Court noted that the Injury to Worker Exclusion excluded from coverage any injury to an employee of any insured if such injury arose out of and in the course of their employment. Although the Complaint alleged that Visconti was an employee of PPM, and not Plaintiffs, the Court found that the exclusion plainly applied here because it excluded coverage for employees of “any” insured, which included PPM’s employees and because the Complaint alleged that Visconti was injured in the course of his pool maintenance work for PPM.
The District Court found no ambiguity in the Injury to Worker Exclusion, nor any public policy reason for not enforcing it. It found that it was written in plain terms and prominently featured in the policy. Further, by plain terms, the Plaintiffs were precluded from seeking coverage that was broader than that provided to PPM.
Based upon all of these reasons, the District Court held that it must enforce the plain terms of the Injury to Worker Exclusion and dismiss Plaintiffs’ claims against Scottsdale, which had sought indemnification and defense from a party that it had no contractual obligation provide such coverage. Hence, Scottsdale’s motion to dismiss was granted and Plaintiffs’ claims against Scottsdale were dismissed for a failure to state a claim.
