This action involves a dispute between two insurance companies as to whether one of the policies provides insurance coverage to plaintiffs in an underlying personal injury action, and whether that policy is primary or excess to the other policy. Plaintiff Arthur Kill Power LLC (Arthur Kill) and ACE American Insurance Company (ACE) move for summary judgment in their favor against defendant American Safety Casualty Insurance Company (ASCIC), sued herein as American Casualty Safety Insurance Company (Motion Seq. No. 003). ASCIC separately moves for summary judgment in its favor against Arthur Kill (Motion Seq. No. 004). This decision addresses both motions.

Pursuant to a Purchase Order dated January 27, 2006, Arthur Kill allegedly engaged Wing [*2]Environmental, Inc. (Wing) to perform asbestos abatement at Arthur Kill's power plant in Staten Island. On February 25, 2006, Jose Barros, a Wing employee, allegedly sustained personal injuries in a slip and fall accident. On July 6, 2007, Barros commenced an action in the Supreme Court, New York County against Arthur Kill, among other defendants, Barros v Arthur Kill Power, LLC, Index no. 109338/2007. Barros allegedly slipped and fell while unloading a Wing truck parked at the dock of the Arthur Kill power plant, "as a result of grease which had fallen from and/or was caused to cover the floor of the subject premises as a result of defendants['] negligence." Callan Affirm., Ex H [Verified Complaint] ¶ 38. Arthur Kill then impleaded Wing, seeking contractual indemnification, common-law indemnification and contribution, and damages for Wing's alleged failure to procure insurance.

It is undisputed that ACE insured Arthur Kill for expenses of the action, pursuant to a liability insurance policy, no. HDOG21723873. The ACE policy has limits of $1 million for each occurrence, and $2 million in the general aggregate. It is undisputed that ASCIC issued a commercial general liability policy, No. ENV009296-05-01 to EWT Fireproofing, Inc., which contained an endorsement that designated Wing as a named additional insured. Like Arthur Kill's ACE policy, the ASCIC policy has limits of $1 million for each occurrence, and $2 million in the general aggregate.

Arthur Kill contends that it is an additional insured under the ASCIC policy. By letter dated July 11, 2007, a third-party administrator for an entity related to Arthur Kill, Broadspire, tendered Barros's claim to Wing, requesting it to notify Wing's insurer, ASCIC. By letter dated July 26, 2007, Broadspire sent ASCIC a copy of its tender letter to Wing, a copy of a certificate of insurance, and a copy of the purchase order. By letter dated October 10, 2007, ASCIC disclaimed coverage. Citing an Employer's Liability exclusion in the policy, ASCIC concluded that there was no coverage as to Arthur Kill. Even if coverage applied, ASCIC concluded that its coverage was excess to any policy issued to Arthur Kill. The letter also stated, "We reserve the right to assert and/or modify any policy defense that may be deemed applicable at any time through the course of our investigation." Callan Affirm., Ex J.

As a threshold issue, the parties disagree as to the law applicable to ASCIC's policy. As Arthur Kill indicates, section 16 of the ASCIC policy states, "This policy and all additions to, endorsements to, or modifications of the policy shall be interpreted under the laws of the State of Georgia." Callan Affirm., Ex E [ASCIC Policy] at AS020. ASCIC contends that New York law applies because the action seeks a declaration as to ASCIC's duties to defend and indemnify plaintiffs for an incident allegedly occurring in the State of New York.

"Generally, courts will enforce a choice-of-law clause so long as the chosen law bears a reasonable relationship to the parties or the transaction.

If ... the foreign law does not entail any such violation ... full effect should be given to the law of our sister State.' Crucially, however, we have reserved the public policy exception for those foreign laws that are truly obnoxious.'"

Under Georgia law, "[t]he hallmark of contract construction is to ascertain the intention of the parties. However, when the terms of a written contract are clear and unambiguous, the court is to look to the contract alone to find the parties' intent." Park 'N Go of Georgia, Inc. v U.S. Fid. & Guar. Co., 266 Ga 787, 791 (1996).

Arthur Kill argues that it is an additional insured under the ASCIC policy pursuant to an Additional Insured Coverage Endorsement [form ENV 98 011 11 04], which adds as an additional insured,

"d. Any person shown as an Additional Insured on a certificate of insurance issued by us or our authorized representative, or by endorsement to the policy, provided such person is required to be named as an Additional Insured in a contract with you, shall be entitled to coverage hereunder solely for claims' or suits' for bodily injury' . . .arising solely out of your negligence.

No obligation for defense or indemnity under the policy is provided to any Additional Insured for claims' or suits' directly or indirectly arising from' the status, actions, or inaction, including (without limitation) for vicarious, derivative or strict liability of said Additional Insured, its agents, consultants, servants, contractors or subcontractors (other than the Name Insured), except for the actions or inactions of the Named Insured.

e. We will have no duty to defend any insured, other than the Named Insured, except when the sole allegation against that insured is vicarious liability for the sole negligence of the Named Insured.

ASCIC contends that there was no contract between Wing and Arthur Kill requiring Wing to name Arthur Kill as an Additional Insured. According to ASCIC, the "contract" consists only of the terms of Arthur Kill's proposal, which does not, on its face, contain the provisions requiring Wing to obtain insurance coverage on Arthur Kill's behalf. Rather, those provisions are contained in paragraph 11 of the General Terms and Conditions, which were incorporated by reference in the proposal. In support of this argument, ASCIC cites New York cases holding that a subcontract does not incorporate by reference the indemnification provisions of a prime contract. [*4]

The issue is not whether the insurance procurement provisions were incorporated into the proposal. Rather, the issue is whether the term "contract" in the ASCIC endorsement would include not only the proposal, but also the General Terms and Conditions, which were incorporated by reference. Interpretation of the word "contract" is governed by Georgia law. In the absence of a specific definition of "contract" in the ASCIC endorsement, the term "contract" must be interpreted as it is understood under Georgia law. Georgia law provides that,

"When an agreement consists of multiple documents that are executed at the same time and during the course of a single transaction, those documents should be read together. Thus, the documents here that were executed contemporaneously must be construed together."

The cases upon which ASCIC relies are inapposite. New York law does not apply to interpretation of the term "contract" in the ASCIC policy. Moreover, the New York cases speak to the issue of whether a subcontract incorporates the indemnification provisions of a prime contract, which is not the case here. The proposal is not incorporating by reference the terms of a prime contract. Even if New York law applied, "[i]t is a well-established principle of contract law that all contemporaneous instruments between the same parties relating to the same subject matter are to be read together and interpreted as forming part of one and the same transaction." Davimos v Halle, 60 AD3d 576, 577 (1st Dept 2009). Thus, New York law would have regarded the proposal, purchase order, and terms and general condition as forming one contract.

As mentioned above, paragraph 11 of the General Terms and Conditions of Wing's agreement with Arthur Kill required Wing to purchase insurance on Arthur Kill's behalf. It states,

"INSURANCE. Supplier [Wing] shall purchase and maintain such insurance as will protect Supplier and Buyer [Arthur Kill] from the losses or claims set forth below which may arise out of or result from Supplier's performance or obligations to perform under this Purchase Order, whether such performance be by Supplier or by anyone directly or indirectly employed by Supplier, or by anyone for whose acts Supplier may be liable:

In sum, Arthur Kill has met the two requirements to be named as an additional insured under the ASCIC policy pursuant to the Section A of the Additional Insured Coverage Endorsement. First, a certificate of insurance by an authorized representative indicates that Arthur Kill is an additional insured. Second, a contract between Wing and Arthur Kill requires Arthur Kill to be named as an additional insured to the ASCIC policy.

ASCIC argues that an Employer's Liability exclusion applies here. Sub-paragraph 2 of Section I — Coverages of the ASCIC Policy provides, in relevant part:

"This insurance does not apply to:

e. Employer's Liability

Bodily Injury' to:

(1) An employee' of any insured arising from' and in the course of:

(a) Employment by any insured; or

(b) Performing duties related to the conduct of the insured's business

This exclusion applies:

(1) Whether an insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury."

This exclusion does not apply to liability assumed by the insured under an Insured contract.'"

ASCIC reasons that the exclusion applies because Barros was an employee of Wing, an additional named insured, and he allegedly suffered bodily injury in the course of his employment by Wing. Arthur Kill does not challenge that analysis. The parties dispute whether the exception to the exclusion, for "liability assumed by the insured under an Insured contract,'" applies.

The ASCIC Policy defines "Insured contract," in relevant part, as:

"That part of any written contract or written agreement under which you assume the tort liability of another party to pay damages not otherwise excluded under the policy because of bodily injury' or property damage' to a third person or organization and caused by your negligence."

The Court notes that ASCIC acknowledges that Wing, the additional named insured, arguably assumed the tort liability of Arthur Kill. Bloom Affirm. ¶ 24. Therefore, ASCIC concedes that Wing's agreement with Arthur Kill is an Insured Contract due to the indemnification provisions contain in the General Terms and Conditions. And yet, ASCIC argues that such Wing's assumption of the tort liability of Arthur Kill is insufficient. Rather, ASCIC argues that Arthur Kill must have [*6]assumed the tort liability of another third-party for the exclusion to apply. This analysis is faulty.

The Employer's Liability exclusion reads, "This exclusion does not apply to liability assumed by the insured under an Insured contract.'" As discussed above, Wing is an additional named insured under the ASCIC policy, and Arthur Kill is an additional insured under the policy, both by virtue of endorsements. The Employer's Liability therefore could be read as:

(1) "This exclusion does not apply to liability assumed by [Wing] under an Insured contract.'"

(2) "This exclusion does not apply to liability assumed by [Arthur Kill] under an Insured contract."

It bears repeating that ASCIC acknowledged that Wing arguably assumed Arthur Kill's tort liability. Bloom Affirm. ¶ 24. Thus, it is unambiguous that the Employer's Liability exclusion does not apply to Arthur Kill's tort liability, which was "liability assumed by [Wing] under an Insured contract.'"

On these motions, ASCIC raises the defense of late notice, even though ASCIC did not disclaim on the ground of late notice in its letter dated October 11, 2007. Arthur Kill argues that, under Georgia law, the late notice defense should be disregarded because ASCIC does not show that it suffered any prejudice. Callan Opp. Affirm. ¶ 21.

Section IV, paragraph 2 of the ASCIC policy states, in relevant part:

"a. You must see to it that we are notified in writing as soon as practicable and within thirty (30) days of when you become aware of an occurrence,' an offense which may result in a claim'.

b. If a claim' is made or suit' is brought against any insured, you must:

(1) Immediately record the specifics of the claim' or suit' and the date received; and

(2) Notify us in writing within ten (10) days of your first receipt of the claim' or suit'."

However, the record does not indicate when Arthur Kill was served with the papers; Arthur Kill apparently answered the complaint in Barros's action on January 24, 2008. See Bloom Affirm., Ex G. Thus, on the record before this Court, it cannot be determined, as a matter of law, whether Arthur Kill notified ASCIC within ten days after receipt of the Barros suit, i.e., after being served [*7]with the pleadings.

ASCIC submits no authority under Georgia law that the letter dated July 26, 2007 constitutes late notice. ASCIC cited New York cases only, and cited only one case where notice was given four weeks after commencement of the underlying action, which is not the case here. Because it cannot be determined from the record when Arthur Kill was served with the pleadings in the Barros action, the Court cannot rule out the possibility that Arthur Kill might have sent notice to ASCIC within ten days of being served with the pleadings, thus complying with the notice requirements of the policy. Therefore, ASCIC has not met its prima facie burden of establishing late notice as a matter of law. Accordingly, the Court does not reach the issue of whether, under Georgia law, ASCIC waived this defense by failing to raise it when it disclaimed coverage.

ASCIC also disclaimed coverage on the ground that coverage under its policy was excess to any other coverage issued to Arthur Kill, pursuant to Section IV (4) of its policy. See Callan Affirm., Ex J. Arthur Kill contends that the ASCIC policy provides coverage on a primary basis, by virtue of a Primary Non Contributory Insurance endorsement to the policy, form ENV 98 036 11 04.

The endorsement states, in relevant part:

"Solely with respect to the specified project listed below and subject to all terms, conditions, and exclusions to the policy, this insurance shall be considered primary to the Additional Insuredlisted below if other valid and collectible insurance is available to the Additional Insured for a loss we cover for the Additional Insured under Coverage A. It is also agreed that any other insurance maintained by the additional insured shall be non contributory.

The endorsement clearly and unambiguously defines additional insureds as those entities with whom the Named Insured, i.e., Wing, executes a written contract prior to the start of the project. It is undisputed that Wing executed the purchase order on February 27, 2006, two days after Barros's alleged accident. Callan Affirm., Ex C; Bloom Affirm., Ex D. Arthur Kill points out that it executed the purchase order before Barros' accident, but this is irrelevant to the definition of additional insured under the endorsement. The issue is not, as Arthur Kill contends, whether Wing and Arthur Kill intended to be bound by the terms of their agreement before Wing executed the purchase order. See Callan Reply Affirm. ¶ 10. The issue is whether Arthur Kill falls under the definition of additional insured in this endorsement, which it clearly does not. To find otherwise would contravene the unambiguous terms of this endorsement. Therefore, the Court concludes that this endorsement does not apply.

Section IV, paragraph 4 of the ASCIC policy states, in relevant part:

"4. Other Insurance

If other valid and collectible insurance is available to the insured, our [ASCIC's] obligations are limited as follows:

a. This insurance is primary, except when b. below applies.

b. This insurance is excess over any other insurance that is valid and collectible insurance available to the insured or any Additional Insured whether such insurance is primary, excess, contingent, or on any other basis and regardless of the nature, kind, date of issuance or limits of such insurance available to the insured or any Additional Insured. We shall have no obligation to provide defense or indemnity for any claim' or suit' for which other insurance exists until such time as the limits of such other insurance are exhausted by the payment of claims' or suits.'"

Arthur Kill contends that the ACE policy provides that its insurance is excess to the ASCIC policy, which would create a conflict in the coordination of the two policies that would need to be resolved. The Court disagrees.

Section IV of the ACE policy issued to Arthur Kill provides, in pertinent part:

"4. Other Insurance

If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:

a. Primary Insurance

b. Excess Insurance

This insurance is excess over:

(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.

c. Method of Sharing

If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss of the remains, whichever comes first."

Callan Affirm., Ex K [CG 00 01 12 04] at Pages 10-11 of 15. Arthur Kill's ACE policy is presumptively primary, unless an exception applies.

Contrary to Arthur Kill's argument, the exception of Section IV (b) (2) does not apply. Section IV (b) (2) appears to make the ACE policy excess to any other policy which provides the [*9]same scope of liability coverage for arising out of "premises-operations" or "products and completed operations,"^[FN3] where Arthur Kill is named as an additional insured. Although Arthur Kill was added as an Additional Insured to the ASCIC policy by endorsement, the endorsement did not provide the same scope of liability coverage. The "premises-operations" coverage and the "products-completed operations" exposure categories refer to the operations of the insured, which refers here to Arthur Kill. Although Arthur Kill was named as an additional insured under the ASCIC policy, the additional insured endorsement clearly insured Arthur Kill against " claims' or suits' for bodily injury' . . .arising solely out of [Wing's] negligence," not arising out of the premises or operations of Arthur Kill. See Section II, supra. Thus, the Court concludes that Section IV (b) (2) of Arthur Kill's ACE policy does not apply.

Because that provision does not apply, the ACE policy provides coverage on a primary basis, which presents no conflict in coordinating insurance coverage with the ASCIC policy. By virtue of Section IV (4) of the ASCIC policy, coverage under the ASCIC policy is excess to the ACE policy.

It cannot be determined on this motion whether the ACE policy, with a limit of $1 million for each occurrence, will be exhausted due to the costs to Arthur Kill from Barros's lawsuit. However, the Court notes that, by the terms of the additional insured endorsement, ASCIC has no duty to defend Arthur Kill. It provides, in pertinent part, "e. We will have no duty to defend any insured, other than the Named Insured, except when the sole allegation against that insured is vicarious liability for the sole negligence of the Named Insured." ASCIC Policy, at AS027.

The complaint in Barros's action alleges that Barros "was caused to slip and fall . . . as a result of grease which had fallen from and/or was caused to cover the floor of the subject premises as a result of defendants['] negligence." Callan Affirm., Ex H [Verified Complaint] ¶ 38. The existence of a slipping hazard on Arthur Kill's premises is not an allegation based on "vicarious liability for the sole negligence of the Named Insured [Wing]," as contemplated in the additional insured endorsement. As the premises owner, Arthur Kill has a common-law duty to maintain the premises in a reasonably safe condition. Although it is possible that Wing could have caused the alleged accumulation of grease, the "sole allegation" against Arthur Kill, based on paragraph 38 of the complaint, is not based on the vicarious liability of Arthur Kill.

Although Arthur Kill is a additional insured under the ASCIC policy, ASCIC therefore has no duty to defend Arthur Kill under the ASCIC policy.

Because it cannot be determined on this motion whether the ACE policy will be exhausted, it is premature to declare whether ASCIC has any duty under the ASCIC policy to Arthur Kill. However, by the terms of the additional insured endorsement, ASCIC has no duty to defend Arthur Kill. At most, ASCIC might have a duty to indemnify Arthur Kill.

Accordingly, it is hereby

ORDERED that plaintiffs' motion for summary judgment is granted in part; and denied in part; and it is further

ORDERED that defendant's motion for summary judgment is granted in part; and denied in part; and it is further

ADJUDGED and DECLARED that, under commercial general liability policy, No. ENV009296-05-01, defendant has no duty to defend plaintiff Arthur Kill Power, LLC in Barros v Arthur Kill Power, LLC, Index no. 109338/2007; and it is further

ADJUDGED and DECLARED that coverage under commercial general liability policy, No. ENV009296-05-01, issued by defendant, for plaintiff Arthur Kill Power, LLC is excess to coverage provided under ACE policy no. HDOG21723873; and it is further

ORDERED that the issues of whether notice to defendant was untimely and whether defendant has duty to indemnify are severed, and the action shall continue as to these severed issues.

Dated: February, 2010

New York, New YorkENTER:

J.S.C.