Senior Associate Robert E.B. Hewitt, III, Paralegal Alexis Joy Acevedo
A dispute arose between a New York commercial building owner and management company and their insurer, Union Mutual Fire Insurance Company, after a worker was seriously injured while performing work for one of the building’s tenants. Although Union Mutual initially defended the owner and management company in the injury lawsuit, the insurer later filed a federal declaratory judgment action seeking to deny coverage and withdraw its defense. The owner and management company then defaulted in the coverage action, under the mistaken belief that the defense attorney retained by Union Mutual in the injury case would also represent them in the coverage case.
The Challenge
After defaulting, the owner and management company turned to Schwartz, Conroy & Hack, P.C. Senior Associate Robert E.B. Hewitt, III quickly recognized the conflict of interest associated with an insurer-provided defense attorney representing an insured against the insurer. Assisted by Paralegal Alexis Acevedo, Robert immediately moved to vacate the default (which Union Mutual initially opposed) and successfully restored our clients’ right to participate in the discovery process in the coverage action.
The facts showed that the injured worker was hurt on his first day of the tenant converting leased space into a restaurant. The owner and management company had no role in or prior knowledge of the tenant’s construction. The tenant was supposed to name our clients as additional insureds but had apparently failed to do so.
Union Mutual moved for summary judgment, arguing that policy exclusions barred coverage for (1) injuries to independent contractors and (2) “ongoing operations.”
The Solution
Robert opposed both claims, demonstrating that both policy provisions were ambiguous and that genuine issues of fact existed. He pointed out that under New York law, ambiguities in insurance policies must be construed in favor of the insured. Based on the policy wording, he argued that the “ongoing operations” exclusion did not apply to work performed by a tenant. Further, the worker’s employment status – employee versus independent contractor – remained unclear, with conflicting testimony and inconsistent characterizations by Union Mutual itself. Robert demonstrated that the independent contractor exclusion raised factual questions that a jury must decide.
The Result
The court denied Union Mutual’s motion for summary judgment, finding the policy ambiguous and ruling that key issues of fact remained for trial. Through strategic advocacy, Schwartz Conroy & Hack vacated the default, preserved the clients’ rights, and kept their coverage case alive.
If your business insurance company has denied or is challenging your claim, contact Schwartz, Conroy & Hack, PC. We have the expertise and tenacity to make insurance companies keep the promises they made to policyholders like you.
