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A federal appeals court Tuesday reversed a lower court decision and ruled in favor of Admiral Insurance Co. in litigation over a settlement reached in a case involving a railroad worker’s injury.
In 2013, the Long Island Railroad contracted with Merrick, New York-based Rukh Enterprises Inc. to complete a paint-removal and repainting project on a Metropolitan Transit Authority railroad bridge in Queens, New York, according to Tuesday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in Century Surety Co. v. Metropolitan Transit Authority, Long Island Railroad, Admiral Insurance Co., et al.
Rukh hired a painting company, which is not a party to the litigation, to work on the project because it was not certified to perform lead-related activities. One of the subcontractor’s workers was injured while working on the project, and he sued Rukh and the LIRR for damages, according to the ruling.
An undisclosed settlement was reached, and insurers in the case, including Admiral, which insured the LIRR, agreed to pay a settlement amount. Meadowbrook Insurance Group Inc. unit Century Insurance, based in Westerville, Ohio, which had insured Rukh, refused to contribute on the basis it had no duty to defend or indemnify any party in the case and filed suit in U.S. District Court in New York on the issue. Admiral countersued, and the lower court ruled in Century’s favor.
A unanimous three-judge appeals court panel overturned that decision.
The panel said the lower court was wrong to conclude that under the language in the Century policy’s “other insurance” provision the coverage was a “true excess policy” and Century was not liable to tender payment until other available insurance policies, including Admiral’s, had made payments under their policy limits.
“The principal issue on appeal is which relevant contractual term governs – the indemnity agreement in the underlying trade contract between Rukh and LIRR or the ‘other insurance’ provision in the Century surety policy,” it said.
The panel, in reversing the lower court’s ruling, said the former was the case. “In short, we conclude that under New York law, Century Surety, as Rukh’s insurer, is liable to pay into the underlying settlement and exhaust its policy limits before Admiral, LIRR’s insurer.”
Attorneys in the case did not respond to a request for comment.