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A Cincinnati Financial Corp. unit must defend its policyholder, a project subcontractor, in construction-related litigation, but it is premature to determine whether it must also indemnify it, a federal appeals court ruled Thursday, in affirming a lower court ruling.
Los Angeles-based Tutor Perini Building Corp., the general contractor hired to build Hanover, Maryland-based Maryland Live! Casino and Hotel, hired Brownsville, Florida-based GM&P Consulting and Glazing Contractors Inc. to provide exterior glazing for the building, according to Thursday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in The Cincinnati Specialty Underwriters Insurance Co. vs. KNS Group LLC, GM&P Consulting and Glazing Contractors Inc., Gemini Insurance Co.
GMP, in turn, enlisted subcontractor Atlanta-based KNS Group LLC to assist by glazing glass and installing window walls. KNS agreed to obtain commercial general liability and other types of insurance to indemnify GM&P for damages caused in whole or in part by KNS, and obtained coverage from Cincinnati.
In June 2020, the casino’s owner, Hanover, Maryland-based PPE Casino Resorts Maryland LLC, filed suit against its general contractor and subcontractors in state court, alleging that GM&P had installed a defective glass facade that was in breach of GM&P’s duty to complete the facade in a safe manner.
GM&P responded by filing suit against KNS and other third-party defendants, charging KNS with breach of contract and negligence.
In July 2020, Cincinnati Financial unit Cincinnati Specialty filed suit in U.S. District Court in Fort Lauderdale, Florida, seeking a declaration it did not have duty to defend or indemnify either KNS or GM&P in the underlying litigation.
The district court ruled Cincinnati had a duty to defend KNS in the underlying litigation, but its narrower duty to indemnify was “not yet ripe” for adjudication. It also held Cincinnati did not have a duty to defend or indemnify GM&P in the underlying litigation.
A three-judge appeals court panel affirmed the lower court’s ruling.
“All doubts as to whether a duty to defend exists in a particular case must be resolved against the insurer and in favor of the insured,” the ruling said, in citing an earlier ruling. “Since the exclusion to property coverage does not apply, this standard is met here.”
However, the ruling said, “we agree with the district court’s assessment that is still premature to rule on” the narrower issue of whether Cincinnati must indemnify KNS for any damages it might be liable for in the underlying litigation.
The ruling also agreed with the lower court that Cincinnati’s additional insured endorsement does not provide coverage to GM&P.
KNS attorney Alexandra Sierra-De Varona, of De Varona Law in Boca Raton, Florida, said in a statement she and her client are pleased with the ruling. “We are not surprised that the Eleventh Circuit affirmed the trial court's decision as it was correct,” she said.
Other attorneys in the case did not respond to requests for comment.
In April, the New Hampshire Supreme Court unanimously affirmed a lower court ruling in favor of Cincinnati Specialty in litigation filed by an injured worker, based on a policy exclusion.