Liberty Surplus Insurance Corporation v. Burlington Ins. Co. and QBE Insurance Corp., Index No. 155165-2012 (Sup.Ct. N.Y.Cty. 2014)

In Liberty Surplus Insurance Corporation v. Burlington Ins. Co. and QBE Insurance Corp., Liberty Surplus (“LSI”) brought suit against QBE for recovery of $1,150,000 of the $2,150,000 it paid to settle an underlying Labor Law case brought against QBE’s insured (a general contractor) and LSI’s insured (the subcontractor/employer of the plaintiff).

In the underlying action, QBE tendered the defense of its insured, Marson Contracting, to LSI as an additional insured insured in LSI’s policy issued to MRC II, plaintiff’s employer. LSI accepted the tender and, at Abrams Gorelick’s insistence, retained separate counsel to defend Marson and the premises owner (1510 Second Avenue), on the one hand and MRC II, on the other. QBE’s insured, Marson, was granted summary judgment dismissing the complaint against it. Subsequently, LSI entered into a settlement of the underlying action in which it paid $2,150,000 ($1 million constituting the limits of its CGL policy and $1,150,000 under its umbrella/excess policy. MRC’s Workers Compensation carrier contributed an additional $350,000 to the overall settlement.

After the settlement, LSI brought an action against the owners’ insurer (Burlington Insurance Company) and QBE (Marson’s insurer) seeking a declaration that the QBE primary policy should apply before the LSI excess/umbrella policy and that QBE is obligated to reimburse LSI for the $1,150,000 paid under the LSI umbrella/excess policy to settle the underlying action.

On July 21, 2014, Judge Arthur Engoron of the Supreme Court, New York County, granted QBE’s motion dismissing LSI’s claim for reimbursement of settlement paid under its umbrella/excess policy, finding that the grant of summary judgment to QBE’s named insured, Marson, in the underlying action was dispositive that QBE’s insured had no liability and thus, QBE had no obligation to reimburse LSI for the settlement.

QBE was represented in the action by Abrams Gorelick partners, Michael Gorelick and Thomas Maeglin.