Background
Erie County hired Destro & Brothers Concrete Company to perform paving work at a county park and engaged LiRo Engineers to provide construction management services for the project. Selective Insurance insured Destro; Zurich American Insurance insured LiRo. Both contractors were required by contract to name the County as an additional insured on their policies.
A bicyclist was injured at the park when she transitioned from the pavement edge to the grass, and she sued the County, Destro, and LiRo for negligent ownership, operation, and design of the pavement. After both insurers refused to defend the County, Erie County commenced a declaratory judgment and breach of contract action seeking coverage. The trial court denied Selective’s motion to compel the County’s deposition (Appeal No. 1) and separately granted the County’s motion for summary judgment declaring that both Selective and Zurich must defend and reimburse defense costs (Appeal No. 2).
The Fourth Department addressed both appeals in a single opinion, reaching different results for each insurer.
The Court’s Holding
On Zurich’s portion of Appeal No. 2, the Fourth Department upheld the finding that Zurich must defend. Zurich argued that its professional services exclusion—which bars coverage for bodily injury “arising out of the rendering of, or failure to render, any professional architectural, engineering or surveying services”—applied because LiRo served as an engineering consultant. The court disagreed. Reaffirming that the duty to defend is “exceedingly broad,” the panel held that an insurer must show the allegations fall “solely and entirely” within the exclusion. Because the underlying complaint alleged negligent “ownership, operation, maintenance, management, construction, control and design,” the court concluded Zurich failed to meet that heavy burden.
On Selective’s portion of Appeal No. 2, the court reversed the summary judgment entered against Selective. The threshold question was whether the scope of Destro’s contract with the County included park paving work. The court found a genuine contractual ambiguity: the bid addenda specifically referenced park work and Destro’s bid included it, yet the executed contract set a bid price that excluded park work. Because neither party established its interpretation as the only reasonable one, neither was entitled to summary judgment; extrinsic evidence is needed to resolve intent.
On Appeal No. 1, the court reinstated Selective’s motion to compel the County’s deposition, which the trial court had incorrectly deemed moot after Selective cross-moved for summary judgment. Filing a cross-motion for summary judgment does not constitute abandonment of a pending discovery motion under NY practice.
Key Takeaways
- NY’s “solely and entirely within the exclusion” standard sets a very high bar for insurers invoking professional services exclusions when underlying complaints allege both professional and operational negligence.
- Additional-insured coverage depends on whether the underlying contract unambiguously includes the specific work at issue; bid addenda expressly incorporated into a contract are part of its scope, but inconsistencies between addenda scope and the contract’s stated price can create ambiguity requiring trial.
- A party does not forfeit a pending discovery motion by cross-moving for summary judgment; courts may not sua sponte deem a motion to compel moot on that basis.
Why It Matters
This decision is directly useful to NY municipal attorneys, insurance coverage counsel, and construction lawyers. Erie County prevails against Zurich but loses the summary judgment against Selective—illustrating how the same facts can produce opposite results depending on which exclusion is invoked and how clearly the underlying contract defines scope of work. For insurers, the ruling reinforces that a professional services exclusion will rarely eliminate the duty to defend where operational negligence is also alleged.
The Selective ruling has practical implications for public-entity procurement statewide. If bid addenda reference additional work but the contract’s price point omits it, coverage litigation will likely follow about whether the contractor’s additional-insured obligations extend to that work. Municipal attorneys and procurement officers should ensure that contract price, scope, and addenda are internally consistent before work begins.