South Carolina Lawyers Weekly
South Carolina Electric & Gas Co. v. Old Republic Insurance Co. (Lawyers Weekly No. 002-127-17, 8 pp.) (Richard Mark Gergel, J.) 2:16-cv-02468; D.S.C.
Holding: Where an underlying lawsuit alleges negligence by both plaintiff and its contractor, and where plaintiff is an additional insured under the contractor’s policy only to the extent of plaintiff’s vicarious liability for the contractor’s negligence, the contractor’s insurer has no duty to defend plaintiff against allegations that plaintiff itself was negligent.
The court denies plaintiff’s motion for summary judgment.
Background
Plaintiff contracted with defendant Emerson Process Management Power and Water Solutions, Inc. (Emerson Solutions), a subsidiary of defendant Emerson Electric Co., to update the turbine control system at one of plaintiff’s plants. The contract required Emerson Solutions to list plaintiff as an additional insured to the extent of the negligent acts or omissions of Emerson. Emerson listed plaintiff as an additional insured, but only to the extent of the negligent acts or omissions of Emerson.
During the update, one of Emerson Solution’s subcontractor’s employees was injured, and the employee and his wife sued plaintiff and Emerson. The complaints allege negligence, negligent supervision, and/or negligent training on behalf of plaintiff, Emerson, and others.
The employee and his wife have settled with Emerson. Plaintiff seeks to have Emerson’s insurer, defendant Old Republic Insurance Co., pay the costs that plaintiff has incurred and will incur in defending the underlying actions.
Discussion
Neither of the underlying complaints seeks to hold plaintiff vicariously liable for the acts of Emerson. The contract language at issue here – “to the extent of the negligent acts or omissions of Emerson” – limits plaintiff’s coverage as an additional insured to the defense of allegations that it is vicariously liable for the acts or omissions of Emerson.
In Smurfit-Stone Container Enterprises, Inc. v. Nat’l Interstate Ins. Co., No. 3:08CV093 (E.D. Va. Sept. 5, 2008), the court held that the additional insured (Smurfit-Stone) was not entitled to recover defense costs where Smurfit-Stone was covered only to the extent that it was alleged to be vicariously (or derivatively) liable for the named insured’s actions, and the underlying complaint did not allege that Smurfit-Stone was vicariously liable in any way. Notably, the district court rejected Smurfit-Stone’s assertion that the underlying complaint’s allegation that Smurfit-Stone and the named insured (Terminal) “joined and concurred with the wrongdoing of one or more other Defendants” could be construed as an allegation that Smurfit-Stone was vicariously liable for the actions of Terminal.
For the reasons stated above, plaintiff’s motion for summary judgment is denied.
