Add this case to your Big Fish Basket!
A Wisconsin federal court recently ruled in Fleet & Farm of Green Bay, Inc. v. United Fire & Cas. Co., No. 13-C-1013, 2015 WL 2453110, at *3-5 (E.D. Wis. May 22, 2015) that an additional insured does have coverage for a loss that occurs when connected to – in any tenuous way – the named insured’s business. This state now joins the majority who have found for additional insureds on the named insured’s policy if the loss arose out of or was connected to the named insured’s work.
As usual, let’s dig in!
A woman claimed she was seriously injured at the Mills’ Fleet and Farm store in Baxter, Minnesota when an employee caused a pallet of paving stones to fall on her leg. The woman, Schaefer, filed suit. Her complaint did not mention or find fault with Country Stone, who had manufactured and delivered the pallet of stone to the Fleet and Farm store.
United Fire insured Country Stone. Fleet and Farm was named as an additional insured on the Country Stone policy. Fleet and Farm demanded a defense and indemnity for Schaefer’s claim. United denied the tender. The insurer argued that the woman’s lawsuit did not implicate the named insured, County Stone, in any way. “We have not been presented with any evidence of any negligence on our insured that in any way contributed to this harm.” Id. slip op. at 1. Thus, the insurer stated, it had no duty to defend Fleet in the woman’s action.
We all know what happened next. Fleet sued United for coverage.
United then moved for summary judgment on the policy. The court and the parties focused solely on the additional insured endorsement:
United’s policy made Mills an additional insured as to any liability for bodily injury “arising out of” Country Stone’s products. When large paver stones fall on someone’s leg, the bodily injury “arises out of” those stones. Accordingly, it does not matter that the complaint fails to allege negligence on Country Stone’s part (although that came later). It is enough that Country Stone’s product caused the injury. The mere fact that the complaint does not allege negligence on the original insured’s part does not mean the vendor is not an additional insured under the policy or that there is no duty to defend.
Id. slip op. at 3. The court found that there was coverage because the incident was broadly connected to Country Stone. Nothing more is required by the endorsement. The court also rejected United’s argument that the duty to defend is triggered by the complaint. The court answered that argument with a flat rejection:
United’s argument rests on its assumption that its only insured was Country Stone. It is true that the original complaint did not mention any negligence on the part of Country Stone. But it didn’t need to because Country Stone was not the only insured under its policy of insurance with United. …By stark contrast, the “additional insured” provision in this case contains no limitation on coverage that would require any allegation whatsoever about the named insured’s conduct. Instead, it simply provides coverage for claims “arising out of” Country Stone’s product sold in the normal course of the vendor’s business.
Id. slip op. at 4-5.
The court also noted a number of other jurisdictions that have adopted this broad interpretation of an additional insured endorsement. The list is growing my friends, day by day.