A Cincinnati Financial Corp. unit must defend its policyholder, a project subcontractor, in construction-related disputes, but it is too early to determine whether it must also indemnify it, a federal appeals court ruled Thursday, affirming a lower court decision.
Los Angeles-based Tutor Perini Building Corp., the general contractor hired to build Hanover, Maryland-based Maryland Live! The Casino and Hotel hired Brownsville, Fla.-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 Cincinnati Specialty Underwriters Insurance Co. vs. KNS Group LLC, GM&P Consulting and Glazing Contractors Inc., Gemini Insurance Co.
GMP, in turn, hired subcontractor Atlanta-based KNS Group LLC to help 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 casino̵7;s owner, Hanover, Maryland-based PPE Casino Resorts Maryland LLC, filed a lawsuit against its general contractor and subcontractors in state court, alleging that GM&P had installed a defective glass facade that violated GM&P’s obligation to complete the facade of a safe way.
GM&P responded by filing suit against KNS and other third-party defendants, accusing KNS of breach of contract and negligence.
In July 2020, Cincinnati Financial entity Cincinnati Specialty filed a lawsuit in US District Court in Fort Lauderdale, Florida, seeking a declaration that it was not obligated to defend or indemnify either KNS or GM&P in the underlying litigation.
The district court ruled that Cincinnati had a duty to defend KNS in the underlying litigation, but its narrower duty to indemnify was “not yet ripe” for judgment. It also held that Cincinnati did not have a duty to defend or indemnify GM&P in the underlying litigation.
A three-judge panel of the appeals court affirmed the lower court’s decision.
“Any doubt 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 says, referring to a previous ruling. “Because the property coverage exception does not apply, this standard is met here.”
But, the ruling said, “we agree with the district court’s assessment that it remains premature to rule on” the narrower question of whether Cincinnati must indemnify KNS for any damages it may 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, Fla., said in a statement that she and her client are pleased with the verdict. “We are not surprised that the Eleventh Circuit affirmed the court’s decision because 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 upheld a lower court ruling in favor of Cincinnati Specialty in lawsuits filed by an injured worker based on a policy exclusion.