An insurer would normally have been required to defend a company that was extra insured under its cover, but which is not on the hook in a case involving a worker who died from a roof due to the settlement in the underlying dispute, a federal appeals court said in a divided judgment.
A warehouse operator in Illinois entered into a contract with a roofing company in Tennessee to repair its hail-damaged roofs, according to Friday's judgment of the 7th U.S. District Court in Chicago ] United Fire & Casualty Co. vs. Illinois-based Prate Roofing & Installations LLC to serve as the main contractor, with All Seasons as the subcontractor, the ruling said.
A commercial general policy issued by Cedar Rapids, Iowa-based United Fire listed Prate Roofing as an additional insured, according to the judgment.
In November 201
After employee compensation provided limited death benefits, the worker's family brought an unfair death to defendants including Prate and All Seasons. United Fire refused to defend Prate in the disputes and it was instead defended by its own insurer, Nationwide Mutual Insurance Co.
A settlement was reached between All Seasons and United Fire in the worker's death, where the insurer paid the insurance limit of $ 1 million. The settlement released All Seasons from liability in the case. The family's case remains against Prate Roofing.
Meanwhile, United Fire filed a separate lawsuit seeking a declaration that it had no obligation to defend Prate in the case. The U.S. District Court in Chicago concluded that since the underlying complaint could lead to deputy liability for Prate Roofing as further insured, United Fire was obligated to defend the company.
The Court of Appeal's 2-1 majority decision agreed in the lower court that United Fire's coverage potentially triggered the obligation to defend.
However, it added that United Fire was obliged to defend the roof of Prate only for potentially surrogate liability, "ie only if All Season's potential liability could have been attributed to it.
"But according to the terms of the settlement, All Seasons had no responsibility," it said in the judgment. As a result, United Fire has no obligation to defend Prate for deputy responsibility, the majority statement said when changing the lower court's ruling.
The dissenting opinion stated that Prate Roofing should not be held as a potential substitute for All Season & # 39 ;s damages.  Lawyers in the case did not respond to a request for comment.
In May, the Occupational Safety and Health Administration cited a roofing contractor in the death of a 16-year-old boy who fell while working at a hotel in Nashville, Tennessee.