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Walsh Construction Co. v. Zurich American Insurance Co.

Court of Appeals of Indiana

March 28, 2017

Walsh Construction Company, Appellant-Plaintiff,
v.
Zurich American Insurance Company, Appellee-Defendant, and Roadsafe Holdings, Inc. d/b/a Roadsafe Traffic Systems, Inc., Appellee-Intervener.

         Appeal from the Lake Superior Court The Honorable William E. Davis, Judge Trial Court Cause No. 45D05-1506-PL-43

          ATTORNEY FOR APPELLANT Michael L. Schultz Parr Richey Obremskey Frandsen & Patterson LLP Indianapolis, Indiana

         SATTORNEYS FOR APPELLEE ZURICH AMERICAN INSURANCE COMPANY Kyle A. Lansberry Lewis S. Wooton Michael R. Giordano Lewis Wagner, LLP Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE ROADSAFE HOLDINGS, INC. T. Allon Renfro Swanson, Martin & Bell, LLP Chicago, Illinois Robert P. Conlon Joyce F. Noyes Walker Wilcox Matousek LLP Chicago, Illinois

          Najam, Judge.

         Statement of the Case

         [¶1] Walsh Construction Company ("Walsh") appeals the trial court's entry of summary judgment in favor of Zurich American Insurance Company ("Zurich") on Walsh's complaint for declaratory judgment. Walsh raises three issues for our review, which we consolidate and restate as whether the trial court erred when it entered summary judgment for Zurich. As a matter of first impression, we hold that a self insured retention endorsement to a commercial general liability insurance policy requires the named insured to satisfy the amount of the endorsement, whether on its own behalf or on behalf of an additional insured, before the additional insured may seek to enforce the policy against the insurer. As that has not occurred here, we affirm the trial court's entry of summary judgment for Zurich.

         Facts and Procedural History

         [¶2] In January of 2009, Walsh, a general contractor, hired Roadsafe Holdings, Inc. d/b/a Roadsafe Traffic Systems, Inc. ("Roadsafe") to be Walsh's subcontractor in the construction of a traffic exchange involving Interstates 65 and 80 in Lake County. Roadsafe's work obligations included providing a safe traffic pattern through the work zone. Walsh's contract with Roadsafe required Roadsafe to indemnify Walsh for any liability resulting from Roadsafe's failure or negligence in its work. Accordingly, Walsh's contract required Roadsafe to procure a commercial general liability insurance policy ("CGL policy") that named Walsh as an additional insured on a primary and noncontributory basis.

         [¶3] Roadsafe obtained its CGL policy from Zurich. The CGL policy defined Roadsafe as the "Named Insured" and stated that, "[t]hroughout this policy[, ] the words 'you' and 'your' refer to the Named Insured . . . . The word 'insured' means any person or organization qualifying as such under Section II-Who Is An Insured." Appellant's App. Vol. 3 at 72. An endorsement attached to the CGL policy named as additional insureds any "person and organization where required by written contract, " such as Roadsafe's contract with Walsh, "but only with respect to liability for 'bodily injury' . . . by your [Roadsafe's] acts or omissions . . . ." Id. at 99. The CGL policy then provided as follows: "We [Zurich] will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' . . . to which this insurance applies. We will have the right and duty to defend the insured against any 'suit' seeking those damages." Id. at 72.

         [¶4] However, Roadsafe also obtained a $500, 000-per-occurrence self insured retention endorsement ("the SIR endorsement") to the CGL policy. The SIR endorsement amended the CGL policy as follows:

The insurance provided by this policy is subject to the following additional provisions, which in the event of conflict with any other provisions elsewhere in the policy, shall control the application of the insurance to which this endorsement applies:
1. Self Insured Retention and Defense Costs-Your Obligations
A. The "self insured retention" amounts stated . . . apply as follows:
1. If a Per Occurrence Self Insured Retention Amount is shown in this endorsement, you shall be responsible for payment of all damages and "pro rata defense costs" for each "occurrence"[] until you have paid damages equal to the Per Occurrence amount . . . .
B. Defense Costs
Except for any "defense costs" that we may elect to pay, you shall pay "pro rata defense costs" as they are incurred . . . .
C. Settlement of Claim
1. Within Self Insured Retention
If any final judgment or settlement is less than the "self insurance retention" indicated . . . above, you shall have the right and obligation to settle all such claims or suits . . . .
2. Excess of Self Insured Retention
You may not settle any claim or suit which exceeds any "self insured retention" amount indicated . . . without our written permission to do so. . . .
H. Compliance
Compliance with the requirements set forth in this endorsement is a condition precedent to ...

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