In GMM Realty, LLC v. St. Paul Fire and Marine Insurance Company, the New York Appellate Court addressed a situation where the parent company of a real estate manager of the insured brought a declaratory judgment action against the insurer seeking defense and indemnification as an additional insured for a personal injury suit. After examining the Complaint and the relevant policy language, the Court held that the allegations of the Complaint suggested a reasonable possibility of coverage that triggered the insurer’s duty to defend.
The underlying personal injury suit arose after the plaintiff slipped and fell near the entrance of a commercial building. The plaintiff worked for a tenant in the building, who was insured by St. Paul. She brought suit against the owner of the building, a court-appointed receiver for the building, the real estate manager, and Fairfield Properties (“Fairfield”), the real estate manager’s parent company.
The receiver then filed a third-party action against the tenant, the real estate manager, and Fairfield. The real estate manager and Fairfield both tendered defense of the suit to St. Paul and the insurer provided a defense to the real estate manager as an additional insured. St. Paul rejected Fairfield’s demand on the basis that the policy did not cover the parent company of the building’s real estate manager.
The insurance policy at issue provided that the insurer would defend “protected persons” against a suit for bodily injury. The definition of “protected persons” included the insured’s real estate manager and provided coverage for the management of the building. There was no endorsement to the policy that specifically listed the names of the additional insureds. Under New York law, an insurer has a duty to defend whenever the allegations in the underlying complaint “suggest a reasonable possibility of coverage.”
Fairfield argued that it was an additional insured because the complaint alleged that Fairfield was the owner or lessor responsible for the operation, control, supervision and maintenance of the building. The trial court determined that Fairfield was not an additional insured because it was not named, described or otherwise referred to as an additional insured in the policy. This appeal by Fairfield followed that determination.
The appellate court examined the Complaint in the underlying action and found that it included allegations that Fairfield negligently managed and maintained the subject building, which caused Plaintiff’s injuries. Since the policy provided coverage for real estate managers, the Court held that those allegations suggested a “reasonable possibility” of coverage and that St. Paul had a duty to defend Fairfield.