Coverage Pointers - Volume XVIII, Special Edition

Volume XVIII, Special Edition

Tuesday, June 6, 2017

A Biweekly Electronic Newsletter


Hurwitz & Fine, P.C.

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As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers. 


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Dear Coverage Pointers Subscribers:


It is a rare day indeed that we bring you a SPECIAL EDITION of Coverage Pointers, but we do so today.  Just a few minutes ago, the New York State Court of Appeals handed down its decision in The Burlington Insurance Company vs. New York City Transit Authority. The high court reversed the decision below and held that the terms “arising out of” and “caused by” in additional insured endorsements indeed mean different things.  “Caused by” means “proximately caused by” and not just “connected to”. 


Our summary can be found in the attached issue and we include the Court of Appeals decision as well.




P.S. – for historical review





Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York

Dan D. Kohane

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Agnes A. Wilewicz

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Jennifer A. Ehman

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Dan D. Kohane, Chair

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Steven E. Peiper, Co-Chair

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Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Edward B. Flink

Patricia A. Fay

Jennifer J. Phillips

Brian D. Barnas

Howard B. Altman

Brian F. Mark

John R. Ewell

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader

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Michael F. Perley

Robert E. Hewitt, III

Jennifer J. Phillips

Brian D. Barnas


Jennifer A. Ehman, Team Leader
[email protected]

Patricia A. Fay


Jody E. Briandi, Team Leader

[email protected]


Jennifer J. Phillips

Diane F. Bosse

06/06/17       The Burlington Insurance Company v. NYC Transit Authority

New York State Court of Appeals

Most Important Liability Insurance Coverage Decision in Several Years.

“Caused by” in Additional Insured Endorsement Means “Proximately Caused By” and Not “Arising Out of”.    High Court Limits Breadth of Additional Insured Coverage
In a monumental decision from New York State’s highest court, the Court of Appeals ruled that where an insurance policy is restricted to liability for any bodily injury “caused, in whole or in part” by the “acts or omissions” of the named insured, the coverage applies only to injury proximately caused by the named insured.  It held that the Appellate Division erroneously interpreted this policy language as extending coverage broadly to any injury causally linked to the named insured, and wrongly concluded that an additional insured may collect for an injury caused solely by its own negligence, even where the named insured bears no legal fault for the underlying harm.


We have followed this case closely.  Burlington Insurance Company (“Burlington”) issued an insurance policy to Breaking Solutions, Inc. (“BSI”) listing as additional insureds defendants, the New York City Transit Authority (NYCTA) and MTA New York City Transit (MTA).  Burlington denied coverage to NYCTA and MTA on the grounds that the parties were not additional insureds within the meaning of the policy because NYCTA was solely responsible for the accident that caused the injury.


The NYCTA contracted with BSI to provide equipment and personnel and for BSI to perform tunnel excavation work on a New York City subway construction project.  BSI purchased commercial general liability insurance from Burlington with an endorsement that listed NYCTA, MTA, and New York City (City) as “additional insureds.”  As specified by NYCTA, BSI agreed to use language in the endorsement adopted from the latest form issued by a trade organization known as the Insurance Services Office (ISO), and which provides, in relevant part, that NYCTA, MTA, and the City are additional insureds:

". . . only with respect to liability for 'bodily injury', 'property damage' or 'personal and advertising injury' caused, in whole or in part, by:

1.       Your acts or omissions; or

2.       The acts or omissions of those acting on your behalf."

A NYCTA employee fell off an elevated platform as he tried to avoid an explosion after a BSI machine touched a live electrical cable buried in concrete at the excavation site.  The employee and his spouse brought an action against the City and BSI in federal court, asserting Labor Law claims, negligence, and loss of consortium.  A tender was made by NYCTA and MTA to Burlington.


Discovery in the employee's federal lawsuit revealed that NYCTA failed to identify, mark, or protect the electric cable, and that it also failed to turn off the cable power.  Documents further established that the BSI machine operator could not have known about the location of the cable or the fact that it was electrified.  Burlington disclaimed coverage to NYCTA and MTA, asserting that BSI was not at fault for the injuries and therefore NYCTA and MTA were not additional insureds under the policy.


Burlington argued that under the plain meaning of the endorsement NYCTA and MTA are not additional insureds because the acts or omissions of the named insured, BSI, were not a proximate cause of the injury.  Put another way, Burlington maintained that the coverage does not apply where, as here, the additional insured was the sole proximate cause of the injury.


In response, NYCTA and MTA also relied on the policy language, but claimed that by its express terms the endorsement applies to any act or omission by BSI that resulted in injury, regardless of the additional insured’s negligence.  They further argued that the Appellate Division properly concluded that BSI’s operation of its excavation machine provided the requisite causal nexus between injury and act to trigger coverage under the policy.


The Court concluded that “Burlington has the better argument”:  there is no coverage because, by its terms, the policy endorsement is limited to those injuries proximately caused by BSI.


The Court seems to suggest that so long as the named insured is a proximate cause, even if not the sole proximate cause, additional insured status would trigger.



NYCTA and others argued that the endorsement does not limit liability to cases in which an insured's acts or omissions are negligent or otherwise legally actionable.  Essentially, they advocated that “caused, in whole or in part” means “but for” causation.  Under their reading of the policy, all that is necessary for an additional insured to be covered is that the insured’s conduct be a causal link to the injury.  The Court found that this was an incorrect interpretation of the policy language, which by its terms describes proximate causation and legal liability based on the insured’s negligence or other actionable deed.



It is well established in our law that “but for” causation, or causation in fact, is “[t]he cause without which the event could not have occurred”  ….  The term refers to a link in the chain leading to an outcome, and in the abstract does no more than state the obvious, that “any given event, including an injury, is always the result of many causes” (Dobbs, § 189).  However, not all “but for” causes result in liability and “[m]ost causes can be ignored in tort litigation” (id.).  In contrast, “proximate cause” refers to a “legal cause” to which the Court has assigned liability… “the determination of proximate cause involves, among other things, policy‑laden considerations; that is, the chain of causation must have an endpoint in order 'to place manageable limits upon the liability that flows from negligent conduct.’”


Here, the Burlington policy endorsement states that the injury must be “caused, in whole or in part” by BSI.  These words require proximate causation since “but for” causation cannot be partial.  An event may not be wholly or partially connected to a result, it either is or it is not connected.  Stated differently, although there may be more than one proximate cause, all “but for” causes bear some connection to the outcome even if all do not lead to legal liability.  Thus, these words – “in whole or in part” -- can only modify “proximate cause” (see Dobbs § 189; Black's Law Dictionary, proximate cause; Hain v Jamison, 28 NY3d at 529).  Defendants' interpretation would render this modification superfluous, in contravention of the rule that requires us to interpret the language “in a manner that gives full force and effect to the policy language and does not render a portion of the provision meaningless” (Cragg v Allstate Indem. Corp., 17 NY3d 118, 122 [2011]…



NYCTA and MTA argued that the language “in whole or in part” was necessary in order to make clear that the parties did not mean “solely caused by.”  Without the additional language, they contended, the endorsement would provide NYCTA and MTA coverage only if BSI’s acts or omissions were solely responsible for the loss.  The Court found this argument unpersuasive because the phrases “caused, in whole or in part, by” and “solely caused by” are not synonymous, either by their plain meaning or legal effect.


The endorsement’s reference to “liability” caused by BSI’s acts or omissions further confirms that coverage for additional insureds is limited to situations where the insured is the proximate cause of the injury.  Liability exists precisely where there is fault and “[i]n the great majority of cases today, tort liability is grounded in the conclusion that the wrongdoer was at fault in a legally recognizable way.”  That the policy extends coverage to an additional insured “only with respect to liability” establishes that the “caused, in whole or in part, by” language limits coverage for damages resulting from BSI's negligence or some other actionable “act or omission.”



The Court similarly rejected defendants’ invitation to adopt the First Department’s conclusion, based on its prior decisions, that the phrase “‘caused by’ does not materially differ from the phrase, ‘arising out of'’ and results in coverage even in the absence of the insured's negligence (Burlington Ins. Co. v NYC Transit Authority, 132 AD3d at 135, citing W & W Glass Sys., Inc. v Admiral Ins. Co., 91 AD3d 530 [1st Dept 2012]; National Union Fire Ins. Co. of Pittsburgh, PA v Greenwich Ins. Co., 103 AD3d 473 [1st Dept 2013]).”  Since the parties did not use the phrase “arising out of,” the First Department's analogy is inapt. 


Here, BSI was not at fault.  The employee'’ injury was due to NYCTA’s sole negligence in failing to identify, mark, or deenergize the cable.  Although “but for” BSI’s machine coming into contact with the live cable, the explosion would not have occurred and the employee would not have fallen or been injured, that triggering act was not the proximate cause of the employee’s injuries since BSI was not at fault in operating the machine in the manner that led it to touch the live cable.      


Editor’s Note:        Special kudos to our friend Michael McMyne, Senior VP and Chief Claim Officer for IFG Companies (Burlington), a long time champion of this “cause” and Attorney Joseph D’Amborsio from Ford Marrin Esposito Witmeyer & Gleser, L.L.P. for his excellent legal advocacy.


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