Second Circuit affirms application of policy exclusion in crane collapse coverage case

Second Circuit affirms application of policy exclusion in crane collapse coverage case

Source: http://www.lexology.com, June 28, 2013
By: James T. Killelea

The Second Circuit recently affirmed a lower court decision holding that an insurance policy exclusion barred coverage for claims against a construction company relating to a March 2008 crane collapse in Manhattan. A copy of the decision can be found here.

According to the lower court decision, the construction company, RCG Group, sought coverage from RSUI Indemnity for dozens of lawsuits over the crane collapse at 303 E. 51 St., a high-rise apartment that was then under construction. The incident was allegedly caused by the failure of slings and collars used to hold the crane to the building, which, as explained by the lower court, resulted in the death of seven people.

RSUI Indemnity filed its coverage suit against RCG Group in 2008, seeking a declaration that it did not have to indemnify the construction group based on a policy exclusion that precluded coverage for work relating to residential projects and mixed use buildings. U.S. District Judge Paul Engelmayer ruled in the insurer’s favor in August 2012.

On appeal, RCG Group argued that the exclusion did not unambiguously exclude coverage because the building where the accident occurred was intended to include community space. RCG Group asserted that because there was planned community space, the project did not fall under the policy’s definition for mixed-use buildings, which the policy specified as structures that “contain” both residential units and commercial space.

The Second Circuit, however, determined that regardless of whether the building project contemplated the inclusion of community space, the projected contained both residential uses and commercial space and therefore should be deemed mixed-use and no ambiguity as to that issue was demonstrated. The Court thus found that the lower court properly determined that the policy exclusion applied and coverage was barred for the claims against RCG Group relating to the crane collapse.

 

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