{"id":1752,"date":"2013-06-21T06:53:54","date_gmt":"2013-06-21T12:53:54","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=1752"},"modified":"2013-06-17T16:54:09","modified_gmt":"2013-06-17T22:54:09","slug":"seventh-circuit-holds-contractor-bodily-injury-exclusion-inapplicable","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/seventh-circuit-holds-contractor-bodily-injury-exclusion-inapplicable\/","title":{"rendered":"Seventh Circuit Holds Contractor Bodily Injury Exclusion Inapplicable"},"content":{"rendered":"

Brian Margolies – June 11, 2013<\/p>\n

In its recent decision in Atlantic Casualty Ins. Co. v. Paszko Masonry, Inc., 2013 U.S. App. LEXIS 11561 (7th Cir. June 7, 2013), the United States Court of Appeals for the Seventh Circuit had occasion to consider whether a company that had bid on, but not yet been awarded a construction project, could nevertheless be deemed a \u201ccontractor\u201d for the purpose of an employee bodily injury exclusion.<\/p>\n

The facts in Paszko related to the construction of an apartment building in Illinois on which Prince Contractors, Inc. was the general contractor.\u00a0 While construction was in process, Prince bid out work relating to caulking of gaps and joints.\u00a0 Raincoat Solutions bid on the project, and its bid was accepted, subject to approval of the caulking material and subject to Prince approving the competency of the caulking employee to be furnished by Raincoat.\u00a0 In an effort to secure the bid, Raincoat sent its intended employee, Rybaltowski, to the construction site to demonstrate how he would perform the caulking.\u00a0 Notably, Raincoat did not expect to be compensated for the work it performed in connection with the demonstration.\u00a0 After the demonstration was completed, but before Mr. Rybaltowski could leave the site, he was injured when a beam fell on him.\u00a0 Only a half hour after this incident, Raincoat and Prince signed a subcontract.\u00a0 Mr. Rybaltowski later filed suit against Prince and the subcontractor that had been working on the beam, Paszko.<\/p>\n

Paszko was insured under a general liability policy issued by Atlantic Casualty.\u00a0 The policy contained an exclusion for \u201cInjury to Employees, Contractors and Employees of Contractors,\u201d which barred coverage for bodily injury \u201cto any ‘contractor’ arising out of or in the course of the rendering or performing services of any kind or nature whatsoever by such ‘contractor’ for which any insured may become liable in any capacity.\u201d\u00a0 The policy stated that:<\/p>\n

\u2026 \u2018contractor\u2019 shall include but is not limited to any independent contractor or subcontractor of any insured, any general contractor, any developer, any property owner, any independent contractor or subcontractor of any general contractor, any independent contractor or subcontractor of any developer, any independent contractor or subcontractor of any property owner, and any and all persons working for and or providing services and or materials of any kind for these persons or entities mentioned herein<\/em>.\u00a0 (Emphasis supplied.)<\/p>\n

Thus, coverage for Paszko, and Prince as an additional insured under Paszko\u2019s policy, turned on the question of whether Raincoat could be considered a \u201ccontractor\u201d at the time of Mr. Rybaltowski\u2019s injury.<\/p>\n

The Seventh Circuit, in a decision authored by Judge Richard Posner, began its analysis by observing that the policy definition of contractor was \u201cpoorly drafted,\u201d since it only set forth examples of contractors rather than clearly defining the term.\u00a0 This definition raised a question as to when Raincoat qualified as a contractor simply by the nature of its business.\u00a0 As Judge Posner explained:<\/p>\n

The wording of the exclusion leaves uncertain whether Raincoat was a contractor simply because companies that engage in construction are called “contractors,” or whether it did not become a “contractor” until it signed a contract with Prince or until it provided materials or services other than the demonstration of caulking, or whether the demonstration itself was a service provided by a contractor.<\/p>\n

Judge Posner acknowledged that in one sense, Raincoat was \u201cproviding services\u201d to Prince in connection with the demonstration, even if it had not yet signed the subcontract.\u00a0 In this connection, Raincoat through Mr. Rybaltowski\u2019s efforts, did caulk a few windows as part of the demonstration, and presumably this was of benefit to Prince.\u00a0 The court nevertheless concluded that the exclusion could be interpreted differently, and in fact, more narrowly.\u00a0 Specifically, Judge Posner reasoned that:<\/p>\n

Also plausible, however, is the alternative interpretation that services are not provided until the contractor (with or without a signed contract, because a provider of services is a “contractor” within the meaning of the exclusion regardless of whether he has a contract) begins to do compensated work on the project.<\/p>\n

Thus, finding several plausible definitions of \u201ccontractor,\u201d the court concluded the term was ambiguous and therefore must be interpreted in the insured\u2019s favor.\u00a0 While the court agreed that it would be \u201ca little odd\u201d to treat a construction worker such as Mr. Rybaltowski as a \u201cpasserby\u201d just because he was demonstrating a construction service rather than performing that service for compensation, this outcome was necessitated by the ambiguity in Atlantic\u2019s definition of \u201ccontractor.\u201d<\/p>\n

via Seventh Circuit holds contractor bodily injury exclusion inapplicable – Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Brian Margolies – June 11, 2013 In its recent decision in Atlantic Casualty Ins. Co. v. Paszko Masonry, Inc., 2013 U.S. App. LEXIS 11561 (7th Cir. June 7, 2013), the United States Court of Appeals for the Seventh Circuit had occasion to consider whether a company that had bid on, but not yet been awarded… Continue reading Seventh Circuit Holds Contractor Bodily Injury Exclusion Inapplicable<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[12,361],"class_list":["post-1752","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-construction","tag-personal-injury","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nSeventh Circuit Holds Contractor Bodily Injury Exclusion Inapplicable - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/seventh-circuit-holds-contractor-bodily-injury-exclusion-inapplicable\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Seventh Circuit Holds Contractor Bodily Injury Exclusion Inapplicable - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Brian Margolies – June 11, 2013 In its recent decision in Atlantic Casualty Ins. 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