{"id":899444,"date":"2021-12-23T09:30:15","date_gmt":"2021-12-23T16:30:15","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=899444"},"modified":"2021-12-23T09:30:33","modified_gmt":"2021-12-23T16:30:33","slug":"duty-to-indemnify-follows-duty-to-defend","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/duty-to-indemnify-follows-duty-to-defend\/","title":{"rendered":"Third Circuit Holds that Duty to Indemnify &#8220;Follows&#8221; Duty to Defend"},"content":{"rendered":"\n<p>Jeffrey J. Vita | <a href=\"https:\/\/www.lexology.com\/library\/detail.aspx?g=246a5b37-b787-457a-97b2-d98558bb2c9d&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+General+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2021-12-17&amp;utm_term=\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Saxe Doernberger &amp; Vita<\/a><\/p>\n\n\n\n<p>In a win for policyholders, the Third Circuit Court of Appeals recently affirmed a District Court\u2019s 2018 ruling, which held that the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/no-duty-to-defend-indemnify\/\" target=\"_blank\" rel=\"noreferrer noopener\">duty to indemnify<\/a> follows the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/duty-to-defend-insurance-breach\/\" target=\"_blank\" rel=\"noreferrer noopener\">duty to defend<\/a> where a settlement precludes a determination on the facts of the case relative to liability and apportionment.<\/p>\n\n\n\n<p>In&nbsp;Liberty Mutual Insurance Co. v. Penn National Mutual Casualty Insurance Co.,&nbsp;a large concrete panel collapsed and killed a construction worker at a construction site in New Kensington, Pennsylvania. Cost Company (\u201cCost\u201d), Liberty Mutual\u2019s insured, was a masonry subcontractor on the project and had further subcontracted with Pittsburgh Flexicore Co. (\u201cFlexicore\u201d), Penn National\u2019s insured, for the concrete panels. Cost\u2019s subcontract agreement required Flexicore to name Cost as an additional insured under its general liability policy issued by Penn National.<\/p>\n\n\n\n<p>When the construction worker\u2019s widow filed a wrongful death lawsuit against Cost and Flexicore, Cost demanded that Penn National defend and indemnify it as an additional insured under the policy. Penn National refused, arguing that any additional insured status had terminated at the conclusion of Flexicore\u2019s work for Cost. As a result, Liberty Mutual defended Cost in the lawsuit, which was ultimately settled.<\/p>\n\n\n\n<p>Following the settlement, Liberty Mutual sued Penn National, asserting that Cost was an additional insured under the Penn National policy and seeking reimbursement for the sums it paid to defend and indemnify Cost. Each insurer moved for summary judgment. The District Court ruled in Liberty Mutual\u2019s favor, and Penn National appealed.<\/p>\n\n\n\n<p>On appeal, the Third Circuit Court of Appeals first addressed whether Penn National had a duty to defend Cost. Answering in the affirmative, the Court of Appeals reasoned that Cost qualified as an additional insured under the Penn National policy\u2019s Completed Operations endorsement. Moreover, the allegations in the complaint (i.e., that the worker\u2019s death was caused, in part, by Flexicore\u2019s failure to provide warnings) demonstrated that there is a possibility that Penn National\u2019s policy covers the claim.<\/p>\n\n\n\n<p>Turning to the duty to indemnify, the Court of Appeals noted that in an insurance coverage action, \u201cwhere the underlying tort case has been settled, the insurers may seek a resolution of only the factual disputes that would not have been resolved had the underlying tort suit been tried.\u201d&nbsp;In other words, factual disputes that would have been addressed in the settled underlying litigation cannot be resolved in a coverage action. The Court of Appeals added that where a coverage action raises such disputes, \u201cPennsylvania law provides that the duty to defend itself triggers the duty to indemnify.\u201d<\/p>\n\n\n\n<p>Moving to the facts of the case, the Third Circuit Court of Appeals agreed with the District Court that \u201cthe settlement made it impossible to determine the precise basis of Cost\u2019s and Flexicore\u2019s liability.\u201d&nbsp;Accordingly, the Court of Appeals held that, \u201c[b]ecause such factual disputes cannot be decided in this multiparty, multiclaim case without factfinding in the [Underlying Action], Pennsylvania law requires that Penn National\u2019s duty to indemnify follows its duty to defend Cost.\u201d<\/p>\n\n\n\n<p>Although&nbsp;Liberty Mutual&nbsp;involves a dispute between two insurers, it represents a win for policyholders because it lowers the bar for triggering an insurer\u2019s duty to indemnify in cases where a settlement precludes a factual determination as to the allocation of liability among various defendants. Instead, an insured need only establish that the applicable insurance policy potentially covers the claim in such cases.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jeffrey J. Vita | Saxe Doernberger &amp; Vita In a win for policyholders, the Third Circuit Court of Appeals recently affirmed a District Court\u2019s 2018 ruling, which held that the duty to indemnify follows the duty to defend where a settlement precludes a determination on the facts of the case relative to liability and apportionment.&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/duty-to-indemnify-follows-duty-to-defend\/\">Continue reading <span class=\"screen-reader-text\">Third Circuit Holds that Duty to Indemnify &#8220;Follows&#8221; Duty to Defend<\/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":[10,10721],"tags":[9895,57,478,22],"class_list":["post-899444","post","type-post","status-publish","format-standard","hentry","category-duty-to-defend","category-insurance","tag-advise-consult","tag-duty-to-defend-2","tag-duty-to-indemnify","tag-insurance","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Third Circuit Holds that Duty to Indemnify &quot;Follows&quot; 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