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Northeast Stucco Systems, Inc. v. Hartford Fire Insurance Co.

May 1, 2009


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2836-07.

Per curiam.


Argued March 30, 2009

Before Judges Sabatino and Simonelli.

In this insurance coverage dispute, Northeast Stucco Systems, Inc. ("Northeast Stucco") appeals an order of the Law Division dated July 18, 2008. The order in question dismissed Northeast Stucco's complaint in New Jersey against defendant,

The Hartford Fire Insurance Company ("The Hartford"), without prejudice to the same underlying claims for coverage being litigated in the courts of New York. We affirm.

The relevant chronology, which largely arises in New York, is as follows. Northeast Stucco was a subcontractor on a project to build a Costco store in Port Chester, New York. On September 10, 2001, Vincent Leone, a union carpenter, was seriously injured at the Costco job site when he fell from an unsecured ladder. At the time of his accident, Leone had been working for another subcontractor on the site, Discovery Construction, Inc. ("Discovery"). Both Northeast Stucco and Discovery had their principal places of business in New Jersey. The record indicates that Discovery is now defunct.

Pursuant to the terms of its subcontract, Discovery agreed "to furnish at own cost and to indemnify and hold harmless" Northeast Stucco "from any and all liability, damages, losses, claims and expenses." Discovery further agreed to furnish a certificate of insurance naming Northeast Stucco as an additional insured.

At the time of Leone's accident, Northeast Stucco was insured by Cumberland Mutual Insurance Company ("Cumberland Mutual"). Northeast Stucco also had procured a potentially applicable policy with Travelers Insurance Company ("Travelers"). Discovery, meanwhile, was insured by a commercial policy with The Hartford.

In December 2002, Leone and his wife brought a personal injury action ("the Leone action"), Docket No. 21148/02, in the Supreme Court of New York in Westchester County, arising out of his September 2001 worksite accident. The Leones sued "Northeast Stucco Systems, NY, Inc." (a misidentified and nonexistent entity), as well as the project's general contractor, developer and property owner (collectively, "the Port Chester defendants").

Discovery, Leone's employer, was not initially named as a defendant in his lawsuit, presumably because of workers' compensation exclusivity principles. However, the Port Chester defendants filed third-party complaints against Discovery and Northeast Stucco (identifying the latter by its proper corporate name). In answering the third-party complaint, Northeast Stucco asserted cross-complaints for indemnification against Discovery, invoking the terms of the subcontract. The Leones thereafter filed a separate personal injury action against Northeast Stucco, this time identifying the company properly. All of these various pleadings and claims were consolidated in the original Leone action, under Docket No. 21148/02.

While the Leone action was still pending, Cumberland Mutual brought a separate declaratory judgment action in the Supreme Court of New York, Westchester County, under Docket No. 03047/05 ("the Cumberland Mutual declaratory action"). Cumberland Mutual sued the Leones, Northeast Stucco, Travelers, and Discovery, among other defendants. In its complaint, Cumberland Mutual disclaimed coverage of Northeast Stucco for the Leone accident, and asserted the potential applicability of the Travelers policy.

On October 5, 2005, the court in the Leone action granted the Leones partial summary judgment on the issue of Northeast Stucco's liability. In its decision, the court specifically found that Northeast Stucco "had the authority to supervise and control [Mr. Leone's] work." Following that ruling, the parties in the Leone action participated in mediation.

The mediation process resulted in a settlement of the Leone action before trial. On January 3, 2006, all parties settled that case, including certain third-party claims, for $1.8 million. Northeast Stucco, through its insurance carrier, Cumberland Mutual, settled with the Leones for $975,000. Through the terms of a mutual release, Cumberland Mutual agreed to pay Northeast Stucco's portion of the settlement to the Leones, and the carrier further "agree[d] that it will not seek reimbursement of said indemnity or defense costs from Northeast Stucco nor shall it seek reimbursement of any costs and fees incurred in the ...

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