On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-49-08.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman, Fuentes and Gilroy.
This appeal requires us to determine the scope of coverage provided by an additional insured endorsement of an insurance policy, which provides that such coverage "shall be excess over any other insurance," where an additional insured had primary coverage under its own policy. We are also required to determine whether the terms of an additional insured endorsement, which provides only excess coverage, should be construed to provide primary coverage if the subcontractorpolicyholder has agreed with a general contractor to obtain additional insurance coverage that is primary.
We conclude that an additional insured endorsement that provides coverage that is "excess over any other insurance" should be construed in accordance with its plain language to provide only excess coverage to an additional insured that had primary coverage under its own policy. We also conclude that a subcontract that requires the named insured-subcontractor to obtain primary coverage for the additional insured-general contractor cannot be construed to expand the scope of coverage provided under an additional insured endorsement if the issuer of the policy was not provided notice of the subcontract's terms.
Plaintiff Jeffrey M. Brown Associates, Inc. (Brown) is a general contractor. Plaintiff Zurich American Insurance Co. (Zurich) issued a commercial general liability policy to Brown with a policy limit of $1 million per occurrence. The sections of that policy relevant to this appeal, which provided primary coverage to Brown, are quoted later in this opinion.
On July 30, 2004, Brown entered into a subcontract with CAP Services, Inc. (CAP), which is not a party to this appeal, to demolish a structure on the site of a condominium project Brown was building. This contract included a provision which stated:
[CAP] shall procure and maintain, at its own expense, insurance.... [CAP's] policy must name Owner and [Brown] as additional insureds and shall be the primary policy. [Emphasis added.]
When this subcontract was entered into, CAP had a commercial general liability policy with a $1 million policy limit issued by defendant Interstate Fire & Casualty Co. (Interstate). That policy contained an additional insured endorsement which provided coverage that was "excess over any other insurance."
Under a subcontract with CAP, defendant Regional Scaffolding & Hoisting Co. (Regional) constructed a sidewalk bridge. On September 18, 2004, which was within the policy periods of both the Zurich and Interstate policies, the bridge collapsed on top of three CAP employees, causing them serious personal injuries. The CAP employees*fn1 brought personal injury actions against Regional;*fn2 John Butler, who was a subcontractor of Regional; and Brown. This appeal only involves the insurance coverage available to Brown for the defense of those actions and indemnification for any liability Brown might incur.
Initially, Zurich undertook to provide a defense to Brown. However, Zurich and Brown later took the position that Interstate was responsible, under the additional insured endorsement of the policy Interstate issued to CAP, to defend Brown and pay any judgments that may be entered against Brown in the underlying personal injury actions.
When Interstate failed to provide the requested coverage, Zurich and Brown brought this declaratory judgment action. The case was brought before the trial court by cross-motions for summary judgment. In an oral opinion, the court concluded, based on the previously quoted provision of the subcontract between Brown and CAP, that the Interstate policy provided primary coverage to Brown for the underlying personal injury actions. Accordingly, the court granted plaintiffs' motion for summary judgment and entered an order requiring Interstate to take over Brown's defense and pay any judgment entered against Brown.*fn3 The court subsequently ordered Interstate to pay the attorneys' fees and costs previously incurred in defending Brown in the personal injury actions and in pursuing this declaratory judgment action. Interstate appeals from those orders, and we now reverse.
We first consider whether the additional insured endorsement of the policy Interstate issued to CAP provided primary coverage to Brown even though that endorsement stated that the coverage provided an additional insured "shall be excess over any other insurance" and the policy Zurich issued to Brown provided primary coverage. We next consider whether the scope of coverage provided to Brown by the additional insured endorsement of the policy Interstate issued to CAP was modified by the provision of Brown's subcontract with CAP that required CAP to obtain an additional insured endorsement that provided primary coverage. Finally, after deciding both of these questions adversely to plaintiffs, we consider whether plaintiffs are nevertheless entitled to an award of the attorneys' fees they incurred in pursuing this declaratory judgment action.
In interpreting "the meaning of a provision in an insurance contract, the plain language is ordinarily the most direct route." Chubb Custom Ins. Co. v. Prudential Ins. Co., 195 N.J. 231, 238 (2008). "If the language is clear, that is the end of the inquiry." Ibid. "[A] court may look to extrinsic evidence as an aid to interpretation" only if there is ambiguity in the language of the insurance policy. Ibid.
With these general principles in mind, we turn to the specific provisions of the Interstate and Zurich policies that provided coverage to Brown for the claims asserted in the underlying personal injury actions. The additional ...