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When a Named Insured’s Employee is Dead, Does “Named Insured” Exclusion Bar Coverage?

This story is reprinted with permission from FC&S Legal, the industry’s only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

A federal district court in New Jersey has ruled that the “Named Insured versus Named Insured” exclusion in an insurance policy did not bar coverage after an employee of a “Named Insured” died and a lawsuit against a “Named Insured” was filed by his estate and widow.

The Case

Brian Pancoast, an employee of Freehold Cartage, Inc., died during the course of his employment while working on a specialty roll-off tank/container when the hatch of the roll-off tank/container closed on him.

As a result of the accident, Dana Pancoast and her husband’s estate filed a wrongful death and survivorship action against FCI Transport, Inc., among others, in a New Jersey state court.

Eventually, the estate and Ms. Pancoast entered into a settlement with FCI Transport under which FCI Transport assigned to the estate and Ms. Pancoast all of its rights against Gemini Insurance Company, which had issued an insurance policy to FCI Transport.

Gemini denied any obligation to defend FCI Transport, citing the policy’s “Named Insured versus Named Insured” exclusion, and it filed an action seeking a declaration that there was no coverage for the lawsuit filed by the estate and Ms. Pancoast against FCI Transport.

The insurer moved for summary judgment, and the estate and Ms. Pancoast moved for judgment on the pleadings.

Gemini argued that the exclusion applied to the estate and Ms. Pancoast, even though they were not Named Insureds under its policy, because the bodily injury at issue was regarding Mr. Pancoast, an employee of a Named Insured, Freehold Cartage, Inc.

The estate and Ms. Pancoast argued that the plain language of the exclusion undermined Gemini’s position. They argued, instead, that the exclusion unambiguously required the court to look at who was bringing the claim and was expressly limited to claims asserted directly by a Named Insured or an employee of a Named Insured.

The Gemini Policy

The Gemini insurance policy stated:

This Insurance does not apply to: . . . .

bb. Named Insured versus Named Insured

Any liability, costs or expenses of any Named Insured or its “employees” arising out of, caused or contributed to by any “bodily injury” or “property damage” claimed by any other Named Insured or its “employees”.

The District Court’s Decision

The district court denied Gemini’s motion and granted the motion filed by the estate and Ms. Pancoast.

In its decision, the district court reasoned that none of the “well-settled principles governing the interpretation of insurance policies” warranted a finding that the “Named Insured versus Named Insured” exclusion barred coverage of a lawsuit brought by someone other than a Named Insured or employee of a Named Insured, such as the estate and Ms. Pancoast.

The district court found the exclusion to be “unambiguous and unequivocal,” and said that it undoubtedly revolved around who was asserting the claim, not who it initially belonged to or what claim was being asserted. “By its plain terms,” the district court said, the exclusion was “expressly limited to claims asserted by a Named Insured or its employees, not an estate or family member.”

The district court rejected Gemini’s contention that the exclusion applied to claims made on behalf of a Named Insured, ruling that the “plain language” of the exclusion did not apply to claims made on behalf of a Named Insured, an estate, or a widow.

The district court added that if Gemini wanted the exclusion to bar coverage for claims by a Named Insured’s deceased employee’s estate or spouse, it should have drafted it to so provide.

Accordingly, the district court concluded that the lawsuit filed by the estate and Ms. Pancoast against FCI Transport was not barred by the exclusion.

The case is Gemini Ins. Co. v. 33 East Maintenance, Inc., No. 17-7393-BRM-TJB (D.N.J. Jan. 22, 2019). Attorneys involved include: For GEMINI INSURANCE COMPANY, Plaintiff: ALEXANDRA ELIZABETH RIGNEY, Fleischner Potash Cardali Chernow Coogler Greisman Stark Ste, White Plains, NY; NICHOLAS L. PAONE, WHITE, FLEISCHNER & FINO, LLP, HOLMDEL, NJ. For 33 EAST MAINTENANCE INC., FCI TRANSPORT, INC., FCI LEASING, LLC, FREEHOLD CARTAGE, INC., Defendants, Third Party Plaintiffs, Counter Claimant, Third Party Defendant: MICHAEL JOHN GORNY, MICHAEL J. GORNY, ESQ, FREEHOLD, NJ. For ESTATE OF BRIAN PANCOAST BY ADMINISTRATIX AD PROSEQUENDUM DANA PANCOAST, Defendant, Third Party Defendant, Counter Defendant: PETER CHAMAS, LEAD ATTORNEY, GILL & CHAMAS, LLC, WOODBRIDGE, NJ. For Willis of Pennsylvania, Inc., WILLIS OF NEW JERSEY, INC., Defendants, Fourth Party Plaintiffs, Third Party Defendants: ROBERT A. MINTZ, LEAD ATTORNEY, MCCARTER & ENGLISH, LLP, NEWARK, NJ; STEVEN HOWARD WEISMAN, LEAD ATTORNEY, MCCARTER AND ENGLISH, NEWARK, NJ. For CRC INSURANCE SERVICES, INC., Defendant, Third Party Defendant, FourthParty Defendant: BRITTANY MARIE WILSON, LEAD ATTORNEY, BALLARD SPAHR LLP, PHILADELPHIA, PA. For WILLIS OF PENNSYLVANIA, Fourth Party Plaintiff, Fourth Party Plaintiff: ROBERT A. MINTZ, LEAD ATTORNEY, MCCARTER & ENGLISH, LLP, NEWARK, NJ; STEVEN HOWARD WEISMAN, LEAD ATTORNEY, MCCARTER AND ENGLISH, NEWARK, NJ. For GEMINI INSURANCE COMPANY, Counter Defendant, Third Party Plaintiff, Counter Claimant: NICHOLAS L. PAONE, WHITE, FLEISCHNER & FINO, LLP, HOLMDEL, NJ.

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.