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Harleysville Insurance Co. v. Church Insurance Co.11/16/2005
Submitted: October 26, 2005
Before STEELE, Chief Justice, HOLLAND, and BERGER, Justices.
Upon appeal from the Superior Court. AFFIRMED.
A personal injury plaintiff, Charles Brown, was injured when a fire escape ladder attached to the property owned by Cathedral Community Services and managed by Capital Management Company fell on his head. Cathedral had a general liability policy with Church Insurance Company and an excess umbrella policy with National Union Fire Insurance Company. Capital had a general liability policy with Harleysville Insurance Company. Church defended Cathedral in the ensuing personal injury litigation. Harleysville defended Capital. Harleysville argued before the Superior Court and before this Court that Capital was an additional, though unnamed, insured under the policy Church issued to Cathedral and that Church had the primary duty to defend Capital. On cross-motions for summary judgment, the Superior Court held, inter alia, that Church did have a duty to defend Harleysville as an additional insured, but that Harleysville, acting on behalf of Capital, waived Capital's right to a defense from Church by failing to conduct a pre-trial inquiry into Capital's potential coverage under the policy Church issued to Cathedral and by seizing the defense of Capital in Brown's personal injury action. Harleysville appeals this judgment. Because the record clearly shows that Harleysville failed to conduct an investigation using its customary procedures into whether its insured, Capital, was covered under Church's policy, and for the reasons articulated in the Superior Court's opinion, we affirm.
Facts
On June 1, 1994, Cathedral Community Services, the owner of a property located at 2001 N. Market Street in Wilmington, Delaware, entered into a written contract with Capital Management Company whereby Capital agreed to manage and maintain the Market Street property, as well as other properties Cathedral owned. The written contract expired in 1995.
On August 23, 1999, Charles Brown was standing underneath an exterior fire escape attached to the side of 2001 N. Market Street. Brown touched the bottom step of the fire escape ladder, and the ladder section fell striking Brown on the head and severely injuring him. The ladder section fell because a heavily corroded supporting metal cable broke releasing the ladder and a counterweight.
At the time of the injury, Cathedral had a primary liability insurance policy with policy limits of $1,000,000 with Church Insurance Company. Cathedral also had an umbrella excess policy with National Union Fire Insurance Company of Pittsburgh with limits of $50,000,000. Capital had a general liability insurance policy with limits of $1,000,000 issued by Harleysville Insurance Company. The Cathedral-Church insurance policy contained a provision that stated in "Section II --Liability Coverage" that "'Insured' means . any person or organization while acting as real estate manager for the named Insured." The Harleysville-Capital policy had a provision that stated "with respect to your liability arising out of your management of property for which you are acting as real estate manager this insurance is excess over any other valid and collectible insurance available to you."
On August 23, 1999, Capital notified Church of the accident. After Capital notified Church, Cathedral, Church's named insured, also notified Church of the claim and requested a defense and indemnity. Church assigned Crawford & Company to investigate the claim. Church also assigned defense counsel to defend Cathedral in any litigation.
On October 21, 1999, Brown filed a personal injury action ag
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