Multi-Unit Construction Exclusion Eliminates Coverage
Midvale Indemnity Company (“Midvale”) sued Arevalos Construction Corp.
(“Arevalos”), Victor Siguenza Zuniga (“Zuniga”), 625 Halsey LLC
(“Halsey”), D&G Construction NY Inc. (“D&G”), and RM
Construction and Development Corp. (“RM”) seeking a declaratory judgment
relating to a commercial general liability insurance policy Midvale
issued to Arevalos and an underlying lawsuit in New York state court,
captioned Victor Siguenza Zuniga v. 625 Halsey LLC, Index No.
525911/2018 (the “Underlying Action”).
In Midvale Indemnity Company v. Arevalos Construction Corp., et al, No.
22-CV-97 (FB) (RML), United States District Court, E.D. New York (July
5, 2023) was asked to overturn the report and recommendations of the
Magistrate Judge to acknowledge the default and order no coverage for
defense or indemnity of anyone named in the Underlying action.
FACTS
D&G and Zuniga timely objected to the report of the Magistrate
judge. These objections triggered the US District Judge's de novo
review.
D&G, a subcontractor of Arevalos claiming coverage and a right to
indemnification by Arevalos' insurer Midvale, and Zuniga, the injured
tort claimant in the Underlying Action, has been named as defendants in
this declaratory action by Midvale. D&G and Zuniga object to the
Magistrate's finding that none of the named defendants was owed coverage under the policy.
DISCUSSION
D&G and Zuniga object to the conclusion that they lack standing to
oppose Midvale's motion, its finding that none of the named defendants
were entitled to coverage, and the scope of its declaratory relief.
The Magistrate recommended finding that D&G's subcontractor
agreement with Arevalos imposed no duty on Midvale, a “stranger to that contract,” to D&G. He also found that “D&G does not claim to be a
third-party beneficiary of the Policy,” that “the Policy does not
indicate an intent to confer a benefit upon D&G or any other
individual or entity other than Arevalos,” and that “Zuniga is not a
named insured or third-party beneficiary under the Policy.”
