16‐140‐cv                                                                 

Certified Multi‐Media v. Preferred Contractors

      

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

          

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.  CITATION TO A SUMMARY

ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE

OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.  WHEN CITING A

SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE

FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ).  A

PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED

BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 3rd day of January, two thousand seventeen.

PRESENT: JOHN M. WALKER, JR.,

DENNY CHIN,

    SUSAN L. CARNEY,

     Circuit Judges.

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CERTIFIED MULTI‐MEDIA SOLUTIONS, LTD.,  

     Plaintiff‐Appellee,

ST. PAUL FIRE & MARINE INSURANCE

COMPANY, TRAVELERS,

Intervenor‐Plaintiff‐Appellee,

         

    v.           16‐140‐cv

           

PREFERRED CONTRACTORS INSURANCE

COMPANY RISK RETENTION GROUP, LLC,      

     Defendant‐Appellant.

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FOR PLAINTIFF‐APPELLEE: ANITA NISSAN YEHUDA, Anita Nissan Yehuda,

P.C., Roslyn Heights, New York.

FOR INTERVENOR‐PLAINTIFF‐  THOMAS A. MARTIN (James M. Strauss, on the

brief), Putney Twombly Hall

APPELLEE: & Hirson LLP, New York, New York.

FOR DEFENDANT‐APPELLANT: CHERYL P. VOLLWEILER (Meryl R. Lieberman, on

the brief), Traub Lieberman Straus &

Shrewsberry LLP, Hawthorne, New York.

Appeal from the United States District Court for the Eastern District of

New York (Spatt, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.  

Defendant‐appellant Preferred Contractors Insurance Company Risk

Retention Group, LLC (ʺPCICʺ) appeals the district courtʹs judgment, entered January

29, 2016, resolving the underlying insurance action in favor of plaintiff‐appellee

Certified Multi‐Media Solutions, Ltd. (ʺCertifiedʺ) and intervenor‐plaintiff‐appellee St.

Paul Fire & Marine Insurance Company, Travelers (ʺTravelersʺ) (together, ʺplaintiffsʺ).  

The parties dispute the scope of certain contractual provisions that purportedly limit

the amount of insurance coverage provided by PCIC to $10,000.  We assume the partiesʹ 

familiarity with the underlying facts, procedural history, and issues on appeal.

In 2008, non‐party Getronics USA Inc. (ʺGetronicsʺ) hired Certified, an

electrical contracting company, to provide electrical services at a shopping mall in the
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Bronx, New York.  Getronics was insured under a commercial general liability policy

issued by Travelers.  

On March 14, 2009, PCIC issued to Certified an insurance policy (the

ʺPolicyʺ) consisting of (1) a commercial general liability policy containing a standard set

of provisions and (2) a specific set of provisions known as the Manuscript Policy

Provisions, which included Endorsement 23.   

On March 19, 2009, non‐party Anthony Balzano, an employee of Certified,

was injured while performing electrical work at the shopping mall.  In New York state

court he sued the mall owner, the lessee of the premises, and the general contractor.  

The lessee filed a third‐party complaint for, inter alia, breach of contract against

Certified and sought indemnification and contribution.  The general contractor filed a

third‐party complaint for breach of contract and negligence against Getronics which, in

turn, filed a third‐party complaint against Certified for breach of contract and

negligence and sought indemnification.  Certified sought coverage under the Policy for

its defense and directed Travelers, which was defending Getronics in litigation, to seek

indemnification from PCIC as well.  PCIC informed Certified in January 2012 that,

pursuant to Endorsement 23 in the Policy, it would provide only up to $10,000 of

coverage, rather than the full coverage of $1 million, for the claims arising from

Balzanoʹs injuries.   
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    Certified filed this diversity action against PCIC in September 2014

seeking a declaratory judgment that the Policy provides up to $1 million in coverage

and that PCIC is required to defend and indemnify it in the state court litigation.  

Travelers intervened and sought a declaratory judgment requiring PCIC also to pay its

defense and indemnity costs in the state court litigation.  In December 2015, the district

court awarded summary judgment in favor of Certified, holding that, based on the

unambiguous and plain meaning of the Policy, the $10,000 cap on insurance coverage in

Endorsement 23 does not apply to the claims arising from Balzanoʹs injuries.  The court

entered judgments for Certified and Travelers shortly thereafter.   

We review an award of summary judgment de novo and will affirm only if

the record, viewed in the light most favorable to the party against whom judgment was

entered, shows that there are no genuine issues of material fact and that the moving

party is entitled to judgment as a matter of law.  Barfield v. N.Y.C. Health & Hosps. Corp.,

537 F.3d 132, 140 (2d Cir. 2008).   

In New York, ʺinsurance policies are interpreted according to general

rules of contract interpretation.ʺ  Olin Corp. v. Am. Home Assurance Co., 704 F.3d 89, 98

(2d Cir. 2012).  ʺ[T]he initial question for the court on a motion for summary judgment

with respect to a contract claim is whether the contract is unambiguous with respect to

the question disputed by the parties.ʺ  Law Debenture Tr. Co. of N.Y. v. Maverick Tube

Corp., 595 F.3d 458, 465 (2d Cir. 2010) (internal quotation marks omitted).  ʺLanguage
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whose meaning is otherwise plain does not become ambiguous merely because the

parties urge different interpretations in the litigation.ʺ  Olin, 704 F.3d at 99 (quoting

Hunt Ltd. v. Lifshultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989)).  The court is to

give the words and phrases in a contract their plain meaning, construe the contract to

give full meaning and effect to all its provisions, and avoid contract interpretations that

render a clause superfluous or meaningless.  Id.   

If the disputed language in the contract is ambiguous in that it is

objectively and reasonably capable of more than one meaning in the context of the

entire agreement, the court may use extrinsic evidence to discern the partiesʹ intent at

contract formation and interpret the disputed language accordingly.  Id.  If the court still

cannot ascertain the partiesʹ intent, it may then apply other rules of contract

interpretation such as the New York rule resolving contractual ambiguity in favor of the

insured.  Id.

In this case, the disputed language is contained in the coverage‐limiting

provisions in Endorsement 23, which is entitled ʺAction Overʺ:

Notwithstanding the limit of coverage shown in the Declarations and/or

Section III . . . , $10,000 only is the most we4 will pay as damages for any

and all claims, including any claim for contractual indemnification, arising

from or related to any  ʺbodily injuryʺ,  ʺproperty damageʺ  or  ʺpersonal

injuryʺ sustained by an employee of an insured while injured, harmed or

damaged in the scope of such employment.

In any action brought by such employee, if you5 are impleaded into said

action, or if any third party action over is commenced against you,
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irrespective of the claims or theories set forth therein, the $10,000 limit of

coverage as provided in this endorsement shall apply when:

1.   The injury sustained by the employee is a  ʺgrave injuryʺ as

defined by Section 11 of the New York State Workersʹ 

Compensation Law, as follows: [list of qualifying injuries]; and

2.   You are required by contract, regulation or law to be insured

under a workers’ compensation policy providing liability coverage

for claims arising from injuries to employees.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 

4   The words ʺweʺ and ʺourʺ refer to the company providing this insurance.

5   The words  ʺyouʺ  and  ʺyourʺ refer to the Named Insured shown in the

Declarations, and any other person or organization qualifying as a Named

Insured under this policy.

J. App. at 97‐98.  Footnote 5 defines ʺyouʺ to mean the ʺNamed Insured shown in the

Declarations,ʺ and ʺNamed Insuredʺ is defined in the Manuscript Policy Provisions as

ʺthe Member identified on the Declarations of the Policy.ʺ  J. App. at 31, 97.  The

ʺCommon Policy Declarationsʺ page identifies the ʺMemberʺ as Certified.  J. App. at 23.

Although the parties agree that the second paragraph in Endorsement 23

does not apply in this action because Balzano did not suffer a ʺgrave injury,ʺ they

dispute whether the first paragraph, read in tandem with the second, imposes a $10,000

cap on damages for claims arising from Balzanoʹs bodily injuries.  The crux of the

partiesʹ dispute is whether the phrase ʺan insuredʺ in the first paragraph extends to the

ʺNamed Insured,ʺ which in this case is Certified.  PCIC contends that ʺan insuredʺ 

includes the ʺNamed Insured,ʺ and that therefore the $10,000 cap applies as Balzano

was an employee of Certified.  Plaintiffs counter that the phrase ʺan insuredʺ cannot be
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read to include the ʺNamed Insuredʺ because such a construction would render the

second paragraph superfluous.   

The district court agreed with plaintiffs, concluding that (1) the plain

meaning of the language in the Policy was clear, (2) the Policy used the phrases ʺan

insuredʺ and the ʺNamed Insuredʺ to refer to different sets of entities, (3) the first

paragraph in Endorsement 23 applied the $10,000 cap to claims involving an employee

of ʺan insured,ʺ and (4) the second paragraph applied the $10,000 cap to claims

involving the ʺNamed Insured.ʺ  See Parks Real Estate Purchasing Grp. v. St. Paul Fire &

Marine Ins. Co., 472 F.3d 33, 42 (2d Cir. 2006) (ʺWhen the provisions [in an insurance

contract] are unambiguous and understandable, courts are to enforce them as written.ʺ).   

The district courtʹs reading makes sense.  The first paragraph of

Endorsement 23 covers claims arising from injuries or property damage sustained ʺby

an employee of an insured,ʺ while the second paragraph applies ʺif you5 are impleaded

into said actionʺ or ʺif any third party action over is commenced against you.ʺ  J. App. at

97.  As noted, ʺyouʺ refers to the ʺNamed Insured shown in the Declarations,ʺ which is

Certified.  Id.  The use of ʺyouʺ indicates that the second paragraph applies specifically

to Certified, while the first paragraph applies generically to any insured.  See Aramony v.

United Way of Am., 254 F.3d 403, 413 (2d Cir. 2001) (describing, as a rule of contract

interpretation, that specific language in a contract should be ʺgiven greater weightʺ than

general language).  In addition, throughout the Policy there are references to the
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ʺNamed Insured,ʺ ʺInsured,ʺ and ʺNamed Insured and/or Insured,ʺ suggesting that the

two are distinct and not the same entities.

On the other hand, PCIC maintains that the definitional provisions in

Section II of the Policy suggest that where, as here, the Named Insured is a company or

organization, the ʺNamed Insuredʺ is included within the definition of ʺan insured.ʺ  

Section II, entitled ʺWho Is An Insured,ʺ provides that:

1.     If you are designated in the Declarations as:

a.      An individual, you and your spouse are insureds, but only with  

respect to the conduct of a business of which you are the sole

owner.

b.     A partnership or joint venture, you are an insured.  Your  

members, your partners, and their spouses are also insureds,

but only with respect to the conduct of your business.

c.      A limited liability company, you are an insured.  Your members  

are also insureds, but only with respect to the conduct of your

business.  Your managers are insureds, but only with respect to

their duties as your managers.

d.     An organization other than a partnership, joint venture or  

limited liability company, you are an insured.  Your ʺexecutive

officersʺ  and directors are insureds, but only with respect to

their duties as your officers or directors.  Your stockholders are

also insureds, but only with respect to their liability as

stockholders.  

e.     A trust, you are an insured.  Your trustees are also insureds, but  

only with respect to their duties as trustees.

J. App. at 43.  The next subsection in Section II identifies other individuals ‐‐ such as

ʺvolunteer workersʺ ‐‐ covered by ʺan insured.ʺ  PCIC focuses on the statements in

subsection 1 of Section II providing that ʺyou are an insuredʺ if ʺyouʺ are, for example, a

partnership, limited liability company, etc.  As the Policy elsewhere explains, ʺ[t]he
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word ʹinsuredʹ means any person or organization qualifying as such under Section II –

Who Is An Insured.ʺ  J. App. at 34.  Because Certified is an organization designated in

the Declarations, this could suggest that it is both the ʺNamed Insuredʺ and ʺan insuredʺ 

under the Policyʹs definitions.  

    Certified responds that the Manuscript Policy Provisions expressly

provide that their provisions and endorsements control, govern, and supersede any

conflicting or varying provisions in the commercial general liability policy.  We agree

that this conflict provision makes clear that any inconsistencies between how the phrase

ʺan insuredʺ is defined or used in Section II and how it is defined or used in

Endorsement 23 are to be resolved by looking to the latter.  Accordingly, while we find

Certifiedʹs reading more plausible, we need not reconcile the inconsistent usages of ʺan

insuredʺ and the ʺNamed Insured,ʺ as, by the plain language of the Policy, the

Manuscript Policy Provisions control.

As the district court concluded, PCICʹs reading of the Policy would render

the second paragraph superfluous.  If ʺan insuredʺ in the first paragraph included the

Named Insured, there would be no need for the second paragraph.  And PCICʹs reading

would create a contradiction, as the first paragraph would impose a $10,000 cap with

respect to Certified generally, while the second paragraph would impose a $10,000 cap

with respect to Certified only when there was a ʺgrave injury.ʺ  Plaintiffsʹ reading of the

Policy avoids this contradiction and gives ready effect to both paragraphs in
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Endorsement 23.  See Olin, 704 F.3d at 99 (ʺAny interpretation of a contract that ʹhas the

effect of rendering at least one clause superfluous or meaningless . . . is not preferred

and will be avoided if possible.ʹʺ (quoting LaSalle Bank Natʹl Assʹn v. Nomura Asset

Capital Corp., 424 F.3d 195, 206 (2d Cir. 2005))).   

Accordingly, because Balzano was an employee of Certified and did not

suffer grave injuries, the $10,000 cap did not apply to claims arising from his injuries

and plaintiffs are entitled to up to $1 million in coverage under the Policy.   

    We have considered all of PCICʹs other arguments and find them to be

without merit.  Accordingly, we AFFIRM the judgment of the district court.  

FOR THE COURT:

     Catherine OʹHagan Wolfe, Clerk