Opinion ID: 1660917
Heading Depth: 2
Heading Rank: 1

Heading: The Duty to Obtain Liability Insurance Coverage on Stone

Text: Stone contends that Star failed to provide insurance to cover Stone against liability for the Clines' claims, as required by the 1990 subcontract. Star did, in fact, procure insurance to cover itself but not to cover Stone. Stone alleges breach of contract, misrepresentation, negligent and wanton failure to procure insurance, and negligent and wanton failure to settle. Jim Cooper, who, as an employee of Stone, executed the 1990 subcontract with Star, stated in his affidavit as follows: I am President of Jim Cooper Construction Company, Inc. in Birmingham, Alabama. During 1989 and 1991, I was employed with Stone ... as a Project Manager. As part of [the] responsibilities in that position, I would negotiate and execute contracts with various subcontractors for various projects that were contracted to Stone. Included in those duties [was] requesting insurance information from the various subcontractors according to the terms of the subcontract; this was usually followed up by bookkeeping. I am familiar with the subcontract that is attached as Exhibit `A' to this affidavit as it is the subcontract that was executed by me, as an employee of Stone ... on Stone's behalf with Star.... I worked with Tom McEwen of Star ... in getting this contract executed for the electrical work to be done on the Brookwood Metroplex renovation construction project on the Fifth Floor in April, 1990. I am also familiar with the letter that is attached as Exhibit `B' to this affidavit as I signed the letter and had it sent to Star.... The letter was sent to Star to request a `blanket certificate' of insurance, which was nothing more than proof that Star had insurance in existence at the time of the contract. I, on behalf of Stone, accepted this `blanket certificate' of insurance from Star's insurance agency as satisfaction of all requirements relating to insurance under the executed subcontract. I am familiar with the terms `additional insured' and `certificate of insurance' as they relate to contractors and subcontractors. It was never my intent, as Stone's employee and representative, to have Stone added as an additional insured under the Star policy. I never requested, nor was I ever instructed to request, that Stone be added as an additional insured under the Star policy. The only requirement that Star had under the subcontract attached as Exhibit `A' was to submit a blanket certificate to me to show that they had the applicable insurance in place. The contract used by Stone, attached as Exhibit `A', was the typical contract used during that period of time with all of Stone's subcontractors. Stone entered into this contract with Star in the same manner as all of the other previous contracts with Star and other subcontractors at the time. Stone did not request that Star in this case, that Stone to be added as an additional insured under the Star policy. Neither was it Stone's practice at the time to make such a request to any subcontractor during that period of time. The subcontract attached as Exhibit `A' and the letter to Star attached as Exhibit `B' set out the intent of Stone to simply have Star submit the `blanket certificate' of insurance proving that Star had its own insurance in place. There was never a requirement that Stone be added as an additional insured under the Star policy of insurance on this April, 1990 subcontract. At some point around the end of 1992, the industry practice changed as far as the insurance requirements in the subcontracts that were used. At that point in time, a different subcontract began to be used by general contractors which specifically required the general contractor to be listed as an `additional insured' in the bottom left hand corner of the subcontractor's certificate. However, when the Star contract was executed, there was no requirement or request made by Stone that they be added as an additional insured under Star's insurance policy. Star's subcontract attached as Exhibit `A' does not require them to do that and is a different subcontract than the one used from 1992 forward. Star's submission of a `blanket certificate' satisfied Star's obligation under the contract as to liability insurance as far as Stone was concerned, as such, the contract was executed by Stone based upon the receipt of the requested blanket certificate.  (C.R. 2232-34, emphasis added.) In the letter referenced as Exhibit B in Cooper's affidavit, Cooper requested of Star as follows: Attached please find two copies of a subcontract agreement for the above-referenced job. Please execute both copies of the agreement and return them to our office with insurance certificates showing coverage in the amounts shown and also, have it read as referenced above or provide us with a blanket insurance certificate. As soon as the executed contracts and insurance are received, we will forward a fully executed copy for your records. (C.R. 2228, emphasis added.) The initial certificate of insurance names Star as the only insured and names Stone as only the certificate holder. No certificate of record names Stone as an insured during any coverage period that would include the August 6, 1991 date of Cline's job-site injury. (C.R.2235-38.) On the one hand, the text of the subcontract required Star to obtain liability insurance covering both Star and Stone, and the insurance Star did obtain covered only Star and not Stone. On the other hand, Star timely sent Stone the certificate of insurance negotiated and required by Stone's own agent Cooper; this certificate revealed Stone's non-coverage; and Stone accepted the certificate without reservation. While Cooper's affidavit, as parol evidence, cannot contradict the terms of the subcontract, the affidavit can and does establish a waiver of the requirement that Star procure insurance to cover Stone. In fact, Stone did not question or challenge Star about the adequacy of the insurance until Stone amended its cross-claim against Star on June 30, 1998, over seven years after Stone received the certificate of insurance (dated 02/05/91) from Star. Of course, after Cline's injury, Star no longer could procure insurance to cover Stone against the Clines' claims. Thus, had Stone's agent Cooper not waived the requirement for the coverage, Star would have suffered prejudice from Stone's delay in demanding strict compliance with the contract. The legal defects in Stone's contract, fraud, negligence, and wantonness claims against Star grounded on its failure to obtain insurance coverage for Stone are too patent to require further discussion. Accordingly, the summary judgment, insofar as it resolves these claims in Star's favor, is due to be affirmed.