New York’s highest court just handed down an interesting decision in Fieldston Property Owners Ass’n v. Hermitage Ins. Co. The case involved an underlying suit for “injurious falsehood,” and the question of who was obligated to provide a defense – the CGL carrier, the D&O carrier, or both? The CGL policy stated that its coverage was primary “unless any of the [policyholder’s] other coverage is also primary,” in which case it would share costs. The D&O policy included a provision stating that if the policyholder had “any other valid polic[ies]” that applied, then the D&O policy would serve as excess only, covering the policyholder beyond what the other primary policies supplied. The Court held that the D&O policy language trumped the CGL coverage, and that the CGL carrier had the sole duty to defend under the “plain language” of the policies.
David Siegel, who writes the New York State Law Digest, had something funny to say about all this: “Why wasn’t the commercial policy phrased in like terms? We’ve seen similar insurance collisions in the Digest over the years, prompting us to visualize what the drafting section of an insurance company looks like. (What comes to mind is a windowless room with an elderly man at a small table, dipping a quill into an inkwell.)”