Trucking Wrongful Death Case Where the Plaintiff is Seeking Indemnification Under an Insurance Contract*

This is a review of a New York State Supreme Court decision in a trucking wrongful death case rendered in February of 2011. The incident that led to the original lawsuit involved a worker who was killed while on a state highway construction site. The worker's family had filed suit against both the State and the State's construction contractor.

The State at the time believed it was protected from any liability for injuries on the site by the contractor's liability insurance, and it sought to turn the suit over to the contractor's insurer. The contractor's insurer, in turn, refused, citing the specific circumstances of the worker's death.

Statement of Facts...

Prior to January 2010, the B. Vidone Corporation placed the lowest bid for a state highway extension project in upstate New York. To bid on any construction project in the state, all bidders must first show proof they carry Indemnification Insurance in a minimum amount of 5 million dollars. At the time, the state felt that B. Vidone had shown sufficient proof of insurance, and gave Vidone the contract for the project.

Vidone commenced construction in January 2010. On the third week into the job, one of Vidone’s tool trucks jumped out of gear. As it did it rolled backwards, killing one of Vidone’s workers who had been unloading tools from the truck. Soon after it was discovered the employee driving the truck was heavily intoxicated. The police were called to the scene and the driver was arrested.

The driver was later convicted of the felony offense of involuntary manslaughter. The worker’s family filed a trucking wrongful death lawsuit against the State and Vidone.

Pursuant to the terms of the Indemnification Insurance Policy, the State turned its lawsuit over to Vidone, who then turned the lawsuit over to its insurance company, Community Writer’s Ltd.

After reviewing the lawsuit and the facts supporting it, Writer’s refused to accept responsibility for the defense of the State, claiming the insurance policy did not cover “criminal acts which led to felony convictions”.

The state, not wanting to be exposed to the liability for the worker's death, filed a "Cross Claim" against Vidone.

In this trucking wrongful death Cross-Claim the state alleged they had an agreement with Vidone that Vidone would present proof of insurance which indemnified the state for up to 5 million dollars.

The State admitted receiving a copy of Vidone’s Indemnification policy’s declaration page. The declaration page affirmed that the policy was in place for the purpose of indemnifying the State for bodily injuries or wrongful death for up to 5 million dollars suffered by any of Vidone’s employees while working on the job.

The state went on to contend that the intention of the agreement was clear; that in cases of bodily injury or wrongful death, Vidone would hold harmless the State and would undertake any legal representation for any lawsuits filed against the State. The State alleged Vidone had breached that agreement by not indemnifying the state in the lawsuit filed by the family of the deceased employee.

The Request...

To resolve its dispute with the state, Vidone requested a Declaratory Judgment from the Court. A declaratory judgment is a judgment of a court in a civil case which declares the rights, duties or obligations of one or more of the parties in a dispute. It is usually heard either before a lawsuit is filed, or very soon after; well before all of the pre-trial litigation gets underway.

In support of its request for a Declaratory Judgment, Vidone argued they had fully met the requirements of the bidding process since they had provided proof of an Indemnification Insurance Policy for up to 5 million dollars.

Vidone went on to say it was the State’s duty to have fully read the Indemnification Insurance Policy. If they had, the State would have realized the policy specifically excluded coverage for bodily injury or wrongful death of an employee if the act which caused the harm resulted from the criminal acts of any third party.

In the lawsuit Vidone submitted into evidence the written requirements the State published for all companies intending to bid on the construction project. Nowhere in the written requirements for proof of Indemnification Insurance did it mention there could not be any exclusions, especially for criminal acts.

Vidone argued it wasn’t their duty to interpret the insurance policy for the State. The State had its own legal department, and it was the State’s duty to have read the policy. If the State didn't want to accept the exclusionary clause for criminal acts, then the State should have said so before Vidone or any other construction companies bid on the project.

Outcome...

After considering all of the evidence the Court ruled:

The State of New York has in place a “bidding process” for the purchase of goods and services. This process has been in place for many years. Although it may have been the intention of both parties to indemnify the State against the bodily injury or death of one of the employees of the Vidone Corporation, that agreement cannot be unilaterally attacked by the State absent a showing of misrepresentation or fraud by Vidone.

In this case we find no misrepresentation or fraud. The State was delinquent in not comprehending the express terms of the Insurance Indemnification Policy. Its failure to do so cannot be held against the Vidone Corporation. We therefore grant the Defendant Vidone’s request for Declaratory Judgment. The State may proceed at its own peril.