Court Finds No Duty to Defend Under Subcontractor’s Policy Where Negligence Is Only Alleged Against General Contractor

Posted on: November 4th, 2015

Gethmann Construction Company (Gethmann) appealed a district court decision finding that United Fire and Casualty Company (United Fire) owed no duty to defend Gethmann in an underlying lawsuit alleging negligence.  The initial lawsuit alleged negligence against Gethmann (the general contractor) and American Piping Group, Inc. (APG) (the subcontractor).  APG had obtained insurance though United Fire that named Gethmann as an additional insured only with respect to APG’s liability which could be imputed to Gethmann.  The Plaintiff alleging negligence ultimately released APG from the lawsuit, leaving Gethmann as the only defendant.  United Fire notified Gethmann that it would no longer defend Gethmann because to APG’s release meant there were no liabilities that could be imputed to Gethmann.  United Fire filed a declaratory judgment action asking for a determination that Gethmann was not entitled to coverage.  The motion was granted at the district court level and upheld on appeal.  The appellate court reasoned that because the issue was whether Gethmann was negligent, and not whether Gethmann could be liable for APG’s negligence, United Fire had no duty to defend Gethmann.  See United Fire and Cas. Co. v. Gethmann Construction Co., Inc.

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