In the world of insurance coverage litigation, insurance companies like to accuse policyholders of attempting to expand coverage terms, or limit the scope of exclusions, beyond the language’s plain meaning. “The policy means what it says,” is a common refrain insurers use to justify coverage denials. However, a recent decision by the federal Fourth Circuit Court of Appeals, Capital City Real Estate, LLC v. Certain Underwriters at Lloyd’s, London, No. 14-1239 (June 10, 2015), demonstrates that insurers are at least as likely as policyholders to try to make policy language say what they wish it said, rather than what it actually says. The court does an admirable job of applying the straightforward language of an additional insured endorsement that has given some other courts trouble, and demonstrates that oftentimes the best approach is simply to hold insurers to the plain meaning of the language that they drafted.
The facts of Capital City are simple. Capital City Real Estate, LLC (“Capital City”) was a real estate company operating as the general contractor for the renovation of a building in Washington, D.C. The building was owned by 57 Bryant Street, NW LP and Bryant St., LLC (together “Bryant Street”). Capital City subcontracted work on the foundation, structural and underpinning work to Marquez Brick Work, Inc. (“Marquez”). The subcontract required Marquez to indemnify Capital City for damages caused by Marquez’s work and further required Marquez to obtain general liability insurance that named Capital City as an additional insured. Marquez duly obtained a general liability policy from Certain Underwriters at Lloyd’s, London (“the Underwriters”). The policy contained a standard additional insured endorsement that insured Capital City:
but only with respect to liability for … “property damage” … caused in whole or in part by:
- the Named Insured’s acts or omissions; or
- the acts or omissions of those acting on the Named Insured’s behalf
in the performance of the Named Insured’s ongoing operations for [Capital City].