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📖 Case Summary: Harco Construction, LLC v Scotssdale Ins. Co.

This Second Department decision stems from a 2011 building collapse in Harlem during demolition work on a project managed by Harco Construction.

⚡️ What Happened:

• Subcontractor Disano Demolition cut into an elevator shaft, triggering a collapse.
• Harco sought coverage as an additional insured from:
  • FMIC (Disano’s primary insurer), and
  • Scottsdale (Disano’s excess insurer, whose policy followed forms to FMIC).
• Prior Proceedings
• FMIC denied coverage based on a “work height” exclusion.
• Harco and the property owner sued FMIC, Scottsdale, and Disano.
• The trial court upheld FMIC’s disclaimer.
• But the Second Department reversed in part—ruling that FMIC’s denial to Harco was untimely under Insurance Law § 3420(d) and therefore estopped.
• 📌 Scottsdale was not a party to that appeal.

📜 Prior Proceedings:

• FMIC denied coverage based on a “work height” exclusion.
• Harco and the property owner sued FMIC, Scottsdale, and Disano.
• The trial court upheld FMIC’s disclaimer.
• But the Second Department reversed in part, ruling that FMIC’s denial to Harco was untimely under Insurance Law § 3420(d) and therefore estopped.
• 📌 Scottsdale was not a party to that appeal.

📚 This Appeal:

• Harco, Mt. Hawley (its own insurer), and 301-303 West 125th LLC brought a new action under Insurance Law § 3420 seeking:
  • Satisfaction of judgments against Disano, and
  • A declaration that Scottsfdale had a duty to indemnify Harco.
• Scottsdale moved to dismiss under CPLR 3211(a), citing:
  • Documentary evidence (prior rulings), and
  • Collateral estoppel.

📝 Appellate Division’s Ruling:

• The prior ruling didn’t conclusively rersolve Scottdale’s coverage obligations. They focused on FMIC, not Scottsdale.
• The Court concluded that the issues were not identical, the parties were different, and Scottsdale failed to show that any issues were “actually litigated and specifially decided.”

✅ Key Legal Takeaways:

🔹 Excess Insurers Beware
A favorable ruling for a primary insurer doesn’t automatically shield excess carriers from further litigation.

🔹 Collateral Estoppel Is Not a Shortcut
Insurers must prove that issues were actually litigated and decided, and Scottsdale couldn’t meet that burden.

🔹 Documentary Evidence Must Be Decisive
Prior decisions involving different insurers can’t support a CPLR 3211(a) motion unless they clearly resolve the same issue for the same party.

🎯 Why This Case Matters For:

💼 Insurance Claims Professionals
– Don’t assume estoppel or disclaimer defenses from another insurer carry over to your file.
– Timeliness under Insurance Law § 3420(d) remains a critical battleground.

⚖️ Coverage Counsel & Defense Attorneys
– “Follow-form” excess policies may still require independent litigation.
– Dismissal requires conclusive proof, not proximity to past outcomes.

🏢 Risk Managers & General Contractors
– A win against the primary insurer does not mean you are covered..
– Ensure your AI strategy and carrier correspondence are proactive and documented.

📢 Final Word:

This ruling reinforces that each policy layer stands on its own. Coverage litigation is rarely one-and-done. Excess insurers cannot rely on a primary’s victory to short-circuit their own responsibilities.

👉 For more legal insights tailored to insurers and risk managers in hundreds of other posts like this one, explore the archive section of New York Civil Law — Case Summaries & Legal Updates. Clearly Explained