Archive: June 11, 2012

1
Buyer Beware: New Jersey’s Appellate Division Confirms that Exclusion for Bodily Injury to “An Employee of Any Insured” Bars Coverage for Third-Party Over Claim Against Additional Insured
2
Violation of NY Lien Law Provision Does Not Discharge Surety’s Obligation Under Performance Bond

Buyer Beware: New Jersey’s Appellate Division Confirms that Exclusion for Bodily Injury to “An Employee of Any Insured” Bars Coverage for Third-Party Over Claim Against Additional Insured

By: Frederic J. Giordano, K&L Gates, Newark

Parties who require additional insured coverage from their contractors usually expect the coverage to extend to third-party over claims, particularly with respect to bodily injury claims by employees of contractors.  Those with such contracts covered by New Jersey law, however, may want to take special notice of a recent ruling of the New Jersey Appellate Division, which suggests that their expectations may be frustrated unless they take particular care in reviewing the policies at issue.

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Violation of NY Lien Law Provision Does Not Discharge Surety’s Obligation Under Performance Bond

Mount Vernon City School Dist. v. Nova Cas. Co., 19 N.Y.3d 28 (N.Y. Ct. App. 2012)

On April 3, 2012, the New York Court of Appeals held that a compensated surety cannot rely on a violation of Article 3-A of the Lien law to discharge its obligations under a performance bond.  The Mount Vernon City School District (“Plaintiff”) hired a contractor who obtained a performance bond in Plaintiff’s name from Nova Casualty Company (“Nova”), a compensated surety, securing his obligation under the contract.  After he defaulted and Nova refused to pay additional funds to complete the project, Plaintiff sued Nova for breach of contract.  Nova moved for summary judgment claiming that Plaintiff violated Article 3-A of New York Lien Law when, per the contractor’s request, Plaintiff remitted $214,000 of his fee to the Department of Labor (“DOL”) thereby discharging Nova’s duty to perform.

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