What did the court decide?

The court held that Southwest Marine must defend Arsenal Scaffold Inc. as an additional insured in the underlying injury lawsuit and reimburse Lloyd's for defense costs.

Who is affected by this decision?

Lloyd's (the insurer) and Arsenal Scaffold (the insured it sought to protect) benefit from the defense obligation; Southwest Marine (the other insurer) must provide the defense and reimburse costs.

Why must the defendant provide a defense even though its named insured wasn't sued?

Because the insurer knew facts that made coverage for Arsenal reasonably possible — namely allegations that the insurer's named insured performed work at the site and may have caused the injuries — which triggers the duty to defend.

Can this decision be appealed further?

Yes, the defendant could seek leave to appeal to the New York Court of Appeals, but this decision affirms the Appellate Division's order.

Certain Underwriters at Lloyd's, London v. Southwest Mar. & Gen. Ins. Co.

Docket Index No. 651449/24|Appeal No. 6399|Case No. 2025-02496|

Court of record · Indexed in NoticeRegistry archive · AI-enriched for research

CivilAffirmed

Filed: Apr 16, 2026 · 2 weeks ago
Jurisdiction: New York
Court: Appellate Division of the Supreme Court of the State of New York
Type: Opinion
Case type: Civil
Disposition: Affirmed
Citation: 2026 NY Slip Op 02329
Docket numbers: Index No651449/24Appeal No6399Case No2025-02496

Appeal from an order granting partial summary judgment declaring a duty to defend and denying defendant's cross-motion for summary judgment

Summary

The Appellate Division, First Department affirmed Supreme Court's order granting plaintiff Lloyd's partial summary judgment that defendant Southwest Marine must defend Lloyd's insured, Arsenal Scaffold Inc., as an additional insured in an underlying personal-injury action and reimburse Lloyd's defense costs. The court held that facts known to defendant created a reasonable possibility of coverage, so the duty to defend was triggered even though defendant's named insured (JGR Services) was not a direct defendant in the underlying suit. The court rejected Southwest Marine's contrary arguments and affirmed the denial of its cross-motion for summary judgment.

Issues Decided

Whether defendant had a duty to defend plaintiff's named insured, Arsenal Scaffold Inc., as an additional insured in the underlying personal-injury action.
Whether facts known to defendant created a reasonable possibility of coverage that triggers the duty to defend even though defendant's named insured was not a direct defendant in the underlying action.

Court's Reasoning

Under New York law, an insurer must defend if facts known to it create a reasonable possibility of coverage. The court found the record showed defendant had actual knowledge of facts that could establish coverage for Arsenal as an additional insured, including allegations that JGR (defendant's named insured) performed work at the site and was alleged to have caused the injuries. Because those facts gave rise to a reasonable possibility of coverage, defendant's duty to defend was triggered and its attempt to avoid that duty failed.

Authorities Cited

Frontier Insulation Contrs. v Merchants Mut. Ins. Co.91 NY2d 169 (1997)
Live Nation Mktg., Inc. v Greenwich Ins. Co.188 AD3d 422 (1st Dept 2020)
Sumner Bldrs. Corp. v Rutgers Cas. Ins. Co.101 AD3d 417 (1st Dept 2012)

Parties

Plaintiff: Certain Underwriters at Lloyd's, London
Defendant: Southwest Marine and General Insurance Company
Additional Insured / Nonparty (in underlying action): Arsenal Scaffold Inc.
Named Insured (defendant's policy): JGR Services Inc.
Judge: Arlene P. Bluth

Key Dates

Appellate decision date: 2026-04-16
Supreme Court order entered: 2025-03-06

What You Should Do Next

1
Provide defense and reimburse costs
Southwest Marine should arrange to defend Arsenal in the underlying action on a primary, noncontributory basis and reimburse Lloyd's for the defense expenses identified in the motion.
2
Consider appellate options
Southwest Marine may consult counsel about seeking leave to appeal to the New York Court of Appeals if it wishes to challenge the Appellate Division's legal ruling.
3
Review policy and underwriting records
All parties should review the insurance policies, endorsements, and underwriting files to clarify coverage scope and any reservation-of-rights issues for the underlying litigation.

Frequently Asked Questions

What did the court decide?: The court held that Southwest Marine must defend Arsenal Scaffold Inc. as an additional insured in the underlying injury lawsuit and reimburse Lloyd's for defense costs.
Who is affected by this decision?: Lloyd's (the insurer) and Arsenal Scaffold (the insured it sought to protect) benefit from the defense obligation; Southwest Marine (the other insurer) must provide the defense and reimburse costs.
Why must the defendant provide a defense even though its named insured wasn't sued?: Because the insurer knew facts that made coverage for Arsenal reasonably possible — namely allegations that the insurer's named insured performed work at the site and may have caused the injuries — which triggers the duty to defend.
Can this decision be appealed further?: Yes, the defendant could seek leave to appeal to the New York Court of Appeals, but this decision affirms the Appellate Division's order.

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Full Filing Text

Certain Underwriters at Lloyd's, London v Southwest Mar. & Gen. Ins. Co. - 2026 NY Slip Op 02329

Certain Underwriters at Lloyd's, London v Southwest Mar. & Gen. Ins. Co.

2026 NY Slip Op 02329

April 16, 2026

Appellate Division, First Department

Certain Underwriters at Lloyd's, London, Plaintiff-Respondent,

Southwest Marine and General Insurance Company, Defendant-Appellant.

Decided and Entered: April 16, 2026

Index No. 651449/24|Appeal No. 6399|Case No. 2025-02496|

Before: Manzanet-Daniels, J.P., Higgitt, Rosado, O'neill Levy, Chan, JJ.

O'Toole Scrivo LLC, New York (Steven A. Weiner of counsel), for appellant.

Kenney Shelton Liptak Nowak LLP, Buffalo (Matthew C. Ronan of counsel), for respondent.

Order, Supreme Court, New York County (Arlene P. Bluth, J.), entered March 6, 2025, which granted plaintiff's motion for partial summary judgment declaring that defendant must defend plaintiff's insured, nonparty Arsenal Scaffold Inc., on a primary and noncontributory basis in an underlying action and reimburse plaintiff for all costs incurred in defending Arsenal in the underlying action, and denied defendant's cross-motion for summary judgment, unanimously affirmed, without costs.

Plaintiff commenced this action for, among other things, a declaration that defendant had a duty to defend plaintiff's named insured, Arsenal, in an underlying action. In the underlying action, the plaintiffs each allege that they were "caused to be seriously injured when" they fell "from an elevated height at" the construction site, and subsequently claimed to have been injured while working on a scaffold. Defendant's named insured, JGR Services Inc., contracted with Arsenal to perform work at the site, and is the only party identified that performed work there on behalf of Arsenal. In a third-party complaint, JGR is also alleged to have caused the underlying plaintiffs' injuries as a result of its negligence.

The court properly granted plaintiff's motion for partial summary judgment declaring that defendant had a duty to defend Arsenal in the underlying action as an additional insured. The record amply supports the court's conclusion that defendant "has actual knowledge of facts establishing a reasonable possibility of coverage," thereby requiring it to provide a defense (
Frontier Insulation Contrs. v Merchants Mut. Ins. Co.
, 91 NY2d 169, 175 [1997] [internal quotation marks omitted];
see

Live Nation Mktg., Inc. v Greenwich Ins. Co.
, 188 AD3d 422, 423 [1st Dept 2020]). While defendant's named insured is not a defendant in the underlying action, defendant cannot simply ignore the facts known to it that create a reasonable possibility of coverage (
see Sumner Bldrs. Corp. v Rutgers Cas. Ins. Co.
, 101 AD3d 417, 418-419 [1st Dept 2012]).

We have considered defendant's remaining arguments and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: April 16, 2026