An Umbrella is not a CGL

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The Supreme Court, New York County (Barbara Jaffe, J.) [the trial court], ruled, granted the motion of defendants/third-party plaintiffs Hyatt Corporation and Hyatt Equities, L.L.C. (together, Hyatt) for summary judgment on their third-party claim for breach of an insurance procurement obligation because the Defendant Securitas failed to acquire a Commercial General Liability policy with limits of no less than $3 million.

In Dominick Benedetto et al. v. Hyatt Corporation et al., Hyatt Corporation, Sued Herein as Hyatt Corporation, Doing Business as Grand Hyatt New York, et al. v. Securitas Security Services USA Inc., Appeal No. 15506-15507 Nos. 2021-00256, 2020-00374, No. 2022-01732, Index Nos. 160322/14, 595457/15, Supreme Court of New York, First Department (March 15, 2022) the appellate court affirmed the decision of the trial court without costs.

DISCUSSION

A party moving for summary judgment on its claim for failure to procure insurance meets its prima facie burden by establishing that a contract provision requiring the procurement of insurance was not complied with. The burden then shifts to the opposing party, who may raise an issue of fact by tendering the procured insurance policy in opposition to the motion. As with any summary judgment motion, the evidence submitted both in support of and in opposition must be tendered in admissible form.

Securitas submitted in support of its cross motion and in opposition to Hyatt’s motion only indicate $2 million worth of commercial general liability insurance coverage. While the certificate of liability insurance also indicates that Securitas procured an additional $1 million in umbrella liability coverage per occurrence – for a total of $3 million of coverage – this does not raise an issue of fact as to whether Securitas procured the $3 million of commercial general liability insurance coverage it was required to procure by the parties’ agreement.

ZALMA OPINON

Although this decision seems to be form over substance since Securitas did maintain $3 million in liability insurance, an umbrella policy is not a CGL. An umbrella simply adds (with different terms and condition unless it is a “follow form” policy) and, therefore, is not compliance with the contract terms. If Securitas could not obtain a $3 million limit on a CGL they were unable to fulfill the terms of the contract. Recognizing that they should have immediately advised Hyatt and requested a modification of the contract to read a CGL with a $2 million limit plus a $1 million umbrella.

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