In its recent decision in The Premcor Refining Group v. National Fire Insurance Co. of Hartford, 2012 U.S. Dist. LEXIS 49097 (D. Del. Apr. 6, 2012), the United States District Court for the District of Delaware considered what allegations and extrinsic evidence can be considered in the context of determining a duty to defend a putative additional insured.
National Fire’s insured, Griffith Roofing, had contracted with Premcor to perform construction work. One of Griffith’s employees was hurt while performing this work, and brought suit against Premcor, alleging that his injuries were caused by Premcor’s sole negligence. Premcor tendered its defense as an additional insured under Griffith’s policy with National Fire. While the National Fire policy had an endorsement providing coverage for additional insureds, where required by contract, the endorsement excluded liability resulting from the putative additional insured’s “sole negligence.”
Notwithstanding this exclusion, and the fact that the complaint alleged liability resulting from Premcor’s sole negligence, Premcor argued that it was entitled to a full defense under Griffith’s policy. Premcor first argued that a certificate of liability insurance issued by Griffith’s broker modified the policy’s additional insured coverage because it stated that Premcor was an additional insured and the certificate did since it did not contain any language limiting the scope of coverage. The court rejected this argument, pointing out that the certificate expressly stated that it was for informational purposes only and did not amend the coverage actually afforded by express terms of the policy. In any event, explained the court, Griffith’s broker did not have actual or apparent authority to amend the terms of the National Fire policy.
More significant for the court was Premcor’s argument that the court should look beyond the pleadings in the underlying suit, since the facts established through discovery indicated that the underlying accident was not the result of Premcor’s sole negligence. In other words, Premcor argued that the duty to defend, at least in the context of additional insured coverage, should not be limited to the four corners of the complaint.
The Premcor court acknowledged, but ultimately distinguished, two decisions by the Delaware Supreme Court in which extrinsic facts were considered in determining a duty to defend. In Pike Creek Chiropractic Center, P.A. v. Robinson, 637 A.2d 418 (Del. 1994), the court considered extrinsic evidence from the underlying case, where discovery had already been completed, to determine whether the insured’s contractual duty to defend was triggered. Likewise, in American Ins. Group v. Risk Enterprise Management, Ltd., 761 A.2d 826 (Del. 2000), the court held that notwithstanding the general rule that a duty to defend is based on the four corners of the complaint, consideration of extrinsic facts was allowed in determining a duty to defend a third-party action where discovery was completed in the first party action and, in fact, the first party action had already settled.
The Premcor court noted that Pike Creek and American Ins. Group were exceptions to the rule and limited to situations where “a complete discovery record had been developed and the underlying litigation was resolved.” In fact, National Fire cited to a case involving Premcor where it cited to these very two cases, unsuccessfully, for the proposition that extrinsic evidence could be used in determining a duty to defend a putative additional insured. See, Premcor Refining Group, Inc. v. Matrix Service Industries, 2009 WL 960567 (Del. Super. 2009). The court therefore rejected Premcor’s argument, explaining that:
Absent completion of discovery and resolution of the underlying case, Delaware law is inclined against looking beyond the pleadings to determine whether a duty to defend exists.
Thus, concluding that the underlying lawsuit alleged injuries as a result of Premcor’s sole negligence, the court held that National Fire had no duty to defend or indemnify Premcor at the present time.