Argued: January 23, 2018
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Graham C. Mullen,
Senior District Judge. (3:14-cv-00529-GCM)
Richard Leonard Pinto, PINTO, COATES, KYRE & BOWERS,
PLLC, Greensboro, North Carolina, for
Ventrell, CNA COVERAGE LITIGATION GROUP, Washington, D.C.,
L. White, PINTO, COATES, KYRE & BOWERS, PLLC, Greensboro,
North Carolina, for Appellant/Cross-Appellee.
J. Redding, Ty K. McTier, REDDING JONES PLLC, Charlotte,
North Carolina, for Appellee/Cross-Appellant.
MOTZ, TRAXLER, and KEENAN, Circuit Judges.
BARBARA MILANO KEENAN, Circuit Judge.
insurance coverage dispute, we consider whether claims in an
underlying personal injury suit against two contractors were
covered under policies issued by Amerisure Insurance Company
(Amerisure), in which the contractors were "additional
insureds." Contending that the claims were excluded from
coverage, Amerisure refused to participate in the
contractors' defense, and did not contribute to a final
settlement of the lawsuit. Thereafter, Continental Casualty
Company (Continental), which had defended the contractors
under the terms of a different policy and had paid the
settlement amount, filed the present suit against Amerisure
asserting that Amerisure had breached its duty to defend.
Continental sought a declaratory judgment requiring Amerisure
to reimburse Continental for the full settlement amount plus
prejudgment interest and for the fees and costs Continental
incurred in defending the underlying action.
the parties filed cross-motions for summary judgment, the
district court denied Amerisure's motion and granted
Continental's motion in part, concluding that Amerisure
was liable to Continental for repayment of the $1.7 million
settlement plus prejudgment interest. However, the district
court denied Continental's motion to hold Amerisure
liable for full payment of Continental's defense costs
and fees, determining that Amerisure should be required to
pay only half those amounts.
our review, we affirm the district court's judgment that
Amerisure improperly relied on a policy exclusion to avoid
its duty to defend, and that Amerisure was liable under the
terms of its policies to pay the full cost of the settlement
plus pre-judgment interest. However, we vacate the
court's judgment with respect to defense fees and costs,
and hold that Amerisure was liable for the full amount of
those fees and costs because Continental did not have an
independent duty to defend in the underlying lawsuit.
Accordingly, we affirm in part, and vacate in part, the
district court's judgment.
Building Group, LLC (BE&K) served as the general
contractor on a construction project to build a hospital for
the Charlotte Mecklenburg Hospital Authority (the Hospital
Authority) in Pineville, North Carolina. BE&K entered
into a subcontract with SteelFab to supply and construct the
steel infrastructure for the hospital. SteelFab, in turn,
entered into a contract (the SteelFab-CSS subcontract) with a
"second-tier" subcontractor, Carolina Steel and
Stone, Inc. (CSS), to erect the steel structure.
working on this portion of the project, Dustin Miller, a CSS
employee, tripped and fell 30 feet to the ground after his
safety cable broke (the accident). Miller suffered serious
injuries, including "paralysis from his chest
down." At the time of the accident, CSS held both
commercial general liability (CGL) and umbrella insurance
policies issued by Amerisure (the Amerisure policies). As
required by the SteelFab-CSS subcontract, the Amerisure
policies included SteelFab and BE&K as "additional
Amerisure policies complied with the minimum coverage amounts
required by the SteelFab-CSS subcontract, namely, a total of
$2, 000, 000. The Amerisure CGL policy provided a limit of
liability of $1, 000, 000 per occurrence, while the umbrella
policy provided an additional $5, 000, 000 per
occurrence. Additionally, the SteelFab-CSS subcontract
stated that "the insurance required of [CSS] must be
primary and noncontributory with SteelFab's
Insurance program." (emphasis added).
addition to its "additional insured" status under
Amerisure's policies, SteelFab held its own CGL policy
issued by Continental, which policy contained an
"additional insured" endorsement covering BE&K.
BE&K also was insured under the Hospital Authority's
"rolling owner controlled insurance program"
(ROCIP). By enrolling in the ROCIP, BE&K also
had coverage under policies issued by a separate insurance
provider. Although the terms of the ROCIP required
participation by all tiers of contractors, participation was
not automatic, and BE&K did not enroll either SteelFab or
CSS in the ROCIP. Instead, as required by an additional
provision of the ROCIP, these unenrolled subcontractors
maintained their own insurance coverage as previously
the accident, Miller filed the underlying personal injury
action against defendants BE&K and SteelFab, alleging
numerous theories of negligence and breach of contract (the
Miller action). Miller alleged, in relevant part, that
BE&K and SteelFab failed to provide a safe work
environment, failed to ensure that their subcontractors
followed certain safety measures, failed to properly inspect
certain safety features, failed to control and supervise the
workplace, and failed to warn subcontractors about the lack
of safety measures. Miller did not name CSS as a defendant,
but was paid workers' compensation benefits based on his
status as a CSS employee.
agreed to defend the Miller action subject to a full
reservation of rights. When Continental sought
Amerisure's participation in this defense, Amerisure
declined on the ground that any defense of Miller's
claims was subject to a "controlled insurance
program" exclusion (the CIP exclusion) contained in the
Amerisure policies. Amerisure contended that this exclusion
precluded coverage and excused any ...