Aug 4, 2021

Trial Victory on Professional Services Exclusion Upheld on Appeal

The Port Authority of New York and New Jersey v. RLI Insurance Company, et ano., Docket No. A-4862-18 (N.J. App. Div. July 28, 2021)

In a unanimous decision, the New Jersey Appellate Division affirmed a trial ruling that RLI Insurance Company does not owe a defense to a putative additional insured, the Port Authority of New York and New Jersey, with respect to an underlying personal injury action.

Following a bench trial, Ford Marrin obtained a judgment declaring that RLI did not owe a duty to defend or indemnify the Port Authority under an insurance policy issued to a construction manager working at the Harrison PATH station. The Appellate Division concurred, affirming the ruling that RLI’s Professional Services Exclusion barred coverage for negligence claims involving a failure to warn where the policy’s definition of “professional services” included the same terminology utilized in the underlying complaint.

The Appellate Division also agreed that the Port Authority did not qualify as an additional insured because its liability was not “caused in whole or in part” by the work of RLI’s named insured. In doing so, the court adopted the view that New Jersey’s Burd rule remains good law. Under this rule, where an insurer decides not to provide a defense, its obligation to defend becomes an obligation to reimburse, but only where it is later determined that there was in fact coverage. Here, the plaintiff was unable to meet its burden to show that the named insured contributed to the accident.

Partners Joseph D’Ambrosio and John A. Mattoon worked on this matter.