City of New Haven v. Insurance Co. of the State of Pennsylvania
A municipality may not possess standing to sue an insurance company on behalf of employees who allegedly were injured in a motor-vehicle accident. New Haven police officers allegedly were involved in a motor-vehicle accident. Claims were asserted against the city, which had an excess insurance policy with the defendant insurance company. The defendant denied coverage, claiming an exclusion that pertained to "fellow workers" applied. The policy provided that the defendant insurance company "will not defend or pay under this Policy for claims or suits against [New Haven] . . . [a]rising out of the liability of your employee for bodily injury to another of your employee(s) injured in the course of his or her employment." The defendant also claimed a "workers' compensation" exclusion applied. The workers' compensation exclusion provided that the defendant "will not defend or pay [New Haven] under this Policy for claims or suits" for which New Haven "may be held liable under any workers' or unemployment compensation law, disability benefits law or any similar law." The city requested a declaratory judgment that the excess liability insurance policy covered claims against the city. The District Court granted the defendant's motion for summary judgment. The City of New Haven appealed. The city argued that because its employees, who are additional insureds under the policy, would be entitled to claim coverage in their own right, regardless of the "fellow employee" exclusion, the city was entitled to file an action on their behalf. The 2nd Circuit reviewed de novo. Even if the employees' estate and conservator could claim coverage, the employees or their representatives were not parties to the city's suit. The city failed to prove it possesses standing to assert claims on their behalf. The city also failed to persuade the 2nd Circuit that the "fellow employee's" exclusion is against public policy. To the extent that the city claims that public policy favors furnishing insurance coverage to employees in motor-vehicle accidents, the subject suit is about the city's legal responsibility to employees, as opposed to the employees' coverage. The 2nd Circuit affirmed the judgment of the District Court, Hall, J.