A federal appeals court on Tuesday affirmed a lower court ruling in favor of Zurich Insurance Group, ruling that Lloyd’s cannot file a replacement claim against Zurich under New York law.
According to the ruling by the 2nd US Circuit Court of Appeals in New York, the dispute in the case stems from a major construction project at LaGuardia Airport. Zurich American Insurance Co., American Zurich Insurance Co. v. Certain Underwriters at Lloyd’s, Arch Insurance Co.
Parsippany, New Jersey,Based Skanska USA Building Inc. and other parties and LaGuardia secured a contactor controlled insurance program for a large construction project at the airport that included a tower of general liability insurance with $300 million coverage in three layers.
Zurich underwrote the base layer of coverage, Arch provided the first layer of additional coverage and Lloyd’s provided the third coverage layer.
After a Skanska employee was injured while working on the LaGuardia project and filed a personal injury lawsuit against the Port Authority and LaGuardia, Zurich agreed that its general liability policy provided coverage for the lawsuit and settled the lawsuit against the defendants in August 2018. Arranged for counsel to represent.
Nearly three years later, Lloyd’s contacted that attorney and asked LaGuardia and the Port Authority to file a third-party claim against Skanska, the judgment says.
A dispute over the feasibility of the claim led to Zurich suing Lloyd’s in the U.S. District Court in New York, seeking an antitrust judgment that Lloyd’s was prohibited under New York law from making the claim.
A three-judge appeals court panel affirmed the district court’s decision in Zurich’s favor. Lloyd’s cannot reimburse its own insured for losses arising from “the underlying litigation, exactly the same risk for which Lloyd’s insured Skanska.
“Lloyd’s proposal does exactly what the anti-subrogation rule prohibits,” it said. “Direct implementation of the rule prohibits claims.”
Lawyers in the case did not respond to requests for comment.
