In a dispute over coverage obligations between two insurers, the court rejected one insurer's claim that the other insurer was equitably estopped from denying a defense. Associated Industries Ins. Co. v. Sentinel Ins. Co., 2025 U.S. Dist. LEXIS 114423 (S.D. N. Y. June 16, 2025).
Eduardo Molina was a construction work who was injured when he fell from a scaffold while working on a project. The premises was owned by Central Area Equities Associates LLC (CAFA) and leased by Venchi 2 LLC. Molia sued Venchi 2 and CAFA.
In its lease, Venchi 2 agreed to provide general liability coverage protecting CAEA against any liability.
CAEA was insured by Associated Industries Insurance Company. Venchi 2 was insured through its parent entity 'Venchi US Inc. by Sentinel Insurance Company. Associated defended CAEA in the underlying action. Sentinel never assumed the defense of CAEA.
Sentinel's policy named as the insured Venchi US. The policy provided that any organization from whom the insured leased premises was an additional insured when "you" agreed that such organization be added as an additional insured on the Sentinel policy. Associated's policy identified CAEA as a named insured.
Sentinel denied the tender of additional insured coverage for CAEA as an additional insured because CAEA was not specifically listed as a named insured or additional insured. While the lease agreement called for Venchi 2 to have liability insurance, it did not require naming CAEA as an additional insured. Sentinel, however, proposed that it share in CAEA's defense and indemnity with Associated on a 50/50 basis. Associated rejected this offer.
Associated filed suit against Sentinel seeking a declaration that Sentinel had a duty to defend and indemnify CAEA as an additional insured and that the Sentinel policy was primary. Cross motions for summary judgment were filed.
There was no dispute that CAEA did not qualify for additional coverage under the Sentinel policy. Associated argued, however, that Sentinel should be equitably estopped from denying coverage to CAEA because Sentinel had raised other defenses that had no merit, thereby causing Associated to incur legal expenses it would not have otherwise incurred to pursue its claim against Sentinel and to reject a settlement would otherwise have accepted.
The court found that even assuming estoppel principles were applicable where there was no coverage under the plain language of the policy and no coverage had been provided. Associated could not, as a matter of law, establish that Sentinel was estopped from disclaiming additional insured coverage to CAEA under the facts of this case. Sentinel disclaimed coverage by letter and never provided coverage to CAEA. Associated did not contest this, but claimed that it relied on Sentinel's representations, namely by incurring legal expenses to challenge the other coverage defenses asserted by Sentinel and regretting its decision to reject Sentinel's settlement of shared coverage for the underlying action.
This was not the sort of circumstance that could support equitable estoppel, even if that claim were available where the underlying policy did not provide coverage and no coverage was ever provided. Sentinel's motion for summary judgment was granted and Associated's motion was denied.
