{"id":84629,"date":"2025-02-12T21:32:32","date_gmt":"2025-02-12T21:32:32","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/insurance\/ai-indemnity-does-exist-boyle-leonard-anderson-p-a\/"},"modified":"2025-02-12T21:32:32","modified_gmt":"2025-02-12T21:32:32","slug":"ai-indemnity-does-exist-boyle-leonard-anderson-p-a","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=84629","title":{"rendered":"AI Indemnity Does Exist! | Boyle, Leonard, & Anderson, P.A."},"content":{"rendered":"


\n<\/p>\n

\n

By, Laura F. Locklair, Esq.<\/h4>\n

Believers in additional insured indemnity have a new soap box to stand on following the issuance of the court\u2019s opinion in Portrait Homes \u2013 South Carolina, LLC and Portrait Homes \u2013 Persimmon Hill, LLC v. Pennsylvania National Mutual Casualty Insurance Company and the Persimmon Hill Homeowners Association, Inc., C.A<\/em>. 2014-CP-08-2757 (Berkeley County Circuit Court, October 22, 2019). For too long carriers in South Carolina and elsewhere have, at best, ignored the idea of separate indemnity obligation owed by an insurer to an additional insured and, at worst, outright denied any independent obligation to indemnify an additional insured for its own scope of fault. However, the court in Persimmon Hill punished an insurer\u2019s breach of its duty to indemnify its additional insured (and other improper conduct by the insurer) by, among other things, awarding to the additional insured as \u201cdamages proximately caused by the breach of the duty to indemnify\u201d the $3,850,000.00 settlement that the additional insured was forced to negotiate and pay on its own behalf, \u201cconstrained [only] by a time on risk analysis and the limits of the applicable policies.\u201d<\/p>\n

In Persimmon Hill<\/em>, a general contractor, Portrait Homes \u2013 South Carolina, LLC and Portrait Homes \u2013 Persimmon Hill, LLC (\u201cPortrait\u201d) sought a defense and indemnity under multiple commercial general liability policies of insurance issued by Pennsylvania National Mutual Casualty Insurance Company (\u201cPenn National\u201d) to the framer, Jose Castillo d\/b\/a JJA Framing Company and JJA Construction (\u201cJJA Framing\u201d), that subcontracted with Portrait on its Persimmon Hill project. Specifically, when Portrait was sued by homeowners in the Persimmon Hill project for alleged construction defects, Portrait tendered its defense and indemnity to Penn National as an additional insured under the JJA Framing policies. Penn National denied Portrait\u2019s tender, inaccurately representing that the policies issued to JJA Framing did not cover completed operations. Faced with Penn National\u2019s denial and \u201cpotential actual damages of $17,380,000 and exposure for punitive damages relating in whole or in part to JJA Framing\u2019s work,\u201d Portrait was forced to negotiate a settlement with the plaintiffs in the underlying construction defect case by paying $3,850,000 \u2013 without the involvement or assistance, financial or otherwise, of Penn National.<\/p>\n

In addition to determining Penn National breached its duty to defend (which could easily be the subject of a separate blog post), the Court in Persimmon Hill<\/em> also concluded that Penn National breached its duty to indemnify Portrait. In the order, the Court interpreted the endorsement CG 2037, which covers the additional insured for liability \u201carising out of\u201d the named insured\u2019s work, and the endorsement 71 11 45, which covers the additional insured for liability \u201ccaused, in whole or in part by,\u201d the named insured\u2019s work, \u201cexpansively in favor of coverage.\u201d As a result, the Court concluded \u201c[t]he coverage provided to Portrait Homes as an additional insured is not limited to its vicarious liability for JJA Framing\u2019s work.\u201d See also Capital City Real Estate, LLC v. Certain Underwriters at Lloyd\u2019s London<\/em>, 788 F.3d 375, 380 (4th Cir. 2015 ) (\u201c[W]hile it is true that the additional insured is covered for its vicarious liability stemming from the named insured\u2019s operations, the insurer\u2019s attempt to limit coverage to that along ignores the [\u201carising out of\u201d and\/or \u201ccaused in whole or in party by] language of the additional insured endorsements.\u201d). Accordingly, the Court in Persimmon Hill<\/em> Court joined multitudes of other courts across the country in holding that an additional insured is insured for its own scope of fault under such endorsements.<\/p>\n

After finding the settlement negotiated by Portrait \u201cwas fair and reasonable under the circumstances and\u2026for \u2018property damage\u2019 caused by an \u2018occurrence\u2019 as those terms are used in the Penn National policies,\u201d the Court applied an analysis of the limits of the policy ($500,000) and a time on the risk analysis (five policy years of coverage) to hold Penn National owed an indemnity obligation of $2,500,000 to Portrait as an additional insured. The Persimmon Hill<\/em> Court further awarded prejudgment interest on the damages for, among other things, \u201cbreach of the duty to indemnify\u201d from the date the order approving the $3,850,000 settlement in the underlying construction defect action was filed and Portrait\u2019s \u201cattorney\u2019s fees and costs associated with prosecuting the claims against Penn National\u201d given its \u201cbreach[ of] the insurance contracts.\u201d As additional cause for carrier concern (and, again, ample material for another, separate blog post), the Court determined that \u201cPenn National acted in bad faith and acted willfully and recklessly disregarded Portrait Homes\u2019s rights when it breach the duty to defend and the duty to indemnify Portrait,\u201d entitling Portrait to recover bad faith and punitive damages to be determined in a subsequent hearing.<\/p>\n

As a result, Persimmon Hill<\/em> demonstrates that additional insured indemnity is very real in South Carolina and serves as a cautionary tale to insurers that would disregard their indemnity obligations to their additional insureds as so doing risks being hit with the entirety of a settlement and\/or verdict, prejudgment interest, attorney\u2019s fees, bad faith, and punitive damages.<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

By, Laura F. Locklair, Esq. Believers in additional insured indemnity have a new soap box to stand on following the issuance of the court\u2019s opinion in Portrait Homes \u2013 South Carolina, LLC and Portrait Homes \u2013 Persimmon Hill, LLC v. Pennsylvania National Mutual Casualty Insurance Company and the Persimmon Hill Homeowners Association, Inc., C.A. 2014-CP-08-2757 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[94],"tags":[5740,21334,25399,41844,32369,32370],"dealstore":[],"offerexpiration":[],"class_list":["post-84629","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-anderson","tag-boyle","tag-exist","tag-indemnity","tag-leonard","tag-p-a"],"yoast_head":"\nAI Indemnity Does Exist! | Boyle, Leonard, & Anderson, P.A. - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=84629\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"AI Indemnity Does Exist! | Boyle, Leonard, & Anderson, P.A. - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"By, Laura F. 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