United States: Additional Insured Entitled To Coverage Even Where Direct Insured Not Named In Underlying Complaint

In Capital City Real Estate, LLC v. Certain Underwriters at Lloyd's London, the Fourth Circuit held that Capital City Real Estate, LLC (Capital City) was entitled to coverage as an additional insured under Marquez Brick Work, Inc.'s (Marquez) insurance policy, even though the underlying complaint for which Capital City was seeking indemnity did not name or otherwise men-tion Marquez.

The Fourth Circuit held that Capital City was permitted to submit evidence extrinsic to the underlying complaint to demonstrate Marquez's role in the excavation work out of which the complaint arose, and based on that extrinsic evidence, found that Capital City was entitled to coverage, reversing the district court's opposite conclusion.

Interestingly, the court noted that the Fifth Circuit, unlike the Fourth Circuit, had interpreted "the exact [same] Endorsement language to provide coverage 'only if the underlying pleadings allege that' the named insured, 'or someone acting on its behalf, proximately caused' the injury or damage." Thus, this case would have had a different outcome in the Fifth Circuit, providing another example of how complicated indemnity/additional insurance issues can be, and why insurers and insureds alike need to be careful when drafting contracts and insurance policies, and in protecting their rights during (or before) litigation. Capital City Real Estate, LLC v. Certain Underwriters at Lloyd's London, 2015 U.S. App. LEXIS 9662 (4th Cir. Jun. 10, 2015).

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