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The Rogak Report: 31 May 2005 ** Anti-Subrogation Rule **

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  • Lawrence Rogak
    CO-DEFENDANTS, INSURED UNDER SAME POLICY, CANNOT PURSUE CROSS-CLAIMS FOR INDEMNIFICATION Fidel Blanco, et al. v. CVS Corporation, d/b/a CVS 346, Indian Rock,
    Message 1 of 1 , May 31, 2005
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      CO-DEFENDANTS, INSURED UNDER SAME POLICY, CANNOT PURSUE CROSS-CLAIMS
      FOR INDEMNIFICATION

      Fidel Blanco, et al. v. CVS Corporation, d/b/a CVS 346, Indian Rock,
      LLC et al. (2d Dept 2005) (Index No. 4950/99)

      Plaintiff, an employee of G.W. Plumbing, Inc., was injured when he
      fell from a scaffold while working on the construction of a drive-
      through canopy at a newly-constructed CVS store. The defendants CVS
      Corporation, d/b/a CVS 346, and CVS Suffern Store, LLC leased the
      premises from the defendant landlord Indian Rock, LLC. Pursuant to
      the terms of the lease, Indian Rock was required to maintain general
      liability insurance coverage and was to name CVS as an additional
      insured under that policy. Indian Rock procured its insurance through
      CNA. The policy had a limit of $1,000,000 per occurrence. The lease
      also required CVS to maintain general liability insurance coverage
      and to name Indian Rock as an additional insured under its policy.
      CVS procured its insurance through AIG. That policy contained a limit
      of $1,750,000 per occurrence.

      Plaintiff commenced this action against CVS and Indian Rock to
      recover damages for personal injuries based upon violation of Labor
      Law ยง 240(1). CVS and Indian Rock asserted cross claims against each
      other for, among other things, contractual and common-law
      indemnification. CNA assumed the defense and indemnification of CVS
      as an additional insured under its policy.

      The plaintiffs settled their action with CVS and Indian Rock for the
      sum of $1,500,000. CVS and Indian Rock agreed that each would pay 50%
      of the settlement sum but reserved their rights to pursue their cross
      claims against one another. The trial court denied the cross claims
      as barred by the anti-subrogation rule. Indian Rock appealed.

      The Second Department held that Indian Rock was not entitled to
      contractual or common-law indemnification from CVS. The anti-
      subrogation rule provides that "an insurer has no right of
      subrogation against its own insured for a claim arising from the very
      risk for which the insured was covered." The rule applies to bar
      indemnification up to the policy limits of the comprehensive general
      liability policy at issue.

      "Indian Rock's comprehensive general liability policy named CVS as an
      additional insured and it contained a limit of $1,000,000 per
      occurrence. Indian Rock's $750,000 share of the settlement fell
      within these policy limits. Since the same insurance company covered
      CVS and Indian Rock for the same risk, the anti-subrogation rule
      applies to bar Indian Rock from indemnification for its part of the
      settlement which was within the limits of the policy purchased by it.
      Thus, Indian Rock's cross claims were properly denied."

      Larry Rogak
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