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Metta v. Fitchburg Mutual Insurance Company

A-4675-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

CONTRACTORS; SUBCONTRACTORS; INSURANCE — An indemnification provision in a contract between a contractor and its subcontractor is to be treated as an insured contract under the contract between contractor and subcontractor.

A builder hired a subcontractor to perform framing work. The agreement between the builder and the subcontractor contained a provision that the subcontractor was to indemnify and hold the builder harmless for any claims of loss or damage resulting from the subcontractor’s performance. The agreement also required the subcontractor to cover the building in its insurance policy. The actual policy contained provisions which stated that the insurance company had no duty to defend the subcontractor from any bodily injury claims. During the course of the project, a worker brought an action against the property owner and the subcontractor, claiming that he was injured while performing work for the subcontractor.

The builder and the property owner, in an action separate from the worker’s suit, sought a declaration that the insurance company had to pay for any judgments obtained against the subcontractor by the worker. The lower court, in disagreement with the insurance company, found that the provisions regarding indemnification in the contract between the builder and the subcontractor were valid and were covered under the subcontractor’s policy with the insurance company. On appeal, the Appellate Division agreed with the lower court that the indemnification provision in the contract between the builder and the subcontractor was to be treated as an insured contract under the insurance policy. It affirmed the lower court’s ruling that the subcontractor was required to indemnify and hold the builder harmless for any damages obtained against it in the worker’s action. The Court, however, determined that final resolution of the matter was to occur when the worker’s action against the subcontractor was finalized.


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