In Nalesnik v. United Nat’l Ins. Co., the plaintiff, an independent contractor, was injured while performing renovation work on Blue Label Properties’ property. Blue Label was insured under a policy that covered bodily injuries sustained on its property. Ultimately, the plaintiff sued Blue Label, but Blue Label’s carrier refused to provide a defense claiming that coverage was excluded under the policy’s independent contractor endorsement. Consequently, the plaintiff commenced a declaratory judgment action to determine whether the carrier’s obligations under the policy.
In its analysis, the court initially noted that, generally, the duty of an insurer runs only to its insured, not to third parties to the contract. Therefore, in order for the plaintiff to establish that he was aggrieved by any breach of the insurance policy, he needed to show a legal duty owed to him as a third-party beneficiary of the policy. The court reasoned that for a third-party to have standing to recover under these circumstances, both contracting parties needed to have made such coverage explicit. Here, the court noted that the plaintiff was not a named insured and was not identified as a third-party beneficiary on the policy.
But, the court’s analysis did not end there. The court noted that an intended third-party beneficiary did not need to be expressly identified in the contract if recognition of the beneficiary’s rights would effectuate the intention of the parties and either party was a creditor or done beneficiary. The court concluded that the plaintiff was not a creditor or donee beneficiary and there was no evidence to suggest that the carrier intended to confer any benefit to the plaintiff. Therefore, the plaintiff did not have standing to compel the carrier to provide overage to Blue Label and the plaintiff’s suit was dismissed.
Thanks to Colleen Hayes for her contribution to this post. For more information, please contact Nicole Y. Brown at firstname.lastname@example.org.