The U.S. Court of Appeals for the Second Circuit affirmed a district court ruling that requires Mt. Hawley Insurance Company to provide coverage in a case stemming from a construction site accident where a ceiling collapsed and injured three workers.
In *Reidy Contracting Group, LLC v. Mt. Hawley Insurance Company* (2d Cir. 2026), the appeals court rejected Mt. Hawley's challenge to a March 29, 2024, judgment by the U.S. District Court for the Western District of New York. The district court had denied Mt. Hawley's motion for summary judgment while granting summary judgment to Reidy Contracting Group, LLC and Merchants Mutual Insurance Company.
The case centers on an excess liability policy that Mt. Hawley issued to Vanquish Contracting Corporation, a subcontractor involved in the construction project where the ceiling collapse occurred. The incident resulted in injuries to three workers, triggering the insurance coverage dispute.
Mt. Hawley raised two primary arguments on appeal. First, the insurer contended that Reidy Contracting Group did not qualify as an additional insured under its policy with Vanquish. Second, Mt. Hawley argued that an Employers Liability Exclusion in the policy barred coverage for the incident.
The Second Circuit panel, consisting of Chief Judge Debra Ann Livingston, Judge Steven Menashi, and Judge Sarah Merriam, unanimously rejected both of Mt. Hawley's arguments. Writing for the majority, Chief Judge Livingston held that Reidy qualified as an additional insured under the policy terms.
Regarding the Employers Liability Exclusion, the appeals court applied the principle of contra proferentem, which requires ambiguous contract language to be construed against the party that drafted it. The court found the exclusion language ambiguous and therefore interpreted it in favor of coverage rather than against Mt. Hawley's interests.
"We hold that Reidy is an additional insured and that, because the Exclusion is ambiguous, we must construe it against the drafter, Mt. Hawley, in accordance with contra proferentem," Chief Judge Livingston wrote in the opinion.
The case represents a typical construction industry insurance dispute where multiple parties and insurance policies intersect following a workplace accident. Construction projects often involve complex insurance arrangements with primary contractors, subcontractors, and various insurance companies providing different levels of coverage.
Additional insured status is a common feature in construction insurance policies that extends coverage to parties beyond the named insured. These provisions typically protect contractors, property owners, or other entities with an interest in the project from liability arising from the named insured's operations.
Employers Liability Exclusions are standard provisions in commercial general liability policies that exclude coverage for injuries to the insured's own employees, as such injuries are typically covered under workers' compensation insurance. However, the application of these exclusions can become complex in multi-party construction scenarios where the injured parties may be employed by different entities.
The Second Circuit's application of contra proferentem reflects established insurance law principles that ambiguous policy language should be resolved in favor of coverage. This doctrine protects policyholders from unclear terms drafted by insurance companies and encourages insurers to use precise language in their policies.
Judge Menashi issued a separate dissenting opinion, though the specific grounds for his disagreement were not detailed in the available court documents. The dissent suggests that at least one member of the panel disagreed with either the majority's interpretation of the additional insured provision or the application of contra proferentem to the exclusion language.
The case was argued before the appeals court on Feb. 21, 2025, with the decision issued on Feb. 12, 2026. Reidy Contracting Group and Merchants Mutual Insurance Company were represented by Richard A. Galbo and Ashlyn M. Capote of Goldberg Segalla LLP in Buffalo, New York. Mt. Hawley was represented by Timothy E. Delahunt of Delahunt Law PLLC, also based in Buffalo.
The ruling affirms the district court's judgment and resolves the coverage dispute in favor of the contracting parties. The decision provides Mt. Hawley with limited appellate options, as the company would need to petition the Supreme Court for certiorari to seek further review of the Second Circuit's ruling.
The case illustrates the ongoing tension between insurance companies seeking to limit their exposure through policy exclusions and contractors expecting broad coverage protection in the complex risk environment of construction projects. The Second Circuit's affirmance strengthens the position of additional insureds in similar coverage disputes and reinforces the application of contra proferentem in resolving ambiguous exclusion language.