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T-Mobile Usa Inc. v. Selective Insurance Company Of America

In T-Mobile USA Inc. v. Selective Insurance Company of America, 908 F.3d 581 (9th Cir. 2018), the United States Court of Appeals for the Ninth Circuit certified the following question to the Washington Supreme Court:

Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party's status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?

T-Mobile Northeast, LLC (“T-Mobile NE”) entered into a Field Services Agreement with Innovative Engineering, Inc. (“Innovative”) to provide service in connection with rooftop cellular antennae towers in New York City. The Agreement required Innovative to maintain general liability insurance naming T-Mobile NE as an additional insured, and to provide certificates of insurance to document this coverage. Selective Insurance Company of America (“Selective”) provided insurance coverage to Innovative. The policy contained an additional insured endorsement that automatically extended “additional insured” status to any entity who Innovative was required to add as an additional insured by written contract. The Van Dyk Group, Inc. (“VDG”), Selective’s authorized agent and insurance broker, issued a Certificate of Insurance (“COI”) to T-Mobile USA:

The COI stated that T-Mobile USA, as the certificate holder, "is included as an additional insured" under the Policy. But it also stated, in capitalized and bolded text, that the COI "is issued as a matter of information only and confers no rights upon the certificate holder," "does not affirmatively or negatively amend, extend or alter the coverage afforded by" the Policy, and "does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder." The COI further warns that "f the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed" and that "[a] statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s)."

T-Mobile USA tendered a claim (which resulted into a lawsuit) to Selective for damage to a building caused during the construction of a cell tower. The lawsuit also named Innovative as well as Omnipoint Communications, Inc. (“Omnipoint”), T-Mobile NE’s predecessor. While Selective agreed to defend Innovative subject to a reservation of rights, Selective denied T-Mobile USA’s tender on the basis that T-Mobile USA was not named as an insured.

T-Mobile USA bought suit against Selective in King County Superior Court. Selective then removed the action to the United States District Court for the Western District of Washington based on diversity jurisdiction. The District Court granted Selective’s motion for summary judgment, finding the “COI could not confer coverage on T-Mobile USA.”

T-Mobile USA appealed the District Court’s order granting summary judgment and denying reconsideration:

T-Mobile USA argues that the 2012 COI that VDG issued to T-Mobile USA confers additional-insured status on T-Mobile USA under the Policy. T-Mobile USA does not contend that the COI is relevant to interpreting the Policy. Rather, T-Mobile USA contends that Selective is bound by VDG's representation in the COI that T-Mobile USA is an additional insured.

The Ninth Circuit noted there are two competing principles under Washington insurance law: (1) an insurance company is bound by its agent’s actions, contracts, and representations within the agent’s actual or apparent authority; and (2) “a COI is not the functional equivalent of an insurance policy, and it therefore cannot be used to amend, extend, or alter the coverage provisions of an insurance policy.” Where the Washington Supreme Court “has not directly spoken on a matter of state law, a federal court sitting in diversity must generally use its own best judgment in predicting how the state's highest court would decide the case.” The District Court cited to International Marine Underwriters v. ABCD Marine, LLC, 165 Wn. App. 223 (Wash. Ct. App. 2011) (“ABCD”), wherein the Washington Court of Appeals reiterated that COIs “cannot amend, extend or alter coverage afforded by the policy” under Washington law. However, the Ninth Circuit found ABCD distinguishable as, there, the agent was not an agent of the insurer, but was the insured’s own agent.

Based on the conflict of laws as well as the Ninth Circuit’s opinion that the issue is potentially dispositive, the Ninth Circuit certified the issue to the Washington Supreme Court.

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