Snowplow Contracts and Ongoing Operations

On the day poor Patty fell, NeverSlip was insured under a commercial general liability policy issued by Stupendous Insurance Company (a successor to Adequate Insurance Company). The policy contained an additional insured endorsement that added the mall as an insured for ongoing operations.[1] The endorsement stated:

After Patty filed suit against the mall seeking to recover for her injuries, Misery, who loves company, sought coverage from Stupendous under the additional insured endorsement.

Is the Insurer Obligated to Afford Additional Insured Coverage?

Weather conditions mirroring the Misery Mall situation occur on a regular basis in cold weather locations across the country. These hazardous conditions guarantee that each year a significant number of people will sustain injury as a result of slips and falls on snow or ice in parking lots or on walkways. Most often, these heavily trafficked locations are owned by individuals or companies that have contracted with vendors to maintain the property. The contracts and obligations vary significantly. In some cases, the agreement requires the vendor to check the property on a daily basis and plow or apply salt or sand as needed. In other cases, the maintenance company is required to appear only when called. Still others may require the contractor to attend to the property when a certain quantity of snow falls. And, irrespective of whether these property owners have retained snowplowers, landscapers, or trash removers, they want the services performed well for those who may enter their premises.

Equally important, the property owners want the risk of injury sustained by visitors transferred from them to the contractor providing the service and that vendor’s insurance carrier.

Accordingly, when entering into agreements with vendors, owners frequently require risk-transfer protections in the form of hold harmless agreements or insurance procurement requirements or both.

Insurance procurement language typically obligates the snowplow contractor or other vendor to name the owner as a named insured or additional insured on a policy of commercial general liability or commercial auto insurance, with limits of a set amount. Once this obligation is in place, the question that then arises following a slip and fall in a parking lot is whether the coverage afforded to the owner under the snowplow contractor’s policy has been triggered. Typically, commercial general liability policies, such as the one procured by NeverSlip, contain an endorsement that provides that an insured will include anyone the named insured is required to name as an additional insured on a policy of insurance for liability arising out of the named insured’s ongoing operations for that entity.

The case law that has developed involving the scope of the snow contractor’s carrier’s duty to a property owner has centered on two questions: whether the incident “arises out of” the work contracted for, and whether the work was “ongoing” at the time of the incident.

“Arising Out Of” Language Is Broadly Construed

In general, courts around the country are broadly interpreting “arising out of” language contained in additional insured endorsements.[2] This phrase has been found to mean such things as “originating from,” “growing out of,” “incident to,” or “flowing from.”[3]

In Cottle v. Walgreens,[4] a New Jersey decision, Walgreens had an oral agreement with Pieco Services to provide snow removal and salting services at Walgreens’ property in Burlington. Farm Family Casualty Insurance Company insured Pieco.[5]

The injured party slipped and fell on “black ice” in the Walgreens parking lot.[6] Farm Family contended that questions of fact existed on whether the plaintiff’s injury “arose out of” Pieco’s work.[7] The court disagreed, holding that there was “clearly a substantial nexus between the claim and Pieco’s services.”[8] It reasoned that the refreezing of snow melt was a “condition that Pieco was hired to address and its invoice explicitly reflected its recognition of the substantial probability of a refreeze.”[9]

In Zraj Olean, LLC v. Erie Insurance Co. of New York,[10] pursuant to a written service contract, Southern Summit Development agreed to perform snow removal, sanding, and salting services on behalf of the owner and property manager at a shopping mall. It also agreed to name the owner and property manager as additional insureds and complied with this obligation through the purchase of insurance from Erie Insurance.[11]

Following a slip and fall during the policy period, a lawsuit was brought against the owner and property manager.[12] In considering what duty Erie owed to the owner and property manager, the New York court initially acknowledged that the duty to defend is exceedingly broad and that, although Southern Summit was not referenced in the underlying amended complaint, the allegations in that amended complaint triggered the defense obligation.[13]

The court then found that, inasmuch as bodily injury liability coverage for an additional insured is provided for injuries caused in whole or in part by the “acts or omissions” of Southern Summit, based on the record before the court, Erie failed to make a prima facie showing that the underlying plaintiff’s slip and fall was not caused in whole or in part by the acts or omissions of Southern Summit.[14] Likewise, the court found that the owner and property manager failed to make a prima facie showing that the slip and fall was caused in whole or in part by the acts or omissions of Southern Summit.[15]

The courts provide no test for determining whether the loss arose out of the work contracted for; rather, they consider whether the injury was connected in any manner to the condition the contractor was retained to address. This means that if the contractor was retained to plow snow and the injured party fell on an accumulation of snow that the contractor failed to remove, the loss arises out of the work contracted for. The same reasoning would apply to a slip and fall on ice.

When Do a Contractor’s “Ongoing Operations” End?

In K-Mart Corp. v. Clean Sweep, Inc.,[16] the contractor, Clean Sweep, carried a liability insurance policy written by Milwaukee Mutual. The policy named K-Mart as an additional insured and provided K-Mart with coverage for liability “arising out of” Clean Sweep’s “ongoing operations performed for [K-Mart].”[17] The plaintiff in the underlying action slipped, fell, and was injured on ice in K-Mart’s parking lot hours after Clean Sweep had removed snow and ice.[18] During that time, additional snow had accumulated on the premises.[19] K-Mart brought a declaratory judgment action against Milwaukee Mutual, and both parties filed for summary judgment.[20]

The court found that the Milwaukee Mutual policy covered K-Mart as an additional insured.[21] The claim “arose out of” Clean Sweep’s snow removal operations because the plaintiff slipped and fell on snow Clean Sweep had failed to remove from the parking lot.[22] Although Clean Sweep had removed snow from the parking lot earlier that day and was not on site when the plaintiff was injured, the court nonetheless held that liability arose out of Clean Sweep’s “ongoing operations.”[23]

The court in Employers Insurance Co. of Wausau v. Harleysville Insurance Co. of New Jersey reached a similar conclusion.[24] There, the court went so far as to hold that a claim arose out of an ongoing obligation to plow and salt even though the accident occurred four days after the last snowfall. The court reviewed a policy that provided that the snowplow contractor, Excell Maintenance Services, Inc., would indemnify the owner, Ackrick Associates, for claims arising out of its “ongoing operations.”[25] The injured party slipped and fell in a parking lot that Excell plowed four days prior to the accident.[26] In between when it plowed and the fall, only .01 inches of snow fell.[27] In determining that the owner qualified as an additional insured, the court held:

In support of its findings, the court relied on an earlier decision in Hartz Mountain Industries v. Preserver Insurance Co..[29] In discussing that decision, the court reasoned:

Even though the court in Hartz did not need to consider the scenario presented here—where the snowplow company failed to salt an icy area it was required to salt, and a person fell on that unsalted ice a few days later—the holding of Hartz could be applied to such a scenario. When a snowplow company does not fulfill its obligation to salt the areas it is required to salt under the contract, its operations cannot be rendered “complete.” If someone falls and injures herself on that unsalted ice, that injury has a substantial nexus, i.e., arises out of—those not-yet-complete—i.e., ongoing—operations of the snowplow company. The same analysis can be applied in this case.[30]

In Wausau Underwriters Insurance Co. v. Cincinnati Insurance Co.,[31] a snow removal contractor, Masciarelli, contracted with Town Square Mall Associates, LLC, to plow and salt Town Square’s parking lot. Cincinnati provided insurance coverage to Masciarelli.[32] The policy also provided coverage for an “additional insured,” “but only with respect to liability arising out of [Masciarelli’s] ongoing operations performed for that additional insured.”[33]

The plaintiff in the underlying action slipped and fell on ice in Town Square’s parking lot.[34] Thereafter, Town Square and its insurer, Wausau, alleged Cincinnati owed Town Square defense and indemnification as an additional insured.[35] The snow removal contract provided that Masciarelli had to prevent standing water from freezing on the premises.[36] The court opined that as long as that task remained undone, the operations were “ongoing.”[37] And the plaintiff slipped and fell on ice the snow contractor failed to remove.[38] Therefore, the endorsement was applicable and coverage was found.

Similarly, in West Bend Mutual Insurance Co. v. Home & Garden Supply Co., Inc.,[39] the court held that snow removal operations were “ongoing” based on the parties’ contract. The contract stated that snow removal duties were not complete until the condition of the parking lot was reduced to “bare pavement,” which the contractor failed to do.[40]

In Mack-Cali Realty Corp. v. Peerless Insurance Co.,[41] the insurer slightly varied the completed operations argument. There, plaintiff property owners entered into a contract with Lascon, a snowplow contractor.[42] The contract provided that Lascon would be responsible for monitoring conditions at the premises and determining the necessity of performing services to address snow, icing, melting, and refreezing conditions, or a combination of those.[43] The contract also obligated Lascon to name the plaintiffs as additional insureds on their liability policy “to completely protect” the plaintiffs from claims arising out of Lascon’s operations.[44]

The plaintiffs brought an action against Lascon’s general liability insurer, Peerless Insurance Company.[45] The plaintiffs sought a declaration that Peerless had a duty to defend the plaintiffs in underlying personal injury lawsuits arising from multiple slip-and-fall accidents.[46]

In response, and what is notable about this decision, Peerless opted not to focus on the ongoing operations language but to focus instead on the subsequent provision in the additional insured endorsement, which provides that an organization’s status as an additional insured ends when the relevant portion of the named insured’s work is put to its intended use.[47] Peerless argued that its ongoing operations coverage ended when a person used an area that Lascon plowed.[48] In other words, the injured parties put Lascon’s snowplow work to its “intended use” when they walked on the premises.[49]

The plaintiffs disagreed, claiming that Peerless had a duty to defend them and that the snow removal responsibilities were ongoing, had not concluded, and therefore were not yet put to their “intended use.”[50] The court found for the plaintiffs.[51] It noted that at best the “intended use” language was ambiguous. And, while it could be read to require Peerless to cover only injuries that occurred when Lascon was clearing snow, this was not the only or even the most reasonable interpretation. The court focused on the fact that Lascon was not hired to provide a one-off service. Rather, its services included maintaining and monitoring the complex continuously to ensure that it was free of ice and snow. If the allegations of the injured parties were true that they slipped and fell because the premises was not cleared of ice and snow, then Lascon’s work was never completed and therefore was never put to its intended use. [52]

Although there is an absence of decisions in which the insurer has successfully argued that snow removal operations were complete prior to the slip and fall, when presented the right set of facts, courts have made such findings when asked to consider the work of other types of vendors.[53]

What can be drawn from these cases is that the courts are paying careful attention to the trade contract obligations of the snow maintenance company. What were its responsibilities? Even though its plowing work had been completed, did it have an obligation to return to the location and monitor its condition? If so, did the accident or injury occur at a time when the plow company should have returned or was contractually obligated to do so?

 Are Snowplow Contractors Guarantors of Safety?

The best way to answer the question of whether snowplow contractors are guarantors of safety is to consider our Misery Mall situation. Does Stupendous Insurance Company indeed have an obligation to extend additional insured coverage to Misery Mall? Were the operations completed when NeverSlip left more than two weeks earlier?

Based on the manner in which courts are currently interpreting the “arising out of” language and their hesitancy to end a contractor’s operations when it leaves the site, the simple (although not definitive) answer is “likely, but not necessarily.”

In many cases, snowplow contracts require a vendor to return to the premises to maintain it. Accordingly, courts are likely to recognize that continuing obligation and impose liability on vendors who fail to fulfill contractual mandates.[54] If ice remains after the removal, it is the snow contractor’s obligation to follow up and remove it.[55] Moreover, several cases support the notion that a contractor does not need to be in the course of work or present on the site for the court to consider operations “ongoing.”[56]

If there is a continuing obligation to return, from the trade contract perspective, then in the separate universe of coverage, the operation is likely to be considered an “ongoing operation” rather than a “completed operation.”

So does that mean that an insurer will always be “on the hook” for slip-and-fall injuries when the carrier insures the plowing company? In light of the case law, if coverage can be successfully challenged, it will be based on the specific language of the snowplow contract.

The case law makes it fairly clear that absent any limitations, the courts are likely to construe standard provisions broadly. But—with a strict limitation that plowing is to be performed after two inches have fallen or upon the property owner’s request, and with a substantial period of time between the work and the loss—the insurer has a better argument that the condition that caused the fall did not arise out of the snowplow contractor’s work or ongoing operations.[57] This is illustrated by the court’s reasoning in Lumbermens Mutual Casualty Co. v. Town of Pound Ridge, Westchester County.[58] There, the court noted that the word “operation” can be taken to refer to a course of continuing work involving recurring inspection and other activities.

Viewed in this sense, the operation of keeping snow and ice off the surface where the accident occurred is still in progress where the named insured is driving over the road or parking lot frequently to determine whether sanding or snow removal is necessary. This pattern of repeated and continuing inspection distinguishes itself from situations where the work involves something like the replacement of equipment and is completed months before the incident, and the named insured is no longer on site.

Thus, the party in the best position to limit exposure is the snowplow contractor. If the contractor assumes all responsibility for the maintenance of the property, its carrier can do little to dispute a claim for additional insured status by a property owner. However, if the contractor agrees only to provide services either upon request or upon a set trigger, and the carrier can establish that the condition causing the fall is different from that which the contractor was obligated to address, then it seems that a carrier can still dispute coverage.

NeverSlip’s contract with Misery Mall required it to plow snow when there were two inches of snow on the ground. There is no evidence that the contract required NeverSlip to continually monitor the condition of the lot, nor is there an indication that there were two inches of snow on the ground at any time between December 7th and December 25th. Stupendous, therefore, has a better argument than most that NeverSlip’s operations were completed and that coverage was not available under its policy.

If the mall, and not the snowplow contractor, is wholly responsible for monitoring the condition of the parking lot, and the only obligation of the snowplow contractor is to plow when the trigger is reached, and over two weeks passed between the work and the fall, then it would appear the carrier has a viable argument that the services provided were isolated and not ongoing. A different result would likely occur if NeverSlip had an ongoing obligation to monitor the lot and plow or sand when it was “necessary.”

Alternatively, the carrier, if it is hesitant to rely on the contracting ability of its named insured, could elect to use an endorsement limiting the coverage afforded an additional insured. A least one court has left open the option for a carrier to exclude from coverage liability not arising from damage to person or property occurring when the insured’s employees or equipment are physically present and at work as long as the exclusion is explicit and unambiguous to a person of average intelligence.[59]

Whether property owners, like the Misery Mall, are left out in the cold will depend on their contracting ability. And if these owners elect to maintain responsibility for monitoring the safety of their parking lots and walkways instead of transferring such tasks to a vendor, they can still look to their own commercial or personal lines liability policies for coverage when there is a premises liability claim. So in that situation, while Misery Mall may not be in misery, its own insurer may not be able to transfer the risk if the underlying contract clearly circumscribed NeverSlip’s obligations.

Keywords: litigation, insurance, coverage, named insured, additional insured, ongoing operations, continuing obligation to return

Dan D. Kohane is a senior member, Jennifer A. Ehman is an associate, and Alyssa J. Jones is a law clerk with Hurwitz & Fine, P.C., in Buffalo, New York.

[1] The policy contained no completed operations additional insured coverage.
[2] Capitol Indem. Corp. v. 1405 Assocs., Inc., 340 F.3d 547, 550 (8th Cir. 2003); Winnacunnet Co-op. Sch. Dist. v. Nat’l Union Fire Ins. Co., 84 F.3d 32, 35 (1st Cir. 1996); Maroney v. N.Y. Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467 (N.Y. App. Div. 2005).
[3] Norfolk S. Ry. Co. v. Nat’l Union Fire Ins. of Pittsburgh, PA, 999 F. Supp. 2d 906, 916 (S.D. W. Va. 2014).
[4] 2013 N.J. Super. Unpub. LEXIS 2059, at *1 (N.J. App. Div. Aug. 19, 2013).
[5] Cottle, 2013 N.J. Super. Unpub. LEXIS 2059, at *1.
[6] Cottle, 2013 N.J. Super. Unpub. LEXIS 2059, at *1.
[7] Cottle, 2013 N.J. Super. Unpub. LEXIS 2059, at *9.
[8] Cottle, 2013 N.J. Super. Unpub. LEXIS 2059, at *15.
[9] Cottle, 2013 N.J. Super. Unpub. LEXIS 2059, at *15. Compare Town of Oyster Bay v. Emp’rs Ins. of Wausau, 269 A.D.2d 387, 388–89 (N.Y. 2d Dep’t 2000), in which the court found that the injury did not arise out of the snowplow contractor’s work where, factually, the injury occurred in a parking lot that was outside the snowplow contractor’s responsibilities.
[10] 134 A.D.3d 1557, 1558, 22 N.Y.S.3d 779 (N.Y. App. Div. 2015), reargument denied, 137 A.D.3d 1634, 26 N.Y.S.3d 909 (N.Y. App. Div. 2016).
[11] Zraj, 134 A.D.3d at 1558.
[12] Zraj, 134 A.D.3d at 1558.
[13] Zraj, 134 A.D.3d at 1561.
[14] Zraj, 134 A.D.3d at 1561.
[15] Zraj, 134 A.D.3d at 1561.
[16] No. C9-97-703, 1997 Minn. App. LEXIS 1193, at *2 (Minn. Ct. App. Oct. 28, 1997).
[17] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *2.
[18] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *2.
[19] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *2.
[20] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *2.
[21] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *4.
[22] Clean Sweep, 1997 Minn. App. LEXIS 1193, at *4–5.
[23] See also Hartz Mountain Indus. v. Preserver Ins. Co., No. A-3086-06T2, 2008 N.J. Super. Unpub. LEXIS 1290, at *16 (N.J. Super. Ct. App. Div. Feb. 11, 2008) (holding that snow operations were ongoing despite the contractor’s absence from the site at the time of the accident. In Hartz, the contractor left with the intention of returning to complete the job).
[24] Emp’rs Ins. Co. v. Harleysville Ins. Co., No. 05-4900 (NLH), 2008 U.S. Dist. LEXIS 69359, at *25 (D.N.J. Aug. 26, 2008).
[25] Harleysville, 2008 U.S. Dist. LEXIS 69359, at *4–5.
[26] Harleysville, 2008 U.S. Dist. LEXIS 69359, at *13–14.
[27] Harleysville, 2008 U.S. Dist. LEXIS 69359, at *12.
[28] Harleysville, 2008 U.S. Dist. LEXIS 69359, at *13–14.
[29] No. A-3086-06T2, 2008 N.J. Super. Unpub. LEXIS 1290 (N.J. Super. Ct. App. Div. Feb. 11, 2008).
[30] Harleysville, 2008 U.S. Dist. LEXIS 69359, at *20–21 (emphasis added).
[31] Wausau Underwriters Ins. Co. v. Cincinnati Ins. Co., 198 F. App’x 148, 149 (2d Cir. 2006).
[32] Wausau, 198 F. App’x at 149.
[33] Wausau, 198 F. App’x at 149.
[34] Wausau, 198 F. App’x at 149.
[35] Wausau, 198 F. App’x at 149.
[36] Wausau, 198 F. App’x at 150.
[37] Wausau, 198 F. App’x at 150.
[38] Wausau, 198 F. App’x at 149.
[39] 2012 IL App (1st) 112728-U (2012).
[40] West Bend Mutual, 2012 IL App (1st) 112728-U, ¶ 15.
[41] 115 F. Supp. 3d 449 (S.D.N.Y. 2015).
[42] Peerless, 115 F. Supp. 3d at 452.
[43] Peerless, 115 F. Supp. 3d at 452.
[44] Peerless, 115 F. Supp. 3d at 452.
[45] Peerless, 115 F. Supp. 3d at 450–51.
[46] Peerless, 115 F. Supp. 3d at 451.
[47] Peerless, 115 F. Supp. 3d at 451.
[48] Peerless, 115 F. Supp. 3d at 454.
[49] Peerless, 115 F. Supp. 3d at 454.
[50] Peerless, 115 F. Supp. 3d at 451.
[51] Peerless, 115 F. Supp. 3d at 452.
[52] Peerless, 115 F. Supp. 3d at 456; see also Sabia Landscaping v. Merchs. Mut. Ins. Co., No. 13-3820, 2013 U.S. Dist. LEXIS 162247 (E.D. Pa. Nov. 6, 2013) (denying a motion to dismiss the plaintiff’s complaint. A snow removal service provider finished plowing and returned the following day to re-salt. In between the plowing and re-salting, an accident occurred. The court held that the contractor’s returning to re-salt may constitute ongoing operations).
[53] See, e.g., Hartford Ins. Co. v. Ohio Cas. Ins. Co., 145 Wash. App. 765, 778 (2008) (holding that a subcontractor’s work was complete and interpreting “ongoing operations” as including work in progress only); Weitz Co., LLC v. Mid Century Ins. Co., 181 P.3d 309, 315 (Colo. App. 2007) (holding that “[u]nder the plain and ordinary meaning of ‘arising out of your ongoing operations’ the endorsement to the policy did not cover ‘completed operations,’ and the insurer had no duty to defend or indemnify the general contractor under the instant circumstances”)
[54] See Emp’rs Ins. Co. v. Harleysville Ins. Co., No. 05-4900 (NLH), 2008 U.S. Dist. LEXIS 69359, at *13–14 (D.N.J. Aug. 26, 2008) (continuing obligation to plow); see also Peerless, 115 F. Supp. 3d at 456 (obligation to maintain safety).
[55] See Cottle v. Walgreens, 2013 N.J. Super. Unpub. LEXIS 2059 (N.J. App. Div. Aug. 19, 2013).
[56] See, e.g., K-Mart Corp. v. Clean Sweep, No. C9-97-703, 1997 Minn. App. LEXIS 1193 (Minn. Ct. App. Oct. 28, 1997).
[57] Of course, this again assumes there is no complete coverage additional insured coverage available under the policy.
[58] 362 F.2d 430, 433–34 (2d Cir. 1966).
[59] Lumbermens, 362 F.2d at 433–34.

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