AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The City of Taos contracted L.C.I.2, Inc. to construct a structure around a pre-existing recreation area. L.C.I.2 subcontracted Newt & Butch’s Sheet Metal, Inc. for the roofing, which included an indemnity clause favoring L.C.I.2. During the construction, an employee of Newt & Butch, Bobby Windham, fell through a skylight cutout into an empty swimming pool, sustaining injuries. Windham and his wife sued L.C.I.2 for negligence. L.C.I.2 sought defense and indemnification from Nationwide Mutual Insurance Company under a policy naming L.C.I.2 as an additional insured. Nationwide accepted the defense under a reservation of rights, questioning the applicability of coverage due to the circumstances of the incident.

Procedural History

• District Court of Taos County, Michael E. Vigil, District Judge: Granted L.C.I.2's motion for summary judgment and denied Nationwide's motion for summary judgment.

Parties' Submissions

• Plaintiffs: Argued that L.C.I.2 was negligent for not covering skylight cutouts and for failing to enforce safety measures, leading to Bobby Windham's injuries. Additionally, Windham's wife sought damages for loss of consortium.
• L.C.I.2: Denied liability, attributing the negligence to the subcontractor (Newt & Butch) or a third party, and invoked comparative negligence. Demanded defense and indemnification from Nationwide as an additional insured.
• Nationwide Mutual Insurance Company: Accepted defense under reservation of rights, questioning whether the incident arose from Newt & Butch's work or L.C.I.2's negligence. Nationwide also sought a declaratory judgment that it had no duty to defend or indemnify L.C.I.2 based on the policy terms and the subcontract agreement.

Legal Issues

• Whether L.C.I.2 is entitled to defense and indemnification from Nationwide as an additional insured under the commercial general liability policy issued to Newt & Butch.
• Whether providing defense to L.C.I.2 violates NMSA 1978, Section 56-7-1 (2003), which concerns indemnity provisions in construction contracts.

Disposition

• The district court's order granting L.C.I.2's motion for summary judgment and denying Nationwide's motion for summary judgment was affirmed.

Reasons

• The Court of Appeals, per Judge Michael E. Vigil, with Judges Michael D. Bustamante and Cynthia A. Fry concurring, held that Section 56-7-1 does not void Nationwide’s obligation to provide L.C.I.2 a defense. The court distinguished between the duty to defend and the duty to indemnify, emphasizing that the policy's coverage for "liability arising out of [Newt & Butch’s] ongoing operations performed for [L.C.I.2]" necessitated Nationwide's defense of L.C.I.2. The court applied a broad interpretation of "arising out of," consistent with precedent, to conclude that the allegations against L.C.I.2 originated from Newt & Butch's operations, thus obligating Nationwide to defend L.C.I.2 regardless of L.C.I.2's ultimate liability.