{ "id": 4342858, "name": "UNIVERSAL INSURANCE COMPANY, Plaintiff v. BURTON FARM DEVELOPMENT COMPANY, LLC, Defendant FIRST SPECIALTY INSURANCE COMPANY, Plaintiff v. UNIVERSAL INSURANCE COMPANY, Defendant", "name_abbreviation": "Universal Insurance v. Burton Farm Development Co.", "decision_date": "2011-11-01", "docket_number": "No. COA10-1554", "first_page": "469", "last_page": "481", "citations": [ { "type": "official", "cite": "216 N.C. App. 469" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "644 S.E.2d 604", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12638417 ], "year": 2007, "pin_cites": [ { "page": "607", "parenthetical": "quoting Waste Mgmt., 315 N.C. at 691, 340 S.E.2d at 377" } ], "opinion_index": 0, "case_paths": [ "/se2d/644/0604-01" ] }, { "cite": "462 S.E.2d 514", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "opinion_index": 0 }, { "cite": "341 N.C. 651", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 793222, 793228, 793200, 793113, 793182 ], "year": 1995, "opinion_index": 0, "case_paths": [ "/nc/341/0651-02", "/nc/341/0651-01", "/nc/341/0651-04", "/nc/341/0651-03", "/nc/341/0651-05" ] }, { "cite": "456 S.E.2d 882", "category": "reporters:state_regional", "reporter": "S.E.2d", "pin_cites": [ { "page": "884" } ], "opinion_index": 0 }, { "cite": "118 N.C. App. 686", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11920692 ], "pin_cites": [ { "page": "690" } ], "opinion_index": 0, "case_paths": [ "/nc-app/118/0686-01" ] }, { "cite": "514 S.E.2d 291", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1999, "pin_cites": [ { "page": "293" }, { "page": "293" }, { "page": "293" } ], "opinion_index": 0 }, { "cite": "133 N.C. App. 76", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11216343 ], "weight": 3, "year": 1999, "pin_cites": [ { "page": "78" }, { "page": "78" } ], "opinion_index": 0, "case_paths": [ "/nc-app/133/0076-01" ] }, { "cite": "284 S.E.2d 211", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "213" } ], "opinion_index": 0 }, { "cite": "54 N.C. App. 551", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523988 ], "year": 1981, "pin_cites": [ { "page": "555" } ], "opinion_index": 0, "case_paths": [ "/nc-app/54/0551-01" ] }, { "cite": "386 S.E.2d 762", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "764", "parenthetical": "holding insured is not required to establish ultimate liability, but only to show that facts of claim were within coverage of policy" } ], "opinion_index": 0 }, { "cite": "96 N.C. App. 635", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524064 ], "year": 1990, "pin_cites": [ { "page": "638", "parenthetical": "holding insured is not required to establish ultimate liability, but only to show that facts of claim were within coverage of policy" } ], "opinion_index": 0, "case_paths": [ "/nc-app/96/0635-01" ] }, { "cite": "183 N.C. App. 437", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8203881 ], "year": 2007, "pin_cites": [ { "page": "442", "parenthetical": "quoting Waste Mgmt., 315 N.C. at 691, 340 S.E.2d at 377" } ], "opinion_index": 0, "case_paths": [ "/nc-app/183/0437-01" ] }, { "cite": "484 S.E.2d 443", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 7, "year": 1997, "pin_cites": [ { "page": "445" }, { "page": "445" } ], "opinion_index": 0 }, { "cite": "126 N.C. App. 217", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11709668 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc-app/126/0217-01" ] }, { "cite": "407 F. Supp. 2d 741", "category": "reporters:federal", "reporter": "F. Supp. 2d", "case_ids": [ 925815 ], "weight": 6, "year": 2006, "pin_cites": [ { "page": "747" }, { "page": "749" } ], "opinion_index": 0, "case_paths": [ "/f-supp-2d/407/0741-01" ] }, { "cite": "85 S.W.3d 185", "category": "reporters:state_regional", "reporter": "S.W.3d", "case_ids": [ 11348608 ], "year": 2002, "pin_cites": [ { "page": "188" } ], "opinion_index": 0, "case_paths": [ "/sw3d/85/0185-01" ] }, { "cite": "718 N.W.2d 888", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 8413304 ], "year": 2006, "pin_cites": [ { "page": "894", "parenthetical": "\"Because it is Bloomington Steel that seeks coverage here, the exclusion for bodily injury expected or intended by 'the insured' is limited to bodily injury expected or intended by Bloomington Steel itself.\"" } ], "opinion_index": 0, "case_paths": [ "/nw2d/718/0888-01" ] }, { "cite": "455 S.W.2d 714", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10147349 ], "year": 1970, "pin_cites": [ { "page": "721", "parenthetical": "\" 'The insured' does not refer to all insureds; rather, the term is used to refer to each insured as a separate and distinct individual apart from any and every other person who may be entitled to coverage thereunder.\"" } ], "opinion_index": 0, "case_paths": [ "/sw2d/455/0714-01" ] }, { "cite": "183 So. 2d 571", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9828589 ], "year": 1966, "pin_cites": [ { "page": "573", "parenthetical": "\"Since the adoption of the severability of interests clause in a policy which would or might apply to several insureds, the term 'the insured', as used in the exclusions and conditions of the policy, means only the person claiming coverage.\"" } ], "opinion_index": 0, "case_paths": [ "/so2d/183/0571-01" ] }, { "cite": "372 F.2d 701", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2043548 ], "year": 1966, "pin_cites": [ { "page": "708", "parenthetical": "'The better reasoned cases adopt a restrictive interpretation of 'the insured' as referring only to the party seeking coverage under the policy.\"" } ], "opinion_index": 0, "case_paths": [ "/f2d/372/0701-01" ] }, { "cite": "937 F. Supp. 413", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 7653496 ], "weight": 4, "year": 1996, "pin_cites": [ { "page": "418" }, { "page": "416", "parenthetical": "emphasis added" }, { "page": "420" } ], "opinion_index": 0, "case_paths": [ "/f-supp/937/0413-01" ] }, { "cite": "350 S.E.2d 66", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1986, "pin_cites": [ { "page": "71" }, { "page": "71" } ], "opinion_index": 0 }, { "cite": "318 N.C. 534", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4732740 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "542-43" }, { "page": "542" } ], "opinion_index": 0, "case_paths": [ "/nc/318/0534-01" ] }, { "cite": "322 S.E.2d 632", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1984, "pin_cites": [ { "page": "635" } ], "opinion_index": 0 }, { "cite": "71 N.C. App. 586", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525970 ], "year": 1984, "pin_cites": [ { "page": "590" } ], "opinion_index": 0, "case_paths": [ "/nc-app/71/0586-01" ] }, { "cite": "692 S.E.2d 605", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2010, "pin_cites": [ { "page": "610", "parenthetical": "quoting Waste Mgmt., 315 N.C. at 693, 340 S.E.2d at 378" }, { "page": "611" } ], "opinion_index": 0 }, { "cite": "364 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4152793 ], "year": 2010, "pin_cites": [ { "page": "6", "parenthetical": "quoting Waste Mgmt., 315 N.C. at 693, 340 S.E.2d at 378" } ], "opinion_index": 0, "case_paths": [ "/nc/364/0001-01" ] }, { "cite": "340 S.E.2d 374", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1986, "pin_cites": [ { "page": "377" }, { "page": "378" }, { "page": "378" }, { "page": "377" } ], "opinion_index": 0 }, { "cite": "315 N.C. 688", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4720126 ], "weight": 3, "year": 1986, "pin_cites": [ { "page": "691" }, { "page": "693" }, { "page": "691" } ], "opinion_index": 0, "case_paths": [ "/nc/315/0688-01" ] } ], "analysis": { "cardinality": 1008, "char_count": 29902, "ocr_confidence": 0.741, "pagerank": { "raw": 5.051679029831156e-08, "percentile": 0.3168242627272864 }, "sha256": "a612bc021d6249b21e3800232bf4507943f9cde8763603f9f69ed8dad4644618", "simhash": "1:caf07fb82c7c3163", "word_count": 4687 }, "last_updated": "2023-07-14T18:13:27.459138+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges BRYANT and BEASLEY concur." ], "parties": [ "UNIVERSAL INSURANCE COMPANY, Plaintiff v. BURTON FARM DEVELOPMENT COMPANY, LLC, Defendant FIRST SPECIALTY INSURANCE COMPANY, Plaintiff v. UNIVERSAL INSURANCE COMPANY, Defendant" ], "opinions": [ { "text": "GEER, Judge.\nUniversal Insurance Company appeals from an order denying its motion for summary judgment, granting First Specialty Insurance Company\u2019s motion for summary judgment, and declaring that Universal Insurance has a duty to defend Burton Farm Development Company, LLC, with respect to a complaint filed in Pamlico County Superior Court (\u201cthe underlying complaint\u201d). Universal Insurance primarily argues that coverage sought by Burton Farm under the personal and advertising injury portion of its policy was barred by the policy exclusion for injury \u201cdone by or at the direction of the insured with knowledge of its falsity.\u201d\nWe agree with First Specialty Insurance and Burton Farm that given the separation of insureds provision in Universal Insurance\u2019s policy, that exclusion would only apply if the underlying complaint alleged personal and advertising injury \u201cdone by or at the direction of\u2019 Burton Farm \u2014 as opposed to another defendant also insured under the Universal Insurance policy \u2014 with Burton Farm\u2019s having \u201cknowledge of its falsity.\u201d The underlying complaint contains no such allegations, and, therefore, this exclusion does not preclude coverage for Burton Farm under the Universal Insurance policy.\nWe also agree that a second policy exclusion is likewise inapplicable and that the plain language of the policies establishes that the Universal Insurance policy provides primary coverage while the First Specialty Insurance policy provides excess coverage. We, therefore, affirm the order below.\nFacts\nOn 5 September 2008, W.O. White, LLC (\u201cWhite\u201d) filed suit against Bernard Mancuso, Jr., Mancuso Development, Inc., and Burton Farm. The White complaint contained causes of action for breach of contract, unfair and deceptive trade practices, and defamation. Subsequently, White filed an amended complaint (\u201cthe White complaint\u201d) that was substantially the same as the original complaint but added a claim for relief alleging, in the alternative, that White was entitled to recover in quantum meruit.\nIn pertinent part, the amended complaint alleged that White \u2014 which was in the business of providing equipment, material, and labor for the purpose of developing subdivisions \u2014 entered into a series of contracts with Burton Farm beginning in April 2007. The contracts called for White to perform site grading, pave roads, install storm drains, and perform work related to the installation of water lines at a subdivision owned by Burton Farm.\nIn April 2008, Burton Farm replaced its existing on-site manager with a new project manager, Mr. Mancuso, who was President of Mancuso Development. Mr. Mancuso, the White complaint alleged, began making unreasonable demands on White that went outside the scope of White\u2019s contracts with Burton Farm. In addition, Mr. Mancuso began a \u201ccampaign to smear the integrity of White\u201d intended to convince Burton Farm executives that White\u2019s work was unsatisfactory and not consistent with the terms of the contracts.\nThe White complaint alleged that Mr. Mancuso caused Burton Farm to breach its contracts with White by bringing in other contractors to perform work that was the subject of White\u2019s contracts with Burton Farm and by withholding payments from White for work and materials. Mr. Mancuso and Burton Farm also interfered with White\u2019s ability to complete the work necessary in order to receive the remaining sums due under the contracts and to recover retainage amounts withheld by Burton Farm pending completion of White\u2019s work.\nIn addition to causes of action for breach of contract and enforcement of a claim of lien asserted against Burton Farm, the White complaint alleged that Mr. Mancuso \u201cmade false, derogatory and defamatory remarks about White\u201d and that \u201c[t]hese slanderous and defamatory remarks, both in writing and orally, were designed to damage the reputation of White, to injure White\u2019s ability to perform under the contracts with Burton Farm, and ... to interfere with White's ability to obtain additional work both from Burton Farm and from other developers.\u201d The amended complaint asserted that \u201c[t]he slanderous, libelous, and defamatory remarks and statements made by Mancuso were made maliciously and with a willful and wanton intent to cause injury and harm to White.\u201d In the unfair and deceptive trade practice claim against Mancuso, White alleged, in part, that \u201cMancuso has fabricated information and made false statements to make it appear that the work performed by White was not in conformity with the contracts between White and Burton Farm . . . .\u201d\nAt some point, Burton Farm notified Universal Insurance of the White complaint and demanded a defense pursuant to a commercial lines policy issued by Universal Insurance that listed Mancuso Development as the named insured and Burton Farm as an additional insured. Universal Insurance filed a declaratory judgment action against Burton Farm, seeking a declaration that Universal Insurance had no duty to defend the White complaint.\nThereafter, First Specialty Insurance, which insured Burton Farm as a named insured under a commercial general liability policy, was allowed to intervene in Universal Insurance\u2019s declaratory judgment action. On 8 June 2009, First Specialty Insurance filed a complaint in intervention seeking a declaratory judgment that the White complaint triggered Universal Insurance\u2019s duty to defend Burton Farm as an additional insured under the Universal Insurance policy and that the Universal Insurance policy was primary and the First Specialty Insurance policy was excess. First Specialty Insurance also sought equitable contribution and equitable subrogation from Universal Insurance for all amounts paid by First Specialty Insurance in connection with its defense of Burton Farm in the White action.\nFirst Specialty Insurance and Universal Insurance filed cross motions for summary judgment. On 17 September 2010, the trial court entered an order denying Universal Insurance\u2019s motion for summary judgment and granting First Specialty Insurance\u2019s motion for summary judgment. Universal Insurance timely appealed from that order to this Court.\nI\nUniversal Insurance first contends that it had no duty, under its policy, to defend Burton Farms. Our Supreme Court has observed that \u201cthe insurer\u2019s duty to defend the insured is broader than its obligation to pay damages incurred by events covered by a particular policy.\u201d Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 691, 340 S.E.2d 374, 377 (1986). This duty to defend \u201cis ordinarily measured by the facts as alleged in the pleadings.\u201d Id. \u201cWhen the pleadings state facts demonstrating that the alleged injury is covered by the policy, then the insurer has a duty to defend, whether or not the insured is ultimately liable.\u201d Id. An insurer is excused from its duty to defend only \u201cif the facts are not even arguably covered by the policy.\u201d Id. at 692, 340 S.E.2d at 378.\nIn order to answer the question whether an insurer has a duty to defend, we apply the \u201c \u2018comparison test,\u2019 reading the policies and the complaint \u2018side-by-side ... to determine whether the events as alleged are covered or excluded.\u2019 \u201d Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1, 6, 692 S.E.2d 605, 610 (2010) (quoting Waste Mgmt., 315 N.C. at 693, 340 S.E.2d at 378). In performing this test, \u201cthe facts as alleged in the complaint are to be taken as true and compared to the language of the insurance policy. If the insurance policy provides coverage for the facts as alleged, then the insurer has a duty to defend.\u201d Id. at 7, 692 S.E.2d at 611.\nUnder North Carolina law, \u201cthe insured . . . has the burden of bringing itself within the insuring language of the policy. Once it has been determined that the insuring language embraces the particular claim or injury, the burden then shifts to the insurer to prove that a policy exclusion excepts the particular injury from coverage.\u201d Hobson Constr. Co. v. Great Am. Ins. Co., 71 N.C. App. 586, 590, 322 S.E.2d 632, 635 (1984). \u201cExclusionary clauses are interpreted narrowly while coverage clauses are interpreted broadly to provide the greatest possible protection to the insured.\u201d State Capital Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 542-43, 350 S.E.2d 66, 71 (1986).\nIn this case, Universal Insurance does not dispute that the White complaint triggered coverage under the personal and advertising injury provisions in the Universal Insurance policy. The Universal Insurance policy provides coverage for personal and advertising injury arising out of one or more of the following offenses: \u201c[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person\u2019s or organization\u2019s goods, products or services[.]\u201d\nNotwithstanding that provision, Universal Insurance argues that no duty to defend exists because the Universal Insurance policy excludes coverage for personal and advertising injury \u201cdone by or at the direction of the insured with knowledge of its falsity.\u201d Universal Insurance contends that the allegations contained in the White complaint \u2014 that Mr. Mancuso, the named insured, \u201cmounted a \u2018smear campaign\u2019 \u201d \u2014 fit this exclusion, thus precluding any duty to defend Burton Farm.\nFirst Specialty Insurance and Burton Farm argue, however, that the allegations regarding whether Mancuso Development knew of the falsity are immaterial because of the separation of insureds clause in the Universal Insurance policy. That clause states:\n7. Separation of Insureds\nExcept with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies:\na. As if each Named Insured were the only Named Insured; and\nb. Separately to each insured against whom claim is made or \u201csuit\u201d is brought.\n\u201c[T]he vast majority of jurisdictions which have addressed the issue\u201d have held that \u201ca separation of insureds clause modifies the meaning of an exclusion phrased in terms of \u2018the insured[,]\u2019 \u201d such that \u201cthe exclusion will only be effective if it applies with respect to the specific insured seeking coverage.\u201d Michael Carbone, Inc. v. Gen. Accident Ins. Co., 937 F. Supp. 413, 418 (E.D. Pa. 1996). See, e.g., Float-Away Door Co. v. Cont\u2019l Cas. Co., 372 F.2d 701, 708 (5th Cir. 1966) (\u2018The better reasoned cases adopt a restrictive interpretation of \u2018the insured\u2019 as referring only to the party seeking coverage under the policy.\u201d); Shelby Mut. Ins. Co. v. Schuitema, 183 So. 2d 571, 573 (Fla. Dist. Ct. App. 1966) (\u201cSince the adoption of the severability of interests clause in a policy which would or might apply to several insureds, the term \u2018the insured\u2019, as used in the exclusions and conditions of the policy, means only the person claiming coverage.\u201d); Commercial Standard Ins. Co. v. Am. Gen. Ins. Co., 455 S.W.2d 714, 721 (Tex. 1970) (\u201c \u2018The insured\u2019 does not refer to all insureds; rather, the term is used to refer to each insured as a separate and distinct individual apart from any and every other person who may be entitled to coverage thereunder.\u201d).\nIn Carbone, the insurance policy contained a separation of insureds clause essentially identical to the one in this case, as well as an exclusion for bodily injury or property damage arising out of the use of any automobile owned or operated by \u201cany insured.\u201d 937 F. Supp. at 416 (emphasis added). Applying the majority rule, the court concluded that the reference to \u201cany\u201d insured as opposed to \u201cthe\u201d insured was critical in considering the impact of the separation of insured clause:\nNote the exact language. The provision excludes losses caused by an automobile operated by \u201cany insured\u201d-, the clause does not say \u201cthe insured.\u201d The distinction is paramount. Had the automobile exclusion used the phrase \u201cthe insured,\u201d the separation of insureds clause would have altered the meaning of the exclusion ....\nId. at 420. The court, therefore, held that the plaintiff was not covered by virtue of the exclusion since the loss arose out of the use of an automobile by one of the plaintiff\u2019s employees, also an insured. Id. See also Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn. 2006) (\u201cBecause it is Bloomington Steel that seeks coverage here, the exclusion for bodily injury expected or intended by \u2018the insured\u2019 is limited to bodily injury expected or intended by Bloomington Steel itself.\u201d); King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 188 (Tex. 2002) (policy contained exclusion for bodily injury or property damage expected or intended from standpoint of \u201cthe insured\u201d; finding that separation of insureds clause required claim to be viewed from standpoint of particular insured against whom injured party\u2019s claim is made and analyzing issue as though party sued were sole insured).\nIn Penske Truck Leasing Co. v. Republic W. Ins. Co., 407 F. Supp. 2d 741 (E.D.N.C. 2006), the federal district court predicted that North Carolina would follow the majority rule. In that case, the policy excluded coverage for any obligation for which the \u201c \u2018 \u201cinsured\u201d or the \u201cinsured\u2019s\u201d insurer may be held liable under any workers\u2019 compensation, disability benefits or unemployment compensation law or similar law.\u2019 \u201d Id. at 747. The plaintiff in the underlying action, who was injured when falling off a truck leased by his employer, sued Penske, the lessor of the truck. Id. The policy included a \u201cseverability of interests\u201d clause that required \u201cthe court to apply this exclusion separately to the insured who is seeking coverage and against whom a claim has been brought.\u201d Id.\nThe district court noted that the policy\u2019s exclusion would preclude coverage in a suit by the plaintiff against his employer, but concluded \u201c[njeither Penske nor Penske\u2019s insurer has been or could be held liable under any worker\u2019s compensation law for the injuries inflicted upon [the plaintiff in the underlying action.] It would be illogical to conclude, in the face of an explicit direction to apply a policy \u2018separately to each insured who is seeking coverage,\u2019 that an additional insured receives the identical coverage as the named insured. If such were the case, the severability of interests clause would appear to be meaningless and unnecessary.\u201d Id. Accordingly, the court held \u201cthat the worker\u2019s compensation exclusion in [the defendant\u2019s] policy does not bar coverage for Penske where the insured against whom suit has been filed, here Penske, is not the employer of the employee in question.\u201d Id. at 749.\nWe agree with the reasoning of Penske and Carbone and adopt the majority rule. In this case, the exclusion at issue \u2014 the \u201cknowledge of falsity\u201d exclusion \u2014 excludes coverage for personal injury \u201cdone by or at the direction of the insured with knowledge of its falsity.\u201d (Emphasis added.) Since the exclusion refers to the insured rather than any insured, the separation of insureds clause requires that the exclusion be applied separately with respect to each insured. The White complaint does not allege that Burton Farm made or directed the making of any injurious statements about White with knowledge of their falsity. Consequently, the \u201cknowledge of falsity\u201d exclusion does not apply with respect to Burton Farm.\nUniversal Insurance does not address the separation of insureds clause. It asserts instead that \u201ca party, whether an injured party or an \u2018additional insured\u2019, has no greater rights versus the insurer than the insured.\u201d Universal Insurance argues that the \u201cknowledge of falsity\u201d exclusion applies to Mancuso Development, and, therefore, Universal Insurance has no duty to defend Burton Farm because Burton Farm has no greater rights versus Universal Insurance than does Mancuso Development. This argument cannot, however, be reconciled with the separation of insureds clause. It would, in fact, render the separation of insureds clause meaningless.\nUniversal Insurance, however, claims that \u201cit is well-settled law in North Carolina that a party, whether an injured party or an 'additional insured\u2019, has no greater rights versus the insurer than the insured.\u201d (Emphasis added.) Although Universal Insurance cites Selective Ins. Co. v. Mid-Carolina Insulation Co., 126 N.C. App. 217, 484 S.E.2d 443 (1997), as its sole support for this claim of \u201cwell-settled law\u201d regarding additional insureds, nothing in Selective Insurance in any way addresses the duty to defend an additional insured. That opinion has no bearing on the issues in this case.\nIn Selective Insurance, Selective had filed an action seeking a declaration that it had no duty to defend or indemnify the defendants in a negligence action that was still pending. The appellant in Selective \u2014 the injured party suing in the underlying action \u2014 appealed a summary judgment order entered in Selective\u2019s declaratory judgment action, concluding that Selective had no duty to indemnify or defend one of the additional insureds covered by the Selective policy. This Court expressly \u201cdecline[d] to address this case on the merits, however, because the appeal must be dismissed for lack of jurisdiction.\u201d Id. at 219, 484 S.E.2d at 445.\nThe Court concluded that it lacked jurisdiction because the appellant injured party was not an aggrieved party as her \u201clegal rights ha[d] not been denied, nor directly and injuriously affected by entry of summary judgment in favor of Selective.\u201d The Court explained that \u201c[a]n injured party who obtains a judgment against the insured has no greater rights against the insurer than the insured\u201d and, therefore, \u201can injured party who has not yet obtained a judgment against the insured [also] has no greater rights against the insurer than the insured.\u201d Id. Because the individual defendant, the additional insured, had not challenged the summary judgment order, the appellant, the injured party, could not challenge it. Id.\nFurther, the Court pointed out, the appellant injured party was \u201cin effect attempting to make a claim directly against the insurer, prior to any judgment against [the insured].\u201d Id. at 220, 484 S.E.2d at 445. Under the law, however, the injured party \u201cha[d] no legal interest in the liability insurance policy in question unless and until she obtained] a judgment against [the individual defendant] in the underlying negligence suit, and execution of that judgment [was] returned unsatisfied.\u201d Id. As a result, because the injured party could not be considered an aggrieved party, the Court had no jurisdiction and dismissed the appeal. Id.\nIn short, Selective Insurance includes no holding or analysis relating to the rights of an additional insured under an insurance policy. We, therefore, hold that the exclusion for personal and advertising injury \u201cdone by or at the direction of the insured with knowledge of its falsity\u201d does not preclude a duty to defend Burton Farm.\nNext, Universal Insurance contends that no coverage exists because the Universal Insurance policy excludes coverage for personal and advertising injury arising out of \u201csupervision . .. done by or for you on a project on which you serve as a construction manager.\u201d Although the policy defined \u201cyou\u201d as Mr. Mancuso, it did not define \u201cconstruction manager.\u201d In support of its argument that this exclusion applies, Universal Insurance asserts only that \u201cit is undisputed that Mancuso was acting as the construction manager on this construction site.\u201d\nHowever, First Specialty Insurance and Burton Farm do dispute whether Mr. Mancuso was a construction manager. As they point out, the White complaint does not refer to Mr. Mancuso as a \u201cconstruction manager.\u201d Instead, the White complaint identifies Mancuso Development as a \u201c \u2018building contractor\u2019 \u201d and Mr. Mancuso, the president, owner, and operator of Mancuso Development, as a \u201cproject manager.\u201d The White complaint contains no reference to a \u201cconstruction manager.\u201d\nUniversal Insurance has not shown that a \u201cconstruction manager\u201d and a \u201cproject manager\u201d are synonymous. As we are required to construe exclusions narrowly, State Capital, 318 N.C. at 542, 350 S.E.2d at 71, we conclude that Universal Insurance has not met its burden of showing that the \u201cconstruction manager\u201d exclusion applies to preclude a duty to defend Burton Farm in connection with acts by its project manager.\nLastly, Universal Insurance argues that it did not have a duty to defend because employers are \u201cgenerally not liable\u201d for the acts of independent contractors such as Mr. Mancuso. Universal Insurance\u2019s argument goes to the issue whether Burton Farm would ultimately be found liable for any of the allegations in the White complaint and whether Universal Insurance would ultimately have to pay \u2014 not whether Universal Insurance has a duty to defend Burton Farm. As this Court explained in Crandell v. Am. Home Assurance Co., 183 N.C. App. 437, 442, 644 S.E.2d 604, 607 (2007) (quoting Waste Mgmt., 315 N.C. at 691, 340 S.E.2d at 377)), even though the claims against the insured in the underlying action might be groundless, that possibility does not excuse an insurer from providing a defense: \u201cThe duty to defend is not . . . dependent on the viability of the claims \u2014 \u2018the insurer has a duty to defend, whether or not the insured is ultimately liable.\u2019 \u201d See also Duke Univ. v. St. Paul Fire & Marine Ins. Co., 96 N.C. App. 635, 638, 386 S.E.2d 762, 764 (1990) (holding insured is not required to establish ultimate liability, but only to show that facts of claim were within coverage of policy).\nUniversal Insurance has not, therefore, established that any of the exclusions contained in its policy apply or that any other basis exists for determining that the claims asserted against Burton Farm are not covered by the Universal policy. The trial court properly concluded that Universal Insurance had a duty to defend Burton Farm.\nII\nUniversal Insurance argues alternatively that even if it has a duty to defend, Universal Insurance\u2019s coverage provides excess coverage while First Specialty Insurance provides primary coverage. Excess insurance clauses generally provide that if other valid and collectible insurance covers the injury, in question, the \u201cexcess\u201d policy will provide coverage only for liability above the maximum coverage of the primary policy. Horace Mann Ins. Co. v. Cont\u2019l Cas. Co., 54 N.C. App. 551, 555, 284 S.E.2d 211, 213 (1981).\nThe Universal Insurance policy and the First Specialty Insurance policy contain identically-worded \u201cOther Insurance\u201d provisions:\nIf other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:\na. Primary Insurance\nThis insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.\nb. Excess Insurance\nThis insurance is excess over:\n(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.\nThus, each policy is excess only over \u201cother primary insurance available to you.\u201d (Emphasis added.) \u201cYou,\u201d as defined in the policies, \u201creferfs] to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy.\u201d\nUniversal Insurance argues that these identical provisions are mutually repugnant and, therefore, should not be considered. However, while the wording of the clauses in the two policies may be identical, the effect of the application of that wording differs between the policies because of the different identity of the \u201cNamed Insured\u201d under each policy. It is undisputed that Mancuso Development Inc. is the \u201cNamed Insured\u201d under the Universal Policy and that Burton Farm is simply an \u201cadditional insured.\u201d Reference to \u201cyou\u201d in the excess insurance provision of the Universal Insurance policy, therefore, refers only to Mancuso Development Inc. and not to Burton Farm. As a result, the Universal Insurance policy provides primary coverage with respect to Burton Farm.\nOn the other hand, Burton Farm is the \u201cNamed Insured\u201d under the First Specialty Insurance policy. Because Burton Farm, through Universal Insurance, has other primary insurance available to it, the First Specialty Insurance coverage is excess over Universal Insurance\u2019s coverage.\nThus, the clauses are not mutually repugnant and can be applied to determine which carrier provides primary coverage. This Court reached the same conclusion in Iodice v. Jones, 133 N.C. App. 76, 78, 514 S.E.2d 291, 293 (1999), holding that \u201cthe \u2018other insurance\u2019 clauses in [that] case, although identically worded, do not have identical meanings and are therefore not mutually repugnant.\u201d The Court then noted that the effect of the clauses \u2014 referring, as in this case, to \u201cyou,\u201d which was defined by the policy as the named insured and spouse \u2014 varied when each policy\u2019s named insured was substituted for \u201cyou.\u201d As a result, the clauses were not mutually repugnant, and the Court was able to determine by applying the clauses that \u201cGEICO\u2019s UIM coverage is \u2018excess\u2019 \u201d and \u201cNationwide provides primary UIM coverage in this case.\u201d Id. at 79, 514 S.E.2d at 293.\nUniversal Insurance, however, asserts that in Iodice \u201cthis Court decided to \u2018read the policies as if [the mutually repugnant excess] clauses were not present\u2019 \u201d and \u201ctherefore went on to find that, because the plaintiff was not the same \u2018class\u2019 of insured under both policies, despite the fact that both policies had identical \u2018Other Insurance\u2019 clauses, the Nationwide policy was primary, and the GEICO policy was excess.\u201d (Emphasis original; quoting Iodice, 133 N.C. App. at 78, 514 S.E.2d at 293.)\nWe find this description of Iodice inexplicable since the Court in fact expressly held that the policies were not mutually repugnant and unambiguously reached its conclusion regarding excess coverage based on the application of the \u201cother insurance\u201d clauses. The quotation from Iodice contained in Universal Insurance\u2019s brief suggesting that the Iodice decision supports its position came not from the analysis or holding of Iodice, but rather from an explanatory parenthetical included in a citation regarding the general law, id. at 78, 514 S.E.2d at 293: \u201cOnley v. Nationwide Mutual Ins. Co., 118 N.C. App. 686, 690, 456 S.E.2d 882, 884 (\u2018[W]e read the policies as if [mutually repugnant excess] clauses were not present.\u2019), disc. review denied, 341 N.C. 651, 462 S.E.2d 514 (1995).\u201d Further, contrary to Universal Insurance\u2019s claim, the Court in Iodice did not base its holding on the \u201cclass\u201d of the insureds. The Court only generally noted in a footnote during a discussion of a different issue that different classes of insureds may be treated differently from one another. Iodice, 133 N.C. App. at 79 n.3, 514 S.E.2d at 293 n.3.\nIodice requires us to conclude that Universal Insurance\u2019s policy provides primary coverage while First Specialty Insurance\u2019s policy provides only excess coverage. The trial court, therefore, properly denied Universal Insurance\u2019s motion for summary judgment and granted First Specialty Insurance's motion for summary judgment.\nAffirmed.\nJudges BRYANT and BEASLEY concur.", "type": "majority", "author": "GEER, Judge." } ], "attorneys": [ "Burton & Sue, L.L.P., by Gary K. Sue and Andrea Dancy Harrell, for Universal Insurance Company, appellant.", "Forman Rossabi Black, P.A., by Amiel J. Rossabi and Jennifer L. Reutter, for First Specialty Insurance Company, appellee; and Poyner Spruill, LLP, by J. Nicholas Ellis, for Burton Farm Development Company, LLC, appellee." ], "corrections": "", "head_matter": "UNIVERSAL INSURANCE COMPANY, Plaintiff v. BURTON FARM DEVELOPMENT COMPANY, LLC, Defendant FIRST SPECIALTY INSURANCE COMPANY, Plaintiff v. UNIVERSAL INSURANCE COMPANY, Defendant\nNo. COA10-1554\n(Filed 1 November 2011)\n1. Insurance \u2014 exclusion clause \u2014 separation-of-insureds\u2014 applied separately\nUniversal Insurance (Universal) had the duty to defend Burton Farms (Burton) against claims arising from a dispute between the owner of a subdivision (Burton Farms) and a company providing equipment, material, and labor for development (White). Burton\u2019s project manager was Mr. Mancuso, Universal\u2019s policy listed Mancuso Development as it\u2019s named insured, and Burton was listed as an additional insured. The separation-of-insureds exclusion clause relied upon by Universal required that the exclusion be applied separately since it referred to the insured rather than to any insured.\n2. Insurance \u2014 exclusion\u2014construction manager \u2014 not applicable to project manager\nAn insurance exclusion for injury arising from supervision of a construction project by a construction manager did not apply where the person in issue was identified as a project manager. The insurance company (Universal) did not show that \u201cconstruction manager\u201d and \u201cproject manager\u201d were synonymous.\n3. Insurance \u2014 duty to defendant \u2014 not dependent on viable claim\nAlthough Universal Insurance argued that it did not have a duty to defend Burton Farms because employers are generally not liable for the acts of independent contractors, the argument went to the issue of whether Burton Farm would ultimately be found liable and whether Universal Insurance would ultimately have to pay, not to whether Universal Insurance had a duty to defend.\n4. Insurance \u2014 other insured clauses \u2014 not mutually repugnant\n\u201cOther insurance\u201d clauses that were identically worded were not mutually repugnant where the named insureds differed. Universal Insurance\u2019s policy provided primary coverage and the trial court properly denied Universal Insurance\u2019s motion for summary judgment.\nAppeal by Universal Insurance Company from order entered 17 September 2010 by Judge Ronald E. Spivey in Forsyth County Superior Court. Heard in the Court of Appeals 25 May 2011.\nBurton & Sue, L.L.P., by Gary K. Sue and Andrea Dancy Harrell, for Universal Insurance Company, appellant.\nForman Rossabi Black, P.A., by Amiel J. Rossabi and Jennifer L. Reutter, for First Specialty Insurance Company, appellee; and Poyner Spruill, LLP, by J. Nicholas Ellis, for Burton Farm Development Company, LLC, appellee." }, "file_name": "0469-01", "first_page_order": 479, "last_page_order": 491 }