Ambiguous Additional-Insured Contract Scope Bars Summary Judgment and Requires Discovery Rulings Before Determining the Duty to Defend

1. Introduction

In County of Erie v Selective Ins. Co. of Am., 2026 NY Slip Op 04092 (4th Dept June 26, 2026), the County of Erie (the “County”) sought declaratory relief and damages for breach of contract against two insurers— Selective Insurance Company of America (“Selective”) and Zurich American Insurance Company (“Zurich”)—after each denied that it owed the County a defense as an additional insured in an underlying personal injury action.

The underlying plaintiff alleged she was injured when she fell from her bicycle at a County-owned park while transitioning from pavement to grass, and she sued the County and two project participants: Destro & Brothers Concrete Company, Inc. (“Destro”) (paving contractor) and LiRo Engineers, Inc. (“LiRo”) (construction management/engineering). Selective insured Destro; Zurich insured LiRo. Both policies named the County as an additional insured.

The appeals presented two central coverage questions and one procedural issue:

  • Zurich: Whether Zurich’s “professional services exclusion” eliminated Zurich’s duty to defend the County.
  • Selective: Whether the County–Destro contract unambiguously required additional-insured coverage for the park work at issue.
  • Procedure/Discovery: Whether Selective’s motion to compel County deposition testimony was “moot” because Selective later cross-moved for summary judgment.

2. Summary of the Opinion

The Fourth Department held:

  • Zurich must defend: Zurich did not meet its “heavy burden” to show the underlying allegations fell “solely and entirely” within the professional services exclusion; the complaint alleged negligence in “ownership, operation, maintenance, management, construction, control and design,” creating a reasonable possibility of covered liability.
  • Selective summary judgment denied to both sides: Although bid addenda were incorporated into the County–Destro contract and referenced park work, the contract’s stated bid amount excluded park work—creating an ambiguity as to whether the park paving fell within the contractual scope that triggered additional-insured coverage. Because intent required extrinsic proof and reasonable competing inferences, neither side was entitled to summary judgment on Selective’s duty to defend/reimburse at that stage.
  • Discovery motion not moot: The trial court erred by deeming Selective’s motion to compel “moot” due to an “inconsistent” later summary-judgment cross-motion. Parties may move to compel discovery and, in the alternative, seek summary judgment.

The court remitted the matter for Supreme Court to decide the outstanding discovery motion and then to reconsider (anew) the County’s and Selective’s summary-judgment requests concerning Selective.

3. Analysis

3.1 Precedents Cited

A. Duty to Defend Standards and Exclusions

  • Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131 (2006): The court relied on this case for the core proposition that the duty to defend is “exceedingly broad” and is triggered whenever the allegations “suggest . . . a reasonable possibility of coverage.” It also supplied the “solely and entirely within the exclusion” formulation used to reject Zurich’s exclusion defense.
  • Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169 (1997): Cited for the “four corners” approach—whether the allegations within the underlying complaint potentially give rise to a covered claim— and for the insurer’s “heavy burden” to negate the duty to defend via an exclusion.
  • Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640 (1993): Reinforced the strict standard that an insurer must show “no possible factual or legal basis” for coverage to escape the defense duty.
  • Georgetown Capital Group, Inc. v Everest Natl. Ins. Co., 104 AD3d 1150 (4th Dept 2013): Used as Fourth Department support for applying the “wholly within the exclusion” test when insurers invoke exclusions to defeat defense.
  • Mscichowski v MLMIC Ins. Co., 227 AD3d 1372 (4th Dept 2024): A recent Fourth Department decision emphasizing that exclusions will not defeat the duty to defend unless the allegations are confined entirely to excluded conduct.

How these cases shaped the Zurich result: Taken together, these authorities required Zurich to show that the underlying complaint’s theory of liability was exclusively professional engineering/surveying/architectural work. Because the pleading also alleged negligence in non-professional categories (e.g., maintenance, operation, ownership/control), Zurich could not carry the “heavy burden” necessary to disclaim a defense at the pleadings stage.

B. Contract Interpretation, Ambiguity, and Extrinsic Evidence

  • Greenfield v Philles Records, 98 NY2d 562 (2002): Provided the definition of unambiguous language (“definite and precise meaning”) and the gateway rule that extrinsic evidence is permitted once ambiguity exists.
  • Ellington v EMI Music, Inc., 24 NY3d 239 (2014): Cited for the modern articulation that ambiguity exists when language is “susceptible of two reasonable interpretations.”
  • University Am. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 25 NY3d 675 (2015): Reinforced contract-interpretation principles in assessing competing reasonable readings.
  • Chimart Assoc. v Paul, 66 NY2d 570 (1986): Cited as foundational authority on when courts find ambiguity and refrain from rewriting agreements.
  • Matter of Panella [appeal No. 2], 218 AD3d 1198 (4th Dept 2023): Applied for the rule that once ambiguity is found, extrinsic/parol evidence may be used to determine intent.
  • Kowalak v Keystone Med. Servs. of N.Y., P.C., 197 AD3d 893 (4th Dept 2021): Supplied the summary-judgment standard in ambiguous-contract cases: the movant must show its construction is the “only” fair one; and if intent turns on credibility or competing inferences from extrinsic proof, summary judgment is inappropriate.
  • Amusement Bus. Underwriters v American Intl. Group, 66 NY2d 878 (1985): A Court of Appeals anchor for denying summary judgment where intent depends on credibility determinations or reasonable inferences from extrinsic evidence.
  • Corter-Longwell v Juliano, 200 AD3d 1578 (4th Dept 2021): Fourth Department support applying these standards to ambiguous agreements and competing interpretations at the summary-judgment stage.

How these cases shaped the Selective result: The court found objective textual signals pointing both ways: the addenda (incorporated and referencing park work) versus the stated bid amount (excluding parks). Under Greenfield/Ellington, that created ambiguity. Under Panella, extrinsic evidence becomes admissible to determine intent; under Kowalak and Amusement Bus. Underwriters, summary judgment is barred where intent requires credibility determinations or competing inferences. Thus, both the County’s and Selective’s competing “only fair construction” arguments failed.

C. Discovery Motions and Summary Judgment Can Proceed in the Alternative

  • R & D Elecs., Inc. v NYP Mgt., Co., Inc., 162 AD3d 1513 (4th Dept 2018); Gustke v Nickerson, 159 AD3d 1573 (4th Dept 2018), lv denied in part & dismissed in part 32 NY3d 1048 (2018); Weichert v Plumadore, 152 AD3d 1190 (4th Dept 2017), lv dismissed 30 NY3d 1010 (2017): These cases collectively stand for the procedural point that parties may seek discovery relief (including motions to compel) and also seek dispositive relief (including summary judgment), including in the alternative.
  • Lundy Dev. & Prop. Mgt., LLC v Cor Real Prop. Co., LLC, 181 AD3d 1180 (4th Dept 2020): Supported remittal where discovery remains outstanding and affects dispositive determinations.

How these cases shaped the remittal: By treating the motion to compel as “moot,” the trial court short-circuited the normal sequence in which discovery disputes are resolved before (or alongside) dispositive motions where factual development is material. The Fourth Department’s remittal directs Supreme Court to decide discovery first and then reassess summary judgment for Selective with a complete (or at least properly managed) factual record.

3.2 Legal Reasoning

A. Zurich: Professional Services Exclusion Did Not Defeat the Duty to Defend

Zurich’s exclusion applied to bodily injury “arising out of the rendering of, or failure to render, any professional architectural, engineering or surveying services.” The court did not decide whether the claim ultimately might implicate professional services; it focused on the defense-duty threshold. Because the underlying complaint alleged negligence not only in “design” but also in “ownership, operation, maintenance, management, construction, [and] control,” Zurich could not show the pleadings were confined “solely and entirely” to excluded professional services. Under New York’s defense-duty jurisprudence, that is enough to require a defense even if indemnity might later be barred.

B. Selective: Contract Ambiguity About Project Scope Prevented Summary Judgment on Additional-Insured Coverage

The key factual/legal hinge was whether the County–Destro contract required additional-insured status for the particular paving work at the park where the accident occurred. The court acknowledged that the addenda were incorporated and referenced park work, and that Destro’s bid included such work. But it found a countervailing textual indicator: the contract’s stated bid amount excluded work in parks. Those competing indicators made it reasonable to interpret the agreement either as including or excluding park work within the project scope.

That ambiguity triggered two consequences:

  1. Extrinsic evidence becomes relevant to determine intent (parol evidence is permitted once ambiguity is found).
  2. Summary judgment is generally unavailable when intent depends on credibility or competing inferences drawn from extrinsic proof.

Therefore, the court concluded that neither the County nor Selective could win summary judgment (at least on the record then presented) as to Selective’s duty to defend and reimburse defense costs.

C. Discovery: A Motion to Compel Is Not Rendered “Moot” by a Subsequent Summary-Judgment Cross-Motion

The Fourth Department rejected the notion of “inconsistency” as a basis for mootness. New York practice permits litigants to pursue discovery enforcement while also pursuing summary judgment, including as alternative relief. Because discovery remained outstanding—specifically deposition testimony demanded from the County—the court remitted for Supreme Court to decide the motion to compel and then to reconsider the Selective-related dispositive motions.

3.3 Impact

A. Additional-Insured Disputes: Drafting and Proof Will Matter More Than Labels

The decision underscores that additional-insured coverage disputes often turn less on the fact that a contractor performed work and more on whether the written contract unambiguously places the accident-causing work within the covered “project” (or other scope-defining language). Where the contract contains internal tension (e.g., incorporated addenda describing work versus a price term excluding that work), courts are likely to find ambiguity and require extrinsic evidence—delaying or defeating early summary judgment.

B. Insurers’ Exclusion Defenses: Pleading Breadth Can Preserve the Defense Duty

For Zurich-type professional services exclusions, the ruling reinforces that mixed allegations (design plus maintenance/operation/control) typically preserve the duty to defend. Insurers seeking to disclaim at the outset must demonstrate that the complaint’s allegations fit wholly within the exclusion and admit of no covered theory.

C. Procedure: Discovery Motions Remain Live Even When Dispositive Motions Are Filed

Practically, the opinion discourages trial courts from declaring discovery motions “moot” merely because a party also seeks summary judgment. Where coverage turns on contractual intent or scope—issues often illuminated by negotiations, bid documents, course of performance, and municipal procurement records—discovery rulings can be outcome-determinative and must be addressed.

4. Complex Concepts Simplified

  • Duty to defend vs. duty to indemnify: The duty to defend is triggered by a reasonable possibility of coverage based on the complaint’s allegations; it can exist even where indemnity (paying a judgment/settlement) might later be barred.
  • “Four corners” rule: Courts compare the insurance policy to the allegations “within the four corners” of the complaint to decide if a defense is owed.
  • Exclusion “heavy burden”: To deny a defense based on an exclusion, an insurer must show the complaint fits entirely within the exclusion and there is no possible covered basis for indemnity.
  • Professional services exclusion: A clause removing coverage for injuries arising from specialized professional work (e.g., engineering). If the complaint also alleges ordinary negligence (maintenance/control), the exclusion may not defeat the defense duty at the pleading stage.
  • Contract ambiguity and parol (extrinsic) evidence: If contract language reasonably supports two meanings, the contract is “ambiguous,” and outside evidence (negotiations, documents, performance) may be used to determine intent.
  • Why ambiguity blocks summary judgment: Summary judgment is for issues that can be decided as a matter of law. If deciding the contract’s meaning requires choosing between competing reasonable inferences or assessing credibility, a trial (or further fact development) is required.

5. Conclusion

County of Erie v Selective Ins. Co. of Am. reinforces three consequential rules in New York insurance-coverage litigation: (1) an insurer invoking an exclusion—like a professional services exclusion—faces a stringent burden to eliminate the duty to defend where the complaint alleges mixed theories; (2) where an additional-insured obligation depends on a contract whose scope is ambiguous, summary judgment is premature and courts must allow extrinsic evidence to resolve intent; and (3) discovery enforcement motions are not “moot” simply because a party also seeks summary judgment. The decision’s broader significance lies in its insistence on careful sequencing—resolving material discovery and contractual ambiguity before declaring defense obligations settled as a matter of law.