Voyager Indemnity Insurance Company (“Voyager) issued a commercial liability insurance policy to MRB Construction, Inc. (“MRB Construction”), a framing subcontractor. As is common with such policies, MRB Construction’s policy contained a “blanket” additional insured endorsement for its ongoing operations. Specifically, the policy not only covered MRB Construction as the named insured, but extended “additional insured” status to those persons or organizations “for whom you are performing operations.” 

To qualify for such status, the blanket additional insured endorsement contained certain conditions, including that MRB Construction and the putative additional insured “have agreed in writing in a contract or agreement that such person or organization be added as an additional insured.”

Jennifer Josephs (“Josephs”) hired general contractor Zalman Netmzov and Zalman N., Inc. (“Zalman”) for a residential building project in Santa Monica. Zalman retained MRB Construction for the project. A construction worker suffered injuries on the project and sued Josephs. In turn, Josephs sued Zalman, MRB and others for indemnity.

Zalman claimed additional insured status under Voyager’s policy with MRB Construction, but produced no underlying written contract requiring MRB Construction to add Zalman as an additional insured. Instead, Zalman relied on a Certificate of Liability Insurance issued by MRB Construction’s insurance broker identifying Zalman as the Certificate Holder. The Certificate of Liability Insurance, however, contained the proviso that it “IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.” It also noted that, if the Certificate Holder is an additional insured, “the policy(ies) must be endorsed.” There was no such endorsement to MRB Construction’s policy.

Voyager filed suit seeking a declaration that it owed no insurance coverage to Zalman as an additional insured. Neither as part of its initial discovery disclosures, nor in response to applicable discovery propounded by Voyager, did Zalman produce any underlying contract or agreement requiring that it be named as an additional insured under MRB Construction’s policy. Instead, Zalman continued to rely on the Certificate of Liability Insurance and the policy.

Voyager moved for summary judgment. With its Opposition Brief, Zalman produced for the very first time an “Insurance Addendum to Construction Agreement,” which stated that all subcontractors on the project were required to maintain general liability insurance that “shall name the Contractor as an Additional Insured.” According to Zalman, both the Certificate of Liability Insurance and the Insurance Addendum independently proved that it qualified as an additional insured such that the District Court should deny Voyager’s motion.

The District Court disagreed and granted Voyager’s motion for summary judgment. 

As a threshold matter, the District Court rejected Zalman’s argument that the Certificate of Liability Insurance conferred additional insured status. Rather, the District Court reasoned that a Certificate of Liability Insurance “is merely evidence that a policy has been issued. It is not a contract between the insurer and the certificate holder.” 2023 WL 2904591 at *4 (quoting Empire Fire & Marine Ins. Co. v. Bell, 55 Cal.App.4th 1410, 1423 fn. 25 (1997)).

Next, the District Court concluded that Zalman could not use the Insurance Addendum to defeat Voyager’s motion. In deciding so, the District Court relied on Federal Rule of Civil Procedure 37(c)(1)’s sanction for the failure to disclose required information. Pursuant to Rule 37(c)(1): “If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.”

The District Court recited facts supporting application of Rule 37(c)(1)’s sanction, including that Zalman made no initial disclosures as required by Rule 26(a)(1) and failed to produce the Insurance Addendum in response to Voyager’s discovery. Nor did Zalman explain the late discovery of the Insurance Addendum on the eve of its Opposition Brief and approximately six months after Zalman’s initial disclosures should have been produced. It described the late production as entirely Zalman’s fault.

The District Court also rejected any notion that the late production was harmless. Rather, the court explained that Zalman’s production of the Insurance Addendum occurred just two weeks before discovery cutoff, and deprived Voyager of the opportunity to conduct discovery concerning the authenticity of the Insurance Addendum. The court also recognized that Voyager had incurred expenses to prepare its motion “based on what Zalman now contends is an incomplete understanding of the facts.” 2023 WL 2904591 at *6.

Because Zalman could not rely on the Insurance Addendum, it failed to introduce evidence of an underlying contract or agreement that required MRB Construction to add Zalman as an additional insured. Thus, the District Court granted Voyager’s motion for a declaration that it owed no duty to defend or indemnify Zalman against the underlying claims asserted by the injured worker and Josephs.