“Cross suits” exclusion does not apply between general and sub

Sterling Homes, the general contractor on a residential construction project, successfully sued Espinoza, a painting subcontractor, for a fire loss over $1 million. Espinoza’s insurer denied coverage because Sterling Homes was an “additional insured” on Espinoza’s policy, which the insurer said brought the Sterling-Espinoza dispute within the policy’s “cross suits” (or “insured v. insured”) exclusion.. The Fifth Circuit concluded that the plain terms of the exclusion would cover parties that were named as “additional insureds,” in addition to the actualy purchasers of a policy. But as to the specific claims at issue, the Court further held that the exclusion was only intended to apply to Sterling Homes’s liability arising rom Espinoza’s operations, as “nothing in the plain language of the subcontracting agreement obligating Espinoza to name Sterling Homes as an additional insured suggests the parties intended for Espinoza to lose insurance overage in the event Sterling Homes needed to sue him.” Certain Underwriters at Lloyd’s v. Sterling Custom Homes