A seemingly ordinary slip-and-fall on a restaurant stairway has ignited a complex legal firestorm between two insurance behemoths, pulling back the curtain on the high-stakes blame game that erupts when intricate contracts and overlapping liability policies collide in court. The federal lawsuit filed by Zurich American Insurance Company against DB Insurance Company transforms a personal injury claim into a multimillion-dollar question of contractual obligation, forcing the industry to once again confront a persistent and costly question: when multiple insurers are on the hook, who pays first?
A Stairway to a Multimillion-Dollar Insurance Battle
The conflict’s origin traces back to a single moment in March 2017. Soo Kew Ong, a waitress at Koodo Sushi Company in New York City, was seriously injured after falling on a stairway at her place of work. Her subsequent personal injury lawsuit named not only her employer but also the building’s owner, manager, and associated entities, including Sutton Management and Liberty & Nassau Associates, LLC, setting in motion a chain of events that would take years to unfold.
What began as a standard premises liability case has escalated far beyond its origins. The core issue is not the fall itself, but the web of agreements designed to manage such risks. At the heart of this dispute is the interpretation of insurance policies and a commercial sublease signed a decade before the incident, demonstrating how carefully worded clauses can become the central battlefield in disputes that leave landlords and tenants caught in a legal crossfire.
The Billion-Dollar Question of Who Pays First
This lawsuit hinges on the critical insurance principle of “primary” versus “excess” coverage. Primary insurance is the first policy to respond to a loss or claim. An “excess” policy, by contrast, only provides coverage after the primary policy’s limits have been exhausted. In commercial real estate, lease agreements frequently require tenants to carry primary insurance that names the landlord as an “additional insured,” effectively making the tenant’s insurer the first line of defense.
Disputes over this hierarchy have significant real-world consequences. When insurers disagree on who holds the primary defense duty, the insured parties—in this case, the landlord and property manager—can be left in limbo. They face mounting legal fees and uncertainty while their respective insurance carriers litigate the matter. This case underscores the financial and operational strain such conflicts place on businesses, long after a lease has been executed.
Deconstructing the Dispute a Timeline of Conflict
The key players in this intricate drama are clearly defined. Zurich insured Sutton Management, one of the landlord entities, and has been funding the legal defense for all landlord-related parties under a reservation of rights. On the other side is DB Insurance, the commercial general liability carrier for the tenant, Koodo Sushi. The policy issued by DB Insurance explicitly named the property owner, Liberty & Nassau Associates, as an additional insured party.
The contractual linchpin of Zurich’s entire case is a sublease agreement from 2007. This document contained a crucial provision requiring Koodo Sushi’s liability insurance to do more than just list the landlord as an additional insured. It specifically mandated that the tenant’s coverage “shall be primary” and that any policy held by the landlord would be considered “excess insurance,” a clause designed to prevent precisely this type of dispute.
Legal Arguments and a Pattern of Alleged Denial
Armed with the sublease agreement and the additional insured endorsement, Zurich formally tendered the defense of the landlord entities to DB Insurance in August 2023. Zurich’s position is that the contractual language is unambiguous: DB’s policy must act as the primary layer of coverage, responsible for all defense costs and potential indemnification related to the claim arising from its policyholder’s premises. After its initial refusal, Zurich tendered the defense again in September 2025, only to be met with a second denial.
This repeated refusal to assume the defense is what ultimately triggered Zurich’s federal lawsuit, in which it seeks a judicial declaration forcing DB Insurance to take over and reimburse all legal costs incurred to date. This case is not an anomaly but rather symptomatic of a recurring industry trend. Litigation over additional insured status and primary coverage obligations is common, particularly in the context of landlord-tenant agreements. These disputes highlight the critical importance of aligning contractual risk transfer mechanisms with the realities of insurance policy language to avoid costly and protracted legal battles.
Actionable Insights for Risk Mitigation
For landlords and property managers, this case serves as a powerful reminder to draft ironclad insurance requirement clauses. Vague language is a recipe for future disputes. Leases should explicitly state that the tenant’s insurance must be primary and non-contributory, and landlords should implement rigorous certificate of insurance tracking systems to ensure ongoing compliance from all tenants.
Commercial tenants, in turn, must recognize the gravity of the insurance provisions within their leases. Before signing, tenants should have their insurance broker review these requirements to confirm their existing or proposed policy meets all obligations. Failure to do so can lead to a breach of contract and leave the tenant exposed to significant uninsured liability, as the landlord’s insurer may seek reimbursement directly from them if their own insurer fails to respond.
Ultimately, the Zurich versus DB Insurance lawsuit underscores that the fine print in a lease agreement can have multimillion-dollar consequences years down the line. It reinforced the critical need for absolute clarity in contractual risk transfer. As the legal proceedings unfolded, the case provided a stark lesson for all stakeholders in the commercial property ecosystem—from insurers and brokers to landlords and tenants—that proactive risk management and meticulous contractual diligence are not just best practices, but essential defenses against becoming entangled in the next complex coverage battle.
