John Hlavaty, a carpenter was contracted by the Monier Construction Company to work on the renovation of their client's (Linn-Howard Selby's) apartment. Hlavaty was injured while working at the Selby residence and he sought damages from Selby. Selby, sought coverage from her own insurer, Great Northern Insurance and from Mount Vernon Fire Insurance. Selby was the named insured under the Great Northern homeowners policy and she was listed as an additional insured under the Commercial General Liability policy. The CGL was secured by Monier, as per the renovation contract between Monier and Selby.

Neither company disputed that the loss was eligible for coverage under both policies. However there was debate over the application of coverage according to the "other insurance" clauses found in both policies. While it is clear that, per policy wording, the Great Northern policy is considered excess insurance over the Mt. Vernon policy; it is disputed whether the Mr. Vernon policy is primary or excess over the Great Northern coverage. If it was interpreted as being excess coverage; then New York State Law would be applied and the "other insurance" clauses would cancel each other out. Then, each insurer would pay coverage on a proportional basis.

Mt. Vernon argued that its clause established it as excess over Northern's coverage. Northern argued that the Mt. Vernon policy wording that creates an excess relationship does not apply because Northern is providing third party liability, rather than the lines of business mentioned in Vernon's clause. The lower court decided that, based upon the Mt. Vernon policy language, the clauses made each policy excess against the other. In the interest of establishing a state precedent, the lower court submitted its decision to the appellate court and asked that the language and decision both be reviewed. The higher court considered the policy language and held the opinion that the Mt. Vernon policy language did not apply in this circumstance. In its opinion, the Mt. Vernon policy provided coverage on a primary basis and the Great Northern policy was excess insurance. The decision was reversed and remanded to the lower court.

Great Northern Insurance Company and Linn Howard-Selby, Plaintiffs-Appellants, v. Mount Vernon Fire Insurance Company, Defendant-Appellee. U.S. 2nd Circuit Court of Appeals No. 97-7989 May 1, 1998 FindLaw: Laws: Cases and Codes: 2nd Circuit Court Opinions http://laws.findlaw.com/2nd/977974.html - U.S. 2nd Circuit Court of Appeals (March 9, 2000)