Nebraska Elevators is the elevator sub-contractor for a high rise office tower being built by Burgoyne General Contractors. There is an intermediate indemnity agreement in the subcontract between Nebraska and Burgoyne that runs to Burgoynes favor. This means Nebraska is obligated to defend and indemnify Burgoyne for any accidents that arise from Nebraskas work for Burgoyne. (Remember: an intermediate indemnity agreement means there must be a finding that the indemnitor, in this case Nebraska, is at least 1% at fault for the accident in order to trigger the indemnity obligation). A worker employed by a different sub on the project is seriously injured when he falls down an elevator shaft being constructed. The worker sues both Nebraska and Burgoyne alleging each was negligent in causing the accident. Burgoyne demands that Nebraska defend and indemnify it per the indemnity agreement in the contract. (answer in terms of the CGL Policy)

1. Assume Nebraska has a CGL policy with Iowa Casualty. Does the Iowa Casualty policy cover Nebraskas contractual obligation to defend and indemnify Burgoyne? If so, where is this found in the CGL policy (cite the policy provisions by page and paragraph)?

2. Can Iowa Casualty use the same lawyer to defend both Burgoyne and Nebraska? Why or why not?

3. If you answered that Iowa Casualty must use two separate lawyers to defend Burgoyne and Nebraska, how are the defense costs incurred by Iowa Casualty in defending Burgoyne treated or characterized (Hint: It is stated in the CGL policy)? What problem does this cause for Burgoyne and Iowa Casualty?