New Page 1
03/11/04
TRIBECA BROADWAY ASSOCIATES, LLC v MOUNT VERNON FIRE INS. CO.
New York State Supreme Court, Appellate Division, First
Department
Certificate of Insurance Issued by Broker Does Not Confer Coverage
Owner contracted with GDM for renovation work on its
premises. The agreement included a hold harmless clause assuring that GDM hold
the owner harmless for claims attributable to personal injuries arising from
negligence by GDM, a subcontractor or anyone for whose acts they may be liable.
The parties also agreed that GDM would maintain insurance indemnifying the owner
for all liability arising from the work. GDM provided the owner with a
certificate of insurance, which stated that GDM was insured and listed the owner
as an additional insured. The certificate also included the statement: “this
certificate is issued as a matter of information only and confers no rights upon
the certificate holder. This certificate does not amend, extend or alter the
coverage afforded by the policies below.” The policy itself did not list the
owner as an additional insured. Subsequently, a Labor Law claim was made against
the owner. The owner’s attorney tendered the defense of that action to GDM’s
broker, seeking confirmation that owner was an additional insured under the
policy. Several letters were exchanged over several months, leading to the
instant declaratory judgment action by the owner claiming that GDM was
contractually obligated to procure insurance on plaintiff’s behalf, that GDM
procured the insurance through Mount Vernon, that plaintiff had demanded that
Mount Vernon assume the defense and provide indemnification in the underlying
action, that Mount Vernon had not disclaimed coverage, and that Mount Vernon was
thus required to provide a defense. Mount Vernon admitted that it insured GDM;
however, it claimed it had not received notice of the claim and that policy
exclusions barred the claim. Plaintiff argued that any affirmative defenses were
waived because of Mount Vernon’s failure to deny or disclaim coverage. Mount
Vernon contended that the policy insured only GDM, that plaintiff was not
identified thereon as either a named or an additional insured, that the
certificate was not evidence of insurance, that the certificate had not been
issued by Mount Vernon but only by GDM’s broker, and that the certificate
clearly indicated that it did not extend coverage. Court held that a party that
is not named an insured or an additional insured on the face of the policy is
not entitled to coverage. Nor did the certificate of insurance in this case
confer coverage. A certificate is only evidence of a carrier’s intent to provide
coverage, but is not a contract to insure the designated party, nor is it
conclusive proof, standing alone, that such a contract exists. Furthermore, it
did not appear in this case that GDM’s broker had the authority to bind the
carrier, for which it did not act as agent, so it could not on that basis estop
the carrier from denying the existence of coverage. Insofar as the claim fell
outside of the policy's coverage, the carrier was not required to disclaim as to
coverage that did not exist. Under the facts of this case, GDM could not create
rights and obligations as between plaintiff and the carrier.
03/08/04
ARMSTRONG v CALIBER ONE INDEMNITY CO.
New York State Supreme
Court, Appellate Division, Second Department
The plaintiff was the
named insured on a homeowner’s policy issued by the defendant, insuring a
residence in Hempstead. There was also a mortgage on the property, which was
noted in the policy. Following a fire at the residence, plaintiff filed a claim
of loss, which was denied by defendant. Thereafter, the plaintiff commenced this
action, alleging three causes of action and seeking to recover damages for their
losses under the policy. The third cause of action alleged that there was a
mortgage and that irrespective of whether or not plaintiff was entitled to
recover, the mortgagee was entitled to recover to the extent of its interest;
the plaintiffs as third-party beneficiaries thereof are entitled to enforce this
claim, and they have been damaged by the defendant’s failure to pay it. The
plaintiff moved for summary judgment on their third cause of action. Defendant
cross-moved for summary judgment dismissing the complaint in its entirety, or to
compel the plaintiffs to join the mortgagee as a necessary party. Supreme Court
granted the motion to the extent of determining that the policy contained a
“standard mortgagee clause” and that the defendant was liable thereunder to the
extent of the mortgagee’s interest. Appellate court held that, contrary to the
Supreme Court’s determination, summary judgment should have been denied. The
motion and orders affect the interest of the mortgagee, which was a necessary
party to this action. Since the mortgagee was not joined, the subject branch of
the motion should have been denied without prejudice to renewal after such
joinder.
03/08/04 HOSPITAL FOR
JOINT DISEASES v ALLSTATE INS. CO.
New York State Supreme
Court, Appellate Division, Second Department
Thirty-day Period to Deny
No-fault Claim Does Not Run Anew from Re-submission of Previously-denied Claim
In an action to recover
unpaid benefits due under the no-fault provisions of the Insurance Law,
plaintiff alleged in its complaint that the no-fault insurer was liable for two
no-fault claims which were mailed on March 6, 2002, because it neither paid nor
denied the claims within 30 days of receipt, as required by Insurance Law §
5106(a) and the corresponding regulation of the Insurance Department, 11 NYCRR
65.15(g) (3). No-fault insurer cross-moved for summary judgment dismissing the
complaint, submitting evidence that before the medical services at issue were
rendered, it had notified the its insured that it had terminated her no-fault
benefits based upon an independent medical examination, and that the plaintiff
had previously submitted claims for these same billings which the defendant
timely denied. Supreme Court denied plaintiff's motion, granted the defendant’s
cross motion, and dismissed the complaint. The appellate court affirmed. Under
the no-fault law, a claimant whose claim for benefits has been denied is
entitled to “seek immediate redress, and to recover both the amount of any
overdue claim and reasonable attorney’s fees in securing payment.” A claimant
may either file suit seeking payment of the claim, or, pursuant to Insurance Law
§ 5106(b), submit the dispute to arbitration, pursuant to simplified procedures
promulgated by the Insurance Department. In this case, the plaintiff did
neither, opting instead to repeatedly resubmit the denied claims, apparently in
the hope that eventually the defendant would fail to issue a denial within 30
days of receipt. Court held, however, that the 30-day period in which to deny a
claim for no-fault benefits does not run anew as the result of the re-submission
of a previously-denied claim.
03/08/04
MATTER OF EMPIRE INS. CO. v DORSAINVIL
New York State Supreme
Court, Appellate Division, Second Department
Coverage Lost for Insured’s
Failure to Submit Sworn Statement after Hit-and-run
Accident
In a proceeding pursuant
to CPLR article 75 to permanently stay arbitration of a claim for uninsured
motorist benefits, court held appellants’ failure to file a sworn statement with
its carrier after the hit-and-run accident, in accordance with a condition
precedent to coverage under the uninsured motorist endorsement of the insurance
policy, vitiated coverage. Permanent stay of arbitration was properly granted.
03/01/04 MURPHY v NUTMEG INS. CO.
New York State Supreme
Court, Appellate Division, Second Department
Defense Required for All Claims
Though Some Claims Excluded; Separate Counsel Required Where Multiple Insureds
Seeking Contribution
Plaintiffs commenced this
action seeking judgment declaring that defendants were obligated to defend and
indemnify them in an underlying action pursuant to an errors and omissions
policy. In the underlying action, the Town of Poughkeepsie asserted three causes
of action against the plaintiffs, who were former Town board members, for RICO
violations, breach of fiduciary duty, and negligence in connection with their
approval of the purchase of a building for town police and court facilities. The
policy excluded coverage for dishonest, fraudulent, and criminal or malicious
acts of the insured, as well as acts arising out of an insured’s activities in a
fiduciary capacity. Although Supreme Court correctly concluded that there was no
basis to compel the defendants to defend the plaintiffs if the RICO violations
and breach of fiduciary duty claims were the only claims for relief against the
plaintiffs in the underlying action in light of the policy exclusions,
defendants were required to defend the plaintiffs with respect to all claims for
relief, as long as there remains a pending claim sounding in negligence, since
the allegations set forth in that claim for relief fall within the scope of
risks covered by the subject policy. Supreme Court properly denied that branch
of the plaintiffs’ motion that was for summary judgment on their cause of action
for indemnification, since there are triable issues of fact with respect to the
plaintiffs' negligence in the underlying action. The insurer was also obligated
to provide separate counsel for each of the plaintiffs, since each made a claim
for contribution, and thus, the possibility of conflict existed.
03/01/04
MATTER OF ATLANTIC MUTUAL COMPANIES v CESERANO
New York State Supreme
Court, Appellate Division, Second Department
Executive Not Insured under
“Drive Other Car Coverage” for Use of Owned Vehicle; Disclaimer Not Required
Ceserano, formerly the
vice president of sales for Effective Security, was injured while engaged in
company business when her vehicle was struck by a vehicle owned and operated by
Jarosz. Jarosz’s insurance carrier settled her action against him for the full
amount of Jarosz’s insurance policy. Underinsurance coverage in the appellant’s
own insurance policy was not triggered and the appellant therefore filed a claim
for underinsurance benefits with Effective Security’s insurance carrier. The
petitioner did not disclaim coverage, but when the appellant served a demand for
arbitration, it commenced this proceeding to permanently stay the arbitration
contending that there was no coverage under the policy. The policy included an
endorsement entitled “Drive Other Car Coverage - Broadened Coverage for Named
Individuals,” which provided liability coverage for an automobile not owned by
Effective Security while being used by an executive officer, except for an
automobile owned by that individual. The endorsement defined an “insured” as an
executive officer using a covered automobile, as described in the endorsement.
Petitioner did not dispute that the appellant was an executive officer, but
contended that the endorsement provided only liability coverage, not
underinsured motorist coverage, and that the coverage was not applicable because
the appellant owned the vehicle. Court held that even assuming that underinsured
motorist coverage was included in the endorsement, an issue it did not reach,
the appellant, by definition, was not an “insured” since she owned the vehicle
she was using. A disclaimer was not required because coverage did not exist
under the terms of the policy in the first instance.
02/26/04
MUNDO v LIBERTY MUTUAL GROUP
New York State Supreme
Court, Appellate Division, First Department
Court holds that carrier
was not obligated to defend or indemnify plaintiff in an underlying action for
property damage sustained by a trailer that plaintiff was hauling. The policy’s
Care, Custody or Control exclusion applied to “property damage to property owned
or transported by the insured or in the insured’s care, custody or control.”
Thus, any obligation to defend and indemnify for property damage was limited to
vehicles that were neither owned by plaintiff nor being transported by him or
otherwise under his care, custody or control when damaged. Since the trailer in
question was under the care, custody or control of plaintiff at the time of the
accident, the exclusion applied. The court found this result consistent with the
policy’s declarations page, which indicated that plaintiff purchased coverage
for “liability,” “personal injury protection” and “uninsured motorists,” but
not, “trailer interchange comprehensive coverage,” “trailer interchange
collision coverage,” “physical damage comprehensive coverage” or “physical
damage collision coverage.” The policy was for “liability,” not “collision.”
02/26/04
FULMONT MUT. INS. CO. v NEW YORK CENTRAL
MUT. FIRE INS. CO.
New York State Supreme
Court, Appellate Division, Third Department
Homeowner’s Exclusion for Damage
to Property Owned by “The Insured” Deemed Ambiguous
Hutchinson owned a parcel
of property on which there were various stores and rental apartments. The
property was insured against fire loss by a policy procured from plaintiff.
Hutchinson, along with his wife and stepson, Rockefeller, resided in one of the
rental apartments. A homeowner’s policy was procured by Hutchinson from
defendant to cover Hutchinson, his wife and Rockefeller for their negligent
acts. Hutchinson’s property was later damaged by fire caused by Rockefeller’s
failure to properly extinguish a cigarette. Plaintiff paid a claim to Hutchinson
pursuant to its policy and Hutchinson executed a subrogation agreement pursuant
to which plaintiff commenced an action against Rockefeller which resulted in a
default judgment. Plaintiff then commenced this action against defendant relying
upon the liability coverage of the homeowner’s policy. Court held that
Rockefeller was an “insured” under the homeowner’s policy, but found an
ambiguity in the exclusion section pertaining to the liability coverage, which
provided there will be no coverage for “property damage to property owned by the
insured.” The issue here was whether “the insured” is only the individual
seeking coverage (Rockefeller), since the policy must be viewed as separate and
distinct to him, or only Hutchinson, the property owner. Court found the use of
“the” and “an” as a modifier for the term “insured” was further complicated by
their use in other provisions of the policy where there was a clear intent to
include all covered individuals as opposed to only “the insured.” Since it is
settled that exclusionary clauses “must be specific and clear in order to be
enforced” and that defendant failed to satisfy its burden of establishing the
meaning it now attributes to this disputed clause as being subject to no other
reasonable interpretation, court held that homeowner’s policy would be required
to provide coverage.
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03/11/04
AMERICAN HOME ASSUR. CO. v POPE
8th Circuit
Insurer had Duty to Indemnify
Claim against Insured for Breach of Common Law Duty to Warn of Future Danger of
Abuse
Court reversed grant of
summary judgment in favor of insurer in declaratory action, and granted
defendant’s motion for summary judgment requiring that the insurer provide
coverage. The defendant, who had been sexually abused by her father, had sued
her father’s ex-psychologist, alleging a cause of action for violation of a
state criminal code requiring a doctor to inform state authorities if they
suspect a child will be sexually abused, and a cause of action for negligently
failing to warn defendant or her mother of future danger of sexual abuse to the
defendant by her father, when her father abandoned treatment. The district court
granted summary judgment in favor of the insurer because the doctor’s insurance
policy contained an exclusion for criminal conduct and, thus did not cover the
defendant’s claim regarding the insured’s violation of the criminal statute. The
court reversed. The court held that the defendant’s first claim, that the
insured violated a criminal statute, was excluded from coverage even though the
insured was not actually charged with the crime. However, the court held that
the district court failed to consider the defendant’s second claim that the
insured failed to warn her of future danger of abuse. The court found that that
there was no exclusion for violation of this common law duty and, thus, the
defendant’s claims are covered by the policy.
Bruce D. Celebrezze and
Hank Brier, Sedgwick, Detert, Moran & Arnold LLP
03/09/04
LEVINE v STATE FARM MUT. INS. CO.
Maine Supreme Judicial
Court
Underinsured Coverage Does Not
Drop Down When Insured Fails to Reach Available Coverage
Does Maine’s
uninsured/underinsured vehicle coverage law require underinsured vehicle
policies to supplant available tortfeasor insurance coverage that is not timely
sought by the injured insured? State Farm Mutual Automobile Insurance Company
appeals from a judgment entered in the Superior Court (Kennebec County, Marden,
J.) concluding that Nicole Levine, who was injured by the driver of an
underinsured vehicle, was entitled to recover from State Farm, the underinsured
vehicle insurance carrier of the driver in whose vehicle she was riding, when
the coverage held by the tortfeasor became unavailable to Levine because of the
passage of time before she filed her claim. It is undisputed that the
tortfeasor’s coverage was less than the State Farm policy limits and that State
Farm is responsible for that amount of underinsurance. Because the court
concludes that State Farm is only liable for the amount by which the State Farm
coverage exceeded the insurance held by the tortfeasor, judgment is vacated.
03/09/04
TWICHEL v MIC GENERAL INS. CO.
Michigan
Supreme Court
Who Owns the Car?
Brady Sies had possession
and control of the vehicle, as well as dominion and authority over the vehicle,
and, thus, would commonly be understood to have “owned” it at the time of the
accident. The facts that the entire purchase price had not yet been paid and
that the technical transfer of title had not yet occurred are not dispositive.
Brady, who had paid part of the purchase price and taken control of the truck
with the intention of permanently possessing it, “owned” the vehicle as that
term would be understood in ordinary usage. Because Brady "owned" the uninsured
vehicle, uninsured motorist benefits are not recoverable under the policy
03/04/04
STATE FARM v HENERSON
Arkansas
Supreme Court
Policy Can Require Physical
Contact for UM Coverage
Section 23-89-403(a)(1)
continues to be viable. The statute requires the plaintiff to prove that the
other vehicle was uninsured and that a policy that relieves the plaintiff of
that burden in hit and run cases where there is physical contact exceeds the
statutory requirement. Under Ward, 535 S.E.2d 830, uninsured motorist statute
requires a plaintiff to prove that the other vehicle is uninsured. Accordingly,
State Farm was not legally obligated under section 23-89-403(a)(1) to provide
any coverage for hit and run accidents where the plaintiff could not prove that
the other vehicle was uninsured. Thus, its policy that relieved an insured of
that burden where there is physical contact between the vehicles exceeded the
requirements of the um statute. Moreover, the fact that State Farm chose to draw
a line in its coverage between those hit and run accidents where there is
actually a hit or physical contact and those where there is no such contact does
not violate the law and is not therefore in contravention to public policy.
Jim Varner and Debra
Herron, McNeer, Highland, McNunn and Varner, L.C.
03/04/04
STANDARD CONSTRUCTION CO. v MARYLAND CAS. CO.
Sixth Circuit (applying
Tennessee law)
Duty to Defend and Indemnify
under CGL Policy where Property Damage Resulting from Trespass was Covered Claim
and “Business Risk” Exclusions Inapplicable
6th Circuit Standard
subcontracted disposal work to Terry Construction Company who obtained written
permission from 6 landowners to dump construction debris on their property. A
similar agreement was signed by the daughter of the 7th landowner. Believing it
had permission of Love, the 7th landowner, Terry began dumping debris on her
property, which was the subject of condemnation proceedings. The State demanded
that dumping upon the Love property cease and subsequently, suit was instituted
by Love against Standard, Terry, Bobo and the State of Tennessee. In reviewing
the order of the district court, the appellate court noted that the act of
deliberately dumping debris, with unforeseen and unintended consequences due to
the insured’s negligence in failing to secure a valid agreement from the
property owner, fell within the definition of “occurrence.” Additionally, the
Court found that it was not the manner in which the dumping was performed (the
“work”) that is faulty or caused damage, but rather that the dumping itself at
the location in question was not authorized. Therefore, there is coverage under
the “property damage” and the “your work” exclusion does not apply. Moreover,
exclusion 2(j)5 does not apply.
Jim Varner and Debra
Herron, McNeer, Highland, McNunn and Varner, L.C.
03/04/04
TURNER v MUT. SERVICE CAS. INS. CO.
Minnesota
Supreme Court
Commercial Automobile Policies
Need Not Provide UM or UIM Coverage for Out-Of-State Rental Vehicles
Plaintiffs were traveling
on business to New Orleans, where they rented a car and, pursuant to company
policy, declined addition insurance from the rental company. While driving in
Baton Rouge, they were involved in a collision with a vehicle traveling in the
wrong lane. The other car had policy limits of $25,000 per person and $50,000
per accident, and the plaintiffs' injuries well exceeded these limits. The
employer's commercial liability policy provided UM/UIM coverage for anyone who
uses, with the policyholder's permission, covered autos, which were defined as
autos owned by the policyholder which were required by law to have UM/UIM
coverage. The court held that, because Minnesota statutes had moved away from
covering an individual and now tied coverage to a particular vehicle specified
in the policy, the commercial policy did not provide UM/UIM coverage to the
employees using a rental vehicle.
Bruce D. Celebrezze and
Erin Adrian, Sedgwick, Detert, Moran & Arnold LLP
03/02/04
DOMTAR, INC. v NIAGARA FIRE INS. CO.
Minnesota
Court of Appeals
Allocation Considered in
Minnesota
Appellant Domtar, Inc.,
brought this action in 1998 against a number of its primary, umbrella, and
excess liability insurers for breach of contract and a declaration that they
must defend and indemnify it from claims arising out of soil and groundwater
contamination at 56 of its former and current wood processing facilities.
Several insurers have settled with Domtar and several others remain but are not
part of this appeal, which involves only four high-level excess liability
insurers and six of the 56 sites. The appellate court found that while issues
involving damages and causation are often fact questions inappropriate for
summary judgment, the district court here was entitled to reject for lack of
proof Domtar's claim that discrete and identifiable events at each site caused
the site damages. In its memorandum, the district court emphasized: "[Domtar]
has had since 1998 to present concrete, specific information regarding the
effect these sudden and accidental occurrences had at these sites. It has had
since 1998 to connect the millions of dollars of damages to sudden and
accidental events rather than to continuous and on-going operations at the
plants. It has not done so." Thus, the district court did not err by allocating
damages under pro rata by the time on the risk and in concluding that the
damages at each of the six Domtar sites fail to trigger coverage under
respondents' high-level excess policies.
Victoria Roberts, TRG
Hurwitz & Fine, P.C. is a full-service law
firm
providing legal services throughout the State of New York.
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MUNDO v LIBERTY MUTUAL
GROUP
Order, Supreme Court,
Bronx County (Dianne Renwick, J.), entered December
26, 2002, which, in a declaratory judgment action involving whether the subject
business auto policy obligates defendant insurer to defend and indemnify
plaintiff insured in an underlying action for property damage sustained by a
trailer that plaintiff was hauling, granted defendant's motion for summary
judgment declaring that it is not so obligated by reason of the policy's Care,
Custody or Control exclusion, unanimously affirmed, without costs.
By its terms, the policy's Care, Custody or Control exclusion applies to "[p]roperty
damage to property owned or transported by the insured or in the insured's care,
custody or control." Thus, any obligation defendant has to
defend and indemnify plaintiff for property damage is limited to vehicles that
were neither owned by plaintiff nor being transported by him or otherwise
under his care, custody or control when damaged. Since the trailer in question,
which is owned by the subrogor of the plaintiff in
the underlying action, was under the care, custody or control of plaintiff
herein at the time of the accident, the exclusion applies. This conclusion
appears consistent with the policy's declarations page, which indicates that
plaintiff purchased coverage for "liability," "personal injury protection" and
uninsured motorists," but not, inter alia, "trailer
interchange comprehensive coverage," "trailer interchange collision coverage,"
"physical damage comprehensive coverage" or "physical damage collision
coverage." As defendant maintains, the policy is for "liability," not
"collision."
We would reach the same result, i.e., a declaration that defendant is not
obligated to defend or indemnify plaintiff in the underlying action, even if we
were to construe defendant's disclaimer as based exclusively, rather than
additionally, on the claim that the damaged trailer is not the trailer listed on
the policy's schedule of covered autos. In this regard, the disclaimer states
that the VIN number of the trailer involved in the accident is 2A5WF8B4PTO53386,
whereas the policy lists the covered trailer's VIN number as 2A9SWF8BOPT053392.
Plaintiff contends that the two numbers are close enough to permit an inference
that the difference is due to a typographical error. On the present record,
there is nothing to support such inference and no further inquiry is warranted.
This constitutes the decision and order of the Supreme Court, Appellate
Division, First Department.
FULMONT MUT. INS. CO.
v
NEW
YORK CENTRAL MUT. FIRE INS. CO.
Appeal from an order of
the Supreme Court (Aulisi, J.), entered July 7, 2003
in Fulton County, which denied plaintiff's motion for summary judgment and
granted defendant's cross motion for a declaratory judgment.
James Hutchinson owns a
parcel of real property in the Town of Canajoharie, Fulton County on which there
are various stores and rental apartments. The property was insured against fire
loss by a policy of insurance procured from plaintiff. Hutchinson, along with
his wife and stepson, Michael Rockefeller, reside in one of the rental
apartments. A homeowner's policy was procured by Hutchinson from defendant to
cover Hutchinson, his wife and Rockefeller for, inter alia,
their negligent acts.
In March 2000,
Hutchinson's property was damaged by fire caused by Rockefeller's failure to
properly extinguish a cigarette. Plaintiff paid a claim to Hutchinson pursuant
to the insurance policy and Hutchinson executed a subrogation agreement pursuant
to which plaintiff commenced an action against Rockefeller which resulted in a
default judgment. Plaintiff then commenced this action against defendant relying
upon the liability coverage of the homeowner's policy. Plaintiff moved for
summary judgment and defendant cross-moved for summary judgment seeking a
declaratory judgment stating that it had no obligation to pay for plaintiff's
loss. Supreme Court granted defendant's cross motion
and this appeal ensued.
It is settled that
“[w]here the provisions of [an insurance] policy 'are clear and unambiguous,
they must be given their plain and ordinary meaning, and courts should refrain
from rewriting the agreement'“ (United States Fid.
& Guar. Co. v Annunziata, 67 NY2d 229, 232
[1986], quoting Government Empls.
Ins. Co. v Kligler,
42 NY2d 863, 864 [1977]). It is equally settled that an
ambiguity in an insurance policy will be construed in favor of the insured (see
Matter of Mostow
v State Farm Ins. Cos.,
88 NY2d 321, 326 [1996]; Butler v New
York Cent. Mut.
Fire Ins. Co., 274
AD2d 924, 925 [2000]), particularly when the ambiguity is in an exclusionary
clause (see
Matter of Metropolitan Prop. &
Cas.
Ins. Co. v Mancuso, 93 NY2d 487, 497 [1999];
Seaboard Sur. Co. v Gillette Co.,
64 NY2d 304, 311 [1984]; Breed v Insurance Co. of N. Am.,
46 NY2d 351, 353 [1978]; General Acc. Ins. Co. v
United States Fid.
& Guar. Ins. Co., 193
AD2d 135, 137 [1993]; Campanile v State Farm Gen. Ins. Co.,
161 AD2d 1052, 1054 [1990], affd
78 NY2d 912 [1991]).
While we find the
provisions of the homeowner's policy to squarely place Rockefeller under the
general definition of “insured,” an ambiguity arises in the exclusion section
pertaining to the liability portion. “Section II - Exclusions” states that, with
respect to “personal liability,” there will be no coverage for “property damage
to property owned by the insured.”[1] The issue becomes whether “the insured” is
only the individual seeking coverage, here Rockefeller, as plaintiff contends,
since the policy must be viewed as separate and distinct to him (see
Fadden v Cambridge
Mut. Fire Ins. Co.,
27 AD2d 487, 488 [1967], citing Greaves v
Public Serv. Mut. Ins.
Co., 5 NY2d 120
[1959]; see also
Lane v Security Mut.
Ins. Co., 96 NY2d
1 [2001]) or only Hutchinson, the property owner, as defendant
contends[2] (see
Butler v New York Cent.
Mut.
Fire Ins. Co.,
supra at 925).
The use of “the” and “an” as a modifier for the term “insured” is further
complicated by their use in other provisions of this policy where there is a
clear intent to include all covered individuals as opposed to only “the
insured.”[3] Since it is settled that exclusionary clauses “'must be specific
and clear in order to be enforced'“ (General
Acc. Ins. Co. v United States Fid. & Guar. Ins. Co.,
supra at
137, quoting Seaboard
Sur. Co. v Gillette Co.,
supra
at 311) and that defendant failed to satisfy its burden of establishing the
meaning it now attributes to this disputed clause as being subject to no other
reasonable interpretation (see
Lane v Security Mut.
Ins. Co.,
supra
at 4-5; Allstate v
Mugavero,
79 NY2d 153, 154 [1992]), plaintiff's motion for summary judgment should have
been granted and defendant required to provide coverage (see Matter
of Mostow v State Farm Ins. Cos.,
supra
at 326; General Acc. Ins. Co. v United
States Fid. & Guar. Ins. Co.,
supra
at 139).
Cardona, P.J.,
Mercure, Mugglin and
Kane, JJ., concur.
ORDERED that the order is
reversed, on the law, with costs, plaintiff's motion granted, defendant's cross
motion denied and it is declared that defendant has a duty to defend and
indemnify Michael Rockefeller in an underlying action.
[1] There is no dispute
that Rockefeller does not have an ownership interest in the property.
[2] Notably, defendant's
proffered interpretation of “the insured” in this case is contrary to the
position it took in
Nancie D. v New York Cent.
Mut.
Fire Ins. Co. (195 AD2d
535, 537 [1993]).
[3] For instance, the
policy clearly indicates coverage for personal property “owned or used by an
insured while it is anywhere in the world,” and a disclaimer for property damage
to “property owned by an insured.”
TRIBECA BROADWAY
ASSOCIATES, LLC v MOUNT VERNON FIRE INS. CO.
Order, Supreme Court, New
York County (Barbara Kapnick, J.), entered December
19, 2002, which, inter alia, granted plaintiff's
motion for summary judgment to the extent of declaring that the defendant Mount
Vernon Fire Insurance Company had a duty to defend plaintiff in an underlying
personal injury action and denied defendant Mount Vernon's cross motion for
summary judgment declaring that plaintiff is not an insured under the subject
policy and that Mount Vernon is not obligated to defend or indemnify it in this
action, unanimously reversed, on the law, without costs, the motion denied and
the cross motion granted.
Plaintiff building owner
contracted with defendant GDM Construction Services for renovation work on the
premises. The construction agreement included a hold harmless clause assuring
that GDM would hold the owner harmless for claims, including attorneys' fees,
attributable to personal injuries arising from negligence by GDM, a
subcontractor or anyone for whose acts they may be liable. The parties also
agreed that GDM would maintain insurance in a specified amount indemnifying the
owner for all liability arising from the contracted-for work. In that regard,
GDM provided the owner with a certificate of insurance dated July 25, 1997. The
certificate stated that GDM was insured for the specified amount, and it listed
the plaintiff-owner as an additional insured. This certificate also included the
statement: "[t]his certificate is issued as a matter of information only and
confers no rights upon the certificate holder. This certificate does not amend,
extend or alter the coverage afforded by the policies below." The policy itself
does not list plaintiff-owner as an additional insured. Subsequently, defendant
Alberto Nieves, claiming to have been injured on the premises, commenced a Labor
Law action against GDM. By letter dated April 4, 2000, plaintiff-owner's
attorney, Scott Brody, tendered the defense in that action to GDM's insurance
broker, Allen Freeman, seeking confirmation that plaintiff-owner was an
additional insured under the policy. By letter dated May 4, 2000, Brody again
contacted Freeman, who responded that he had referred the claim to
defendant-appellant Mount Vernon's New York agent, the Simon Agency.
On May 12, 2000, Brody
asked Freeman to confirm that he had notified Mount Vernon of the claim, which
required additional followup letters from Brody on
July 6, 2000 and August 16, 2000, neither of which was acknowledged. Brody sent
copies of these letters to the Simon Agency. On or about September 7, 2000,
plaintiff-owner commenced the present declaratory judgment action, claiming that
GDM was contractually obligated to procure insurance on plaintiff's behalf, that
GDM procured the insurance through Mount Vernon, that plaintiff had demanded
that Mount Vernon assume the defense and provide indemnification in the
underlying personal injury action, that Mount Vernon had not disclaimed
coverage, and that Mount Vernon was thus required to provide a defense. Mount
Vernon, in its answer, generally denied the allegations, except to admit that at
the relevant time period it insured GDM. It also claimed as affirmative defenses
that it had not received notice of the claim and that policy exclusions barred
the claim.
Plaintiff moved for
summary judgment on the grounds noted above, and also argued that any
affirmative defenses were waived because of Mount Vernon's failure to deny or
disclaim coverage. In its cross motion for summary judgment, Mount Vernon
contended that the policy insured only GDM, that plaintiff was not identified
thereon as either a named or an additional insured, that the certificate of
insurance was not evidence of insurance coverage, that the certificate of
insurance had not been issued by Mount Vernon but only by GDM's broker, and
that, in any event, the certificate clearly indicated thereon that it did not
extend coverage. Affidavit evidence submitted by Mount Vernon averred that Mount
Vernon had not insured plaintiff and that Freeman, insofar as he was not Mount
Vernon's agent, had no authority to bind Mount Vernon. Mount Vernon also noted
that it had not been a party to any agreement between plaintiff and GDM, and
insofar as it had not insured plaintiff, it was not obligated to provide a
defense. In response, plaintiff argued that Mount Vernon, under the terms of the
policy, had obligated itself to provide coverage to a class of entities that
included plaintiff. In this regard, the policy obligated the carrier to defend
and indemnify those parties for whom its insured was contractually obligated
under an "insured contract" to indemnify for bodily injuries. It also defined an
insured contract as "[t]hat part of any other contract or agreement pertaining
to your business . . . under which you assume the tort liability of another
party to pay for bodily injury or property damage to a third person or
organization. Tort liability means a liability that would be imposed by law in
the absence of any contract or agreement." Mount Vernon contended that the
policy contained no coverage for contractual indemnity. Mount Vernon included a
copy of GDM's file with the motion to indicate that no application had been made
to add plaintiff as an additional insured.
Initially, it is well
established that the party claiming insurance coverage bears the burden of
proving entitlement, and, as we have recently held, a party that is not named an
insured or an additional insured on the face of the policy is not entitled to
coverage (Moleon v
Kreisler Borg Florman Gen.
Constr. Co., 304 AD2d 337). Nor does the
certificate of insurance in this case confer coverage. A certificate of
insurance is only evidence of a carrier's intent to provide coverage but is not
a contract to insure the designated party nor is it conclusive proof, standing
alone, that such a contract exists (Buccini
v 1568 Broadway Associates, 250 AD2d 466). Nor does it appear in this case
that GDM's broker had the authority to bind the carrier, for which it did not
act as agent, so that we would not on that basis estop the carrier from denying
the existence of coverage (compare Bucon
v Pennsylvania Manufacturing Association Ins. Co., 151 AD2d 207). Insofar as
the claim fell outside of the policy's coverage, the carrier was not required to
disclaim as to coverage that did not exist (cf. Worcester Ins. Co. v
Bettenhauser, 95 NY2d 185;
Zappone v Home Ins. Co., 55 NY2d 131 [no contractual
relationship between claimant and carrier]; compare
Handelsman v Sea Ins. Co., 85 NY2d 96 [claimants were
insureds under policy, but coverage for incident was potentially barred by
policy exclusion; disclaimer required]). Under the facts of this case, GDM could
not create rights and obligations as between plaintiff and the carrier.
ARMSTRONG v CALIBER
ONE INDEMNITY CO.
In an action to recover
damages for failure to pay for a fire loss pursuant to an insurance policy, the
defendant appeals (1), as limited by its brief, from so much of an order of the
Supreme Court, Nassau County (Segal, J.), dated March 6, 2003, as granted that
branch of the plaintiffs' motion which was for summary judgment on the third
cause of action and denied that branch of its cross motion which was for summary
judgment dismissing the complaint in its entirety, and (2), by permission, from
an order of the same court entered August 20, 2003, which, upon the prior order,
directed it to issue payment satisfying the plaintiffs' mortgage.
ORDERED that the order
dated March 6, 2003, is modified, on the law, by deleting the provision thereof
granting that branch of the motion which was for summary judgment on the third
cause of action and substituting therefor a
provision denying that branch of the motion, without prejudice to renewal after
joinder of a necessary party; as so modified, the order is affirmed insofar as
appealed from; and it is further,
ORDERED that the order
entered August 20, 2003, is reversed, on the law; and it is further,
ORDERED that the matter
is remitted to the Supreme Court, Nassau County, for further proceedings
consistent with this determination; and it is further,
[*2]
ORDERED that one bill of
costs is awarded to the defendant.
The plaintiff Derek
Armstrong (hereinafter the plaintiff) is the named insured on a homeowners
policy issued by the defendant, insuring a residence in Hempstead. The residence
is allegedly titled in the name of his wife, the plaintiff Sharon Armstrong.
Additionally, the plaintiff alleged that there is a mortgage on the property.
The insurance policy notes the mortgage of "Roslyn National Mortgage ISAOA."
Neither the deed, the mortgage, nor the note are
included in the record on appeal.
On March 26, 2001, there
was a fire at the residence. The plaintiff filed a claim of loss which was
denied by the defendant. Thereafter, the plaintiff and his wife commenced this
action, alleging three causes of action and seeking to recover damages for their
losses under the policy. The third cause of action alleges, in substance: there
is a mortgage and that irrespective of whether or not the plaintiffs are
entitled to recover under the policy, the mortgagee is entitled to recover to
the extent of its interest; the plaintiffs as third-party beneficiaries thereof
are entitled to enforce this claim; and they have been damaged by the
defendant's failure to pay it.
The plaintiffs moved,
inter alia, for summary judgment on their third
cause of action. The defendant cross-moved, inter alia,
for summary judgment dismissing the complaint in its entirety, or to compel the
plaintiffs to join the mortgagee as a necessary party. Insofar as is relevant to
this appeal, the Supreme Court granted the motion to the extent of determining
that the policy contained a "standard mortgagee clause" and that the defendant
was liable thereunder to the extent of the mortgagee's interest, and embodied
its determination in the first order appealed from. Based upon that order, upon
notice, the plaintiffs settled the second order appealed from, which purports to
effectuate the first order by directing the defendant to issue payment
satisfying the mortgage.
Contrary to the Supreme
Court's determination, that branch of the motion which was for summary judgment
on the third cause of action should have been denied. The motion and orders
affect the interest of the mortgagee, which is a necessary party to this action
(see
Syracuse Sav. Bank v Yorkshire Ins. Co., Ltd.,
301 NY 403,
407; McDowell v St. Paul Fire and Marine Ins. Co., 207 NY 482, 485).
Since the mortgagee was not joined, the subject branch of the motion should have
been denied without prejudice to renewal after such joinder.
In light of this
determination we need not reach the parties' remaining contentions.
FLORIO, J.P., KRAUSMAN, SCHMIDT and TOWNES, JJ.,
concur.
HOSPITAL FOR JOINT
DISEASES v ALLSTATE INS. CO.
In an action to recover
unpaid benefits due under the no-fault provisions of the Insurance Law, the
plaintiff appeals from an order of the Supreme Court, Nassau County (Cozzens,
J.), dated January 31, 2003, which denied its motion for summary judgment and
granted the defendant's cross motion for summary judgment dismissing the
complaint.
ORDERED that the order is affirmed, with costs.
The plaintiff Hospital
for Joint Diseases, as assignee of its patient, alleged in its complaint that
the defendant no-fault insurer was liable for two no-fault claims which were
mailed on March 6, 2002, because it neither paid nor denied the claims within 30
days of receipt, as required by Insurance Law § 5106(a) and the corresponding
regulation of the Insurance Department, 11 NYCRR 65.15(g)(3).
Thereafter, the plaintiff made the same argument in a motion for summary
judgment.
The defendant cross-moved
for summary judgment dismissing the complaint, submitting evidence that before
the medical services at issue were rendered, it had notified the plaintiff's
assignor that it had terminated her no-fault benefits based upon an independent
medical examination, and that the plaintiff had previously submitted claims for
these same billings which the defendant timely denied. The Supreme Court denied
the plaintiff's motion, granted the defendant's
[*2]cross
motion, and dismissed the complaint. The plaintiff appeals.
We affirm. Under the
no-fault law, a claimant whose claim for benefits has been denied is entitled to
"seek immediate redress, and to recover both the amount of any overdue claim and
reasonable attorney's fees in securing payment" (Roggio
v Nationwide Mut. Ins. Co.,
66 NY2d 260, 262). A claimant
may either file suit seeking payment of the claim, or, pursuant to Insurance Law
§ 5106(b), submit the dispute to arbitration, pursuant to simplified procedures
promulgated by the Insurance Department. In this case, the plaintiff did
neither, opting instead to repeatedly resubmit the denied claims, apparently in
the hope that eventually the defendant would fail to issue a denial within 30
days of receipt. We hold, however, that the 30-day period in which to deny a
claim for no-fault benefits does not run anew as the result of the re-submission
of a previously-denied claim.
Since the plaintiff's
complaint was predicated solely upon the defendant's failure to pay or deny the
claims sent March 6, 2002, within 30 days of receipt, and the defendant
established that it previously issued timely denials for identical claims
submitted by the plaintiff, the defendant was properly granted summary judgment
dismissing the complaint.
In light of the
foregoing, we do not reach the parties' remaining contentions.
MATTER OF EMPIRE INS.
CO. v DORSAINVIL
In a proceeding pursuant
to CPLR article 75 to permanently stay arbitration of a claim for uninsured
motorist benefits, the appeal is from an order of the Supreme Court, Queens
County (Thomas, J.), dated April 15, 2002, which granted the petition and
permanently stayed arbitration.
ORDERED that the order is affirmed, with costs.
The appellants' failure
to file a sworn statement with the petitioner Empire Insurance Company after the
hit-and-run accident, in accordance with a condition precedent to coverage under
the uninsured motorist endorsement of the insurance policy, vitiated coverage (see
Matter of Legion Ins. Co. v Estevez, 281 AD2d 420; Matter of Aetna Life &
Cas. v Ocasio, 232
AD2d 409). Accordingly, the Supreme Court properly granted the petition and
permanently stayed the arbitration.
In light of our
determination, we need not address the appellants' remaining contention.
MURPHY v NUTMEG INS.
CO.
In an action for a
judgment declaring, inter alia, that the defendants
are obligated to defend and indemnify the plaintiffs in an underlying action
entitled Town of Poughkeepsie v Thomas Espie,
pending in the United States District Court for the Southern District of New
York, under Docket No. 02 CIV 6995(CLB), the defendants appeal from so much of
an order of the Supreme Court, Dutchess County
(Dillon, J.), dated April 14, 2003, as granted that branch of the plaintiffs'
motion which was for summary judgment declaring that the defendants are
obligated to defend them in the underlying Federal action as long as there
remains a pending claim sounding in negligence, and denied their cross motion
for summary judgment declaring that they are not obligated to defend or
indemnify the plaintiffs in the underlying Federal action to the extent of
determining that the defendants are required to defend the plaintiffs in the
underlying Federal action as long as there remains a pending claim sounding in
negligence, and the plaintiffs cross-appeal from stated portions of the same
order which, inter alia, denied those branches of
their motion which were for summary judgment declaring that the defendants were
obligated to defend and indemnify them on all claims for relief in the
underlying Federal action, and to provide separate counsel for each of the
plaintiffs Michael Dunagan, Mary
Percesepe, Lorraine Treacy,
Louis Lurraso, Patrick Hinkley,
and Dennis Leary in the underlying Federal action.
ORDERED that the order is
modified, on the law, by deleting the provision thereof denying that branch of
the plaintiffs' motion which was for summary judgment declaring that the
defendants are obligated to provide separate counsel for each of the plaintiffs
Michael Dunagan, Mary Percesepe,
Lorraine Treacy, Louis Lurraso,
Patrick Hinkley, and Dennis Leary in the underlying
Federal action and substituting therefor a provision
granting that branch of the motion; as so modified, the order is affirmed
insofar as appealed and cross-appealed from, without costs or disbursements; and
it is further,
ORDERED that the matter
is remitted to the Supreme Court, Dutchess County,
for the entry of a judgment declaring, inter alia,
that the defendants are obligated to provide separate counsel for each of the
plaintiffs Michael Dunagan, Mary
Percesepe, Lorraine Treacy,
Louis Lurraso, Patrick Hinkley,
and Dennis Leary in the underlying Federal action as long there remains a
pending claim sounding in negligence.
The plaintiffs commenced
this action seeking a judgment declaring that the defendants are obligated to
defend and indemnify them in an underlying Federal action pursuant to an errors
and omissions insurance policy. In the underlying Federal action, the Town of
Poughkeepsie asserted, inter alia, three causes of
action against the plaintiffs, who were former Town board members, for RICO
violations, breach of fiduciary duty, and negligence in connection with their
approval of the purchase of a building for town police and court facilities.
The subject policy
clearly excluded coverage for, among other things, dishonest, fraudulent, and
criminal or malicious acts of the insured, as well as acts arising out of an
insured's activities in a fiduciary capacity. Although the Supreme Court
correctly concluded that there was no basis to compel the defendants to defend
the plaintiffs if the RICO violations and breach of fiduciary duty claims were
the only claims for relief against the plaintiffs in the underlying Federal
action in light of the policy exclusions (see Technicon
Elecs. Corp. v American Home
Assur. Co., 74 NY2d 66, 73;
Physicians' Reciprocal Insurers v Blank, 258 AD2d 573;
Tartaglia v Home Ins. Co., 240 AD2d 396), the Supreme Court
also correctly found that the defendants were required to defend the plaintiffs
with respect to all claims for relief, as long as there remains a pending claim
sounding in negligence, since the allegations set forth in that claim for relief
fall within the scope of risks covered by the subject policy (see Seaboard
Sur. Co. v Gillette Co., 64 NY2d 304, 310).
Therefore, the Supreme Court correctly denied that branch of the plaintiffs'
motion which was for summary judgment declaring that the defendants are
obligated to defend them on causes of action to recover for RICO violations and
breach of fiduciary duty, and in denying that branch of the defendants' motion
which was for summary judgment declaring that they were not obligated to defend
the plaintiffs on the negligence claim for relief.
Further, the Supreme
Court properly denied that branch of the plaintiffs' motion which was for
summary judgment on their cause of action for indemnification, since there are
triable issues of fact with respect to the plaintiffs' negligence in the
underlying action (see Frontier Insulation
Contrs., v
Merchants Mu. Ins. Co.,
91 NY2d 169; Public
Serv. Mut. Ins.
Co. v Goldfarb, 53 NY2d 392;
Cepeda v Varveris,
239 AD2d 536; General Acc. Ins. Co. of
Am. v IDBAR Realty Corp., 229 AD2d 515).
However, the Supreme
Court erred in denying that branch of the plaintiffs' motion which was to compel
the defendants to provide separate counsel for each of the plaintiffs Michael
Dunagan, Mary Percesepe,
Lorraine Treacy, Louis Lurraso,
Patrick Hinkley, and Dennis Leary, since each made a
claim for contribution, and thus, the possibility of conflict exists (see
Death v Salem, 111 AD2d 778).
Accordingly, we remit the
matter to the Supreme Court, Dutchess County, for
the entry of a judgment declaring, inter alia, that
the defendants are obligated to provide separate counsel for each of the
plaintiffs Michael Dunagan, Mary
Percesepe, Lorraine Treacy,
Louis Lurraso, Patrick Hinkley,
and Dennis Leary in the underlying action as long as there remains a pending
claim sounding in negligence.
RITTER, J.P., KRAUSMAN,
TOWNES and COZIER, JJ., concur.
ENTER:
James Edward Pelzer
Clerk
March
1 2d dept.
MATTER OF ATLANTIC
MUTUAL COMPANIES v CESERANO
In a proceeding pursuant
to CPLR article 75 to stay arbitration of an underinsured motorist claim, the
appeal is from an order of the Supreme Court, Putnam County (Hickman, J.),
dated January 8, 2003, which granted the petition and
permanently stayed arbitration.
ORDERED that the order is affirmed, with costs.
The appellant Grace Marie
Ceserano, formerly the vice president of sales for Effective Security Systems,
Inc. (hereinafter Effective Security), was injured while engaged in company
business when her vehicle was struck by a vehicle owned and operated by Frank
Jarosz. Jarosz's insurance carrier settled her action against him for the full
amount of Jarosz's insurance policy. Underinsurance coverage in the appellant's
own insurance policy was not triggered and the appellant therefore filed a claim
for underinsurance benefits with the petitioner, Effective Security's insurance
carrier. The petitioner did not disclaim coverage, but when the appellant served
a demand for arbitration, it commenced this proceeding to permanently stay the
arbitration contending, among other things, that there was no coverage for the
appellant under the terms of the policy.
The policy issued by the
petitioner included an endorsement entitled "Drive Other Car Coverage -
Broadened Coverage for Named Individuals" which provided, in relevant part,
liability coverage for an automobile not owned by Effective Security while being
used by an executive officer, except for an automobile owned by that individual.
The endorsement defined an "insured" as, among others, an executive officer
using a covered automobile, as described in the endorsement. The petitioner did
not dispute that the appellant was an executive officer, but contended that the
endorsement provided only liability coverage, not underinsured motorist
coverage, and that the coverage was not applicable because the appellant owned
the vehicle. The Supreme Court agreed, concluded that a disclaimer was not
required under the circumstances, and granted the petition.
Even assuming that
underinsured motorist coverage was included in the endorsement, an issue we need
not reach, the appellant, by definition, was not an "insured" since she owned
the vehicle she was using. The Supreme Court properly concluded that a
disclaimer was not required because coverage did not exist under the terms of
the policy in the first instance (see Zappone v
Home Ins. Co., 55 NY2d 131; State Farm Mut.
Auto. Ins. Co. v John Deere Ins. Co.,
288 AD2d 294).
In light of our
determination, it is unnecessary to address the parties' remaining contentions.
