Opinion
7972-06.
June 4, 2008.
Jones Hirsch Connors Bull, Attn: Donald J. Cayea, Esq., Attorneys for Plaintiffs, One Battery Park Plaza New York, NY.
Robert M. Spadaro, Esq., Attorney for Defendant, New York, NY.
The following papers read on this motion:
Notice of Motion ................... 1 Cross-Motion ....................... 3 Plaintiffs' Memorandum of Law ...... 2 Answering Papers ................... 4 Reply .............................. 5Plaintiffs move pursuant to CPLR 3212(b) for partial summary judgment on their claim for breach of a contract to insure. Defendant cross-moves pursuant to CPLR 3212(b) for a denial of the motion for partial summary judgment and dismissal of plaintiffs' complaint.
BACKGROUND
Victor Brownlee and Loretta Schwannemann ("Brownlee and Schwannemann") commenced an action against Brenda Reiss ("Reiss") and others in the United States District Court, Eastern District of New York, Case Number CV 05 1271, sounding in racial discrimination.
Reiss forwarded the complaint to defendant United Services Automobile Association (USAA), by whom she was insured under Policy Number 00084 31 01 90A. The named insured and residence premises are identified as Joseph S. Reiss and Brenda H. Reiss, 33 Bayberry Road, Lawrence, NY. Form HO-70NY (04-93) lists "Additional Residence Rented to Others" but does not identify the premises leased by Brownlee and Schwannemann, to wit: 1496 Wantagh Avenue, Wantagh, New York (Ex. C)-Counsel for USAA stipulated that the Wantagh premises was deemed to be listed on the form. USAA'S correspondence of April 13, 2005, to its insureds stated in pertinent part as follows:
A review of the allegations contained in the complaint, as well as the applicable terms and conditions of your Homeowner's policy reveal there is no coverage with respect to the claims asserted against Brenda Reiss in this lawsuit. There is an absence of coverage because the allegations do not meet the specifications of the Insuring Agreement or are excluded from coverage pursuant to exclusions found within the policy.
Your Homeowner's policy provides coverage for liability arising out of an "occurrence" subject to the conditions and exclusions outlined in the policy.
(PI's Ex. E).
The following designated provisions of the policy were referenced:
SECTION II — LIABILITY COVERAGES
COVERAGE E — Personal Liability
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:
1. pay up to our limit of liability for the damages for which the insured is legally liable; and
2. provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. This coverage does not provide defense to any insured for criminal prosecution or proceedings.
We will not pay for punitive damages or exemplary damages, fines or penalties.
The following policy definitions apply to this loss:
DEFINITIONS
1. "bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results.
5. "occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:
a. bodily injury; or
b. property damage.
6. "property damage" means physical damage to, or destruction of tangible property, including loss of use of this property. (Id.)
With respect to this loss, the policy does not provide coverage for Brenda Reiss since the allegations in the lawsuit do not meet the definitions of occurrence, bodily injury or property damage. Additionally, there is no coverage for any punitive damages as asserted in the complaint nor does the policy provide any coverage for the injunctive relief sought.
In addition, the letter also referenced the following policy exclusions applicable to this loss:
SECTION II — EXCLUSIONS
1. Coverage E — Personal Liability and Coverage F — Medical Payments to Others do not apply to bodily injury or property damage:
a. caused by the intentional or purposeful acts of an insured, including conduct that would reasonably be expected to result in bodily injury to any person or property damage to any property. (Id.)
With respect to this loss, there is no coverage for the indemnity or the defense of this lawsuit since Brenda Reiss's actions are alleged to have been intentional and not accidental. (Id.)
Plaintiff, The Automobile Insurance Company of Hartford, Ct. ("Travelers"), insured Reiss under an umbrella policy and provided representation to her under a reservation of rights. The complaint filed by Reiss and Travelers seeks reimbursement of $20,000, representing the amount paid to settle the underlying federal action, as well as the costs incurred by Travelers to provide a defense to the underlying action and for its costs in prosecuting this action.
Plaintiffs submit that the allegations in the complaint in the underlying action triggered USAA' s duty to provide a defense to Reiss. Specifically, it is contended that Brownlee and Schwannemann suffered tremendous emotional distress, embarrassment, humiliation, inconvenience, anxiety and frustration constituting "bodily injury" within the terms of the USAA Homeowner's policy.
Defendant was obligated to defend and indemnify plaintiff Reiss under the terms of the Homeowner's policy if the complaint can be reasonably interpreted to allege an "occurrence" within the policy definitions. If the complaint alleges "intentional acts" on the part of the insured, it is excluded from coverage. The claimed "personal injuries" are essentially emotional distress, embarrassment, humiliation, inconvenience, anxiety and frustration. Whether these constitute "personal injuries" within the policy definitions is relevant only if they were caused by an "occurrence" and not by an "intentional act."
When presented with a motion for summary judgment, the function of a court is "not to determine credibility or to engage in issue determination, but rather to determine the existence or non-existence of material issues of fact." ( Quinn v. Krumland, 179 A.D.2d 448, 449 — 450 [1st Dept. 1992]; See also, S.J. Capelin Associates, Inc. v. Globe Mfg. Corp., 34 N.Y.2d 338, 343).
To grant summary judgment, it must clearly appear that no material and triable issue of fact is presented. ( Stillman v. Twentieth Century-Fox Corp., 3 N.Y.2d 395, 404). It is a drastic remedy the procedural equivalent of a trial, and will not be granted if there is any doubt as to the existence of a triable issue. ( Moskowitz v. Garlock, 23 A.D.2d943 [3d Dept. 1965]; Crowley's Milk Co. v. Klein, 24 A.D.2d 920 [3d Dept. 1965]).
The evidence will be considered in a light most favorable to the opposing party. (Weill v. Garfield, 21 A.D.2d 156 [3d Dept. 1964]). The proof submitted in opposition will be accepted as true and all reasonable inferences drawn in favor of the opposing party. ( Tortorello v. Carlin, 260 A.D.2d 201, 206 [1st Dept. 2003]). But this rule will not be applied where the opposition is evasive or indirect. The opposing party is obligated to come forward and bare his proof, by affidavit of an individual with personal knowledge, or with an attorney's affirmation to which is appended material in admissible form, and the failure to do so may lead the Court to believe that there is no triable issue of fact. ( Zuckerman v. City of New York, 49 N.Y.2d 557, 562).
The obligation of a liability insurance carrier under an insurance policy provision requiring it to defend in an action brought against the insured is to be determined by the allegations of the complaint or petition in the action. Whenever the four corners of the complaint suggest, or the insurer has actual knowledge of facts establishing a reasonable possibility of coverage, there is a duty to defend. ( Continental Casualty Co. v. Rapid-American, 80 N.Y.2d 640, 648 [citations omitted]).
While an insured may rely upon matters extraneous to the complaint in an effort to convince the insurer that they are entitled to representation and coverage, the insurer cannot rely on extrinsic facts to show that there is no coverage. (Fitzpatrick v. American Honda Co., Inc., 78 N.Y.2d 61, 65 [citations omitted]). The rationale for the "four corners of the complaint" rule "is based on the oft-stated principle that the duty to defend is broader than the duty to indemnify" ( Id.) The Court further stated that:
"an insurer's duty to defend is called into play whenever the pleadings allege an act or omission within the policy's coverage. Even where there exist extrinsic facts suggesting that the claim may ultimately prove meritless or outside the policy's coverage, the insurer cannot avoid its commitment to provide a defense, since '[a] complaint subject to defeat because of debatable theories * * * must [nevertheless] be defended by the insured.' ( International Paper Co. v. Continental Cas. Co., supra, 35 N.Y.2d 322, 361 N.Y.S.2d 873, 320N.E.2d619)." (Id. at 66).
The insurer has the burden of proof to establish that a denial of coverage based upon an exclusion in the policy. Their duty is determined when the action is brought, not by the outcome of the action. ( Lapierre, Litchfield and Partners v. Continental Cas. Co., 59Misc. 2d 20, 22 [Sup. Ct., NY Co. 1969]).
The evidence upon which the motion and cross-motion are to be determined is documentary, consisting of the USAA policy of insurance and the complaint filed by Brownlee and Schwannemann in the Eastern District. This presents an appropriate scenario for summary judgment, since there are no facts in controversy, only the interpretation of the documents.
Defendant was obligated to defend and indemnify plaintiff Reiss under the terms of the Homeowner's policy if the complaint can be reasonably interpreted to allege an "occurrence" within the policy definitions. If the complaint alleges "intentional acts" on the part of the insured, it is excluded from coverage. The claimed "personal injuries" are essentially emotional distress, embarrassment, humiliation, inconvenience, anxiety and frustration. Whether these constitute "personal injuries" within the policy definitions is relevant only if they were caused by an "occurrence" and not by an "intentional act."
An occurrence within the policy definition is an accident, or continuous exposure to harmful conditions, leading to personal injury. An intentional act by the insured is one which is purposeful. None of the allegations of the complaint constitute an accident, and therefore they are not occurrences. The alleged misconduct by the insured includes refusal to accept tendered payment in accordance with the lease, commencement of an unwarranted eviction proceeding, and the refusal to obey a lawful stay of eviction, all of which were motivated by racial discrimination. These are clearly intentional acts by the insured which fall within the policy exclusions.
Even if the complaint were to contain language sounding in negligence and alleging carelessness, it would not alter the fact that the operative fact giving rise to the claim for recovery is the unlawful eviction. ( Desir v. Nationwide Mutual Fire Insurance Company, N.Y.S.2d, 2008 WL 1823427 [N.Y.A.D. 2d Dept.], 2008 Slip Op. 03578).
Since there is no legal basis upon which the insurer could be liable for coverage, there was no obligation to provide a defense or to indemnify the insured. Id. (citations omitted).
Plaintiff's motion for partial summary judgment is denied. Defendant's cross-motion for summary judgment dismissing the complaint is granted. The Complaint is dismissed.
This decision constitutes the order of the court.