Opinion
11560/04.
Decided December 14, 2004.
plaintiff, The City of New York, moves for an order, pursuant to CPLR 3212, granting summary judgment in its favor and declaring that defendant Westchester Fire Insurance Co. (Westchester) must defend the City in an action entitled Alvester Hayes v. De Micco Brothers Inc., HHM Associates, Inc. and The City of New York (Queens County, Index No. 23612/02). Background The Underlying Action
The plaintiff Alvester Hayes commenced that action in September 2002.
The Hayes lawsuit, which spawned this declaratory judgment action, concerns personal injuries which Mr. Hayes allegedly sustained on September 17, 2001, at about 8:30 am., while allegedly riding his bicycle at the intersection of Sutphin Boulevard and 115th Road in Queens. The complaint in that action alleges that HHM Associates (HHM) and De Micco Brothers Inc. (De Micco) negligently performed construction work at the subject intersection and that such negligence proximately caused Mr. Hayes' injuries.
The Operative Agreement
HHM executed an agreement with the City, through its Department of Design and Construction (DDC), to reconstruct the Sutphin Boulevard and 115th Road intersection. That agreement required HHM to obtain insurance coverage naming the City and DDC as additional insureds for claims "aris[ing] from operations under this contract."
The agreement's " Comprehensive General Liability" provision pertinently provides that ". . . the Contractor [HHM] shall procure a comprehensive general liability insurance policy in the Contractor's name and naming the City of New York, Department of Design and Construction as additional insured and endorsed to cover liability assumed by the Contractor under the indemnity provisions of this Agreement. This insurance policy . . . shall protect the City of New York, the Department of Design and Construction and the Contractor and its subcontractors performing work at the site from claims for property damage and/or bodily injury, including death, which may arise from operations under this contract. . . ." In addition, the agreement states that "[t]he Contractor, at his/her option, may carry, in lieu of liability insurance . . . comprehensive general liability insurance with a limit per accident equal to the amount required in Schedule 'A'." That schedule requires "$3,000,000 per Occurrence."
HHM sought to fulfill this insurance obligation by purchasing a commercial general liability policy from Westchester for the twelve-month period from June 1, 2001 to June 1, 2002. That policy named HHM as the insured and provided that the term "additional insured[s]" shall include any person or organization "as required by contract. . . . but only with respect to liability arising out of 'your work' for that insured by or for you." Allied North America Insurance Brokerage Corp. of New York, broker for the policy, subsequently issued a certificate of liability insurance to DDC on November 30, 2001reflecting HHM's insured status and stating that "[a]dditional [i]nsured status encompasses [g]eneral liability and [a]utomobile [l]iability."
The Coverage Demand and Responses
The New York City Comptroller's Office, which allegedly received Mr. Hayes' notice of claim on or about November 8, 2001, in turn, notified Westchester, by letter dated April 25, 2002, about that claim. ACE USA Claims Department (ACE) acknowledged receipt of that letter and advised the Comptroller, by its own letter dated May 13, 2002, that it recognized its resulting contractual obligations. Another letter from ACE, dated June 20, 2002, acknowledged due and timely notice of Mr. Hayes' claim, declared that Westchester will defend the City concerning the claim and pledged to assign defense counsel after receiving a copy of the summons and complaint.
The responsive letter pertinently provided in this regard that ACE "agreed to defend and indemnify the City . . . as required by and pursuant to the terms and conditions of the contract between our insured and the City. Also, ACE will also provide additional insured status to the City as required by the contract between our insured and the City and pursuant to the terms and conditions of the ACE policy."
That letter pertinently provided that "[t]he Westchester Fire Insurance Company insures the City of New York and its agencies, officials and employees (the 'City') under the above-captioned policy and will defend the City in any action arising from this claim and will indemnify the City under the terms and up to the limits of the aforementioned policy. We hereby agree . . . to assign counsel to defend the City on this claim no later than upon receipt of a Summons Complaint arising from this claim. The statements, assurances, agreements and commitments set forth in this letter are definitive and shall not be withdrawn or modified hereafter."
The City's Law Department, which allegedly received a copy of plaintiff's summons and complaint on October 1, 2002, thereafter notified ACE, initially by letter dated November 18, 2002 and then allegedly by letter dated January 14, 2003, of such receipt and sought the name of the attorney undertaking the City's defense. However, ACE noted in its responsive letter, dated March 25, 2003, that "Westchester is not yet fully convinced that HHM's operations led to the incident involving Hayes. Accordingly, we do not see any contractual duty to the City at this point." The City has thus defended itself in the Hayes lawsuit and this declaratory judgment action and summary judgment motion have now ensued.
The Parties' Positions
The City notes that the Hayes complaint alleges negligence in connection with HHM's work and that such negligence caused Mr. Hayes' injuries. Such allegations, the City believes, trigger HHM's contractual duty to protect the City against claims arising from HHM's operations. That contractual duty, the City contends, in turn, obligates Westchester to fulfill its corresponding duty, under its policy with HHM, to defend the City as an additional insured against liability claims arising from HHM's contractual work. Westchester, in any event, waived its disclaimer rights or failed to timely issue its March 25, 2003 disclaimer letter, in the City's view, by failing to respond to the City's defense demand for more than four months.
Westchester, on the other hand, argues that it has no duty to defend the City under these circumstances. It claims that no waiver occurred, that the underlying complaint concurrently predicates liability on a co-defendant's operations, that uncertainty exists regarding HHM's liability and that such circumstances make the City ineligible as an additional insured. It also regards the City's motion as premature considering that discovery remains outstanding.
Discussion
The Disclaimer Issue
Insurance Law § 3420 (d) requires an insurer's disclaimer "as soon as is reasonably possible." However, defendant claims that no disclaimer obligation applied herein. "Where [, as here,] a clause limits the circumstances in which a party is an additional insured under an insurance policy and the underlying claim falls outside the limited coverage provided, disclaimer pursuant to Insurance Law § 3420 (d) is not required ( see Crespo v. City of New York, 303 AD2d 166, 167; American Ref-Fuel Co. of Hempstead v. Employers Ins. Co. of Wausau [ 265 AD2d 49], supra, at 54 [2000])" ( National Union Fire Ins. Co. of Pittsburgh, Pa. v. Utica First Ins. Co., 6 AD3d 681, 682).
More specifically, that provision provides that "[i]f under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant."
The Court of Appeals has explained that "[a] disclaimer is unnecessary when a claim does not fall within the coverage terms of an insurance policy" ( Markevics v. Liberty Mut. Ins. Co., 97 NY2d 646, 648). "Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. By contrast, disclaimer pursuant to section 3420 (d) is necessary when denial of coverage is based on a policy exclusion without which the claim would be covered" ( Worcester Ins. Co. v. Bettenhauser, 95 NY2d 185, 188-189).
Here, construing the additional insured and covered occurrence provisions of the policy principally determines Westchester's obligation. Consequently, assuming arguendo that noncoverage arose from a lack of inclusion, not a policy exclusion, a timely disclaimer of coverage was not required ( Continental Casualty Co. v. Luhrs, 299 AD2d 357, 358). Thus, accepting for a moment defendant's contention that the "noncoverage arose from a lack of inclusion," no waiver of Westchester's defense to this declaratory judgment action therefore occurred. The Additional Insured Issue (a) The Appellate Division, Second Department has recently reminded litigants that "[a]n insurer is obligated to defend its insured where the allegations of the complaint in the underlying action give rise to a reasonable possibility of coverage ( see Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., 91 NY2d 169)" ( Haight v. Estate of DePamphilis, 5 AD3d 547, 548-549). Thus, "[i]f, liberally construed, the complaint is within the embrace of the policy, the insurer must come forward to defend its insured ( see, Ruder Finn v. Seaboard Sur. Co., 52 NY2d 663, 670 rearg denied 54 NY2d 753)" ( Agoado Realty Corp. v. United Intern. Ins. Co., 95 NY2d 141, 145). In addition, "[i]f any of the claims against the insured arguably arise from covered events, the insurer is required to defend the entire action ( Seaboard Sur. Co. v. Gillette Co., 64 NY2d 304, 311)" ( Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., 91 NY2d 169, 175). Here, defendant's commercial general liability policy covered the City as an additional insured "but only with respect to liability arising out of 'your [HHM's] work' for [the City] by or for you." The Hayes' complaint alleges that HHM's construction work at the intersection where Mr. Hayes rode his bicycle at least in part caused him to fall and suffer injuries. Such "allegations within the four corners of the underlying complaint potentially give rise to a covered claim" ( Frontier Insulation Contractors, 91 NY2d at 175). The Appellate Division, Second Department has echoed that "[t]he duty of the insurance carrier to defend, which is 'exceedingly broad' ( Colon v. Aetna Life Cas. Ins. Co., 66 NY2d 6, 8; see, Continental Cas. Co. v. Rapd-Am. Corp., 80 NY2d 640, 648), is triggered whenever the four corners of a complaint, liberally construed, suggest a reasonable possibility of coverage" ( Conrad R. Sump Co. v. Home Ins. Co., 267 AD2d 415, 417). The claims in the Hayes' complaint, alleging, among other items, that HHM negligently performed construction work at the accident site, indicate that liability could arise from HHM's operations thereby making the City an additional insured. The additional insured clause, citing "liability arising out of your [HHM's] operations," focuses "'upon the general nature of the operation in the course of which the injury was sustained' ( Consolidated Edison Co. v. Hartford Ins. Co., supra [ 203 AD2d], at 83). Also, the clause was not to be read as an exclusion of coverage . . . since, as an endorsement, it was an addition to coverage, not a limitation" ( Tishman Const. Corp. of New York v. CNA Ins. Co., 236 AD2d 211, 211).
(b) In addition, no determination of HHM's liability must serve as a prerequisite to trigger the duty to defend the City, as Westchester argues. Such finding affects indemnity obligations and "[t]he duty to defend is broader than the duty to indemnify ( see Seaboard Sur. Co. v. Gillette Co., 64 NY2d 304, 310; Ruder Finn v. Seaboard Sur. Co., 52 NY2d 663, 669)" ( Haight v. Estate of DePamphilis, 5 AD3d at 548). Indeed, the Court of Appeals has stressed the importance of the core policy obligation to defend an additional insured "since a 'provision for defense of suits is useless and meaningless unless it is offered when the suit arises' (7C Appelman [Insurance Law and Practice], op. cit., § 4684, at 83)" ( Fitzpatrick v. American Honda Motor Co., Inc., 78 NY2d 61, 70).
The Appellate Division, Second Department has also summarized in this regard that:
"[a]n insurer may be relieved of its duty to defend only if it can establish, as a matter of law, that there is no possible factual or legal basis upon which it might eventually be obligated to indemnify its insured, or by proving that the allegations fall wholly within a policy exclusion ( see Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., supra [ 91 NY2d 169, 175 (1997)], Deetjen v. Nationwide Mut. Fire Ins. Co., supra [ 302 AD2d 350 (2003)]). If any of the allegations arguably arise from a covered event, the insurer must defend the entire action ( see Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., supra [ 91 NY2d 169, 175 (1997)]; Deetjen v. Nationwide Mut. Fire Ins. Co., supra [ 302 AD2d 350 (2003)])" ( City of New York v. Insurance Corp. of New York, 305 AD2d 443, 443-444).
The above discussion shows that the allegations in the Hayes' action arguably arise from a covered event thus obligating Westchester to defend. Westchester's reference to deposition testimony suggesting that De Micco, another defendant, may bear some responsibility for the situation fails to eliminate the possibility, as a matter of law, that Westchester may ultimately bear an indemnity obligation and only shows that the indemnity determination "must await the outcome of the underlying action" ( id. at 444). Westchester thus presents no triable factual issue regarding its defense obligation stemming from the allegations in the Hayes complaint.
Seeking discovery in this context provides no panacea to Westchester. The Appellate Division, Second Department has explained that:
"Pursuant to CPLR 3212 (f), the [lower] court has discretion to deny a motion for summary judgment, or to order a continuance to permit affidavits to be obtained or disclosure to be had, if facts essential to justify opposition to the motion may exist but cannot then be stated. For the [lower] court to delay action on the motion, there must be a likelihood of discovery leading to such evidence. The mere hope that evidence sufficient to defeat the motion may be uncovered during the discovery process is insufficient ( see Frouws v. Campell Foundry Co., 275 AD2d 761 [2000]; Mazzaferro v. Barterama Corp., 218 AD2d 643 [1995])" ( Neryaev v. Solon, 6 AD3d 510, 510 [2004]).
Here, no basis to delay addressing and resolving this summary judgment motion exists considering that the court need only look to the face of the underlying personal injury complaint to properly resolve the motion.
This declaratory judgment action therefore now requires entry of an appropriate judgment ( see Lanza v. Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901; Neglia v. Blue Ridge Ins. Co., 9 AD3d 453, 454; Lorich Bldg. Corp. v. Insurance Corp. of New York, 7 AD3d 581, 582; City of New York v. Insurance Corp. of New York, 305 AD2d at 444). Accordingly, it is
ORDERED that the City's summary judgment motion is granted; and it is further
ORDERED, ADJUDGED and DECLARED that Westchester is obligated to defend and, if necessary, indemnify the City in the underlying action entitled Hayes v. De Micco Brothers Inc., HHM Associates, Inc. and The City of New York (Queens County, Index No. 23612/02).
This constitutes the decision, order and judgment of this court.