Indeed, “[t]he New York Court of Appeals has eschewed wooden application of the four corners of the complaint rule,” in favor of a rule requiring the insurer to also provide a defense where, notwithstanding the complaint allegations, underlying facts made known to the insurer create a reasonable possibility of coverage.” See QBE Ins. Corp. v. Adjo Contracting Corp., 997 N.Y.S.2d 425, 440-41 (N.Y.App.Div. 2014).
The defendant appeals. [1–3] "The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved" (Matter of Allstate Ins. Co. [Stolarz —New Jersey Mfrs. Ins. Co.], 81 N.Y.2d 219, 223, 597 N.Y.S.2d 904, 613 N.E.2d 936; see QBE Ins. Corp. v. Adjo Contr. Corp., 121 A.D.3d 1064, 1078, 997 N.Y.S.2d 425; Jimenez v. Monadnock Constr., Inc., 109 A.D.3d 514, 516, 970 N.Y.S.2d 577). Assuming a conflict exists, "[i]n contract cases, the court then applies a ‘center of gravity’ or ‘grouping of contacts’ analysis in order to determine which State has the most significant relationship to the transaction and the parties" (Jimenez v. Monadnock Constr., Inc., 109 A.D.3d at 516, 970 N.Y.S.2d 577, citing Matter of Midland Ins. Co., 16 N.Y.3d 536, 543, 923 N.Y.S.2d 396, 947 N.E.2d 1174, and Zurich Ins. Co. v. Shearsan Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 618 N.Y.S.2d 609, 642 N.E.2d 1065; see Munzer v. St. Paul Fire & Mar. Ins. Co., 203 A.D.2d 770, 610 N.Y.S.2d 389).
"The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved" (Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 N.Y.2d 219, 223; see QBE Ins. Corp. v Adjo Contr. Corp., 121 A.D.3d 1064, 1078; Jimenez v Monadnock Constr., Inc., 109 A.D.3d 514, 516). Assuming a conflict exists, "[i]n contract cases, the court then applies a 'center of gravity' or 'grouping of contacts' analysis in order to determine which State has the most significant relationship to the transaction and
In support of its position, Harleysville directs the Court to QBE Insurance Corporation v. Adjo Contracting Corp., where the Supreme Court, Nassau County, stated that "'arising out of' might accept an employment relation as a sufficient causal nexus, and the expression 'caused in whole or in part by' might exclude employment as sufficient nexus." QBE Ins. Corp., No. 601695/2009, 2011 WL 3505475, *29 (N.Y. Sup. Ct. Apr. 5, 2011) (emphasis added), rev'd in part, 121 A.D.3d 1064 (2d Dep't 2014). However, the court's tenuous statement as to the proper interpretation of the two endorsement phrases was made in dicta, as the court concluded that the parties seeking additional insured coverage had alleged a causal nexus between the injuries and the named insureds' acts or omissions that would satisfy even the more stringent proximate cause nexus established in Dale.
Further, in those cases the Courts distinguish between an insurer's own claim and a tender letter by an insurer on behalf of its insured (id.). The Courts held that a tender letter by an insurer on behalf of its insured, like State National's May 5, 2014 Tender Letter in this case, does in fact trigger the insurer's duty to timely disclaim as per Insurance Law § 3420 (d) (id.; see also QBE Ins. Corp. v. Adjo Contr. Corp., 121 A.D.3d 1064, 1081-82 [2d Dept 2014]).
Euchner-USA, Inc., 754 F.3d at 140 (alterations omitted) (quoting Auto. Ins. Co. of Hartford, 7 N.Y.3d at 137, 818 N.Y.S.2d 176, 850 N.E.2d 1152). While "[t]he New York Court of Appeals has eschewed wooden application of the four corners of the complaint rule," see QBE Ins. Corp. v. Adjo Contracting Corp., 121 A.D.3d 1064, 997 N.Y.S.2d 425, 440-41 (2014) (citations and internal quotation marks omitted), the extrinsic evidence relied upon may not overlap with the facts at issue in the underlying case, see City of New York v. Liberty Mut. Ins. Co., No. 15-CV-8220, 2017 WL 4386363, at *15 (S.D.N.Y. Sept. 28, 2017) (holding that "it is a 'settled rule [under New York law] that extrinsic evidence can[not] be used to defeat the duty to defend . . . [unless it is] unrelated to the merits of [the underlying] plaintiff's action.' " (citation omitted)).
“The duty to defend remains ‘even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered.'” Euchner-USA, Inc., 754 F.3d at 140 (alterations omitted) (quoting Auto. Ins. Co. of Hartford, 7 N.Y.3d at 137). While “[t]he New York Court of Appeals has eschewed wooden application of the four corners of the complaint rule,” see QBE Ins. Corp. v. Adjo Contracting Corp., 997 N.Y.S.2d 425, 440-41 (App. Div. 2014) (citations and internal quotation marks omitted), the extrinsic evidence relied upon may not overlap with the facts at issue in the underlying case, see City of New York v. Liberty Mut. Ins. Co., No. 15-CV-8220, 2017 WL 4386363, at *15 (S.D.N.Y. Sept. 28, 2017) (holding that “it is a ‘settled rule [under New York law] that extrinsic evidence can[not] be used to defeat the duty to defend . . . [unless it is] unrelated to the merits of [the underlying] plaintiff's action.'” (citation omitted)).
Euchner–USA, Inc. , 754 F.3d at 140 (alterations omitted) (quoting Auto. Ins. Co. of Hartford , 7 N.Y.3d at 137, 818 N.Y.S.2d 176, 850 N.E.2d 1152 ). While "[t]he New York Court of Appeals has eschewed wooden application of the four corners of the complaint rule," seeQBE Ins. Corp. v. Adjo Contracting Corp. , 121 A.D.3d 1064, 997 N.Y.S.2d 425, 440–41 (2014) (citations and internal quotation marks omitted), the extrinsic evidence relied upon may not overlap with the facts at issue in the underlying case, seeCity of New York v. Liberty Mut. Ins. Co. , No. 15-CV-8220, 2017 WL 4386363, at *15 (S.D.N.Y. Sept. 28, 2017) (holding that "it is a ‘settled rule [under New York law] that extrinsic evidence can[not] be used to defeat the duty to defend ... [unless it is] unrelated to the merits of [the underlying] plaintiff's action.’ " (citation omitted) )
A CGL policy may even include this clause as an exclusion. See, e.g., City of New York v. Lexington Ins. Co., 735 F. Supp. 2d 99, 109 (S.D.N.Y. 2010); QBE Ins. Corp. v. Adjo Contracting Corp., 32 Misc. 3d 1231, 2011 WL 3505475 (Sup. Ct. Apr. 5, 2011), aff'd in part and rev'd in part on other grounds, 121 A.D. 3d 1064, 997 N.Y.S. 2d 425 (2d Dept. 2014). In interpreting this clause, the courts do not gloss over the words, assume or assumption, but read the clause to address coverage in those circumstances when the insured has contractually assumed another's liability, as in an indemnification agreement or hold harmless agreement.
” Id. (quoting Cont'l Cas. Co. v. Rapid–Am. Corp. , 80 N.Y.2d 640, 593 N.Y.S.2d 966, 609 N.E.2d 506, 509 (1993) ). “The New York Court of Appeals has eschewed ‘wooden application of the four corners of the complaint rule,’ in favor of ‘a rule requiring the insurer to [also] provide a defense where, notwithstanding the complaint allegations, underlying facts made known to the insurer create’ a reasonable possibility of coverage.” QBE Ins. Corp. v. Adjo Contracting Corp. , 121 A.D.3d 1064, 997 N.Y.S.2d 425, 440–41 (2014) (quoting Fitzpatrick v. Am. Honda Motor Co. , 78 N.Y.2d 61, 571 N.Y.S.2d 672, 575 N.E.2d 90, 92, 95 (1991) ). However, “an insurer owes its insured no duty of defense ‘if it can be concluded as a matter of law that there is no possible factual or legal basis on which the insurer will be obligated to indemnify the insured.’ ”