Opinion
601 CA 21-00865
11-10-2022
Juanita WALKER, Plaintiff-Respondent-Appellant, v. ERIE INSURANCE COMPANY and Erie Insurance Company of New York, Defendants-Appellants-Respondents.
HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR DEFENDANTS-APPELLANTS-RESPONDENTS. WEBSTER SZANYI LLP, BUFFALO (KEVIN A. SZANYI OF COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.
HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR DEFENDANTS-APPELLANTS-RESPONDENTS.
WEBSTER SZANYI LLP, BUFFALO (KEVIN A. SZANYI OF COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.
PRESENT: WHALEN, P.J., SMITH, CENTRA, PERADOTTO, AND NEMOYER, JJ.
MEMORANDUM AND ORDER It is hereby ORDERED that said appeal insofar as taken by defendant Erie Insurance Company of New York is unanimously dismissed and the order is modified on the law by granting the cross motion of defendant Erie Insurance Company insofar as it seeks summary judgment dismissing the complaint to the extent that it alleges that the professional liability exclusion, if properly noticed to the insured, does not apply to preclude coverage for the underlying claims, and as modified the order is affirmed without costs.
Memorandum: Plaintiff contracted the bacterial infection Methicillin-Resistant Staphylococcus Aureus (MRSA) during a pedicure performed at a nail salon (hereinafter, insured) that was insured pursuant to a policy with commercial general liability coverage issued by Erie Insurance Company (defendant). Plaintiff commenced a personal injury action alleging that the insured's negligence caused her injuries. The insured requested coverage under the policy, but defendant disclaimed on the basis that the policy contained an endorsement consisting of a professional liability exclusion that precluded coverage for the underlying action. A judgment was ultimately entered against the insured in the underlying action and plaintiff subsequently commenced the present action alleging that, pursuant to Insurance Law § 3420, she was entitled to recover the damages under the judgment pursuant to the terms of the policy issued by defendant to the insured. Defendants appeal and plaintiff cross-appeals from an order that, upon granting plaintiff's motion for leave to reargue, denied plaintiff's motion for summary judgment on the complaint and denied defendant's cross motion for summary judgment dismissing the complaint.
Preliminarily, we note that defendant Erie Insurance Company of New York is not an aggrieved party, and we thus dismiss the appeal insofar as taken by that defendant (see CPLR 5511 ; Kirbis v. LPCiminelli, Inc. , 90 A.D.3d 1581, 1582, 935 N.Y.S.2d 783 [4th Dept. 2011] ).
Defendant contends on its appeal that Supreme Court erred in denying its cross motion because construction of the professional liability exclusion is a question of law for the court to decide, the exclusion is unambiguous, and the exclusion precludes coverage for plaintiff's injuries inasmuch as the evidence establishes that plaintiff contracted MRSA due to the rendering of a cosmetic service or treatment, namely, the professional pedicure performed by the insured. Plaintiff contends on her cross appeal that the court erred in denying her motion for summary judgment because the subject exclusion is inapplicable given that she was injured due to preparatory acts taken by the insured prior to and unconnected with any specific cosmetic treatment, and any ambiguity must be construed in favor of coverage. Plaintiff also contends in response to defendant's appeal that the court properly denied defendant's cross motion because defendant failed to meet its initial burden of establishing that the insured had notice of the exclusion. We conclude that the court should have granted defendant's cross motion for summary judgment dismissing the complaint to the extent that the complaint alleges that the professional liability exclusion, if properly noticed to the insured, does not apply to preclude coverage for the underlying claims. We therefore modify the order accordingly.
"In determining a dispute over insurance coverage, [courts] first look to the language of the policy" and, "[a]s with the construction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court" ( Lend Lease [US] Constr. LMB Inc. v. Zurich Am. Ins. Co. , 28 N.Y.3d 675, 681-682, 49 N.Y.S.3d 65, 71 N.E.3d 556 [2017] [internal quotation marks omitted]). "Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured" ( Cragg v. Allstate Indem. Corp. , 17 N.Y.3d 118, 122, 926 N.Y.S.2d 867, 950 N.E.2d 500 [2011] ). "[W]henever an insurer wishes to exclude certain coverage from its policy obligations, it must do so ‘in clear and unmistakable’ language" ( Seaboard Sur. Co. v. Gillette Co. , 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 [1984] ). "Any such exclusions or exceptions from policy coverage must be specific and clear in order to be enforced. They are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction" ( id. ). "To the extent that there is any ambiguity in an exclusionary clause, [courts] construe the provision in favor of the insured" ( Cragg , 17 N.Y.3d at 122, 926 N.Y.S.2d 867, 950 N.E.2d 500 ; see Breed v. Insurance Co. of N. Am. , 46 N.Y.2d 351, 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280 [1978], rearg denied 46 N.Y.2d 940, 415 N.Y.S.2d 1027, 388 N.E.2d 372 [1979] ). Thus, "[i]n order to establish that an exclusion defeats coverage, the insurer has the ‘heavy burden’ of establishing that the exclusion is expressed in clear and unmistakable language, is subject to no other reasonable interpretation, and is applicable to the facts" ( Georgetown Capital Group, Inc. v. Everest Natl. Ins. Co. , 104 A.D.3d 1150, 1152, 961 N.Y.S.2d 622 [4th Dept. 2013], quoting Continental Cas. Co. v. Rapid-American Corp. , 80 N.Y.2d 640, 654-655, 593 N.Y.S.2d 966, 609 N.E.2d 506 [1993] ; see Seaboard Sur. Co. , 64 N.Y.2d at 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 ; Hillcrest Coatings, Inc. v. Colony Ins. Co. , 151 A.D.3d 1643, 1645, 56 N.Y.S.3d 394 [4th Dept. 2017] ).
Here, the professional liability exclusion states—in clear and unmistakable language—that the insured's policy "does not apply to ‘bodily injury’ ... due to ... [t]he rendering of or failure to render cosmetic ... services or treatments." We agree with defendant that, contrary to plaintiff's contention, "[t]here is no ambiguity in the wording of the exclusion" inasmuch as it is susceptible of only one reasonable interpretation: there is no coverage for bodily injury due to (i.e., "caused by") the rendering (i.e., the performance) of a cosmetic service or treatment (e.g., a pedicure) ( Beauty by Encore of Hicksville, Inc. v. Commercial Union Ins. Co. , 92 A.D.2d 855, 856, 459 N.Y.S.2d 848 [2d Dept. 1983] ). Thus, employing " ‘the test to determine whether an insurance contract is ambiguous [by] focus[ing] on the reasonable expectations of the average insured upon reading the policy and employing common speech’ " ( Universal Am. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 25 N.Y.3d 675, 680, 16 N.Y.S.3d 21, 37 N.E.3d 78 [2015] ), we conclude that the exclusion is unambiguous because the average insured would understand the policy to exclude coverage for injuries caused by the performance of acts that constitute part of the pedicure service (see Beauty by Encore of Hicksville , 92 A.D.2d at 856, 459 N.Y.S.2d 848 ).
Plaintiff nonetheless insists on a different reading, i.e., that the policy excludes only "injuries due to the manner in which the cosmetic service is performed" such that "the manner in which the pedicure was performed must be the cause of the injury," which would not include preparatory tasks undertaken before a customer arrives for cosmetic treatment. We reject plaintiff's proposed reading. "Courts may not, through their interpretation of a contract, add or excise terms or distort the meaning of any particular words or phrases, thereby creating a new contract under the guise of interpreting the parties’ own agreement[ ]" ( Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc. , 30 N.Y.3d 572, 581, 69 N.Y.S.3d 520, 92 N.E.3d 743 [2017] ; see Slattery Skanska Inc. v. American Home Assur. Co. , 67 A.D.3d 1, 14, 885 N.Y.S.2d 264 [1st Dept. 2009] ). That, however, is precisely what plaintiff asks us to do by adopting her reading of the exclusion. Nowhere does the exclusion limit its reach to "the manner" of performance, which, under plaintiff's view, means only those precise physical acts undertaken contemporaneous with the cosmetic service upon the customer's person, but does not include any tasks taken in preparation for the service. Rather, as our analysis of the exclusion language makes clear, the policy excludes coverage for injuries caused by the performance of acts that constitute part of the pedicure service (see Beauty by Encore of Hicksville , 92 A.D.2d at 856, 459 N.Y.S.2d 848 ; Brockbank v. Travelers Ins. Co. , 12 A.D.2d 691, 691, 207 N.Y.S.2d 723 [3d Dept. 1960], lv denied 9 N.Y.2d 609, 210 N.Y.S.2d 1025, 172 N.E.2d 293 [1961] ). Plaintiff's further assertion that any other interpretation but her own would swallow the coverage otherwise provided by the policy is incorrect. Contrary to plaintiff's suggestion, if a ceiling tile fell on and injured a patron during a cosmetic service, the matter would be a premises case, not a professional liability case, and the exclusion would not apply because the injury was not caused by acts that constituted part of the professional cosmetic service, but rather by an act or omission (lack of premises maintenance) or a condition (loose ceiling tile) independent of, and thus not part of, the cosmetic service (see Beauty by Encore of Hicksville , 92 A.D.2d at 855-856, 459 N.Y.S.2d 848 ). We thus conclude that "[t]he enforcement of the exclusion does not create a result that would have the exclusion swallow the policy" ( Lend Lease [US] Constr. LMB Inc. , 28 N.Y.3d at 685, 49 N.Y.S.3d 65, 71 N.E.3d 556 [internal quotation marks omitted]).
Ultimately, we agree with defendant that plaintiff's assertion that the "due to" causal trigger in the exclusion may be reasonably interpreted to draw a distinction between acts that occur during the cosmetic service and those that occur in preparation thereof constitutes an impermissible attempt to manufacture an ambiguity. "[P]arties cannot create ambiguity from whole cloth where none exists, because provisions ‘are not ambiguous merely because the parties interpret them differently’ " ( Universal Am. Corp. , 25 N.Y.3d at 680, 16 N.Y.S.3d 21, 37 N.E.3d 78 ). Where, as here, "the meaning of [a] ... contract is plain and clear ... [it is] entitled to [be] enforced according to its terms ... [and] not to be subverted by straining to find an ambiguity which otherwise might not be thought to exist" ( Uribe v. Merchants Bank of New York , 91 N.Y.2d 336, 341, 670 N.Y.S.2d 393, 693 N.E.2d 740 [1998] [internal quotation marks omitted]). "There is no ambiguity in the wording of the exclusion" here, the only reasonable interpretation of which is the reading set forth above ( Beauty by Encore of Hicksville , 92 A.D.2d at 856, 459 N.Y.S.2d 848 ; see Brockbank , 12 A.D.2d at 691, 207 N.Y.S.2d 723 ). Based on the foregoing, we conclude that defendant met its burden on its cross motion of "establishing that the exclusion is expressed in clear and unmistakable language[ and] is subject to no other reasonable interpretation" ( Georgetown Capital Group, Inc. , 104 A.D.3d at 1152, 961 N.Y.S.2d 622 ).
Defendant is also required to establish that the exclusion "is applicable to the facts" ( id. ). Defendant met that part of its burden as well (see generally Valley Forge Ins. Co. v. ACE Am. Ins. Co. , 160 A.D.3d 905, 907, 74 N.Y.S.3d 596 [2d Dept. 2018] ). With respect to the applicable law, in determining whether a professional liability exclusion applies, courts " ‘[look] to the nature of the conduct under scrutiny rather than to the title or the position of those involved’ ..., as well as to the underlying complaint" ( Reliance Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 262 A.D.2d 64, 65, 691 N.Y.S.2d 458 [1st Dept. 1999] ; accord Beazley Ins. Co., Inc. v. ACE Am. Ins. Co. , 880 F.3d 64, 71 [2d Cir. 2018] ). Here, defendant submitted in support of its cross motion the verified complaint in plaintiff's underlying personal injury action in which plaintiff alleged that she received a pedicure by a nail technician employed by the insured and, as a result of the insured's negligence, contracted MRSA. More particularly, plaintiff alleged that the insured was negligent in "fail[ing] to properly clean, disinfect and sanitize the pedicure equipment and materials used for ... [p]laintiff's pedicure, including but not limited to the foot bath, to ensure the safety and health of ... customers including ... [p]laintiff." Plaintiff further alleged that her infection was "caused by the actions, equipment and/or materials that were exclusively in the [insured's] control." Defendant also submitted the verified complaint in the present action in which plaintiff represented that, pursuant to the underlying judgment, the insured was found liable for the conduct alleged in the underlying verified complaint and set forth in a confession of judgment. Pursuant to the confession of judgment as quoted by plaintiff, the court found that the insured was negligent in failing to properly clean, disinfect, and sanitize the premises to ensure the safety and health of the customers and, consequently, the premises and the equipment and materials used for plaintiff's pedicure, including the foot bath and tools, became contaminated. Plaintiff contracted MRSA directly as a result of the insured's negligent acts and omissions.
We conclude that defendant's submissions established that the exclusion applies to the facts here because the bodily injury (MRSA infection ) was due to (caused by) the rendering (the performance) of a cosmetic service and treatment (the professional pedicure) with the unsanitary pedicure equipment and materials. As is clear from the allegations of negligence for which the insured was found liable, plaintiff's injury was not caused by the insured's mere failure to sanitize the pedicure equipment—i.e., plaintiff was not infected simply by her presence among unsanitary instruments at the nail salon—but rather was caused by the insured's use of that contaminated equipment while performing the professional pedicure on plaintiff's feet and toenails. We have considered plaintiff's contentions seeking to classify the insured's culpable conduct as ordinary negligence in maintaining the premises that is distinct from the rendering of a professional pedicure and conclude that those contentions lack merit. Plaintiff's further contention that the exclusion does not apply to the insured's liability for her negligent training and supervision claims is also without merit. Each of plaintiff's negligence theories, including negligent supervision and training, is dependent on the injury sustained as a result of the insured's failure to use sanitized equipment during the professional pedicure service, and therefore those theories "are solely and entirely within the exclusionary provisions of the [professional liability] exclusion" ( Handlebar, Inc. v. Utica First Ins. Co. , 290 A.D.2d 633, 635, 735 N.Y.S.2d 249 [3d Dept. 2002], lv denied 98 N.Y.2d 601, 744 N.Y.S.2d 761, 771 N.E.2d 834 [2002] ; see Westchester Fire Ins. Co. v. Metropolitan Life Ins. Co. , 280 A.D.2d 331, 332, 721 N.Y.S.2d 14 [1st Dept. 2001] ; see generally Mount Vernon Fire Ins. Co. v. Creative Hous. , 88 N.Y.2d 347, 352, 645 N.Y.S.2d 433, 668 N.E.2d 404 [1996] ).
In view of the foregoing, we conclude that defendant met its heavy burden on its cross motion of establishing that the exclusion defeats coverage (see generally Georgetown Capital Group, Inc. , 104 A.D.3d at 1152, 961 N.Y.S.2d 622 ). The burden thus shifted to plaintiff to raise a triable issue of fact and she failed to do so. The construction of the insurance policy is a question of law for the courts to resolve and, contrary to plaintiff's various contentions, the exclusion is susceptible to only one reasonable interpretation. To the extent that plaintiff attempts to raise a triable issue of fact whether the unambiguous exclusion applies to these facts by submitting an expert affidavit questioning whether the sanitizing of pedicure equipment required professional judgment, we conclude that the expert affidavit is insufficient inasmuch as it consists of "impermissible legal conclusions" ( Preston v. APCH, Inc. , 175 A.D.3d 850, 854, 107 N.Y.S.3d 515 [4th Dept. 2019], affd 34 N.Y.3d 1136, 119 N.Y.S.3d 419, 142 N.E.3d 102 [2020] ; see Penda v. Duvall , 141 A.D.3d 1156, 1157-1158, 36 N.Y.S.3d 333 [4th Dept. 2016] ) and conclusory assertions that are at odds with the applicable industry regulations (see Blumenthal v. Bronx Equestrian Ctr., Inc. , 137 A.D.3d 432, 432, 26 N.Y.S.3d 78 [1st Dept. 2016], lv denied 28 N.Y.3d 906, 2016 WL 6432765 [2016] ; Cordani v. Thompson & Johnson Equip. Co., Inc. , 16 A.D.3d 1002, 1006, 792 N.Y.S.2d 675 [3d Dept. 2005], lv denied 5 N.Y.3d 704, 801 N.Y.S.2d 1, 834 N.E.2d 780 [2005] ). Thus, there are no triable issues of fact regarding the applicability of the unambiguous exclusion to the facts here. For the same reasons, we conclude that the court properly denied plaintiff's motion.
We nonetheless agree with plaintiff that the court properly denied defendant's cross motion to the extent that defendant failed to meet its initial burden of establishing that the insured had notice of the exclusion. It is foundational that, "[o]n a motion for summary judgment, the moving party must ‘make a prima facie showing of entitlement to judgment as a matter of law [by] tendering sufficient evidence to demonstrate the absence of any material issues of fact’ " ( Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP , 26 N.Y.3d 40, 49, 19 N.Y.S.3d 488, 41 N.E.3d 353 [2015], rearg denied 27 N.Y.3d 957, 29 N.Y.S.3d 918, 49 N.E.3d 1213 [2016], quoting Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ; see Accadia Site Contr., Inc. v. Town of Orchard Park , 188 A.D.3d 1679, 1679, 132 N.Y.S.3d 359 [4th Dept. 2020] ). Plaintiff, "as subrogee of the insured's rights" who " ‘stands in the shoes’ of the insured" in this action pursuant to Insurance Law § 3420 ( D'Arata v. New York Cent. Mut. Fire Ins. Co. , 76 N.Y.2d 659, 665, 563 N.Y.S.2d 24, 564 N.E.2d 634 [1990] ), alleged in her verified complaint in the present action that, upon information and belief, the policy provided by defendant to the insured omitted numerous pages and forms, including the professional liability exclusion. On that ground, plaintiff alleged that the exclusion could not form the basis for defendant's denial of coverage. Thus, in order to establish its entitlement to judgment as a matter of law by eliminating any material issues of fact in this case, defendant had the burden on its cross motion for summary judgment of establishing that the insured had notice of the exclusion (see North Country Ins. Co. v. Raspante , 117 A.D.3d 1518, 1519, 986 N.Y.S.2d 291 [4th Dept. 2014] ).
Defendant failed to meet that burden (see id. ). Defendant submitted a certified copy of the policy that included the professional liability exclusion and was accompanied by a certification letter, sworn by the records coordinator for defendant and notarized in Pennsylvania, stating that the policy documents were "true likenesses of the documents issued to [the insured]." Even though the lack of an authenticating certificate accompanying the out-of-state certification letter as required by CPLR 2309 (c) constitutes a defect that may be disregarded (see CPLR 2001 ; Smith v. Allstate Ins. Co. , 38 A.D.3d 522, 523, 832 N.Y.S.2d 587 [2d Dept. 2007] ; Sparaco v. Sparaco , 309 A.D.2d 1029, 1031, 765 N.Y.S.2d 683 [3d Dept. 2003], lv denied 2 N.Y.3d 702, 778 N.Y.S.2d 461, 810 N.E.2d 914 [2004] ), the admissibility and authenticity of the certified policy does not "establish that the exclusion was actually mailed" to the insured, and defendant did not otherwise attempt to show that the exclusion was sent to the insured pursuant to office practice ( North Country Ins. Co. , 117 A.D.3d at 1519, 986 N.Y.S.2d 291 ; cf. Preferred Mut. Ins. Co. v. Donnelly , 111 A.D.3d 1242, 1243, 974 N.Y.S.2d 682 [4th Dept. 2013], lv denied 22 N.Y.3d 1169, 985 N.Y.S.2d 470, 8 N.E.3d 847 [2014] ; Schmiemann v. State Farm Fire & Cas. Co. , 13 A.D.3d 514, 515, 786 N.Y.S.2d 572 [2d Dept. 2004] ). Moreover, while defendant correctly points out that the summary and declaration pages of the policy that plaintiff concedes were provided to the insured contained references to a professional liability exclusion, those references alone, without the actual terms of the exclusion in the policy documents, are insufficient to establish the presumption that the insured had notice of the terms and limits of the policy (cf. Chase's Cigar Store, Inc. v. Stam Agency, Inc. , 281 A.D.2d 911, 912, 722 N.Y.S.2d 320 [4th Dept. 2001] ). Defendant's failure to make a prima facie showing on the notice issue requires the denial of its cross motion to that extent, regardless of the sufficiency of the opposing papers (see Alvarez , 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ).