Summary
noting that, “in the event of a breach of the insurer's duty to defend, the insured's damages are the expenses reasonably incurred by it in defending the action after the carrier's refusal to do so”
Summary of this case from United Parcel Serv. v. Lexington Ins. Grp.Opinion
2013-02-14
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, et al., Plaintiffs–Appellants–Respondents, v. GREENWICH INSURANCE COMPANY, Defendant/Third–Party Plaintiff–Respondent–Appellant, v. Erie Insurance Company, Third–Party Defendant–Respondent.
Law Offices of Beth Zaro Green, Brooklyn (Steven G. Adams of counsel), for appellants–respondents. Law Offices of Todd M. McCauley, LLC, New York (David F. Tavella of counsel), for respondent–appellant.
Law Offices of Beth Zaro Green, Brooklyn (Steven G. Adams of counsel), for appellants–respondents. Law Offices of Todd M. McCauley, LLC, New York (David F. Tavella of counsel), for respondent–appellant.
Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse (Kenneth T. Boyd of counsel), for respondent.
MAZZARELLI, J.P., FRIEDMAN, MANZANET–DANIELS, ROMÁN, CLARK, JJ.
Order, Supreme Court, New York County (Anil C. Singh, J.), entered February 14, 2012, which, insofar as appealed from, denied plaintiffs' motion for summary judgment, denied defendant/third-party plaintiff's motions for summary judgment, and granted third-party defendant's motion for summary judgment dismissing the third-party complaint, unanimously modified, on the law, to grant plaintiffs' motion and declare that defendant is obligated to reimburse plaintiffs for their defense and settlement costs in the underlying personal injury action, with interest, and otherwise affirmed, without costs.
The additional insured endorsement of the policy that defendant issued to nonparty (to this action) Associated (the Greenwich policy) applies only if there is a written contract or agreement. Defendant contends that the only written contract in effect at the time of Draper's injury was for material only and thus inapplicable. This argument is unavailing; the contract clearly states, “This Agreement contains the terms and conditions under which Contractor [ i.e., Associated] agrees to provide materials and/or perform services ” (emphasis added). Contrary to defendant's claim, the contract is not ambiguous. Hence, extrinsic evidence such as deposition testimony cannot be considered, especially since the contract contains a merger clause and a no-oral-modification clause ( see e.g. Cornhusker Farms v. Hunts Point Coop. Mkt., 2 A.D.3d 201, 203–204, 769 N.Y.S.2d 228 [1st Dept. 2003] ).
The additional insured endorsement in the Greenwich policy applies to bodily injury caused, in whole or in part, by Associated's acts or omissions or the acts or omissions of those acting on Associated's behalf in the performance of Associated's ongoing operations for plaintiff NVR, Inc. The phrase “caused by” “does not materially differ from the ... phrase, ‘arising out of’ ” ( W & W Glass Sys., Inc. v. Admiral Ins. Co., 91 A.D.3d 530, 937 N.Y.S.2d 28 [1st Dept. 2012] ). In turn, the phrase “arising out of” focuses “not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained” (Regal Constr. Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA, 15 N.Y.3d 34, 38, 904 N.Y.S.2d 338, 930 N.E.2d 259 [2010] [internal quotation marks omitted] ). Defense counsel admitted below that the underlying personal injury action arose out of an accident that occurred while Draper was acting on behalf of Associated in the performance of its ongoing operations. Thus, the condition set forth in the additional insured endorsement was satisfied, and summary judgment should have been granted in plaintiffs' favor ( see e.g. Hunter Roberts Constr. Group, LLC v. Arch Ins. Co., 75 A.D.3d 404, 904 N.Y.S.2d 52 [1st Dept. 2010] ); it is not necessary to try the issue of causation.
“[I]n the event of a breach of the insurer's duty to defend, the insured's damages are the expenses reasonably incurred by it in defending the action after the carrier's refusal to do so ...” ( Sucrest Corp. v. Fisher Governor Co., 83 Misc.2d 394, 407, 371 N.Y.S.2d 927 [Sup. Ct., N.Y. County 1975], affd.56 A.D.2d 564, 391 N.Y.S.2d 987 [1st Dept. 1977] ). Defendant did not respond to plaintiffs' letters; however, Associated (defendant's insured) refused tender on June 30, 2008, and sent a copy of this letter to defendant. Under the circumstances of this case, defendant is responsible for NVR's defense costs from June 30, 2008. NVR is entitled to interest from the date it paid each legal bill ( see La Pierre, Litchfield & Partners v. Continental Cas. Co., 32 A.D.2d 353, 356, 302 N.Y.S.2d 370 [1st Dept. 1969] ). Plaintiffs are also entitled to interest on the settlement from the date of payment ( see Sucrest, 83 Misc.2d at 406, 371 N.Y.S.2d 927).
Defendant/third-party plaintiff contends that Associated is an additional insured under the policy that third-party defendant issued to Mr. Draper d/b/a Draper Construction (the Erie policy), specifically, paragraph 4 of “Who Is An Insured.” However, this language covers only vicarious liability ( see e.g. Long Is. Light. Co. v. Hartford Acc. & Indem. Co., 76 Misc.2d 832, 836, 350 N.Y.S.2d 967 [Sup. Ct., Nassau County 1973]; Huber Engineered Woods, LLC v. Canal Ins. Co., 364 N.C. 413, 700 S.E.2d 220, 221 [2010] [adopting the dissenting opinion of the NC Court of Appeals]; Garcia v. Federal Ins. Co., 969 So.2d 288, 289, 291–292, 294 [Fla. 2007];Transportation Ins. Co. v. George E. Failing Co., 691 S.W.2d 71, 73 [Tex.App. 1985];Canal Ins. Co. v. Earnshaw, 629 F.Supp. 114, 120 [D. Kan. 1985] ). In Draper, NVR alleged that Associated was negligent; it did not allege that Associated was vicariously liable for Draper's negligence. Hence, Associated is not an additional insured under the Erie policy ( see e.g. Garcia, 969 So.2d at 289, 292;Transportation Ins., 691 S.W.2d at 73;Canal, 629 F.Supp. at 120).
In light of the foregoing, it is not necessary to consider the applicability of the contractual liability and employers' liability exclusions of the Erie policy.