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Reliance Insurance v. National Union Fire

Appellate Division of the Supreme Court of New York, First Department
Jun 8, 1999
262 A.D.2d 64 (N.Y. App. Div. 1999)

Summary

finding that engineering firm's obligation to perform inspections of contractor's work regarding compliance with contract and safety laws required only "normal powers of supervision and observation" and not "engineering acumen"

Summary of this case from Webster County v. Brackenrich Assoc

Opinion

June 8, 1999.

Appeal from the Supreme Court, New York County (Charles Ramos, J.).


Reliance should be held obligated to indemnify Seelye on the ground that the professional liability exclusion in its policy did not exclude the underlying claim for personal injuries. "[L]ook[ing] to the nature of the conduct under scrutiny rather than to the title or the position of those involved" ( Camp Dresser McKee v. Home Ins. Co., 30 Mass. App. Ct. 318, 323, 568 N.E.2d 631, 634), as well as to the underlying complaint, the contract under which Seelye was to perform inspection services, the trial record, including the jury charge and verdict indicating a finding of only ordinary negligence against Seelye ( see, Lavanant v. General Acc. Ins. Co., 164 A.D.2d 73, 77, affd 79 N.Y.2d 623; Beauty by Encore v. Commercial Union Ins. Co., 92 A.D.2d 855), and the evidence adduced in this action, it is clear that Seelye's alleged failure in the underlying action to make sure that the contractor at a renovation site remained in compliance with both its contract and the relevant safety laws did not require Seelye's engineering acumen, but rather normal powers of supervision and observation. To hold otherwise where, as here, Seelye was not required to create or review the plans, but merely to enforce them, "would have the exclusion swallow the policy" ( Camp Dresser McKee v. Home Ins Co., supra, 30 Mass. App. Ct. at 323, 568 N.E.2d at 634; compare, Atlantic Mut. Ins. Co. v. Continental Natl. Am. Ins. Co., 123 N.J. Super. 241, 243, 302 A.2d 177, 178 [finding similar general liability policy excluded coverage where supervising engineers were to "`assist in a correct interpretation of the plans'"], with Aetna Fire Underwriters Ins. Co. v. Southwestern Eng'g Co., 626 S.W.2d 99 [Tex. Ct. App.] [failure to locate underground pipelines, causing injury, did not implicate engineering services]).

Since we find that Reliance's policy provides the applicable coverage, we need not reach the issue, deemed dispositive by the IAS Court, of whether Reliance is estopped from denying coverage. We note, however, that were we to reach this issue, we would find no such estoppel.

We further find that Seelye is entitled to its reasonable costs in defending this declaratory judgment action since Reliance cast it in a defensive posture ( see, Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 21). In this regard, neither the fact that Reliance seeks recovery from the National Union policy, nor the fact that the National Union policy is actually a "front" for Seelye's self-insurance of professional risks, alters the fact that Reliance sought to be relieved of obligations it rightfully owed Seelye as its insured, thus casting Seelye, in its capacity as Reliance's insured, in a defensive posture.

Finally, Reliance should pay to National Union the $2.7 million that National Union paid in settlement of the underlying action. Payment to National Union, as opposed to either Seelye or its parent, is appropriate in order to replenish the policy limits of the National Union policy for the benefit of other potential claimants. Any overage, beyond the policy limits, should be refunded to STV, Seelye's parent company.

Concur — Williams, J.P., Wallach, Andrias and Friedman, JJ.


Summaries of

Reliance Insurance v. National Union Fire

Appellate Division of the Supreme Court of New York, First Department
Jun 8, 1999
262 A.D.2d 64 (N.Y. App. Div. 1999)

finding that engineering firm's obligation to perform inspections of contractor's work regarding compliance with contract and safety laws required only "normal powers of supervision and observation" and not "engineering acumen"

Summary of this case from Webster County v. Brackenrich Assoc

looking to "the nature of the conduct under scrutiny rather than the title or position of those involved" in determining whether professional liability policy afforded coverage

Summary of this case from Certain Underwriters v. DVO, Inc.

In Reliance Insurance Co. v. National Union Fire Insurance Co. of Pittsburgh, Pa., 262 A.D.2d 64, 691 N.Y.S.2d 458 (1st Dep't 1999), the Appellate Division stated that courts should “[look] to the nature of the conduct under scrutiny rather than the title or position of those involved, as well as to the underlying complaint....” Id. at 65, 691 N.Y.S.2d 458 (internal citation omitted); see also Lumbermens Mut. Cas. Co. v. Flow Int'l Co., 844 F.Supp.2d 286, 302 (N.D.N.Y.2012) (citing the Reliance standard).

Summary of this case from David Lerner Assocs., Inc. v. Phila. Indem. Ins. Co.

In Reliance Ins. Co. v National Union Fire Ins. Co. of Pittsburgh, Pa. (262 A.D.2d 64 [1st Dept 1999]), the First Department held that an insurer that had unsuccessfully challenged its obligation to pay the costs of a settlement in the underlying action, but not sought reimbursement of defense costs, was required to pay its insured's attorney fees in the coverage action.

Summary of this case from Utica Mut. Ins. Co. v. Crystal Curtain Wall Sys. Corp.
Case details for

Reliance Insurance v. National Union Fire

Case Details

Full title:RELIANCE INSURANCE COMPANY, Appellant-Respondent, v. NATIONAL UNION FIRE…

Court:Appellate Division of the Supreme Court of New York, First Department

Date published: Jun 8, 1999

Citations

262 A.D.2d 64 (N.Y. App. Div. 1999)
691 N.Y.S.2d 458

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