Zurich-American Ins. Co.v.Mead Reinsurance

Appellate Division of the Supreme Court of New York, First DepartmentMay 15, 1990
161 A.D.2d 403 (N.Y. App. Div. 1990)
161 A.D.2d 403555 N.Y.S.2d 333

May 15, 1990

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

A vehicle owned by Mendon Leasing and leased by Bowcraft Trimming Co. caused serious physical injury to a pedestrian in New York County in June 1981. Plaintiff covered the lessee under a $500,000 business automobile liability policy. Mendon Leasing was covered for this accident by three policies — a $150,000 primary policy; an $850,000 policy in excess of the primary tier issued by Ambassador Insurance Company; and defendant's $1,000,000 excess policy over the two other Mendon policies. Defendant's policy provided, "this Policy will apply in excess of reduced underlying insurance provided such reduction in the underlying insurance is solely the result of accidents or occurrences happening after the inception date of this policy". In November 1983, Ambassador Insurance Company was placed in rehabilitation and in September 1984, declared insolvent. The underlying action by the injured pedestrian was settled for $300,000, an amount stipulated by the insurers in this action to be a reasonable one. The primary insurers of the vehicle's owner and lessee each contributed $150,000 to the settlement, with the lessee's primary insurer (plaintiff herein) reserving all rights against Mead.

The Supreme Court properly rejected plaintiff's contention that defendant's coverage "dropped down" upon Ambassador's insolvency on the basis that such reduction in the underlying insurance was not "solely the result of accidents or occurrences happening after the inception date of this policy". Plaintiff's theory supporting its request for a declaratory judgment being insufficient, summary judgment and a declaration in favor of defendant should have issued. (See, Lanza v. Wagner, 11 N.Y.2d 317. )

Concur — Rosenberger, J.P., Kassal, Ellerin, Smith and Rubin, JJ.