Opinion
CV 00-6083
January 16, 2001
ORDER
In this action for a judgment declaratory of the rights of the parties under a homeowner's liability insurance policy, plaintiff David Byrne ("plaintiff") and defendant JIL Industnes move for summary judgment, and defendant Nationwide Mutual Fire Insurance Company ("Nationwide") cross-moves for summary judgment. The facts are not in dispute.
Defendant Nationwide issued a homeowner insurance policy to plaintiff, effective between October 22, 1998 and October 22, 1999. The homeowner insurance policy listed David P. and Lois Byrne as the named insured. On August 11, 1999, Lois Byrne allegedly suffered personal injuries when a retractable awning ("Awning"), that David Byrne purchased from defendant JIL Industries which he installed on the exterior of his residence, collapsed and knocked Lois Byrne to the floor.
David and Lois Byrne commenced an action against defendant JIL Industries on November 12, 1999 to recover damages for injuries they sustained as the result of strict products liability and negligence, inclusive of defendant's failure to warn, failure to test and improper design. On June 19, 2000, defendant JIL Industries commenced a third-party action against plaintiff alleging negligence in connection with the installation of the awning and seeking contribution and indemnity to the extent of any judgment against it in the underlying action.
Plaintiff served written notice of the third-party action upon defendant Nationwide on July 8, 2000 and demanded coverage under the policy for liability in connection with the third-party action and for legal defense in the third-party action. On July 26, 2000, Nationwide disclaimed plaintiffs request for coverage. Plaintiff thereafter commenced the instant action against defendants on October 11, 2000 for a declaratory judgment that defendant Nationwide is obligated to indemnify him for any judgment that may be recovered against him in the third-party action brought by defendant JIL Industries.
The personal liability coverage agreement contained in the liability insurance policy issued by Nationwide states in pertinent part:
We will pay damages an insured is legally obligated to pay due to an occurrence resulting from negligent personal acts or negligence arising out of ownership, maintenance or use of real or personal property. We will provide a defense at our expense by counsel of our choice. We may investigate and settle any claim or suit.
Plaintiffs Memorandum of Law in Support of Motion for Summary Judgment, Exhibit C, at G1.
For purposes of this coverage, the policy provides the following relevant definitions:
"OCCURRENCE" means bodily injury or property damage resulting from an accident, including continuous or repeated exposure to the same general condition. The occurrence must be during the policy period.
"BODILY INJURY"means bodily harm, including resulting care, sickness or disease, loss of services or death. Bodily injury does not include emotional distress, mental anguish, humihation, mental distress or injury, or any similar injury unless the direct result of bodily harm.
"PROPERTY DAMAGE"means physical injury to or destruction of tangible property. This includes its resulting loss of use.
Plaintiffs Memorandum of Law in Support of Motion for Summary Judgment, Exhibit C, at Gi.
In addition, the policy outlines certain liability exclusions one upon which defendant Nationwide relies:
Coverage E — Personal Liability does not apply to bodily injury to an insured as defined in general Definitions 4.(a) and 4.(b).
General Definition 4.(a) and 4.(b) in liability insurance policy states "INSURED" means you and the following who regularly live at the residence premises: (a) your relatives; (b) any person under age 21 and in the care of you or your relatives.
"It is well-established that a liability insurer has a duty to defend its insured in a pending lawsuit if the pleadings allege a covered occurrence, even though facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered." Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 62, 571 N.Y.S.2d 672 (1991) (citation omitted); see also State of New York v. AMRO Realty Corp., 936 F.2d 1420, 1426-27 (2d Cir. 1991). In addition
if the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend. Moreover, when an exclusion clause is relied upon to deny coverage, the insurer has the burden of demonstrating "that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation.
Technicon Electronics v. American Home Assur. Co., 74 N.Y.2d 66,73-74, 544 N.Y.S.2d 531 (1989) (internal citations and quotation marks omitted); see AMRO Realty Corp., 936 F.2d at 1427. See also Jefferson Ins. Co. v. Travelers Indemnity Co., 92 N.Y.2d 363, 370, 681 N.Y.S.2d 208, 212 (1998) ("This Court has consistently held policy exclusions are to be narrowly construed.").
In the case at hand, defendant Nationwide contends principally that the complaint seeks damages for the bodily injuries sustained by plaintiffs spouse and therefore the policy exclusions for bodily injuries to an insured precludes coverage. However, upon review of the complaint, the Court finds that the claim set forth in the complaint herein is in essence a third-party claim for contribution by one potential tortfeasor against another, which is distinct from a claim for bodily injury to an insured. Thus this claim falls outside the policy exclusion.
Moreover, the statutory presumption that interspousal liability is excluded from coverage unless specifically provided for in the policy is not a bar to liability coverage in this case. See, e.g., General Accident Ins. Co. v. Elbaum, 653 N.Y.S.2d 659, 236 A.D.2d 472 (2d Dep't 1997); State Farm Mutual Automobile Ins. Co. v. Grund, 662 N.Y.S.2d 845, 243 A.D.2d 557 (2d Dep't 1997); cf Mandels v. Liberty Mutual Ins. Co., 45 N.Y.2d 455, 410 N.Y.S.2d 62 (1978). Insurance Law § 3420(g) provides in relevant part:
No policy or contract shall be deemed to insure against any liability of an insured because of injuries to his or her spouse or because of injury to . . . his or her spouse unless an express provision relating specifically there to is included in the policy. This exclusion shall apply only where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse.
N Y Ins. Law § 3420(g).
Pursuant to the 1976 amendment (L. 1976 ch. 616), the exclusion only applies "where the injured spouse, to be entitled to recover, must prove the culpable conduct of the insured spouse." See Firemen's Ins. Co. v. Allstate Ins. Co., 575 N.Y.S.2d 378, 379, 171 A.D.2d 186, 188 (3rd Dep't 1991). The policy behind this statute is to prevent possible fraud and collusion which could arise in actions wherein an injured spouse seeks to recover for injuries resulting from the negligence of an insured spouse. See State Farm Mut. Auto Ins. Co. v. Westlake, 35 N.Y.2d 587, 364 N.Y.S.2d 482 (1974); Firemen's Ins. Co., 575 N.Y.S.2d at 379, 171 A.D.2d at 188. The Law Revision Commission, however, "reasoned that third-party claims against spouses of injured parties for contribution, based upon relative fault under the then recent doctrine of Dole v. Dow Chem. Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382 (1972), do not pose a danger of collusion between spouses because the injured spouse's cause of action does not rise and fall on the proof of the driver- spouse's negligence." Firemen's Ins. Co., 575 N.Y.S.2d at 379, 171 A.D.2d at 188 (citation and internal quotation marks omitted). Accordingly, "by enacting the amendment, the Legislature expressed an intent to limit the application of Insurance Law § 3420(g) to situations where, for example, there is a direct claim by one spouse against the other, or the alleged liability of the third-party nonspouse is purely vicarious." Elbaum, 653 N.Y.S.2d at 660, 236 A.D.2d at 474.
In a memorandum in support of the amendment to the predecessor to Insurance Law § 3420(g), the Law Revision Commission observed:
The proposed amendment to section 167(3) [now 3420(g)] does not violate [the original intent underlying the statute] because the chance of fraud and collusion is slight where a passenger-spouse is suing a third-party who brings a claim for relative contribution against a driver-spouse. The recovery of the injured spouse is not dependent upon proving the liability of the driver-spouse. Rather, it depends upon proof of the liability of an unrelated third party.
Here, there is no direct claim by one spouse against the other. Moreover, because the Byrnes' claims against defendant JIL Industries in the principle action, sounding in strict products liability and negligence, inclusive of defendant's failure to warn, failure to test and improper design, are independent torts, the alleged liability of JIL Industries is not purely vicarious. Thus, Insurance Law § 3420(g) does not preclude plaintiffs claim for coverage under the policy. See id; see also Grund, 662 N.Y.S.2d at 846-47, 243 A.D.2d at 557-58.
Inasmuch as there are no disputed questions of fact, the Court grants summary declaratory judgment in favor of plaintiff and against defendant Nationwide and declares that defendant Nationwide has an obligation to defend and indemnify plaintiff under the liability policy for any judgment that may be recovered against him in the third-party action brought by defendant JIL Industries.