Opinion
Index No. 652583/2022 Motion Seq. No. 001
05-10-2024
HARLEYSVILLE PREFERRED INSURANCE COMPANY, Plaintiff, v. HUDSON INSURANCE COMPANY, ADVANCE RELOCATION & STORAGE, INC., d/b/a THE ADVANCE GROUP, and THERESA GEE, Defendants.
Unpublished Opinion
MOTION DATE 05/19/2023
PRESENT: HON. LOUIS L. NOCK, JUSTICE
DECISION + ORDER ON MOTION
LOUIS L. NOCK, JUDGE
The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 37, and 38 were read on this motion for SUMMARY JUDGMENT.
Plaintiff Harleysville Preferred Insurance Company seeks a declaratory judgment that it is not required to defend and indemnify defendant Advance Relocation & Storage, Inc., doing business as The Advance Group ("Advance"), in a personal injury action brought by defendant Theresa Gee ("Gee"), captioned Gee v Advanced Group, et al., bearing index No. 714185/2018 and pending in the Supreme Court of the State of New York, Queens County (the "underlying action"). Before the court is plaintiffs motion for summary judgment on its declaratory judgment complaint, and for an order requiring defendant Hudson Insurance Company to reimburse plaintiffs defense costs incurred in the underlying action. Upon the foregoing documents, the motion is granted in part and denied in part, in accordance with the following memorandum.
Background
Plaintiff issued a commercial general liability insurance policy to nonparty Molloy Bros. Trucking ("Molloy Bros"), covering the period during which the underlying accident occurred. Among other provisions, the policy contains an exclusion for "Aircraft, Auto Or Watercraft," which excludes coverage for bodily injury or property damage "arising out of the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft owned or operated by or rented or loaned to any insured," including "operation and 'loading and unloading'" (the "Auto exclusion") (Harleysville policy, NYSCEF Doc. No. 17, CG 00 0112 07, 4 of 16, § I [2] [g]). The exclusion applies even where the occurrence involved "the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft that is owned or operated by or rented or loaned to any insured" (id.).
Defendant Hudson Insurance Company ("Hudson") issued a commercial auto policy to Molloy Bros, covering the same time period. The Hudson policy provides that Hudson will pay all sums incurred due to bodily injury or property damage "caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto'" (Hudson policy, NYSCEF Doc. No. 26, CA 00 20 10 13, 2 of 15, § II [A]).
The court in the underlying action granted leave to Gee to file an amended complaint (NYSCEF Doc. No. 46 in underlying action [the "Underlying Amended Complaint"]) which alleges that Advance personnel loaded "material and/or goods" into Advance's vehicle, and then "delivered said goods and materials to" a "location at the intersection of Lafayette Street and Broadway, at or near 148 Lafayette Street" (Underlying Amended Complaint ¶¶ 15, 24, 49, 51) where the accident occurred, involving the "dropping a crate onto [Gee]" (id., ¶ 51). A police report submitted by Gee in support of said, granted, motion for leave to file the Underlying Amended Complaint cites Gee as stating that: ". . . LARGE EMPTY BINS FELL ON HER WHILE SHE WAS STANDING ON THE SIDEWALK FROM THE TRUCK . . . ." (NYSCEF Doc. No. 37 in underlying action.) Gee testified in the underlying action that she had seen a stack of plastic crates on the truck's lift gate; but did not see the stack before it struck her (Gee EBT tr., NYSCEF Doc. No. 18 at 16). She also testified that she did not recall seeing anyone unloading the truck before the stack of crates struck her (id.).
Harleysville argues that the Auto exclusion applies to bar coverage, as the driver was unloading the truck when Gee was injured by the falling stack of crates. Hudson counters that: "Even after the bill of particulars and deposition testimony, it cannot be stated as a matter of law that the alleged accident occurred due to the negligent use of the vehicle or the actual loading or unloading of the vehicle." (NYSCEF Doc. No. 31 ¶ 8.)
Standard of Review
Summary judgment is appropriate where there are no disputed material facts (Andre v Pomeroy, 35 N.Y.2d 361, 364 [1974]). The moving party must tender sufficient evidentiary proof to warrant judgment as a matter of law (Zuckerman v City of N.Y., 49 N.Y.2d 557, 562 [1980]). "Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986] [internal citations omitted]). Once a movant has met this burden, "the burden shifts to the opposing party to submit proof in admissible form sufficient to create a question of fact requiring a trial" (Kershaw v Hospital for Special Surgery, 114 A.D.3d 75, 82 [1st Dept 2013]). "[I]t is insufficient to merely set forth averments of factual or legal conclusions" (Genger v Genger, 123 A.D.3d 445, 447 [1st Dept 2014] [internal citation omitted]). Moreover, the reviewing court should accept the opposing party's evidence as true (Hotopp Assocs. v Victoria's Secret Stores, 256 A.D.2d 285, 286-287 [1st Dept 1998]), and give the opposing party the benefit of all reasonable inferences (Negri v Step & Shep, 65 N.Y.2d 625, 626 [1985]). Therefore, if there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied (Rotuba Extruders v Ceppos, 46 N.Y.2d 223, 231 [1978]).
Discussion
"The unambiguous provisions of an insurance policy, as with any written contract, must be afforded their plain and ordinary meaning" (Broad St., LLC v Gulf Ins. Co., 37 A.D.3d 126, 130-31 [1st Dept 2006]). The policy should be read as a whole, and no particular words or phrases should receive undue emphasis (Bailey v Fish & Neave, 8 N.Y.3d 523, 528 [2007]). Courts should give effect to every clause and word of an insurance contract (Northville Indus. Corp, v National Union Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 621, 633 [1997]). An interpretation is incorrect if "some provisions are rendered meaningless" (County of Columbia v Continental Ins. Co., 83 N.Y.2d 618, 628 [1996]). It is the insured's burden to show that the provisions of a policy provide coverage (BP A. C. Corp, v One Beacon Ins. Group, 33 A.D.3d 116, 134 [1st Dept 2006]). Moreover, where the policy language offers no reasonable basis for a difference of opinion, the court should not find it ambiguous (Breed v Insurance Co. of N.A., 46 N.Y.2d 351, 355 [1978]).
The duty to defend under an insurance policy is exceedingly broad and extends beyond the limits of the duty to indemnify, covering any situation where the allegations of the complaint "suggest a reasonable possibility of coverage" (Automobile Ins. Co. of Harford v Cook, 7 N.Y.3d 131, 137 [2006] [internal quotations and citation marks omitted]). "Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course" (id.). "If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be" (id. [internal quotations and citation marks omitted]). The duty remains "even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered" (id. [internal quotations and citation marks omitted]).
"When an exclusion clause is relied upon to deny coverage, the burden rests upon the insurance company to demonstrate that the allegations of the complaint can be interpreted only to exclude coverage" (Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 444 [2002]). More specifically:
To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision.(Frontier Insulation Contractors, Inc. v Merchants Mut. Ins. Co., 91 N.Y.2d 169, 175 [1997].)
Plaintiff relies on Country-Wide Ins. Co. v Excelsior Ins. Co. (147 A.D.3d 407 [1st Dept 2017]), in which the injured party was unloading material onto the lift gate of a truck. The lift gate failed, causing the worker to fall (id. at 408). The court stated, in interpreting the Auto exclusion contained within Country-Wide's policy, that "[i]n the context of a policy exclusion, the phrase arising out of is unambiguous, and is interpreted broadly to mean originating from, incident to, or having connection with" (id. at 409 [internal quotation marks and citations omitted]). In that context, the fact that the lift gate failed did not take the case out of the exception; the worker was injured while unloading the truck, even if the lift gate was the immediate but for cause of the accident (id.).
Five years after Country-Wide, the Appellate Division, First Department, addressed the term "loading and unloading" in the context of a similar dispute to that herein; namely, the conflict between the Auto exclusion and another insurer's commercial auto policy. In Tishman Constr. Corp. v Zurich Am. Ins. Co. (204 A.D.3d 623 [1st Dept 2022]), relied on by Hudson, the employee of a subcontractor was injured while attempting to drive a truck away from a loading dock (id. at 624). He had backed the truck into the loading dock. In front of the entrance through which he backed the truck were "wind flaps and a plastic sheet" which had to be manually raised (id.). The worker had finished unloading and loading his truck and was walking to the entrance to raise the curtain (id.). While doing so, a plate covering a hole in the ground shifted, causing him to fall in (id.). The court held that the Auto exclusion did not apply, reasoning that "an accident does not arise from the use of an automobile merely because it occurs during the loading or unloading process, but rather must be the result of some act or omission related to the use of the vehicle" (id. at 625 [internal quotation marks and citation omitted]). The accident was held to be not subject to the Auto exclusion "because the injury was caused by a defective premises condition, rather than any act or omission related to the use of the automobile" (id.).
The instant action falls somewhat between the facts of Country-Wide and Tishman. On the one hand, there is no allegation that a dangerous premises condition caused the stack of crates to strike Gee. Conversely, Advance's driver was not physically in the process of removing the stack of crates from the truck when they fell. As noted earlier, Gee testified that the stack of crates was stationary on the truck's lift gate proximate in time to her being struck (Gee EBT tr., NYSCEF Doc. No. 18 at 16). In this light, the court finds instructive the reasoning of Zurich Am. Ins. Co. v ACE Am. Ins. Co. (165 A.D.3d 558 [1st Dept 2018]), in which the accident occurred while "rebar cages" were being unloaded from a truck, specifically while straps holding the cages in place were being untied (id. at 559). The court held that those facts arose out of "the loading and unloading of the truck," even where, as here, the offending item was not physically being removed from the truck at the moment of the accident (id.). Given such a broad interpretation of the Auto exclusion language, the court agrees with plaintiff that its policy exclusion applies to bar coverage here, and a declaration stating the same will issue.
Having found, though, that plaintiff is not required to provide coverage in the underlying action, the court denies so much of the plaintiffs motion as seeks to recoup plaintiffs entire defense costs thus far incurred. An apparent split exists between the First and Second Appellate Division Departments on this issue. The Second Department holds that such recoupment requires an express provision allowing same in the policy itself, even where the right to recover costs is reserved in a reservation of rights (American W. Home Ins. Co. v Gjonaj Realty & Mgt. Co., 192 A.D.3d 28, 39-41 [2d Dept 2020]). The First Department, though, has allowed insurers to recoup costs after a finding of no coverage based solely on a reservation of the right to do so (American Home Assur. Co. v Port Auth. of New York and New Jersey, 166 A.D.3d 464, 465 [1st Dept 2018]; Certain Underwriters at Lloyd's London Subscribing to Policy No. SYN-1000263 v Lacher & Lovell-Taylor, P.C., 112 A.D.3d 434, 435 [1st Dept 2013]).
Here, plaintiff submits no evidence of a reservation of the right to recoup its defense costs in the event of a finding of no coverage. Indeed, plaintiffs policy indicates that plaintiff will, in fact, "pay, with respect to any claim we investigate or settle, or any 'suit' against an insured we defend: a. All expenses we incur" (Harleysville policy, NYSCEF Doc. No. 17, CG 00 0112 07, 8 of 16, Supplementary Payments, § 1 [a]). While the policy does state that it will not pay "attorneys' fees or attorneys' expenses taxed against the insured" (id., § 1 [e]), plaintiffs defense costs have not been "taxed" against Advance. In this context, the court reads "taxed" to refer to sums that the court in the underlying action would order Advance to pay on behalf of Gee or another party, rather than the costs of Advance's own defense. Thus, under the approach of either Department, plaintiff is not entitled to recoup its entire defense costs. To the extent that plaintiff argues that it has been paying Hudson's share of the defense costs since Hudson began defending Advance, plaintiff submits no evidence of its bills that would allow the court to determine the reasonable amount to be allocated to Hudson (Tishman Const. Corp. of New York v American Mfrs. Mut. Ins. Co., 303 A.D.2d 323, 324-25 [1st Dept 2003] ["AMMI did challenge the reasonableness of the claimed defense costs, and we modify to remand for a hearing on that issue"]). Denial is without prejudice to renewal upon submission of further proof of the defense costs incurred and how they should be apportioned.
Accordingly, it is hereby
ORDERED that the motion of plaintiff for summary judgment on its first cause of action seeking a declaration that it is not obliged to provide a defense to, and provide coverage for, the defendant Advance Relocation & Storage, Inc., doing business as The Advance Group in the action captioned Gee v Advanced Group, et al., bearing index No. 714185/2018 and pending in the Supreme Court of the State of New York, Queens County, is granted; and it is further
ADJUDGED and DECLARED that plaintiff herein is not obliged to provide a defense to, and provide coverage for, defendant Advance Relocation &Storage, Inc., doing business as The Advance Group in the said action pending in Queens County; and it is further
ORDERED that the balance of this action is severed and continued.
This constitutes the decision and order of the court.