Opinion
March 26, 1992
Appeal from the Supreme Court, Tompkins County (Ellison, J.).
Notified by the Department of Environmental Conservation (hereinafter DEC) that an oil spill on her neighbor's property may have contaminated her drinking water, plaintiff commenced suit against, among others, John De Franco, the owner of the neighboring property, for bodily injury and property damage. When De Franco notified his insurance company, defendant herein, of plaintiff's claim against him, defendant informed De Franco that he had no coverage in effect at the time of the alleged occurrence. Thereafter De Franco defaulted and plaintiff was awarded damages of $94,766.20 following an inquest. De Franco being unable to satisfy the judgment, plaintiff commenced the instant action against defendant pursuant to Insurance Law § 3420 (a) (2). At the conclusion of a nonjury trial, Supreme Court found that plaintiff had established that her exposure to and ingestion of the harmful compounds had occurred between June 1985 (when she moved to her premises) and December 1985 (when De Franco's homeowner's insurance policy expired) so that defendant was liable for the judgment, with interest, against its insured, De Franco. Defendant appeals. We affirm.
Defendant contends that since plaintiff's knowledge of the elevated levels of hydrocarbons in her and her son's bodies (her medically confirmed exposure) and her consequent emotional distress all occurred after the policy expired, plaintiff is precluded from recovering. The policy is so written, however, that coverage exists. It expressly states that it applies "to accidents, occurrences [defined in the policy to include continuous or repeated exposure to substantially similar conditions] or losses which happen during the policy period" (emphasis supplied). Thus, by its very terms, the policy does not require that a "loss" occur during the policy period; an "occurrence" is sufficient (cf., Greenlee v Sherman, 142 A.D.2d 472, 476-477; National Cas. Ins. Co. v City of Mount Vernon, 128 A.D.2d 332, 336; Mraz v Canadian Universal Ins. Co., 804 F.2d 1325, 1327; American Home Prods. Corp. v Liberty Mut. Ins. Co., 748 F.2d 760, 762-763). The trial testimony warrants concluding that plaintiff's person and property were repeatedly exposed to harmful chemicals during the policy period and that plaintiff's emotional distress, the manifestation of her injury, was covered by the policy (see, Allstate Ins. Co. v Colonial Realty Co., 121 Misc.2d 640, 641; cf., Greenlee v Sherman, supra, at 478).
Furthermore, having disclaimed its duty to defend De Franco in the underlying action, defendant assumed the risk as to what might be proven against De Franco; more to the point, defendant may not now go behind the underlying default judgment, which found that plaintiff had been injured and De Franco was liable, to raise defenses extending to the merits of plaintiff's claim (see, United States Fid. Guar. Co. v Copfer, 63 A.D.2d 847, 847-848, affd 48 N.Y.2d 871; Manard v Hardware Mut. Cas. Co., 12 A.D.2d 29, 31). Hence, we do not reach defendant's assertion that plaintiff is paltering with the truth, that she should be barred from recovering inasmuch as she failed to notify Supreme Court that DEC had informed her during the pendency of the underlying action that her water supply had not been adversely effected.
Similarly unavailing is defendant's argument that plaintiff, as subrogee, is estopped from recovering (see, Abrams v Maryland Cas. Co., 98 N.Y.S.2d 520, 523, affd 278 App. Div. 951, affd 303 N.Y. 698; 23 N.Y. Jur 2d, Contribution, Indemnity and Subrogation, § 35, at 56-57) because its coverage disclaimer was the product of defendant's reliance on De Franco's "misrepresentation" that plaintiff had purchased her property in 1987, when in fact she did so in 1985; defendant has not shown any evidence of bad faith or collusion between plaintiff and De Franco (see, Albert v Public Serv. Mut. Cas. Ins. Corp., 266 App. Div. 284, 286, affd 292 N.Y. 633; 70 N.Y. Jur 2d, Insurance, § 1695, at 774-776). Moreover, given the ease with which defendant could have determined plaintiff's exact purchase date, one is hard put to say that defendant's reliance on De Franco's statement was reasonable.
Finally, in holding defendant liable for plaintiff's emotional distress, Supreme Court did not, as defendant suggests, find a new injury, i.e., an injury other than that reflected in the default judgment. In the suit underlying that default, defendant's insured, De Franco, was found liable for plaintiff's damages caused by her exposure to harmful chemicals from De Franco's property; in the present action, all Supreme Court decided was that such exposure occurred during the policy period.
Mikoll, J.P., Mercure, Crew III and Casey, JJ., concur. Ordered that the order and judgment is affirmed, with costs.