Advanced Integrative Wellness LLC v. Merchants Ins. Group, 2010 NY Slip Op 30646(U) (N.Y. Sup. Ct. 3/19/2010), 6346/08.

• Decision Date: 19 March 2010
• Docket Number: No. 6346/08.,6346/08.
• Parties: ADVANCED INTEGRATIVE WELLNESS LLC and HEALTHBRIDGE MEDICAL ASSOCIATES, P.C., Plaintiffs, v. MERCHANTS INSURANCE GROUP, Defendant.
• Court: New York Supreme Court

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2010 NY Slip Op 30646(U)

ADVANCED INTEGRATIVE WELLNESS LLC and HEALTHBRIDGE MEDICAL ASSOCIATES, P.C., Plaintiffs, v. MERCHANTS INSURANCE GROUP, Defendant.

No. 6346/08.

Supreme Court, Nassau County.

March 19, 2010.

DENISE L. SHER, Judge.

Upon the foregoing papers, it is ordered that the motions are decided as follows:

The motion by the plaintiffs, Advanced Integrative Wellness, LLC and Healthbridge Medical Associates, P.C., (Motion Sequence No. 1) for an order pursuant to CPLR 3212 granting them summary judgment declaring that the defendant Merchants Insurance Group is obligated to defend and indemnify them in the action Dziegielewski v. Advanced Integrative Wellness LLC, et al, (Supreme Court Nassau County [Index No. 018467/09]) and that the insurer is liable to them for the costs they have incurred in defending themselves in that action is granted as provided herein.

The cross-motion by the defendant, Merchants Insurance Group, (Motion Sequence No. 2) for an order pursuant to CPLR 3212 granting it summary judgment declaring that it is not obligated to defend or indemnify the plaintiffs, Advanced Integrative Wellness LLC and Healthbridge Medical Associates, P.C., in the action Dziegielewski v. Advanced Integrative Wellness LLC, etal, (Index No. 018467/09) is denied.

Dziegielewski, plaintiff in the related action Dziegielewski v. Advanced Integrative Wellness LLC, et al, seeks to recover from Advanced Integrative Wellness, LLC, Healthbridge Medical Associates, P.C., Elysium Day Spa and Dynatronics, Inc., for personal injuries to her leg allegedly sustained as a result of Synergie cellulite reduction services which she received at Elysium Day Spa between November 10, 2003 to June 2004. She alleges that she was treated with a Synergie AMS Device which was manufactured by Dynatronics and that her treatments were provided by an employee of Advanced Integrative Wellness. She has advanced causes of action sounding in negligence, violations of General Business Law § 349 which prohibits deceptive business practices, General Business Law § 350 which prohibits false advertising and negligent misrepresentation. She also seeks exemplary damages.

It is not disputed that plaintiffs provided timely notice to defendant of Dziegielewski's claim and that defendant timely disclaimed. However, the propriety of defendant's disclaimer is contested in this action. It disclaimed plaintiffs' defense and indemnification on several grounds: (1) because "professional services are specifically excluded" by the policy; (2) because deceptive and false advertising are intentional acts which are specifically excluded by the policy; and, (3) because "exemplary damages are punitive and would not be covered by insurance as it is against public policy." Whether even a possibility of coverage under the policy exists is the issue to be resolved here: An examination of the complaint in Dziegielewski v. Advanced Integrative Wellness LLC, et al, (Index No. 018467/09) and the parties' policy is required. See BP Air Conditioning Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708, 840 N.Y.S.2d 302 (2007).

"On a motion for summary judgment pursuant to CPLR 3212, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." See Sheppard-Mobley v. King, 10 A.D.3d 70, 778 N.Y.S.2d 98 (2d Dept. 2004), aff'd as mod., 4 N.Y.3d 627, 797 N.Y.S.2d 403 (2005), citing Alvarez v. Prospect Hospital, 68 N.Y.2d 320, 508 N.Y.S.2d 923 (1986); Winegrad v. New York University Medical Center, 64 N.Y.2d 851, 487 N.Y.S.2d 316 (1985). "Failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers." See Sheppard-Mobley v. King, supra, at 74; Alvarez v. Prospect Hospital, supra; Winegrad v. New York University Medical Center, supra. Once the movant's burden is met, the burden shifts to the opposing party to establish the existence of a material issue of fact. Alvarez v. Prospect Hospital, supra, at 324. The evidence presented by the opponents of summary judgment must be accepted as true and they must be given the benefit of every reasonable inference. See Demishick v. Community Housing Management Corp., 34 A.D.3d 518, 824 N.Y.S.2d 166 (2d Dept. 2006), citing Secof v. Greens Condominium, 158 A.D.2d 591, 551 N.Y.S.2d 563 (2d Dept. 1990). An insurer's disclaimer is strictly limited to the grounds set forth in its disclaimer. See Adames v. Nationwide Mut. Fire Ins. Co., 55 A.D.3d 513, 866 N.Y.S.2d 210 (2d Dept. 2008). A reservation of additional grounds for disclaiming may only be advanced for grounds reasonably unknown by the insurer. See Estee Lauder, Inc. v. One Beacon Ins. Group, LLC, 62 A.D.3d 33, 873 N.Y.S.2d 592 (1^st Dept. 2009). See also General Acc. Ins. Group v. Cirucci, 46 N.Y.2d 862, 414 N.Y.S.2d 512 (1979); State of N.Y. v. AMRO Realty Corp., 936 F.2d 1420, 1431 (2d Cir. 1991). Therefore, any attempt by defendant to rely on any grounds for disclaiming of which it had notice but failed to disclaim early is flatly rejected.

"[I]t is well settled that an insurer's `duty to defend [its insured] is "exceedingly broad" and an insurer will be called upon to provide a defense whenever the allegations of the complaint "suggest... a reasonable possibility of coverage." "' See BP Air Conditioning Corp. v. One Beacon Ins. Group, supra, at 714, quoting Automobile Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131, 818 N.Y.S.2d 176 (2006), quoting Continental Cos. Co. v. Rapid-American Corp., 80 N.Y.2d 640, 593 N.Y.S.2d 966 (1993). See also Pioneer Towers Owners Ass `n v. State Farm Fire & Cos. Co., 12 N.Y.3d 302, 880 N.Y.S.2d 885 (2009). "'The duty to defend [an] insured [ ]... is derived from the allegations of the complaint and the terms of the policy. If [a] complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend.'" See BP Air Conditioning Corp. v. One Beacon Ins. Group, supra, at 714, quoting Technicon Electronics. Corp. v. American Home Assur. Co., 74 N.Y.2d 66, 544 N.Y.S.2d 531 (1989), rearg den., 74 N.Y.2d 893, 547 N.Y.S.2d 851 (1989). See also Franklin Development Co., Inc. v. Atlantic Mut. Inc., 60 A.D.3d 897, 876 N.Y.S.2d 103 (2d Dept. 2009); Global Const. Co., LLC v. Essex Ins. Co., 52 A.D.3d 655, 860 N.Y.S.2d 614 (2d Dept. 2008). This is so even if the complaint against the insured advances `"additional claims which fall outside the policy's general coverage or within its exclusory provisions.'" See BP Air Conditioning Corp. v. One Beacon Ins. Group, supra, at 714, quoting Town ofMassena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 749 N.Y.S.2d 456 (2002). "The merits of the complaint are irrelevant" and therefore, `"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.'" See BP Air Conditioning Corp. v. One Beacon Ins. Group, supra, at 714, quoting Town of Massena v. Healthcare Underwriters Mut. Ins. Co., supra, at 444 and Automobile Ins. Co. of Hartford v. Cook, supra, at 137. See also Franklin Development Co., Inc. v. Atlantic Mut. Inc., supra; Global Const. Co., LLC v. Essex Ins. Co., supra. An insurer is relieved of its obligation to defend its insured only `"when "as a matter of law... there is no possible factual or legal basis upon which the insurer might eventually be held to be obligated to indemnify the claimant under any provision of the insurance policy" or `when the only interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion.'" Franklin Development Co., Inc. v. Atlantic Mut. Inc., supra; Global Const. Co., LLC v. Essex Ins. Co., supra, at 900-901, quoting Bruckner Realty, LLC v. County Oil Co., Inc., 40 A.D.3d 898, 838 N.Y.S.2d 87 (2d Dept. 2007); City of New York v. Evanston Ins. Co., 39 A.D.3d 153, 830 N.Y.S.2d 299 (2d Dept. 2007); Global Const. Co., LLC v. Essex Ins. Co., supra, at 656 and citing Automobile Ins. Co. of Hartford v. Cook, supra, at 137; Bruckner Realty, LLC v. County Oil Co., Inc., supra, at 900. See also Pioneer Towers Owners Ass `n v. State Farm Fire & Cos. Co., supra.

"When an insurer seeks to disclaim coverage on the ... basis of an exclusion,... [it] will be required to `provide a defense unless it can "demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy's exclusions, and further, that the allegations, in toto, are subject to no other interpretation."'" See Automobile Ins. Co. of Hartford v. Cook, supra, at 137, quoting Allstate Ins. Co. v. Mugavero, 79 N.Y.2d 153, 581 N.Y.S.2d (1992). See also Continental Cos. Co. v. Rapid-American Corp., supra, at 648; Essex Ins. Co. v. Pingley, 41 A.D.3d 774, 839 N.Y.S.2d 208 (2d Dept. 2007), Iv den., 9 N.Y.3d 811, 846 N.Y.S.2d 601 (2007), citing Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 486 N.Y.S.2d 876 (1984); Pioneer Towers Owners Ass'n v. State Farm Fire & Cos. Co., supra.. "An exclusion from coverage `must be specific and clear in order to be enforced..."' See Essex Ins. Co. v. Pingley, supra, at 776, quoting Seaboard Sur. Co. v. Gillette Co., supra, at 311. See also Pioneer Towers Owners Ass `n v. State Farm Fire & Cos. Co., supra; Automobile Ins. Co. of Hartford v. Cook, supra, at 137. Furthermore, "an ambiguity in an exclusionary clause must be construed most strongly against the insurer." See Essex Ins. Co. v. Pingley, supra, at 776, citing Ace Wire & Cable Co., Inc. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 469 N.Y.S.2d 655 (1983); Guachichulca v. Laszlo N. Tauber & Associates, LLC, 37 A.D.3d 760, 831 N.Y.S.2d 234 (2d Dept. 2007); Bassuk Bros., Inc. v. Utica First Ins. Co., 1 A.D.3d 470,768 N.Y.S.2d 479 (2d Dept. 2003), lv dism., 3 N.Y.3d 696, 785 N.Y.S.2d 15 (2004)....