Cent. Mut. Ins. Co. v. Willig

• Decision Date: 27 June 2014
• Docket Number: No. 1:13–cv–1134 (GLS/CFH).,1:13–cv–1134 (GLS/CFH).
• Citation: 29 F.Supp.3d 112
• Parties: CENTRAL MUTUAL INSURANCE COMPANY, Plaintiff, v. William P. WILLIG, as Executor of the Estate of William J. Morgan, et al., Defendants.
• Court: U.S. District Court — Northern District of New York

29 F.Supp.3d 112

CENTRAL MUTUAL INSURANCE COMPANY, Plaintiff,

v.William P. WILLIG, as Executor of the Estate of William J. Morgan, et al., Defendants.

No. 1:13–cv–1134 (GLS/CFH).

United States District Court,

N.D. New York.

Signed June 27, 2014.

Rivkin, Radler Law Firm, Frank M. Misiti, Esq., Marc P. Gorfinkel, Esq., William M. Savino, Esq., of Counsel, Uniondale, NY, for the Plaintiff.

Herzog Law Firm, James M. Reilly, Esq., of Counsel, Albany, NY, for the Defendants.

MEMORANDUM–DECISION AND ORDER

GARY L. SHARPE, Chief Judge.

I. Introduction

Plaintiff Central Mutual Insurance Company commenced this action against defendants William P. Willig, in his capacity as the executor of the Estate of William J. Morgan (the “Morgan Estate”), Norman R. Levy, and Doreen Levy, ¹ seeking a judgment declaring, among other things, that the insurance contracts entered into by Central and the Levys do not obligate Central to defend or indemnify the Morgan Estate for any amounts in connection with an underlying state court action. (Compl., Dkt. No. 1.) Pending is Central's motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). (Dkt. No. 17.) For the reasons that follow, Central's motion is granted.

II. Background²

A. Facts

This action concerns the scope of two insurance policies, an easement on the shores of Lake George, and a long-standing feud between Levy and Morgan that lives on, even after Morgan's death.

1. The Insurance Policies

Central issued two insurance policies—a Homeowners Policy, number FMH 4245859, (Dkt. No. 1, Attach. 1), and a Personal Umbrella Policy, number PXS 4245870, (Dkt. No. 1, Attach. 2), (collectively, “the Policies”). Both of the Policies identify the Levys as the named insureds, and Morgan, now deceased, is included as an additional insured. (Dkt. No. 1, Attachs. 1, 2.) Among other things, the Policies promise to defend and indemnify the insureds “[i]f a ... suit is brought against an ‘insured’ for damages because of ‘bodily injury’ or ‘property damage’ caused by an ‘occurrence.’ ” (Dkt. No. 1, Attach. 1 at 20, 34, 36; Dkt. No. 1, Attach. 2 at 7.) Notably, an “ ‘occurrence’ ” is defined as “an accident.” (Dkt. No. 1, Attach. 1 at 8; Dkt. No. 1, Attach. 2 at 6.) Further, as relevant to this motion, one exclusion under the Policies is of note: the Policies exclude coverage for “ ‘[b]odily injury’ or ‘property damage’ which is expected or intended by an ‘insured,’ ” (“the Exclusion”). (Compl. ¶¶ 23, 24; Dkt. No. 1, Attach. 1 at 22, 34, 36; Dkt. No. 1, Attach. 2 at 7.)

2. The Underlying Action

On March 23, 2013, Levy filed a complaint against Willig, in his capacity as the executor of Morgan's estate, and Tomas Decea, Morgan's tenant (“the Underlying Complaint” or “the Underlying Action”). (Dkt. No. 1, Attach. 3.) In general, the Underlying Complaint tells the story of the unrelenting battle between Morgan and Levy, over an easement, held by Levy, on the northerly and southerly sides of Morgan's property, which sits on Lake George; the easement grants Levy access to the shores, and the right to construct and use a temporary dock. ( See generally id.) Specifically, the Underlying Complaint alleges that, from 2002 through 2008, Morgan himself undertook several actions to impede Levy's use of his easement, including: (1) “intentionally and unlawfully remov[ing] and destroy[ing]” Levy's dock and “block[ing Levy]'s access to [his] dock area,” ( id. ¶ 19); (2) refusing to comply with New York state court orders ³ and stipulations that required him to reconstruct the dock, ( id. ¶¶ 20–28); (3) altering the grade, pitch, and size of the northerly easement so that the easement was rendered unusable—actions for which he was ultimately held in contempt, ( id. ¶¶ 25–26); and (4) blocking the easement and dock with boards containing nails protruding upward and his vehicle, ( id. ¶ 31).

Later, in 2010, Morgan rented his property to Decea, at a discounted price, and “with the express understanding, agreement[,] and purpose of having ... Decea ... engage in a course of conduct to physically remove [Levy] from the Morgan property and to interrupt and interfere with [Levy]'s deeded and court ordered rights.” ( Id. ¶¶ 32–33, 115.) Specifically, on July 3, 2010, after discovering that Decea physically blocked the right-of-way, ⁴ Levy parked his truck on Morgan's lawn, and walked down to the dock. ( Id. ¶ 48.) When Levy returned to his vehicle, he was arrested and charged with reckless endangermentand criminal mischief; the criminal complaint was based entirely on a supporting deposition from Decea. ( Id. ¶¶ 50, 51.) Consequently, an order of protection was entered against Levy, which required him to stay away from Decea, his home, and his family, but still permitted Levy to use the easement. ( Id. ¶¶ 54–55.) Despite his right to continue to use the easement, Levy was again arrested on July 4, 2010, and charged with criminal contempt for violating the order of protection. ( Id. ¶ 56.)

The Underlying Complaint alleges that Decea's complaints “were false and were known by ... Decea to be false,” and filed at the request of Morgan to remove Levy from the property. ( Id. ¶¶ 60, 61.) Days later, Morgan and Decea filed a motion seeking to terminate all of Levy's easement rights; the motion was based on the criminal complaints and an affidavit from Decea. ( Id. ¶¶ 62–63.) As a result of these actions, in the Underlying Complaint, Levy asserts claims of malicious prosecution, abuse of process, and prima facie tort, and seeks, among other things, damages “for all of his physical, emotional, psychological injuries suffered from the defendants' wrongful conduct.” ( Id. ¶¶ 93–119.)

On June 14, 2013, the Morgan Estate, as an additional insured under the Policies, forwarded the Underlying Complaint to Central, seeking defense and indemnification. (Compl. ¶ 17; Dkt. No. 1, Attach. 4.) On July 23, 2013, Central responded, and informed the Morgan Estate that it would provide a defense, but also reserved its rights to assert any coverage defenses that may apply. (Compl. ¶¶ 18–19; Dkt. No. 1, Attach. 5.)

B. Procedural History

On September 12, 2013, Central filed the instant diversity action, seeking a judgment declaring that, under the Policies, it has no obligation to defend or indemnify the Morgan Estate for any amounts in connection with the underlying action. ( See generally Compl.) The Morgan Estate filed an answer, and asserted a counterclaim ⁵ and crossclaim.⁶ (Dkt. No. 11.) While Central filed an answer to the Morgan Estate's counterclaim, (Dkt. No. 14), the Levys have not filed an answer, and, in fact, have yet to appear in the action. Thereafter, Central filed its motion for judgment on the pleadings, which is now before the court. (Dkt. No. 17.)

III. Standard of Review

“The standard for addressing a Rule 12(c) motion for judgment on the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim.” Wright v. Monroe Cmty. Hosp., 493 Fed.Appx. 233, 234 (2d Cir.2012) (internal quotation marks and citation omitted). For a full discussion of that standard, the court refers the parties to its prior decision in Ellis v. Cohen & Slamowitz, LLP, 701 F.Supp.2d 215, 218 (N.D.N.Y.2010).

IV. Discussion⁷

In support of its motion, Central argues that it is not obligated to defend or indemnify the Morgan Estate for several reasons. (Dkt. No. 18 at 8–21.) Primarily, however, Central contends that it need not defend or indemnify the Morgan Estate because the Underlying Complaint alleges that Morgan engaged in a course of intentional conduct that was designed to cause injury to Levy, and therefore: (1) there has been no “occurrence”; and (2) the Exclusion applies to the Underlying Action. ( Id. at 8–17.) The Morgan Estate claims that Central failed to timely disclaim coverage as required by New York Insurance Law § 3240(d), and that Morgan's involvement in the allegations in the Underlying Complaint is unclear, such that it would be inappropriate for the court to grant Central's motion. (Dkt. No. 22 at 6–9, 10–11.) The court agrees with Central.

A. New York Insurance Law § 3420(d)(2)

First, the court will address the Morgan Estate's argument that Central may not rely on the exclusions because it failed to timely disclaim coverage under New York Insurance Law § 3420(d)(2). (Dkt. No. 22 at 10–11.) Central contends, and the court agrees, that § 3420(d)(2) does not apply here because it never disclaimed coverage; it simply sent a reservation of rights letter. (Dkt. No. 24 at 7–10.)

New York Insurance Law § 3420(d)(2) states, in relevant part:

If under a liability policy issued or delivered in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of ... any ... type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.

It is well established, however, that “[a] reservation of rights letter has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage.” Hartford Ins. Co. v. Cnty. of Nassau, 46 N.Y.2d 1028, 1029, 416 N.Y.S.2d 539, 389 N.E.2d 1061 (1979). “Courts considering the question of whether a letter to an insured is a disclaimer of coverage or a reservation of rights have held that sufficiently definite language must be used in order for the communication to constitute a disclaimer,” Tudor Ins. Co., Inc. v. McKenna Assocs., No. 01CIV 0115, 2005 WL 1138386, at *5 (S.D.N.Y. May 12, 2005), and notice of a disclaimer should be in “unequivocal[ and] unambiguous” language, U.S. Fid. & Guar. Co. v. Treadwell Corp., 58 F.Supp.2d 77, 90 (S.D.N.Y.1999) (internal quotation marks and citation omitted).

Here, on June 14, 2013, the Morgan Estate forwarded the Underlying Complaint to Central, seeking defense and indemnification...