City of N.Y. v. Phila. Indem. Ins. Co.
| Decision Date | 10 September 2020 |
| Docket Number | 1:19-CV-01951 (ALC)(RWL) |
| Citation | 485 F.Supp.3d 410 |
| Parties | The CITY OF NEW YORK, Plaintiff, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Cynthia C. Weaver, Eric Proshansky, New York City Law Department, New York, NY, for Plaintiff.
Jennifer Anne Ehman, Dan David Kohane, Hurwitz & Fine, P.C., Buffalo, NY, for Defendant.
INTRODUCTION
The City of New York ("the City") brought this action seeking a declaration that Philadelphia Indemnity Insurance Company ("Philadelphia") has a duty to defend the City in an underlying matter for the wrongful death of Thaiya Princetta Spruill-Smith ("the Spruill-Smith child"), pending in the Supreme Court of the State of New York, New York County (the "Spruill-Smith Action"). The Parties, in agreement that there are no material disputes of fact, have filed motions for summary judgment.
The City of New York, through the Administration of Children's Services ("ACS"), entered into an agreement with Seaman's Society for the Children and Families ("Seamen's Society") to provide preventive services to reduce incidents of maltreatment of children at risk of foster care placement. As required by the agreement, Seaman's obtained insurance, choosing Philadelphia Indemnity as the insurer for a series of policies.
In July 2014, ACS opened an investigation regarding alleged abuse of the Spruill-Smith child. The child was referred to the Seaman's Society for general preventive services. She was visited by the organization at least once in October 2014. The child died in November 2014. In 2015, a lawsuit was launched against the City of New York, ACS, The New York City Police Department and a detective, asserting several causes of action, claiming that the death was caused by abuse from the child's mother or stepfather.
The policy between Seaman's Society and Philadelphia in place at the time of the child's death listed the City of New York as an additional insured. In September 2018, the City of New York tendered the defense of the lawsuit to Philadelphia. Three weeks later, Philadelphia denied coverage, purporting to cite an exclusion in the applicable policy. However, Philadelphia cited an exclusion from the wrong policy. The exclusion Philadelphia relied on is broader than the exclusion that could have applied. Philadelphia did not correct this error for 7 months.
By waiting so long to correct this error, Philadelphia has waived the exclusion that might apply. As explained further below, the Court therefore GRANTS New York City's motion for summary judgment and DENIES that of Philadelphia.
The following facts are taken from the Parties’ Joint Statement of Undisputed Facts Pursuant to Rule 56.1. ("56.1"), ECF No. 25.
The City and Philadelphia come to this dispute through an intermediary, Seamen's Society. The City of New York, acting through the Administration for Children's Services, entered an agreement with Seamen's Society to provide preventive services related to child welfare for a term of four years, from July 1, 2011 to June 30, 2015. 56.1 ¶ 1. Seamen's Society was to use an integrated neighborhood-based service model to reduce incidents of maltreatment of children at risk of foster care placement. 56.1 ¶ 4.
The agreement with the City required Seamen's Society to carry a commercial general liability policy and professional liability insurance. 56.1 ¶ 5. Seamen's Society purchased a series of insurance policies from Philadelphia Indemnity Insurance Company ("Philadelphia"). 56.1 ¶ 7. There are two policies relevant to the instant matter.
The first is policy number PHPK1106312, which was in effect from December 1, 2013 through December 1, 2014 (the "2013/2014 Policy"). 56.1 ¶ 8. The 2013/2014 Policy provides, in relevant part: i) commercial general liability coverage against claims for bodily injury; and ii) professional liability coverage. 56.1 ¶ 8. It includes Endorsement CG 20 10 07 04, which lists "The City of New York" and "Its officials and employees" as "additional insured person(s) or organizations(s)". 56.1 ¶ 10. The 2013/2014 Policy also includes Endorsement CG 21 46 07 98, Abuse or Molestation Exclusion, ("2013/2014 Abuse or Molestation Exclusion"), which states:
56.1 ¶ 11 (citing ECF No. 25-2 at Bates No. 117).
The second relevant policy is number PHPK1747004, in effect from December 1, 2017 through December 1, 2018 ("the 2017/2018 Policy"). 56.1 ¶ 13. The City is not an additional insured on the 2017/2018 Policy. That policy contains "Endorsement PI-SAM 006 (01/17), the Abuse or Molestation Exclusion", ("2017/2018 Abuse or Molestation Exclusion"), which provides, in part: "This insurance does not apply to any injury sustained by any person arising out of or resulting from the alleged, actual or threatened abuse or molestation by anyone." 56.1 ¶ 13. As compared to the 2013/2014 Abuse or Molestation Exclusion, the 2017/2018 Abuse or Molestation Exclusion is broader because it does not include the limitation to abuse or molestation "while in the care, custody or control of any insured".
In July 2014, ACS opened an investigation concerning alleged abuse of Thaiya Princetta Spruill-Smith, who lived primarily with her mother and stepfather. 56.1 ¶ 15. On September 15, 2014, a Child Safety Conference was conducted by ACS concerning the Spruill-Smith child. 56.1 ¶ 15. On October 14, 2014, ACS referred Spruill-Smith to Seamen's Society for general preventive services. 56.1 ¶¶ 19-22. On October 22, 2014, a joint visit by ACS and a Seamen's Society's case planner occurred. 56.1 ¶ 22. On that date, the family also signed up for services, and another home visit was scheduled for the following week on October 28, 2014. 56.1 ¶ 24. The October 28, 2014 visit did not take place because the Spruill-Smith child's stepfather told the caseworker that the mother was pregnant and had been admitted to the hospital because her water broke. 56.1 ¶ 25. Thereafter, on November 13, 2014, the caseworker was leaving for an unannounced visit when she received a call advising that the child was hospitalized. 56.1 ¶ 26. On November 14, 2014, the Spruill-Smith child died. 56.1 ¶ 27.
On or about November 13, 2015, the City was served with a summons and complaint in the Spruill-Smith action, which bears the caption Kings County Public Administrator, Administrator of the Estate of Thaiya Princetta Spruill-Smith, deceased, and Terrell Smith v. City of New York, New York City Administration for Children's Services, "Jane" Washington, Tamara Johnson, "John Does" #1-5, the names being unknown but who are intended to be the Caseworkers who neglected to properly investigate Terrell Smith's complaints of abuse inflicted upon Thaiya by Teoka Spruill-Adams and/or David Adams, New York City Police Department, and Detective James Tillman, Shield No.: 5516 , New York Supreme Court, Kings County, Index No. 11965/2015, (or, the "underlying action"). 56.1 ¶¶ 28-29; ECF No. 25-10.
The complaint alleges that the death of the Spruill-Smith child was caused by abuse by her mother or stepfather. 56.1 ¶ 27. The action names the City, ACS, New York City Police Department, and Detective James Tillman as defendants, but not Seamen's Society. 56.1 ¶ 29. Against ACS and the City, the Complaint alleges causes of action for Negligent Supervision, Negligent Investigation, Negligent Hiring, Training, Supervision, and Retention, and Wrongful Death. Spruill-Smith Complaint, ECF No 25-10. The Spruill-Smith Action also includes claims against the NYPD, City and Detective Tillman related to the allegedly unlawful arrest and prosecution of Terrell Smith, the child's father, for violating a court-ordered custody agreement by not returning the Spruill-Smith child to her mother at the appointed time. Spruill-Smith Complaint, ECF No. 25-10 at 30-37.
By letter dated September 6, 2018, the New York City Law Department tendered the defense of the Spruill-Smith Action to Philadelphia, noting the City's receipt of the Spruill-Smith Complaint, forwarding a copy of the summons, verified complaint, the Certificate of Insurance, and excerpts of the contract between the City and Seamen's Society, and requesting a defense as an additional insured under the Policy. 56.1 ¶ 35. By letter dated September 27, 2018 (the "Disclaimer"), Philadelphia responded to the demand stating that Philadelphia would not accept the tender of the Spruill-Smith Action because "the Abuse or Molestation Exclusion operates to preclude coverage", citing "Endorsement PISAM 006 (01/17), the Abuse or Molestation Exclusion" in the 2017/2018 Policy. 56.1 ¶¶ 37-39.
By letter dated October 10, 2018, the Law Department objected to the September 27, 2018 Disclaimer. 56.1 ¶ 40. By email dated October 17, 2018, a claims specialist for Philadelphia contacted the Law Department and asked for "any and all evidence you have that our insured, Seamen's Society was performing services for the family pursuant to the contract you are referencing." 56.1 ¶ 41. By email dated October 18, 2018, the Law Department provided Philadelphia with certain ACS documents describing actions taken by ACS with respect to...
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