Cragg v. Allstate Indem. Corp..
| Decision Date | 09 June 2011 |
| Citation | 17 N.Y.3d 118,926 N.Y.S.2d 867,2011 N.Y. Slip Op. 04767,950 N.E.2d 500 |
| Parties | Eric CRAGG, as Administrator of the Estate of Kayla Margaret Rose Cragg, Deceased, Appellant,v.ALLSTATE INDEMNITY CORPORATION, Respondent, et al., Defendants. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE Magavern Magavern Grimm LLP, Buffalo (Edward J. Markarian of counsel), and Law Office of John J. Fromen (John J. Fromen, Jr., of counsel) for appellant.Goldberg Segalla LLP, Buffalo (Patrick B. Omilian and Sharon Angelino of counsel), for respondent.
This appeal requires us to interpret the breadth of an exclusion in a homeowner's insurance policy excluding coverage for bodily injury to an insured where an insured would receive “any benefit” under the policy.
Plaintiff, Eric Cragg, is the father of decedent, Kayla Margaret Rose Cragg. Three-year-old Kayla and her mother, defendant Marina Ward, lived with defendant grandparents, Gregory and Katherine Klein, in the Kleins' Clarence, New York home. In July 2001, Kayla drowned accidentally in the Kleins' swimming pool. At the time, the Kleins had a homeowner's insurance policy in place that had been issued by Allstate. Under the terms of the policy, Kayla and her mother were insured persons, as residents of the household who were related to the policyholders. Plaintiff maintained a separate residence and was not an insured under the Kleins' homeowner's insurance policy.
Allstate disclaimed coverage based on the policy exclusion at issue here. Under “Coverage X[—]Family Liability Protection,” the policy states that “[w]e do not cover bodily injury to an insured person ... whenever any benefit of this coverage would accrue directly or indirectly to an insured person.” Bodily injury is defined in the policy as “physical harm to the body, including sickness or disease, and resulting death.” The policy does not define the term “benefit.”
Plaintiff, as the administrator of Kayla's estate, commenced an action seeking to recover against defendants for Kayla's wrongful death and for her conscious pain and suffering. Defendant Ward defaulted and judgment was entered against her in the amount of $300,000—$150,000 for wrongful death and $150,000 for pain and suffering. Plaintiff brought this declaratory judgment action against Allstate for a declaration that Allstate was required to defend and indemnify its insureds. Supreme Court granted Allstate's motion for summary judgment, declaring that Allstate had no obligation to defend or indemnify Ward or the Kleins in relation to the wrongful death or conscious pain and suffering claims.
The Appellate Division affirmed (74 A.D.3d 90, 905 N.Y.S.2d 381 [4th Dept.2010] ). That Court noted that the general
[950 N.E.2d 502 , 926 N.Y.S.2d 869]
purpose of homeowner's insurance policies is to provide coverage for injuries sustained by those who are not insured by the subject policy and found that, based on the plain language of the exclusion, Allstate did not have to indemnify Ward because she would thereby obtain a benefit under the policy. We granted plaintiff leave to appeal (15 N.Y.3d 705, 908 N.Y.S.2d 158, 934 N.E.2d 892 [2010] ) and we now reverse.
At this stage of the litigation, plaintiff properly limits his argument to the wrongful death claims of the underlying action. As we recently noted, a claim for conscious pain and suffering belongs to the estate of the deceased, rather than the distributees ( see Heslin v. County of Greene, 14 N.Y.3d 67, 76–77, 896 N.Y.S.2d 723, 923 N.E.2d 1111 [2010]; EPTL 11–3.2 [b] ). By contrast, “a wrongful death action belongs to the decedent's distributees and is designed to compensate the distributees themselves for their pecuniary losses as a result of the wrongful act” ( Heslin, 14 N.Y.3d at 76, 896 N.Y.S.2d 723, 923 N.E.2d 1111; see also EPTL 5–4.3). Plaintiff's wrongful death claim therefore is based on his own loss and is not derivative of any claim on behalf of his insured daughter.
Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured ( see Matter of Mostow v. State Farm Ins. Cos., 88 N.Y.2d 321, 326–327, 645 N.Y.S.2d 421, 668 N.E.2d 392 [1996] ). To the extent that there is any ambiguity in an exclusionary clause, we construe the provision in favor of the insured. Moreover,
“ ” ( Pioneer Tower Owners Assn. v. State Farm Fire & Cas. Co., 12 N.Y.3d 302, 307, 880 N.Y.S.2d 885, 908 N.E.2d 875 [2009], quoting Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 [1984] ).
Allstate has not met that burden here.
The language of the policy exclusion—excluding coverage “whenever any benefit of this coverage would accrue directly or indirectly to an insured”—is ambiguous. It could be interpreted, as Allstate urges, to mean that bodily injury to an insured is not covered whenever any benefit—including coverage itself in the form of defense and indemnification—would accrue to an insured. However, as plaintiff points out, this interpretation ascribes meaning only to the first clause of the exclusion—“[w]e do not cover bodily injury to an insured person.” Since the right to defense and indemnification universally accrues to an insured, under Allstate's interpretation the condition of the second clause of the exclusion would always be met. However, the second part of the exclusion must somehow modify the first part of the clause in order to have any meaning. In this context, a benefit must mean something other than coverage itself and is more naturally read to mean proceeds paid under the policy. In light of our obligation to interpret the exclusion in a manner that gives full force and effect to the policy language and does not...
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