Emp'rs Ins. Co. of Wausau v. Harleysville Preferred Ins. Co.
| Decision Date | 04 April 2018 |
| Docket Number | No. 16-906-cv,16-906-cv |
| Parties | EMPLOYERS INSURANCE COMPANY OF WAUSAU, Plaintiff-Counter-Defendant-Appellant, v. HARLEYSVILLE PREFERRED INSURANCE COMPANY, Defendant-Cross-Claimant-Counter-Claimant-Appellee, THE TRAVELERS INDEMNITY COMPANY, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendants-Cross-Defendants-Appellees, THE ELECTRICAL EMPLOYERS SELF INSURANCE SAFETY PLAN, Defendant-Cross-Defendant. |
| Court | U.S. Court of Appeals — Second Circuit |
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 4th day of April, two thousand eighteen.
MARSHALL T. POTASHNER, Janet J. Lee, Jaffe & Asher LLP, New York, NY.
FOR DEFENDANT-CROSS-CLAIMANT-COUNTER-CLAIMANT-APPELLEE:
LANCE J. KALIK, Brooks H. Leonard, Riker Danzig Scherer Hyland & Perretti LLP, Morristown, NJ.
FOR DEFENDANTS-CROSS-DEFENDANTS-APPELLEES:
JOANNE M. ENGELDRUM, Alan C. Eagle, Cheryl F. Korman, Rivkin Radler LLP, Uniondale, NY.
Appeal from a judgment of the United States District Court for the Southern District of New York (Cote, J.).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court entered March 4, 2016, is AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, and REMANDED.
In this insurance coverage dispute among three insurers, Plaintiff-Counter-Defendant-Appellant Employers Insurance Company of Wausau ("Wausau") appeals from the District Court's entry of summary judgment in favor of Defendant-Cross-Claimant-Counter-Claimant-Appellee Harleysville Preferred Insurance Company ("Harleysville") and Defendants-Cross-Defendants-Appellees The Travelers Indemnity Company and Travelers Property Casualty Company of America (together, "Travelers"). We assume the parties' familiarity with the underlying facts and the procedural history of the case, to which we refer only as necessary to explain our decision.
This case arises from the August 5, 2014 death of Nicholas Cavataio. Mr. Cavataio was working as an electrician for Hellman Electric Corporation ("Hellman") at a construction site at the Throgs Neck Bridge in New York City, when he was struck and killed by a falling 2700-pound battery. In response to the accident, Rosanne Cavataio, his widow, filed a tort suit in New York state court in November 2014 against, as relevant here,the Metropolitan Transportation Authority ("MTA"), the Triborough Bridge and Tunnel Authority ("TBTA"), and Monarch Electric Company ("Monarch"). In January 2015, the MTA and TBTA filed a third-party complaint against Hellman, seeking indemnification and contribution.
In the underlying state tort suit, Ms. Cavataio's allegations are set out in a complaint and a later-filed bill of particulars. The allegations are vague and open to more than one interpretation. With almost no elaboration, the complaint lists several theories of how the defendants breached their duty to operate a safe worksite, causing Mr. Cavataio's death. Ms. Cavataio also alleges that the MTA and TBTA owned and operated the worksite; that Hellman was Mr. Cavataio's employer and entered into a contract with the MTA and TBTA to provide services at the worksite; and that Monarch owned, operated, and/or leased a truck involved in the accident—a truck from which, it can be inferred from the pleadings, the battery fell. A fourth entity not named as a defendant, Miller Auto Leasing Corporation ("Miller"), also allegedly owned, operated, and/or leased the truck. The bill of particulars references, among other asserted breaches of the defendants' duties, a failure to "use the proper pallet jack for the item ('battery') being unloaded from the vehicle." J.A. 80.
The three parties in this federal suit are the liability insurers of the defendants in Ms. Cavataio's tort suit. Wausau issued Hellman a general commercial liability policy (implicated because Mr. Cavataio was a Hellman employee). Harleysville issued Hellman a commercial auto policy (implicated because a truck was involved in the death of Mr. Cavataio, a Hellman employee). Travelers issued a commercial auto policy to Consolidated Electric Distributors, Inc. ("CED"), Monarch's parent corporation, naming Monarch as an insured (implicated because of Monarch's connection to the truck involved in Mr. Cavataio's deathThe MTA and TBTA are additional insureds under all of those policies for any vicarious liability imposed on them for the other defendants' negligence.
Wausau filed this federal suit in June 2015, contending that it has been wrongfully forced to defend Hellman, the MTA, and the TBTA in Ms. Cavataio's tort suit, following Harleysville's and Travelers's disclaimers of coverage. Wausau concedes that it has a duty to defend those defendants, but it seeks a declaration that Harleysville and Travelers also have aduty to defend and indemnify Hellman, the MTA, and the TBTA in the tort suit, and that their obligations are primary to Wausau's. Wausau also seeks reimbursement from Harleysville and Travelers for the defense costs it has incurred.
On October 16, 2015, Wausau moved for partial summary judgment as to the duty to defend. Wausau later moved for summary judgment also as to the reimbursement claim. Harleysville and Travelers opposed Wausau's motion and filed cross-motions for summary judgment under the theory that two coverage exclusions in their auto policies were applicable: "mechanical device exclusions" for injuries arising out of the movement of property using mechanical devices (here, the pallet jack), and "employer's liability exclusions" for injuries to the employees of certain insureds arising from their employment.
On February 29, 2016, the District Court denied Wausau's motion and granted Harleysville's and Travelers's motions. It concluded that, although Hellman, the MTA, and the TBTA were all insureds under both policies, the mechanical device exclusions applied to the circumstances of the fatal accident. The court then deemed moot any discussion of the "priority of coverage"—that is, which insurers are "primary" insurers and which are "excess" insurers. On March 3, 2016, the District Court found that Wausau's claims regarding reimbursement and the duty to indemnify necessarily failed in tandem with the duty to defend claim. It entered judgment the next day, and Wausau timely appealed.
As to Harleysville's commercial auto policy issued to Hellman, for the reasons set forth below, we conclude that neither of the coverage exclusions invoked by Harleysville (the mechanical device exclusion and the employer's liability exclusion) applies to the liability that Hellman, the MTA, and the TBTA might face in Ms. Cavataio's suit—at least, not as a matter of law on the facts presented. Thus, neither exclusion relieves Harleysville of its duty to defend. We therefore reverse the District Court's judgment as to Harleysville's duty to defend the MTA, the TBTA, and Hellman.
The parties agree that New York law governs the Harleysville policy. Under New York law, "an insurer's duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy." Fitzpatrick v. Am. Honda Motor Co., 78 N.Y.2d 61, 65 (1991). An insurer has a duty to defend if "the allegations of the complaint are even potentially within the language of the insurance policy." Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 443 (2002). If an insurer invokes an exclusion clause to deny coverage, the insurer bears the burden "to demonstrate that the allegations of the complaint can be interpreted only to exclude coverage." Id. at 444. New York courts construe policy exclusions strictly and narrowly, and resolve any ambiguity against the insurer. Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 383 (2003).
The first coverage exclusion invoked by Harleysville is the "mechanical device exclusion." The exclusion precludes coverage for:
"Bodily injury" or "property damage" resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered "auto."
J.A. 330. The parties dispute whether Mr. Cavatio's death "result[ed] from the movement of property" by the pallet jack, triggering the mechanical device exclusion. In our view, the available facts regarding the pallet jack are insufficient to determine "as a matter of law that there is no possible factual or legal basis on which [Harleysville] might eventually be obligated to indemnify" Hellman, the MTA, and the TBTA. Allstate Ins. Co. v. Zuk, 78 N.Y.2d 41, 45 (1991). The District Court therefore erred in ruling that the mechanical device exclusion relieved Harleysville of its duty to defend.
As an initial matter, we address the parties' disagreement over which record materials may properly be considered in assessing the applicability of the mechanical device exclusion. Ordinarily, that assessment would turn on a comparison between the policy's language and the allegations in Ms. Cavataio's state court complaint. Int'l Bus. Machines Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 144 (2d Cir. 2004). We may...
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