Erie Ins. Co. v. McKay
| Docket Number | 5:20-CV-1282 |
| Decision Date | 01 February 2022 |
| Parties | ERIE INSURANCE COMPANY, Plaintiff, v. FRANK McKAY; WILLIAM LANSBURY; and AMY McKAY, Defendants. WILLIAM LANSBURY and AMY McKAY, Counter Claimants, v. ERIE INSURANCE COMPANY, Counter Defendant. |
| Court | U.S. District Court — Northern District of New York |
HURWITZ & FINE, P.C.-BUFFALO Attorneys for Plaintiff and Counter Claimant Erie Insurance Company
STEVEN E. PEIPER, ESQ.
BARCLAY DAMON LLP-ROCHESTER Attorneys for Defendant Frank McKay
SANJEEV DEVABHAKTHUNI, ESQ.
MICHAELS, SMOLAK LAW FIRM Attorneys for Defendants and Counter Claimants William Lansbury and Amy McKay
JAN M. SMOLAK, ESQ.
On October 16, 2020, plaintiff Erie Insurance Company (“Erie” or “plaintiff) filed a complaint in this District. Plaintiff requests a declaratory judgment that it is not obliged to provide coverage or a defense for defendant Frank McKay (“Frank”) in his own efforts to defend himself against defendants William Lansbury (“Lansbury”) and Amy McKay (“Amy”) (the “claimants”).
The claimants were both injured on August 12, 2018[1] in an accident involving a boat Frank had been piloting. From Erie's perspective, that accident is subject to a coverage exclusion that relieves it from defending Frank and compensating claimants. But according to Frank and claimants, plaintiff waited far too long in disclaiming coverage, and should be foreclosed from leaving Frank to fend for himself now. On December 15, 2021, both defendant and claimants filed motions for summary judgment under Federal Rule of Civil Procedure (“Rule”) 56. On December 17, 2021, plaintiff filed a summary judgment motion of its own. Those motions, having been fully briefed, will now be decided on the submissions and without oral argument.
On August 12, 2018, Amy, her husband Michael McKay (“Michael”), and their friend Lansbury arrived at Michael's mother's cottage on Lake Owasco near Auburn, New York.[2] Dkt. 33-16, Plaintiffs Statement of Material Facts (“PSMF”), ¶¶ 1, 3, 6. It was the day of the “Great Race” in Auburn, which apparently is accompanied by a full day of celebration. Id. ¶ 1.
One participant in the festivities was Frank-Michael's brother-who spent the day out on the lake on the family boat. PSMF ¶¶ 3, 12. The boat was 28 feet long and equipped with a 140-horsepower motor. Id. ¶ 3. When Michael, Amy, and Lansbury arrived, Frank returned to the cottage to pick them up. Id. ¶ 5. Apparently, the whole party spent some time on the water, and at least Frank, Amy, and Lansbury drank a generous amount of alcohol as the day wore on. Id. ¶¶ 7-9.
Eventually, everyone decided to take the boat back to Frank and Michael's mother's cottage for a cookout. PSMF ¶ 10. Some 300 yards from the cottage, Michael noticed a football in the water and told Frank to stop the boat so he could grab it. Id. ¶ 12. Michael dove in to retrieve the wayward ball, while Frank drove a circle around him. Id. ¶¶ 13-15. Frank watched Michael the whole time. Id. ¶ 17. Once Michael returned to the boat, he told Frank they were all set to continue the trip back to the cottage. Id. ¶ 20.
As it turned out, they were not. Apparently, claimants had jumped into the water to relieve themselves while Frank was watching Michael collect the football. PSMF ¶ 18. Neither remembers whether they told Frank that they were exiting the boat. Id. ¶ 19. In any case, Frank was apparently oblivious, and opened the boat's throttle. Id. ¶ 21. As the boat lurched to a start, its propeller struck Lansbury's left leg and Amy's right bicep and thumb. Id. ¶ 23.
On August 21, 2018, Robin McKay (“Robin”), Frank's wife, notified Erie about the accident. Dkt. 31-14, Defendant's Statement of Material Facts (“DSMF”), ¶ 6. The claim was assigned to Brian Weber (“Weber”), one of plaintiff's claims agents. PSMF ¶ 25. Weber interviewed Robin the next day. Dkt. 32-19, Claimants' Statement of Material Facts (“CSMF”), ¶ 6; PSMF ¶ 26.
The interview component of Weber and Robin's conversation was recorded. PSMF ¶ 26. But apparently, Weber forgot to ask Robin who owned the boat during the recorded statement, so instead he asked her after the recording had stopped. Dkt. 33-2 (“Weber Tr.”), p. 22.[3] As a result, Robin's exact answer has been lost to time. See Id. at 23. In any case, Weber walked away from his conversation under the impression that Michael owned the boat. Id. at 24. But according to Robin, she said that she thought that Michael owned the boat, but that she was not sure. Dkt. 33-7 (“Robin Tr.”), p. 9.
The ownership of the boat is no trivial matter. After all, Frank's homeowner's policy with Erie protects him in the event of an occurrence of bodily injury during the policy period. Dkt. 33-9, p. 20. However, the policy specifically excludes coverage for an injury caused by a watercraft with more than seventy-five horsepower if that watercraft is owned by the policy holder. Id. at 21.
Because the boat Frank was driving on August 12, 2018 had 140 horsepower, if he had owned the boat, it would have been subject to an exclusion and plaintiff would not have needed to cover him. See Dkt. 33-9, p. 21. But the converse is also true: Weber's impression from Robin that Frank did not own the boat led him to believe that the exclusion did not apply and that plaintiff was bound to cover the injury. PSMF ¶ 32.
On January 9, 2019, claimants' attorney submitted a letter to Weber presenting a settlement demand. Dkt. 32-15, p. 2. In that letter's recitation of the operative facts, the attorney consistently referred to Frank as “Mr. McKay.” See Id. The fact pattern traced the outline the Court described above, but one piece of it bears emphasis. Specifically, the letter refers to “Mr. McKay” as the “owner and operator of the boat.” Id. Well below that language, the letter also describes the football falling off the boat, “which caused Mr. McKay to stop the boat so his brother, Michael, could jump off . . . .” Id. That sentence was the first reference to Michael in the letter. See generally id.
On February 22, 2019, more than a month after receiving the demand letter and more than five months after taking Robin's statement, Weber reached out to Frank for a statement for the first time. Weber Tr. 25. Notwithstanding the reference to “Mr. McKay” being the boat's owner, Weber did not ask Frank who owned the boat. Id. at 26. Weber also never asked to speak to Michael. Id. at 27.
On December 6, 2019, an Erie liability specialist named Keith Merkel (“Merkel”) was reassigned to the McKay case. CSMF ¶ 19. Merkel had access to the letter from claimants' counsel no later than January 27, 2020.
CSMF ¶ 20. Merkel came away from that letter under the impression that Michael was the “Mr. McKay” that the letter referred to as the boat's owner and operator. Dkt. 33-3 (“Merkel Tr.”), p. 18. As a result, Merkel did not follow up with anyone involved in the accident, nor did he request the boat's title. Id. at 19.
However, someone at Erie grew concerned, because on May 27, 2020, plaintiff personnel had a meeting and determined that someone should confirm the boat's ownership. Merkel Tr. 22. Around that time, one of plaintiff's employees asked Frank to produce the boat's title for the first time. DSMF ¶ 12. He promptly did. Id.
On June 2, 2020, Merkel performed an information request to determine who owned the boat. Merkel Tr. 22. That request came back with both Frank and Michael listed as the boat's owners.[4] Id.
On June 26, 2020, Erie sent Frank a letter denying coverage based on the exclusion discussed above. DSMF ¶ 14. On July 6, 2021, claimants sued Frank in New York State Supreme Court, Cayuga County. Id. ¶ 18. On July 15, 2021, Frank notified plaintiff of the lawsuit and demanded coverage. Id. ¶ 19.
Even before claimants sued Frank, Erie had already filed this case on October 16, 2020. Dkt. 1. Plaintiff asks this Court to relieve it from any obligation to indemnify Frank and defend him against claimants' suit. See generally, id., passim. Claimants responded with a counterclaim arguing that plaintiff should be required to defend Frank due to its failure to timely disclaim coverage. Dkt. 10. Frank and claimants moved for summary judgment on December 15, 2021. Dkts. 31; 32. Plaintiff filed a summary judgment motion of its own on December 17, 2021. Dkt. 33. This decision now follows.
Summary judgment under Rule 56 is warranted if the parties' submissions show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (citing Fed.R.Civ.P. 56(a)). A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute of a material fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The movant bears the burden of pointing the court to the materials that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Additionally a court considering a summary judgment motion “must resolve any ambiguities and draw all inferences from the facts in a light most favorable to the nonmoving party.” Ward v. Stewart, 286 F.Supp.3d 321, 327 (N.D.N.Y. 2017) (citing Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir. 2005)). Even so, a non-movant's conclusory allegations without support from record evidence are insufficient: the non-movant must “put up or shut up.” Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000). At bottom, summary judgment tasks the Court with...
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