Fieldston Property Owners Association, Inc. v. Hermitage Insurance Company, Inc., 2006 NY Slip Op 30541 (N.Y. Sup. Ct. 8/7/2006)
| Decision Date | 07 August 2006 |
| Docket Number | 600177/03.,Motion Seq. No. 002. |
| Citation | 2006 NY Slip Op 30541 |
| Parties | FIELDSTON PROPERTY OWNERS ASSOCIATION, INC., Plaintiff, v. HERMITAGE INSURANCE COMPANY, INC. and CHUBB GROUP OF INSURANCE COMPANIES, Defendants. |
| Court | New York Supreme Court |
This is a declaratory judgment action by plaintiff Fieldston Property Owners Association, Inc. (Fieldston) to recover, from its insurers, legal fees incurred by it in an underlying action. Defendant Federal Insurance Company (Federal) moves for summary judgment dismissing the Amended Complaint and Amended Cross-Claims of defendant Hermitage Insurance Company, Inc. (Hermitage), CPLR 3212. Hermitage cross-moves for summary judgment on its cross-claims claims against Federal. For the reasons stated below, the motion is granted and the cross-motion is denied.
The facts of this case have previously been set forth in detail in this court's decision dated December 14, 2004. Briefly Federal issued a Directors and Officers Liability Policy to Fieldston for the term February 13, 1999 to February 13, 2002 Federal also issued a Commercial Umbrella Policy to Fieldston for the term June 5, 2000 to June 5, 2001. Hermitage issued a Commercial General Liability Policy to Fieldston for the term July 5, 2000 to July 5, 2001.
On April 20, 2001, non-party Chapel Farm Estates (Chapel Farm) sent a letter to Fieldston alleging that certain of Fieldston's officers had made false statements and fraudulent claims in connection with Chapel Farm and its right to access its property. On May 14, 2001, Fieldston sent a Notice of Occurrence to Federal regarding Chapel Farm's allegations.
Chapel Farm commenced an action against Fieldston on August 31, 2001, in the U.S. District Court for the Southern District of New York, (Chapel Farm Estates, Inc., v. Moerdler, et al., U.S.M.C. S.D.N.Y. 01 Civ 3601 MBM). Fieldston retained the firm of Salans, Hertzfeld, Heilbronn, Christy & Veiner (Salans, Hertzfeld) as its counsel and Salans, Hertzfeld, notified both Federal and Hermitage of the pendency of the lawsuit. In November of 2001, Hermitage appointed Robert Pagano, Esq. as defense counsel on behalf of Fieldston, subject to a full reservation of rights. Federal notified Fieldston that it would not provide a defense.
Fieldston objected to the appointment of Mr. Pagano as counsel and stated that it preferred to be represented by Salans Hertzfeld. Hermitage took the position that it was entitled to choose counsel pursuant to the policy.
Fieldston asserts that Mr. Pagano eventually told attorneys from Salans, Hertzfeld that he could not handle the Chapel Farm litigation, which caused Fieldston to continue the retention of Salans, Hertzfeld in the Chapel Farm case.
The Chapel Farm action was dismissed on August 19, 2003.
In the meantime, Fieldston commenced the instant declaratory judgment action in January of 2003, seeking to recover its attorneys fees and costs incurred in defending that action. The Complaint alleges that Fieldston incurred in excess of $130,000 in defending the Chapel Farm action. Fieldston asserted claims against both Federal and Hermitage for failure to defend. In an Answer dated February 10, 2003 Hermitage asserted a cross-claim against Federal for contribution in connection with defense costs.
In a decision dated December 14, 2004, this court granted Federal's motion to dismiss the Complaint as to it. The court also dismissed Hermitage's cross-claim to the extent that Hermitage sought contribution from Federal in connection with the Commercial Umbrella policy issued by Federal. However, the court declined to dismiss the cross-claim to the extent that it sought contribution pursuant to the Directors and Officers policy.
Fieldston served an Amended Complaint on June 17, 2005, asserting claims for breach of contract and bad faith. Hermitage served four amended cross-claims on Federal on June 20, 2005.
Federal now moves for summary judgment dismissing the Amended Complaint. However, Fieldston has stipulated to withdraw any claims against Federal in the Amended Complaint that are based on the Commercial Umbrella Policy. Moreover, Fieldston's remaining claims against Federal are the subject of another motion to dismiss which is pending before this court. Therefore, the court need not address those claims in this decision.
Federal also moves for summary judgment dismissing Hermitage's amended cross-claims.1
A party moving for summary judgment is required to make a prima facie showing that it is entitled to judgment as a matter of law, by providing sufficient evidence to eliminate any material issues of fact from the case. Winegard v. NYU Medical Center, 64 NY2d 851 [1985]; Grob v. Kings Realty Associates. LLC, 4 AD3d 394 [2d Dept 2004]. The party opposing must then demonstrate the existence of a factual issue requiring a trial of the action. Zuckerman v. City of New York, 49 NY2d 557, 560 [1980].
Hermitage alleges in its cross-claims that it is entitled to contribution from Federal in the event that it is determined that Fieldston is entitled to coverage from Hermitage in connection with the Chapel Farm action. Hermitage alleges that Federal was responsible for defending Fieldston in the underlying action and that Hermitage is entitled to be reimbursed for monies it spent in defending that action.
To the extent that Hermitage seeks contribution from Federal in connection with the Federal Commercial Umbrella Policy, that claim has already been dismissed by this court in the December 14, 2004 decision. Therefore, it is barred by the doctrine of res judicata and law of the case. See, Mancini v. Hardscrabble Commons Associates, ___ AD2d ___, ___ NYS2d ___, 2006 WL 2065259 [2d Dept 2006] (); City of New York v. Welsbach Elec Corp, ___ AD2d ___, 817 NYS2d 11 [1st Dept 2006].
Hermitage also seeks contribution from Federal based on the Federal Directors & Officers Policy. Federal asserts that this claim must be dismissed because the policy was an excess insurance policy and Hermitage, not Federal, was the primary insurer. Federal argues that its obligations to provide a defense were never triggered because the limits of the primary Hermitage policy were not exhausted.2
"A primary insurer has the primary duty to defend on behalf of [its] insureds.'" General Motors Acceptance Corp v. Nationwide Ins Co, 4 NY3d 451, 455 [2005], quoting, General Acc Fire & Life Assur Corp v. Piazza, 4 NY2d 659, 669 [1958]. "Moreover, a primary insurer has a duty to defend without any entitlement to contribution from an excess insurer.'" Id, at 456 quoting Firemen's Ins Co of Washington, DC v. Federal Ins Co, 233 AD2d 193 [1st Dept 1996]. An excess carrier may choose to participate in the defense in order to protect its interests, but it is not obliged to do so. Id.
The Federal D&O Policy provides that
If any Loss arising from any claim made against the Insurad(s) is insured under any other valid...
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