Graphic Arts Mut. Ins. Co. v. Pine Bush Cent. Sch. Dist.

• Decision Date: 09 March 2018
• Docket Number: 2015–11565,Index No. 6304/15
• Citation: 73 N.Y.S.3d 241,159 A.D.3d 769
• Parties: GRAPHIC ARTS MUTUAL INSURANCE COMPANY, appellant, v. PINE BUSH CENTRAL SCHOOL DISTRICT, et al., respondents.
• Court: New York Supreme Court — Appellate Division

159 A.D.3d 769

73 N.Y.S.3d 241

GRAPHIC ARTS MUTUAL INSURANCE COMPANY, appellant,

v.PINE BUSH CENTRAL SCHOOL DISTRICT, et al., respondents.

2015–11565

Index No. 6304/15

Supreme Court, Appellate Division, Second Department, New York.

Argued December 19, 2017

March 9, 2018

Lester Schwab Katz & Dwyer, LLP (Simpson Thacher & Bartlett, LLP, New York, N.Y. [Jonathan K. Youngwood, Jonathan S. Zelig, and Lauren E. Repole ], of counsel), for appellant.

Hogan Lovells US, LLP, New York, N.Y. (Ira M. Feinberg of counsel), for respondents.

L. PRISCILLA HALL, J.P., LEONARD B. AUSTIN, SANDRA L. SGROI, LINDA CHRISTOPHER, JJ.

DECISION & ORDER

Appeal from an order of the Supreme Court, Orange County (Elaine Slobod, J.), dated October 15, 2015. The order, insofar as appealed from, granted those branches of the defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and those branches of the defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action are denied.

The plaintiff issued four consecutive Commercial General Liability (hereinafter CGL) and School District and Educators Legal Liability (hereinafter SDELL) primary policies, as well as CGL umbrella policies, to the defendant Pine Bush Central School District (hereinafter the School District) covering each academic year from July 1, 2008, to July 1, 2012. In an action entitled T.E. v. Pine Bush Central School Dist., commenced in the United States District Court for the Southern District of New York (case number 12–CV–2303) (hereinafter the underlying action), five students alleged that the School District, the defendant Pine Bush Central School District Board of Education, the defendant Philip G. Steinberg, as the superintendent of the School District, the defendant Eric Winter, as the principal of Pine Bush Elementary School and the former assistant principal of Crispell Middle School, the defendant Steve Fisch, as the former principal of Pine Bush Elementary School, the defendant Robert Peters, as the former assistant principal of Crispell Middle School (hereinafter collectively the defendants), and other administrators violated their civil rights by being deliberately indifferent to anti-Semitic harassment and discrimination perpetrated by other students against them. In April 2012, Steinberg notified the plaintiff of the underlying action and the plaintiff advised the School District that it would pay the costs of the defense in the underlying action, but reserved its right to disclaim coverage upon further investigation of the allegations. The plaintiff eventually disclaimed any duty to indemnify the defendants in the underlying action. However, it continued to provide a defense through the resolution of the underlying action.

During mediation, the parties to the underlying action agreed to settle that action for a total of $3,000,000 in compensatory damages and $1,480,000 in attorneys' fees. A representative of the plaintiff attended the mediation. The plaintiff did not contribute toward the settlement.

Thereafter, the plaintiff commenced this action against the defendants alleging five causes of action. The first four causes of action sought a judgment declaring that the plaintiff is not obligated to indemnify the defendants in the underlying action under the various policies issued by it to the School District. According to the allegations set forth in the complaint with respect to those causes of action, the plaintiffs in the underlying action, in their first amended complaint, based their claims against the defendants on intentional discriminatory conduct related to disparate treatment. The plaintiff in this action alleged, inter alia, that exclusions to the policies issued to the School District precluded coverage for claims seeking damages stemming from intentional discriminatory conduct, and that those claims did not fall under the definition of either a covered "occurrence" or "loss" as those terms were defined by the policies. The fifth cause of action sought a declaration that, in the event the plaintiff was found to have a duty to indemnify the defendants in the underlying action, the duty to indemnify would be limited to that part of the settlement that was found to be reasonable, since the plaintiff alleged that the settlement amount in the underlying action was excessive.

The defendants moved pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint. The Supreme Court granted those branches of the motion which were to dismiss the first, second, third, and fourth causes of action, but denied that branch of the motion which was to dismiss the fifth cause of action. The plaintiff appeals from so much of the order as granted those branches of the defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action.

A motion to dismiss on the basis of CPLR 3211(a)(1) may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; see 533 Park Ave. Realty, LLC v. Park Ave. Bldg. & Roofing Supplies, LLC, 156 A.D.3d 744, 746, 68 N.Y.S.3d 110 ; 413 Throop, LLC v. Triumph, the Church of the New Age, 153 A.D.3d 1306, 1307, 61 N.Y.S.3d 307 ). For evidence to be considered documentary, it "must be unambiguous and of undisputed authenticity" ( Fontanetta v. John Doe 1, 73 A.D.3d 78, 86, 898 N.Y.S.2d 569 ).

On a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d at 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ; Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 ; Sposato v. Paboojian, 110 A.D.3d 979, 979, 974 N.Y.S.2d 251 ; Constructamax, Inc. v. Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 109 A.D.3d 574, 574, 971 N.Y.S.2d 48 ). Where, as here, evidentiary material is submitted and considered on a motion pursuant to CPLR 3211(a)(7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one, and unless it has been shown that a material fact claimed by the plaintiff to be one is not a fact at all, and unless it can be said that no significant dispute exists regarding it, dismissal should not eventuate (see Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17 ; Sposato v. Paboojian, 110 A.D.3d at 979, 974 N.Y.S.2d 251 ; Constructamax, Inc. v. Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 109 A.D.3d at 574–575, 971 N.Y.S.2d 48 ).

Here, in considering dismissal of the first four causes of action pursuant to CPLR 3211(a)(1), the documentary evidence submitted by the defendants, to wit, the insurance policies, does...