Hartford Acc. and Indem. Co. v. Michigan Mut. Ins. Co.
| Decision Date | 03 May 1984 |
| Citation | 61 N.Y.2d 569,475 N.Y.S.2d 267,463 N.E.2d 608 |
| Parties | , 463 N.E.2d 608 HARTFORD ACCIDENT AND INDEMNITY COMPANY, Individually and as Subrogee of L.A.D. Associates, Inc., and Another, Respondent, v. MICHIGAN MUTUAL INSURANCE CO., Appellant, et al., Defendant, and Montfort, Healy, McGuire and Salley et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Kevin B. Lynch, Babylon, Asher Marcus, Forest Hills, and Peter James Johnson, New York City, for appellant.
Steven B. Prystowsky, New York City, for Hartford Acc. and Indem. Co., respondent.
An insurer which carries both the general liability coverage and the workers' compensation coverage of three affiliated companies may be liable, when an employee of one of the companies sues the other two for injuries incurred in the course of his employment, for failure to comply with the demand of the excess carrier for the same three companies that the two companies sued implead the employer company, if the primary carrier cannot show a good-faith basis for its refusal. The order of the Appellate Division, 93 A.D.2d 337, 462 N.Y.S.2d 175, should, therefore, be affirmed, with costs.
Michigan Mutual Insurance Co. insured DeFoe Corporation and its two subsidiaries, L.A.D. Associates, Inc., and D.A.L. Construction Corporation, under a general liability policy with coverage of $1,000,000. It was also the workers' compensation insurer for the same three companies. Hartford Accident and Indemnity Co. provided excess coverage of $5,000,000 to the same three companies. An employee of D.A.L. (Davor Gobin) was injured in the course of his employment. Though prevented by the exclusivity provision of the Workers' Compensation Law ( § 11) from suing D.A.L., Gobin began a negligence action against DeFoe and L.A.D. Notwithstanding that Hartford, as excess carrier, demanded that D.A.L. be impleaded in the Gobin action, Michigan Mutual and the attorneys representing it failed to do so. The Gobin action was settled for $1,400,000, Hartford paying $400,000, but as part of the settlement proceeding stating that it reserved the right to pursue any remedies against Michigan Mutual.
Hartford then began the present action against Michigan Mutual and the law firm which at its behest represented DeFoe and L.A.D. in the Gobin action. Involved on this appeal are only the fourth through seventh causes of action against Michigan Mutual for inducing breach by DeFoe of the cooperation clause of Hartford's policy, for inducing a like breach by L.A.D., for bad faith in failing to cause D.A.L. to be impleaded in the Gobin action, and for conspiracy to deprive DeFoe and L.A.D. of an adequate defense and representation in the Gobin action by not impleading D.A.L. Michigan Mutual moved for summary judgment as to those causes of action. Special Term treated the motion as one to dismiss and dismissed insofar as the causes of action were stated to be in favor of Hartford in its individual capacity but otherwise denied. On appeal the Appellate Division dealt with the motion as one for summary judgment but found triable issues of fact and, one Justice dissenting, modified by reinstating the causes of action by Hartford in its individual capacity and otherwise affirmed. It also granted Michigan Mutual's motion for leave to appeal and certified to us the question whether its order was properly made.
Michigan's contention that the cooperation clause of the...
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