In re the Brunswick Hospital Center, Inc.

• Citation: 399 B.R. 582
• Decision Date: 06 February 2009
• Docket Number: Bankruptcy No. 07-40290-CEC.,Adversary No. 08-1070-CEC.
• Parties: In re THE BRUNSWICK HOSPITAL CENTER, INC., Debtor. Physicians' Reciprocal Insurers, Plaintiff, v. The Brunswick Hospital Center, Inc. and Cynthia Nester, Defendants.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York

399 B.R. 582

In re THE BRUNSWICK HOSPITAL CENTER, INC., Debtor.

Physicians' Reciprocal Insurers, Plaintiff, v. The Brunswick Hospital Center, Inc. and Cynthia Nester, Defendants.

Bankruptcy No. 07-40290-CEC.

Adversary No. 08-1070-CEC.

United States Bankruptcy Court, E.D. New York.

February 6, 2009.

COPYRIGHT MATERIAL OMITTED

Gabriel Mignella, Law Office of James W. Tuffin, Manhasset, New NY, Attorney for Physicians' Reciprocal Insurers.

Kevin G. Snover, North Babylon, NY, Attorney for Cynthia Nester.

Richard McCord, Carol Glick, Certilman Balin Adler & Hyman, LLP, East Meadow, NY, Attorney for The Brunswick Hospital Center, Inc.

DECISION

CARLA E. CRAIG, Chief Judge.

This matter comes before the Court on the motion of Physicians' Reciprocal Insurers ("PRI") for summary judgment in this adversary proceeding, which it commenced against The Brunswick Hospital Center, Inc. ("Brunswick") and Cynthia Nester ("Ms.Nester"), seeking a declaratory judgment that Brunswick's general liability policy, which was issued by PRI, does not provide coverage for the claims alleged in the action entitled Cynthia Nester v. Brunswick Hospital (the "Nester Claim"), pending in New York Supreme Court. Brunswick opposes PRI's motion, and requests a declaration stating that PRI cannot disclaim coverage of the Nester Claim based on any exclusion contained in the general liability policy, and limiting Brunswick's liability regarding the Nester Claim to $25,000.

Also before the Court is Ms. Nester's cross-motion for summary judgment determining that the Nester Claim is covered by the general liability policy issued by PRI to Brunswick. PRI opposes Ms. Nester's cross-motion.

For the following reasons, PRI's motion is granted, Ms. Nester's motion is denied, and Brunswick's request for a determination that its liability on the Nester Claim is limited to $25,000 is denied without prejudice.

Jurisdiction

This Court has jurisdiction over this core proceeding under 28 U.S.C. §§ 1334(b) and 157(b), the Eastern District of New York standing order of reference dated August 28, 1986, and the order dated October 17, 2007 confirming the plan of reorganization in this case. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.

Background

The following facts are undisputed.¹

On March 10, 2003, Ms. Nester was admitted to Brunswick for rehabilitation services following knee replacement surgery. At the time she was admitted, a nurse determined that Ms. Nester was at a high risk for falling, and placed a yellow wristband on her wrist, to alert all staff dealing with Ms. Nester that they were required to follow Brunswick's fall prevention protocol in caring for her. (Pl.Ex. T at 7.) According to this protocol, a patient with a high risk of falling must be "offer[ed] a bedpan, urinal or commode or assist[ed] to the bathroom frequently." (Pl.Ex. U at 3.) Upon admission, the nurse also documented that Ms. Nester was given "[i]nstructions [n]ot to [g]et [u]p without [a]ssistance." (Pl.Ex. T at 1.)

At the time of the accident, Brunswick was insured by PRI pursuant to two insurance policies, a general liability policy and a professional liability policy. While the general liability policy has a deductible of $25,000 per occurrence, the professional liability policy has a deductible of $300,000 per occurrence. An endorsement to the general liability policy contains the following exclusion (the "Exclusion"):

This insurance does not apply to "bodily injury", "property damage", "personal injury" or "advertising injury" arising out of:

1. The rendering or failure to render:

a. Medical, surgical, dental, x-ray or nursing service, treatment, advice or instruction or the related furnishing of food or beverages; [or]

b. Any health or therapeutic service, treatment, advice, or instruction ...

(Pl.Ex.II-2.)

On January 30, 2004, Ms. Nester commenced an action against Brunswick asserting a claim for negligence and seeking compensatory and punitive damages for her injuries. Ms. Nester claimed that she sustained injuries on March 11, 2003, when she fell after a nurse's aide instructed her to walk to the bathroom, instead of bringing her a bedpan. (Pl.Ex. A at ¶¶ 9-12.) Ms. Nester stated that she did not fall because of liquid or objects on the floor. (Pl.Ex. A at 47.)

On April 6, 2004, PRI sent a letter to Brunswick, Ms. Nester, and Ms. Nester's counsel stating that the Nester Claim is not covered by Brunswick's general liability policy pursuant to the Exclusion, and that Brunswick's professional liability policy does not cover Ms. Nester's claim for punitive damages.

On October 12, 2005, Brunswick filed a voluntary petition under chapter 11 of the Bankruptcy Code, staying Ms. Nester's action against Brunswick.

On May 31, 2006, Brunswick filed a motion to approve procedures to liquidate medical malpractice claims, by engaging in mediation or lifting the automatic stay to liquidate the claim in a court of competent jurisdiction. On August 29, 2006, the Court granted the motion.

On November 6, 2006, the Court so-ordered a stipulation between Brunswick and Ms. Nester lifting the automatic stay to permit Ms. Nester's claim to be liquidated in state court.

On May 23, 2007, the Court amended the Mediation Order to extend the claims liquidation procedures to claimants asserting negligence claims against Brunswick.

On December 20, 2007, Ms. Nester and Brunswick executed a stipulation liquidating the Nester Claim at $225,000. The stipulation was never submitted to the Court for approval.

On March 3, 2008, PRI filed a motion seeking relief from the automatic stay to commence this action, and sought to stay Ms. Nester's action against Brunswick pending the determination of this action.

On April 18, 2008, PRI commenced this action. Thereafter, on April 30, 2008, the Court stayed the enforcement of the stipulation dated December 20, 2007, as well as Ms. Nester's action against Brunswick, pending the determination of this adversary proceeding.

On May 16, 2008, Brunswick filed an answer to the complaint and asserted a counterclaim for a declaratory judgment that the general liability policy provides coverage for the Nester Claim and that PRI cannot disclaim coverage based on any exclusion. Ms. Nester never filed an answer in this adversary proceeding.

On August 8, 2008, PRI filed its motion for summary judgment, and on September 12, 2008, Ms. Nester filed a cross-motion for summary judgment. A hearing was held on the motions on October 8, 2008.²

Summary Judgment Standard

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When cross-motions for summary judgment are pending, '[e]ach individual summary judgment motion must be evaluated independently.'" Healey v. Thompson, 186 F.Supp.2d 105, 113 (D.Conn.2001), aff'd in part, vacated in part on other grounds, Lutwin v. Thompson, 361 F.3d 146 (2d Cir.2004). A court is not required to grant one party's motion because the other party's motion was denied. Otis Elevator Co. v. Factory Mut. Ins. Co., 353 F.Supp.2d 274, 279 (D.Conn.2005).

When deciding a motion for summary judgment, the court's function is not to resolve disputed issues of fact, but only to determine whether there is a genuine issue of material fact to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is considered material if it "might affect the outcome of the suit under the governing law." Id. at 248, 106 S.Ct. 2505. No genuine issue exists "unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S.Ct. 2505 (citations omitted). On the other hand, if "there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper." Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994). "The non-moving party must show that there is more than a metaphysical doubt regarding a material fact and may not rely solely on self-serving conclusory statements." Rosenman & Colin LLP v. Jarrell (In re Jarrell), 251 B.R. 448, 450-51 (Bankr.S.D.N.Y.2000) (citations omitted). When deciding cross-motions for summary judgment, the court must "tak[e] care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Otis Elevator, 353 F.Supp.2d at 279.

Discussion

1. The General Liability Policy

PRI argues that the nurse's aide's conduct alleged by Ms. Nester constitutes a "nursing service" or "health or therapeutic service, treatment, advice or instruction," as provided in the Exclusion, and that coverage for Ms. Nester's injuries arising from that conduct is excluded from the general liability coverage.³

Brunswick argues that the terms of the Exclusion are ambiguous, and that Ms. Nester's interpretation of the general liability policy to cover the nurse's aide's conduct is reasonable. Brunswick argues that PRI therefore cannot disclaim coverage of Ms. Nester's claim under the general liability policy.

Under New York law, the terms of an insurance contract must be "interpreted to give effect to the intent of the parties as expressed in the clear language of the contract." Parks Real Estate Purchasing Group v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 42 (2d Cir.2006) (quoting Morgan Stanley Group Inc. v. New England Ins. Co., 225 F.3d 270, 275 (2d Cir.2000)). When the provisions are clear and...