International Paper Co. v. Continental Cas. Co.

Decision Date20 November 1974
Citation35 N.Y.2d 322,361 N.Y.S.2d 873,320 N.E.2d 619
Parties, 320 N.E.2d 619 INTERNATIONAL PAPER COMPANY, Appellant, v. CONTINENTAL CASUALTY COMPANY, Respondent.
CourtNew York Court of Appeals Court of Appeals

Alfred E. Schretter, Henry L. King and Allan J. Mayer, New York City, for appellant.

Richard J. Burke and John E. Morris, New York City, for respondent.

GABRIELLI, Judge.

Plaintiff seeks to recover from its insurer the legal fees and disbursements incurred in defending an action brought by an employee in which damages were sought for personal injuries sustained on January 28, 1966 by reason of plaintiff's alleged negligence. Because of defendant's disclaimer of liability and refusal to defend the negligence action, plaintiff was required to retain counsel to represent it in the litigation which resulted in a dismissal of the action since it was ultimately determined that the injuries arose out of the employment relationship.

In January, 1965, the defendant insurance company issued a general liability policy insuring plaintiff from January 1, 1965 to January 1, 1968. The policy dealt with the defendant's duty to pay all sums for which the plaintiff insured might become liable as well as with its duty to defend suits brought against the insured. As to the first, the defendant agreed to pay such obligations for personal injuries 'sustained by any person'. As to the duty to defend, the defendant agreed to 'Defend any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent'.

Sometime after the January 28, 1966 incident, Evelyn McDermott, an employee of plaintiff, commenced an action against the plaintiff for bodily injuries in which she alleged, Inter alia, that plaintiff negligently employed one John Crowther, having knowledge of his propensity and instability, he having molested her, and that there was a failure to protect her from such molestations and, further, by paragraph 'SEVENTH' of the complaint that '(o)n or about January 28, 1966, the said John Crowther, an employee of the defendant, threatened plaintiff with a weapon and forced her to accompany him from the premises of the defendant to another place where by force and threats and the use of weapons and physical force on her body he held her captive, forced her to disrobe and attempted to rape her.'

Following service of the papers in the negligence action, the defendant advised plaintiff it would not accept liability and refused to defend, and rested its determination on those other provisions of the policy which provided that it did not apply to injuries sustained by an employee 'if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law' or 'To any obligation for which the insured * * * may be held liable under any workmen's compensation * * * or disability benefits law, or under any similar law'.

It is manifestly clear that the negligence complaint did not allege facts sufficient to find, on its face, that it was subject to these policy exclusions; and, as later to be discussed, if the insurer is to be relieved of a duty to defend it is obligated to demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, In toto, are subject to no other interpretation. As a consequence, even if the complaint fails to articulate adequately an action grounded solely in negligence, the insurer is required to defend. * An insured's right to be accorded legal representation is a contractual right and consideration upon which his premium is in part predicated, and this right exists even if debatable theories are alleged in the pleading against the insured.

We construe the complaint as one asserting a common-law right to damages for personal injuries caused by the employer's negligence and that the pleading could well be interpreted to refer clearly to an occurrence that not only took place away from the premises but also not within the scope of or during the course of the employment.

In plain and concise language, and without equivocation, the defendant obligated itself to defend any action brought against the plaintiff insured whenever the complaint alleged a cause of action in negligence covered by the policy, regardless of the ultimate factual determination of the occurrence. As we have noted, the policy required it to 'Defend any suit against the insured alleging * * * injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent'; and this is so whether or not the defendant would have been under a duty to pay, had the employee prevailed in the negligence action. Such an eventuality need not here concern us for it is eminently clear that the defendant had agreed to Defend the suit. Even if it be possible, or even probable, from the allegations of the complaint that the employee would not...

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