Lumbermens Mutual Cas. Co. v. Town of Pound Ridge

• Decision Date: 14 June 1966
• Docket Number: No. 287,Docket 30004.,287
• Citation: 362 F.2d 430
• Parties: LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff-Appellee, v. TOWN OF POUND RIDGE, COUNTY OF WESTCHESTER, and Elizabeth Garfield, as Executrix of the Estate of Samuel H. Garfield, deceased, and Elizabeth Garfield, individually, Defendants-Appellants, Mary Stolz, William B. Stolz, Norman W. Cook and Nancy B. Cook, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

362 F.2d 430 (1966)

LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff-Appellee, v. TOWN OF POUND RIDGE, COUNTY OF WESTCHESTER, and Elizabeth Garfield, as Executrix of the Estate of Samuel H. Garfield, deceased, and Elizabeth Garfield, individually, Defendants-Appellants, Mary Stolz, William B. Stolz, Norman W. Cook and Nancy B. Cook, Defendants.

No. 287, Docket 30004.

United States Court of Appeals Second Circuit.

Argued March 23, 1966.

Decided June 14, 1966.

John C. Marbach, White Plains, N. Y. (Bleakley, Platt, Schmidt, Hart & Fritz, White Plains, N. Y., with him on the brief), for appellant Town of Pound Ridge.

Milton G. Sincoff, New York City (Gerald A. Robbie, Kreindler & Kreindler, New York City, with him on the brief), for appellant Elizabeth Garfield.

Perrell, Nielsen & Stephens, New York City, for defendant-appellant, County of Westchester.

Sidney A. Schwartz, New York City (Edward Ash and Alexander, Ash & Schwartz, New York City, with him on the brief), for appellee.

Before LUMBARD, Chief Judge, and WATERMAN and MOORE, Circuit Judges.

MOORE, Circuit Judge:

This is an appeal by the defendants from a declaratory judgment in an action brought under 28 U.S.C.A. § 2201 holding that the plaintiff insurance company, Lumbermens Mutual Casualty Company, was not obligated under a policy issued to the insured defendant, Town of Pound Ridge, to defend the insured in actions pending in the Supreme Court of New York, County of Westchester, nor to indemnify the insured or pay any judgments which may be entered against it in such actions.

The state court actions arose from a collision between two cars on a county road in Westchester County on February 11, 1961. Samuel H. Garfield, a passenger in one of the cars, was killed. His widow brought suit in her own behalf and as his executrix against the driver-owner of the car in which her husband had been riding; the driver and the owner of the other car; the County of Westchester; and the Town of Pound Ridge. The suit against Pound Ridge proceeded on the theory that the town, which had entered into a contract with Westchester County to remove snow and ice from the road, was negligent:

"in improperly and carelessly removing snow and ice from said road; in improperly and carelessly storing snow and moving snow in close proximity to said road with the knowledge that thawing temperatures followed by freezing temperatures would produce an icy condition thereon that was dangerous to motor vehicles; in failing to maintain said road in a reasonably safe condition and free from ice thereon after receiving actual and constructive notice; in failing to sand said road; in sanding said road in an inadequate and careless manner; and in failing to warn plaintiff and plaintiff\'s decedent of the danger. * * *"

The driver-owner of the car in which Garfield had been riding brought suit in the New York Supreme Court against Pound Ridge on a similar theory, also naming Westchester as a defendant.

The policy issued by Lumbermens to Pound Ridge was a comprehensive general liability policy, under which Lumbermens agreed "to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident." Similar coverage was provided for property damage liability. The policy went on to provide that "with respect to such insurance as is afforded by this policy, the company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, * * *."

The standard exclusions in the policy were supplemented by a rider, by its terms effective on the same day as the policy itself, as follows:

"EXCLUSION OF PRODUCTS HAZARD

It is agreed that the policy does not apply to the products hazard as defined herein."

The following definition of "products hazard" appears in the main body of the policy:

"(c) Products Hazard. The term `products hazard\' means

(1) goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured or on premises for which the classification stated in division (A) of the declarations excludes any part of the foregoing; provided, such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold;

(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; provided further, the following shall not be deemed to be `operations\' within the meaning of this paragraph: (a) pick-up or delivery, except from or onto a railroad car, (b) the maintenance of vehicles owned or used by or in behalf of the insured, (c) the existence of tools, uninstalled equipment and abandoned or unused materials and (d) operations for which the classification stated in division (A) of the declarations specifically includes completed operations."

The District Court found that no snow clearing operations were actually in progress at the scene and at the time of the accident and held that any possible liability of Pound Ridge was excluded from the coverage of the policy by the "completed operations" exclusion.

There is no dispute between the parties as to the applicability of New York law. The insurance company does business in New York; the insured is a New York municipal corporation; and the policy was delivered and countersigned in New York. See Nobile v. Travelers Indem. Co., 4 N.Y.2d 536, 542, 176 N.Y.S.2d 585, 152 N.E.2d 33 (1958); United States Mortgage & Trust Co. v. Ruggles, 258 N.Y. 32, 38, 179 N.E. 250, 79 A.L.R. 802 (1932); Employers Liab. Assur. Corp. v. Aresty, 11 A.D.2d 331, 205 N.Y.S.2d 711 (1st Dep't 1960), aff'd without opinion, 11 N.Y.2d 696, 225 N.Y.S.2d 764, 180 N.E.2d 916 (1962).

Under the law of New York, "if a policy of insurance is written in such language as to be doubtful or uncertain in its meaning, all ambiguity must be resolved in favor of the policy holder and against the company." Tonkin v. California Ins. Co., 294 N.Y. 326, 328-329, 62 N.E.2d 215, 216, 160 A.L.R. 944 (1945); Hartol Products Corp. v. Prudential Ins. Co., 290 N.Y. 44, 49, 47 N.E.2d 687 (1943). An insurance policy "should be so plain and unambiguous that men of average intelligence who invest in these contracts may know and understand their meaning and import." Hartol Products, supra, at 50, 47 N.E.2d at 690; Janneck v. Metropolitan Life Ins. Co., 162 N.Y. 574, 578, 57 N.E. 182 (1900).

Applying these tests to the case before us, we find that the completed operations clause did not unambiguously exclude from coverage the risks which form the basis of the pending state actions, and that the town reasonably could have understood that the policy covered liability of the sort asserted in the state actions.

The rider entitled "EXCLUSION OF PRODUCTS HAZARD" is expressly limited to "the products hazards as defined" in the policy. In turning to the heading "3. Definitions" in the policy, paragraph (c) (2) thereof states under the subtitle "Products Hazard" that "the term `products hazard' means," among other things, "operations, if the accident occurs after such operations have been completed or abandoned." Conversely, if the "operations" were not completed, they would not fall within the "Products Hazard" definition and hence would not be covered by the exclusionary rider.

The insurer...