Munzer v. St. Paul Fire and Marine Ins. Co.

• Decision Date: 23 February 1989
• Citation: 145 A.D.2d 193,538 N.Y.S.2d 633
• Parties: I. Walter MUNZER et al., Respondents-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al., Appellants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 633

538 N.Y.S.2d 633

145 A.D.2d 193

I. Walter MUNZER et al., Respondents-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al Appellants-Respondents.

Supreme Court, Appellate Division Third Department.

Feb. 23, 1989.

Adams, Duque & Hazeltine (Peter D. FitzGerald of La Pann, Reardon, Morris, FitzGerald & Firth, P.C., Glens Falls, of counsel), for St. Paul Fire and Marine Ins. Co. and another, appellants-respondents.

Carter, Conboy, Bardwell, Case, Blackmore & Napierski, Albany (Marilyn E. Kerst, Thomas W. Brunner of Wiley, Rein & Fielding, Washington, D.C., of counsel), for Maryland Cas. Co., appellant-respondent.

Miller, Mannix & Pratt, P.C. (Benjamin R. Pratt, Jr., Glens Falls, of counsel), for respondents-appellants.

Mudge, Rose, Guthrie, Alexander & Ferdon (Paul R. Koepff and Kathleen A. Gallagher, New York City, of counsel), for Insurance Environmental Litigation Association, amicus curiae.

Before CASEY, J.P., and MIKOLL, YESAWICH, MERCURE and HARVEY, JJ.

HARVEY, Justice.

Plaintiffs commenced this action against defendants, St. Paul Fire and Marine Insurance Company, St. Paul Mercury Insurance Company (hereinafter collectively referred to as St. Paul) and Maryland Casualty Company (hereinafter Maryland), seeking, inter alia, a declaration that defendants wrongfully refused to indemnify or represent them in various actions instituted against them as a result of plaintiffs' operation from 1971 through June 1984 of a mercury thermometer manufacturing factory in Poultney, Vermont. Plaintiffs allege that they are entitled to such representation and indemnification pursuant to policies of general liability insurance apparently issued to them by defendants in New York.

The record shows that during the manufacturing process at the plant there was inadvertent breakage of thermometers or spillage of mercury which resulted in excessive levels of mercury vapor in the air. Apparently there was further contamination of the floors and walls of the plant which may have been carried to the automobiles and homes of plant employees on their shoes and clothing. It also appears that the plant's drains and sewage pipes, that led to the Poultney Sewage Disposal Plant, became contaminated due to plaintiffs pouring used mop water containing mercury down the drains.

The following actions or proceedings have been instituted against plaintiffs in Vermont: (1) an action by Vermont and others for money damages and other relief for the contaminati of the Poultney sewer system, (2) a proceeding by the Vermont Department of Health to compel plaintiffs to decontaminate the homes and automobiles of plaintiffs' employees, and (3) actions commenced by former employees of plaintiffs for money damages for personal injuries and property damage alleged to have been caused by mercury contamination. All defendants represented plaintiffs in the action by Vermont but refused representation in the Department of Health proceeding. Only Maryland refused to represent plaintiffs in the actions commenced by plaintiffs' former employees.

The Vermont action resulted in a judgment, entered by stipulation, finding, inter alia, that plaintiffs had violated Vermont water pollution control laws and required plaintiffs to clean up the plumbing and sewers connected to the Poultney plant, as well as the sewage treatment plant itself. Alternatively, the judgment required plaintiffs to pay money damages. In the administrative proceeding, plaintiffs were required by an order of the Vermont Department of Health to decontaminate the homes and automobiles of the former employees. The suits by the former employees are still pending.

Plaintiffs' complaint in this action seeks not only a declaration of plaintiffs' rights of representation and indemnification in any completed or pending lawsuit but also in any action or proceeding for mercury contamination brought against them in the future. Before all discovery proceedings were completed in this action, plaintiffs moved for partial summary judgment for the declaratory relief previously described. Supreme Court denied all aspects of the motion except for a declaration that Maryland was required to defend plaintiffs in the pending employee suits. All parties appeal from the order entered.

Elementary to the determination of this appeal is a consideration of the limitations to the entitlement of summary relief encompassed by CPLR 3212. This statute provides, in relevant part, that:

A motion for summary judgment shall be supported by affidavit, by a copy of the pleadings and by other available proof, such as depositions and written admissions. The affidavit shall be by a person having knowledge of the facts; it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit. The motion shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party. Except as provided in subdivision (c) of this rule the motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact (CPLR 3212[b] ).

Summary judgment is a drastic remedy and "should not be granted where there is any doubt as to the existence of a triable issue" (Moskowitz v. Garlock, 23 A.D.2d 943, 944, 259 N.Y.S.2d 1003; see, State Bank of Albany v. McAuliffe, 97 A.D.2d 607, 467 N.Y.S.2d 944, appeal dismissed 61 N.Y.2d 758). Accordingly, the focus of the court must be on issue identification rather than issue determination (see, Cunningham v. General Elec. Credit Corp., 96 A.D.2d 502, 464 N.Y.S.2d 543).

With these principles in mind, the first issue to be addressed is whether Supreme Court properly granted plaintiffs' summary judgment motion to the extent of holding that Maryland has a duty to defend plaintiffs in the pending lawsuits instituted by plaintiffs' former employees. The court determined that the remaining issues raised by the parties were factual ones requiring resolution at trial. We agree with the result arrived at by Supreme Court although our reasons for finding that Maryland has a duty to defend in the employee suits differ from those stated by Supreme Court.

It is settled law that:

An insurer's duty to defend an action against the insured is measured, in the first instance, by the allegations in the plaintiff's pleadings, and if such pleadings state facts bringing the injury within the coverage of the policy, the insurer must defend, irrespective of the insured's ultimate liability to the plaintiff (7C Appleman, Insurance Law and Practice § 4683, at 42 [Berdal ed.] ).

(See, Zurich-American Ins. Cos. v. Atlantic Mut. Ins. Cos., 139 A.D.2d 379, 384, 531 N.Y.S.2d 911.) Here, as outlined by Maryland, coverage under the Maryland liability insurance policies is limited to sums which the insured is "legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence". An "occurrence" in the Maryland policies is defined as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured" (emphasis supplied).

Maryland vigorously argues that it has no duty to defend or indemnify in any of the suits brought against plaintiffs because the mercury contamination was not an "occurrence" as defined in its policies. Supreme Court premised Maryland's duty to defend upon the alleged invalidity of a "pollution exclusion" clause contained in the Maryland policies due to the existence of a Vermont law or policy disallowing such clauses during the pertinent time periods. Our review of the record reveals, however, that Maryland had earlier conceded the inapplicability of the pollution exclusion clause because it had previously accepted its deletion after receiving a notice sent by the Vermont Department of Banking and Insurance. Maryland does not presently assert the applicability of that clause.

Nonetheless, our examination of the allegations contained in the complaints of the employee suits shows that they in fact did trigger Maryland's duty to defend as a matter of law. On their face, the complaints allege personal and property damage by plaintiffs bringing them within the scope of the policies' coverage (see, Zurich-American Ins. Cos. v. Atlantic Mut. Ins. Cos., 139 A.D.2d 379, 384, 531 N.Y.S.2d 911, supra ). This holds true regardless of defendants' ultimate obligation to indemnify, which, in the case of the pending employee suits, cannot be resolved until trial (see, id.). Significantly, "[e]ven where the complaint does not state facts with sufficient definiteness to clearly bring the case within or without the coverage of the policy * * * if there is potentially a case within the coverage of the policy the insurer is obliged to defend" (Lapierre, Litchfield & Partners v. Continental Cas. Co., 59 Misc.2d 20, 23, 297 N.Y.S.2d 976, mod. 32 A.D.2d 353, 302 N.Y.S.2d 370). Moreover, an insurer denying a duty to defend has the burden to establish as a matter of law on a summary judgment motion that the injury complained of falls outside the coverage of the policy or that claims against the insured are unambiguously exempted from coverage (see, Smith Jean, Inc. v. Royal Globe Ins. Cos., 139 A.D.2d 503, 504, 526 N.Y.S.2d 604). As the following discussion will show, defendants have established neither assertion as a matter of law and Supreme Court properly delineated Maryland's duty to defend.

With respect to defendants' duty to indemnify in the completed action and proceeding, ¹ an obligation distinct from any duty to defend (Zurich-American Ins. Cos. v. Atlantic Mut. Ins. Cos., supra ), plaintiffs contend that their liability in the various suits resulted from a series of unintended or unexpected events that the...