New Hampshire Ins. Co. v. Jefferson Ins. Co. of New York

• Decision Date: 28 March 1995
• Citation: 624 N.Y.S.2d 392,213 A.D.2d 325
• Parties: NEW HAMPSHIRE INSURANCE COMPANY, Plaintiff-Respondent, v. JEFFERSON INSURANCE COMPANY OF NEW YORK, Defendant-Appellant, and Camp Merrimac, Inc., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 392

624 N.Y.S.2d 392

213 A.D.2d 325

NEW HAMPSHIRE INSURANCE COMPANY, Plaintiff-Respondent, v. JEFFERSON INSURANCE COMPANY OF NEW YORK, Defendant-Appellant, and Camp Merrimac, Inc., Defendant.

Supreme Court, Appellate Division,

First Department.

March 28, 1995.

E.A. Portugese, for plaintiff-respondent.

M.I. Nagel, for defendant-appellant.

Before WALLACH, J.P., and RUBIN, KUPFERMAN and TOM, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County (Diane A. Lebedeff, J.), entered November 1, 1993, which granted plaintiff New Hampshire Insurance Company's motion for summary judgement to the extent of requiring defendant Jefferson Insurance Company to defend Camp Merrimac, Inc. in the underlying tort action, and which denied Jefferson Insurance Company's cross-motion to dismiss the complaint, reversed, on the law, the motion denied and the cross-motion granted, without costs.

David Vainchenker, plaintiff in the underlying tort action, sustained injury when he was struck by a motor vehicle owned by Camp Merrimac, Inc., defendant in the underlying tort action, and operated by one of its employees. New Hampshire Insurance Company, which issued an automobile liability policy to the camp, commenced this action against Jefferson Insurance Company, which issued a general liability policy to the camp, seeking a judgment declaring that Jefferson is obligated to defend and indemnify Camp Merrimac, Inc. Alternatively, New Hampshire seeks a declaration that Jefferson is obligated to share equally all expenses which may be incurred in defending the Vainchenker action. Jefferson cross-moved for summary judgement dismissing New Hampshire's complaint.

As the camp's automobile liability insurer, New Hampshire does not contest its duty to defend on the grounds that the complaint in the underlying action alleges negligence in the operation of an automobile. However, it contends that allegations in the complaint asserting negligent supervision of the campers implicates Jefferson's duty to defend under the terms of its general liability policy.

Jefferson argues that, irrespective of the theory of liability stated in the complaint, this accident clearly falls within the exclusion clause of its general liability policy. It omits from coverage all "[b]odily injury * * * arising out of the ownership, maintenance, operation [or] use * * * of (1) any automobile * * * owned or operated by or rented or loaned to any insured, or (2) any other automobile * * * operated by any person in the course of his employment by any insured." Supreme Court granted plaintiff's motion to the extent of declaring that both insurers are obligated to share equally in providing a defense to Camp Merrimac, denying defendant's cross-motion to dismiss the complaint.

The duty of an insurer to defend is more expansive than its duty to indemnify (Goldberg v. Lumber Mut. Cas. Insurance Co., 297 N.Y. 148, 154, 77 N.E.2d 131). The duty to defend arises as a matter of contractual obligation to the insured, whereas liability for indemnification rests on principles of basic negligence (Monarch Ins. Co. of Ohio v. Hetherly, 148 Misc.2d 594, 560 N.Y.S.2d 745, aff'd 182 A.D.2d 1138, 586 N.Y.S.2d 764). Hence, the duty to defend is triggered if facts alleged in the complaint fall within the scope of coverage intended by the parties at the time the contract was made (Album Realty Corp. v. American Home Assurance Co., 80 N.Y.2d 1008, 592 N.Y.S.2d 657, 607 N.E.2d 804). Similarly, the scope of exclusions written into an insurance contract is determined by the intent of its execution. An insurer has the burden of establishing that any exclusion is "unambiguously applicable to the pleaded allegations" (Duncan Petroleum v. Aetna Ins. Co., 96 A.D.2d 942, 943, 466 N.Y.S.2d 394, aff'd 61 N.Y.2d 665, 472 N.Y.S.2d 88, 460 N.E.2d 229).

In the present action, Supreme Court found that the allegations of negligent supervision of children in its care and negligent operation of an automobile by its employee constitute two distinct causes of action that, together, obligate both New Hampshire and Jefferson to defend the underlying action (citing Prashker v. United States Guarantee Co., 1 N.Y.2d 584, 590-591, 154 N.Y.S.2d 910, 136 N.E.2d 871; Cordial Greens Country Club v. Aetna Cas. & Sur. Co., 50 A.D.2d 688, 375 N.Y.S.2d 431, mod. 41 N.Y.2d 996, 395 N.Y.S.2d 443, 363 N.E.2d 1178). It is evident that an action commenced against the insured predicated on the negligent operation of an automobile implicates New Hampshire's duty to defend the camp under the terms of its automobile liability policy. It should be equally apparent that the action falls squarely within the operation of the exclusion clause of Jefferson's general liability policy exempting coverage for any injury "arising out of" the use or operation of an automobile. The meaning of the exclusion is clear and unambiguous and allows no opportunity for construction as a question of fact (Hartford Acc. & Indem. Co. v. Wesolowski, 33 N.Y.2d 169, 171-172, 350 N.Y.S.2d 895, 305 N.E.2d 907). It is necessary for this Court to observe only that, whatever theory of liability the resourceful attorney may fashion from the circumstances of a client struck by an automobile, it remains that the immediate and efficient cause of the injury is, in fact, the automobile.

In Matter of Duncan Petroleum Trans. v. Aetna Ins. Co., 96 A.D.2d 942, 466 N.Y.S.2d 394, aff'd 61 N.Y.2d 665, 472 N.Y.S.2d 88, 460 N.E.2d 229, the insured sought a declaration that Aetna was obligated to defend it in an underlying wrongful death action resulting from the explosion of a truck during the transfer of gasoline from its cargo tank. Aetna's policy contained an exclusion for "bodily injury * * * arising out of the ownership, maintenance, operation, use, loading or unloading of * * * any automobile * * * owned or operated by [the] insured" (id., 96 A.D.2d at 942-943, 466 N.Y.S.2d 394). The underlying complaint asserted that "the accident was caused by such factors as, inter alia, a failure to inspect the vehicles, a failure to train and supervise personnel, the use of dangerous procedures for the transfer of gasoline, and improper maintenance and design of the vehicles" (id., at 943, 466 N.Y.S.2d 394). Holding that Aetna was not obligated to defend the insured, the Court stated, "Duncan seeks to avoid the impact of the clear, expansive exclusion in the policy by attributing alleged nonexcluded factors as causes of the accident * * * Nothing about the foregoing asserted factors, even if they were actually involved in causing the explosion, would negate the unequivocal and unchallenged fact that the accident arose out of the loading or unloading of the automobile. Duncan's factors of causation serve to do no more than provide reasons or subfactors explaining why the accident arose out of the loading or unloading of the vehicle. Acts or omissions which predated the loading operation but which allegedly brought about the explosion during the loading do not prevent...