Phila. Indem. Ins. Co. v. Harleysville Preferred Ins. Co.

• Decision Date: 11 December 2017
• Docket Number: INDEX NO.: EF001471-2016
• Parties: PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiffs, v. HARLEYSVILLE PREFERRED INSURANCE COMPANY, Defendants.
• Court: New York Supreme Court

2017 NY Slip Op 33236(U)

PHILADELPHIA INDEMNITY INSURANCE COMPANY, Plaintiffs,
v.
HARLEYSVILLE PREFERRED INSURANCE COMPANY, Defendants.

INDEX NO.: EF001471-2016

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ORANGE

RECEIVED: December 13, 2017
December 11, 2017

NYSCEF DOC. NO. 102

To commence the statutory time for appeals as of right (CPLR 5513 [a]), you are advised to serve a copy of this order, with notice of entry, upon all parties.

DECISION AND ORDER
Motion Date: 10/19/2017
Sequence No. 3 - 5

SCIORTINO, J.

The following papers numbered 1 to 43 were read on the motion (Seq. #3) by Harleysyille Preferred Insurance Company (Harleysville) to compel Philadelphia Indemnity Insurance Company (Philadelphia) to respond to all outstanding discovery demands; the motion (Seq. #4) by Philadelphia for summary judgment dismissing the counterclaims of Harleysville, and upon dismissal of the counterclaims, for leave to discontinue the action; and the cross-motion (Seq. #5) by Harleysville for leave to serve and file a Second Amended Answer, asserting an additional counterclaim against Philadelphia:

PAPERS	NUMBERED
Notice of Motion (Seq. #3) / Affirmation in Support (Altman) /; Affirmation of Good Faith (Altman) / Exhibits A - H	1 - 11
Affirmation in Opposition (Cassidy) / Exhibits 1 - 4 / Memorandum; of Law	12 - 17
Reply Affirmation (Altman) / Exhibit A	18 - 19
Notice of Motion (Seq. #4) / Affirmation (Cassidy) / Exhibits 1 - 5 /; Affidavit (Steinbock) / Exhibits 1 - 4 / Memorandum of Law	20 - 31
Notice of Cross-Motion (Seq. #5) / Affirmation (Peiper) / Exhibits A - E	32 - 38
Reply Affirmation (Cassidy) / Exhibits 1 - 3 / Memorandum of Law	39 - 43

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Upon the foregoing papers, Philadelphia's motion (Seq. #4) is granted, and Harleysville's motions (Seq. #s 3 and 5) both are denied, as follows:

Background

This is an action between two insurance companies for declaratory judgment regarding coverage in a related personal injury action entitled Blake v. Nashopa House Crystal Run Village, Index Number 0294/2015 (the Blake Action). This matter was commenced by the electronic filing of a Summons and Complaint by Philadelphia on March 3, 2016. The Complaint asserts that the Blake Action consists of claims that Ernest Blake was injured on three separate occasions from falls which took place in 2012 and 2013, while he was a resident of a group home operated by Crystal Run. His injuries were alleged to be the result of multiple violations of Crystal Run's duty of due care and negligence in the operation of the group home. Blake's second and third causes of action asserted violations of New York State Public Health Law and Federal Law, respectively.

Philadelphia insured Crystal Run with a Commercial Lines policy effective January 1, 2002, and ending January 1, 2013. Thereafter, Harleysville issued a Commercial Lines Policy, effective January 1, 2013 through January 1, 2014. Philadelphia's Complaint asserts that the injuries which resulted from the third fall, on March 7, 2013, should be covered by Harleysville's policy, but that Harleysville has refused coverage. Harleysville's Answer, asserting denials and eight separate affirmative defenses, was filed April 20, 2016.

By Notice of Motion filed on January 20, 2017, Harleysville sought leave to amend its Answer, to assert four counterclaims against Philadelphia, which Harleysville claimed would establish that insurance coverage in the Blake Action was the sole responsibility of Philadelphia. Prior to the return date of that motion, the Court was advised that the plaintiff's claims in the Blake

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Action had been settled, with Philadelphia and Harleysville each contributing a portion of the settlement funds. By Decision and Order dated May 2, 2017, Harleysville was granted leave to amend its Answer to assert two of the four proposed counterclaims, and was directed to electronically file its Amended Answer and counterclaims on or before May 12, 2017.

Harleysville electronically filed its Amended Answer on May 4, 2017. The First Counterclaim asserts that the claims in the Blake Action predate and thus fall outside the coverage of the Harleysville policy. The Second Counterclaim asserts that the Harleysville policy does not provide coverage for intentional acts or for violations of statutes or regulations. Both Counterclaims thus seek a declaration that Harleysville has no obligation to defend, indemnify, or pay any fees, damages, or expenses to Philadelphia or any other party relating to the claims asserted in the Blake Action, and that Philadelphia is solely responsible to indemnify Crystal Run in that action.

Philadelphia's Reply to Counterclaims, asserting denials and nine Affirmative Defenses, was filed on May 24, 2017.

Current Motions

By Notice of Motion (Seq. #3) filed on May 30, 2017, Harleysville seeks an order compelling Philadelphia to fully respond to all outstanding discovery demands. In the interest of judicial economy, and for the reasons set forth below, the arguments of the respective parties on this motion are not discussed herein.

By Notice of Motion (Seq. #4) filed on July 21, 2017, Philadelphia seeks summary judgment and dismissal of Harleysville's counterclaims, and, upon such dismissal, leave to discontinue its own action. Philadelphia submits that its action was brought to obtain a declaration regarding the respective rights and obligations of Philadelphia and Harleysville in connection with the Blake

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Action. As the Blake Action has been settled with both insurance companies contributing to the settlement, and without any reservation of rights by Harleysville, Philadelphia contends that neither its own suit nor the counterclaims present a justiciable controversy. Philadelphia further argues that any declaratory judgment issued by the Court in this action would amount to an impermissible advisory opinion.

Philadelphia takes the further position that any future claims Harleysville may assert are barred by the voluntary payment doctrine. Philadelphia contends that Harleysville, after having expressly disclaimed coverage in...