Public Service Mut. Ins. Co. v. Goldfarb
| Decision Date | 07 July 1981 |
| Citation | 53 N.Y.2d 392,442 N.Y.S.2d 422,425 N.E.2d 810 |
| Parties | , 425 N.E.2d 810 PUBLIC SERVICE MUTUAL INSURANCE COMPANY, Appellant, v. Saul GOLDFARB et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
The question before us is whether a policy of professional liability insurance issued by plaintiff affords coverage to a dentist in a civil suit commenced by a former patient grounded upon an act of sexual abuse alleged to have occurred in the course of dental treatment.
Plaintiff Public Service Mutual Insurance Company, a multi-line insurer, issued a "Dentist's Professional Liability Policy" to the Dental Society of the State of New York. Defendant, Saul Goldfarb, a member of the society, obtained coverage under that policy. Defendant Jacqueline P. Schwartz is a former patient of Dr. Goldfarb who received dental treatment from him on May 23, 1977. She claims that in the course of receiving such treatment, she was sexually abused by Dr. Goldfarb. This claim, which is the subject of a pending civil suit, also formed the basis of professional disciplinary proceedings against Dr. Goldfarb and resulted in a criminal conviction of the crime of sexual abuse in the third degree (Penal Law, § 130.55). In this declaratory judgment action, plaintiff has asked the court to determine whether its policy of insurance provides coverage for the civil claim seeking compensatory and punitive damages.
Special Term held that no coverage was provided. The court found that the acts complained of by Jacqueline Schwartz were never intended to fall within the protective scope of the professional liability policy because they were undertaken for the personal satisfaction of the practitioner and not in the course of proper dental treatment. The Appellate Division, First Department, reversed, noting that the policy specifically provided coverage for "assault" and "undue familiarity" as well as for dental malpractice. The court concluded that this broad language indicated an intent that a claim based upon sexual abuse in the course of treatment be covered and that the insurer would be liable for both compensatory and punitive damages. Two Justices dissented, however, taking the view that no coverage for punitive damages was allowable because any award for such damages would contravene public policy.
On this appeal, plaintiff argues that its policy of insurance was not intended by the parties to provide coverage against a claim of sexual abuse and that, in any event, no adequate notice of claim was given to the insurer by defendant Goldfarb as required by the terms of the policy. It is further argued that even if, as a contractual matter, coverage exists, it should not be enforced in this case because the public policy of this State does not allow contractual indemnification for civil liability which arises out of the commission of a crime.
Defendant argues that the broad language of the insurance policy in issue specifically provides coverage for a claim of sexual abuse in the course of dental treatment and that he has provided adequate notice of claim in accordance with the terms of the policy. He further argues that where, as here, the policy explicitly provides coverage, such protection should not be denied upon public policy grounds.
The first question which must be addressed is whether the policy of insurance in issue contractually obligated plaintiff to defend and to indemnify Dr. Goldfarb for the claim made by defendant Schwartz. If there is no such contractual obligation, then no question of public policy need be decided. In order to resolve this issue, we must determine first whether adequate notice of claim was given to the insurer and, second, whether such a claim falls within the protective scope of the policy.
We agree with the courts below that Dr. Goldfarb timely notified plaintiff of the existence of defendant Schwartz' claim against him. The policy required the insured to notify the company as soon as possible "in the event of an accident, unusual occurrence or receiving notice of claim or suit". Plaintiff contends that the commencement of disciplinary and criminal proceedings against defendant Goldfarb were "unusual occurrences" within the meaning of the policy which triggered the requirement of notice. We cannot agree.
Although Dr. Goldfarb was aware long before Schwartz' lawsuit was commenced that the propriety of his conduct was in issue, he had no knowledge that any civil claim would be brought against him until he was served with process by defendant Schwartz. When the lawsuit was commenced, he promptly advised his insurer of the pending claim in accordance with the express language of the insurance contract which, as noted earlier, required such notice upon the happening of an unusual occurrence "or receiving notice of claim or suit". Defendant complied with the literal requirements of the policy. That the provisions of the policy could be read to require earlier notice is beside the point. The term "unusual occurrence" is, at best, ambiguous, and any ambiguity in the policy must be resolved against the insurer. (See Public Serv. Mut. Ins. Co. v. Levy, 57 A.D.2d 794, 395 N.Y.S.2d 1.)
We also agree, as did the majority and the dissenters below, that the insurance policy in issue was intended by the parties to provide coverage for liability arising out of the acts complained of by defendant Schwartz. The policy specifically states that the insurer will "pay on behalf of the Insured named in this certificate all sums, including punitive damages, which the Named Insured shall become obligated to pay by reason of the liability imposed upon him by law for damages because of injury resulting from professional dental services rendered * * * and resulting from any claim or suit based upon * * * error, negligence or mistake, assault, slander, libel undue familiarity". This language clearly indicates an intent on the part of the insurer to pay both compensatory and punitive damages arising out of unlawful or inappropriate physical contact which occurs during the course of dental treatment. Defendant Schwartz claims that such contact occurred. Hence, as a purely contractual matter absent any consideration of public policy, a claim within the stated coverage has been made and the insurer is obligated to defend the suit.
Whether indemnity will ultimately be required, however, cannot be determined at this stage of the proceeding. It is possible, of course, that the trier of fact could find that unlawful contact with defendant Schwartz occurred, but that it did not occur in the course of professional dental services. In this event, defendant Schwartz could recover from defendant Goldfarb, but he, in turn, could not seek contractual indemnity from his insurer because...
To continue reading
Request your trial
-
Worcester Ins. Co. v. Fells Acres Day School, Inc.
...would not infer intent to injure when perpetrator of sexual abuse was only fourteen years old); Public Serv. Mut. Ins. Co. v. Goldfarb, 53 N.Y.2d 392, 442 N.Y.S.2d 422, 425 N.E.2d 810 (1981) (holding that insurance company had duty to defend dentist, who allegedly sexually molested his pati......
-
In re Coin Phones, Inc.
...(see, Giblin v. Murphy, 73 N.Y.2d 769, 772, 536 N.Y.S.2d 54, 532 N.E.2d 1282 (1988); Public Serv. Mut. Ins. Co. v. Goldfarb, supra, 53 N.Y.2d 392 at 400, 442 N.Y.S.2d 422, 425 N.E.2d 810 (1981); N.Y. PJI 2:278). . . . The concept of punitive damages has been sanctioned under New York law in......
-
Maryland Cas. Co. v. WR Grace & Co.
...damages against Grace or for any sanctions, fines or penalties imposed against Grace. Citing Public Serv. Mut. Ins. Co. v. Goldfarb, 53 N.Y.2d 392, 442 N.Y.S.2d 422, 425 N.E.2d 810 (1981), and Hartford Accident & Indem. Co. v. Village of Hempstead, 48 N.Y.2d 218, 422 N.Y.S.2d 47, 397 N.E.2d......
-
Federal Ins. Co. v. Cablevision Systems Dev. Co.
...Ins. Co. v. Colangione, 107 A.D.2d 978, 979, 484 N.Y.S.2d 929, 930-931 (3d Dep't 1985); see Public Service Mutual Ins. Co. v. Goldfarb, 53 N.Y.2d 392, 442 N.Y.S.2d 422, 425 N.E.2d 810 (1981) (insurer must cover dentist charged with sexual assault of patient where victim's complaint alleges ......
-
Using General Liability Insurance Policies To Cover IP Claims
...of rights," the insured may have the right to play a role in selecting the counsel who is hired. See Pub. Serv. Mut. Ins. v. Goldfarb, 425 N.E.2d 810, 815, 53 N.Y.2d 392, 401, 442 N.Y.S.2d 422, 427 (1981); City of N.Y. v. Clarendon Nat. Ins., 765 N.Y.S.2d 802, 803, 309 A.D.2d 779, 779 (2d D......
-
Punitive damages: when, where and how they are covered.
...1st Dep't 1990) (portion of settlement representing punitive damages not insurable). Public Service Mutual Insurance Co. v. Goldfarb, 425 N.E.2d 810 (N.Y. 1981) (insurer had duty to defend dentist in suit alleging sexual misconduct but did not have duty to indemnify for any resulting puniti......