Sanabria v. American Home Assur. Co.
| Citation | 113 A.D.2d 193,495 N.Y.S.2d 533 |
| Parties | Benjamin SANABRIA et al., Respondents, v. AMERICAN HOME ASSURANCE COMPANY, Respondent, and Public Service Mutual Insurance Company, Appellant. |
| Decision Date | 27 November 1985 |
| Court | New York Supreme Court — Appellate Division |
Orseck, Orseck & Greenberg (Gerald Orseck, of counsel), Liberty, for Benjamin Sanabria and others, respondents.
Bower & Gardner (Steven J. Ahmuty, Jr., of counsel), New York City, for American Home Assur. Co., respondent.
Before MAHONEY, P.J., and KANE, MAIN, YESAWICH and HARVEY, JJ.
Plaintiff Benjamin Sanabria was involved in an automobile accident in the Village of Monticello, Sullivan County, in October of 1974, as a result of which he was arrested by police officers employed by the Village. Alleging that he sustained injuries due to the negligence of the police officers, Sanabria commenced an action in Federal court against, inter alia, the Village and "its employees, officers and police officers". About one year after service, the complaint was amended to name the police officers individually. The Village had two liability insurance policies in effect at the time of these events. Defendant Public Service Mutual Insurance Company (Public Service) provided a "Comprehensive General Liability" policy and defendant American Home Assurance Company (American) provided a "Police Professional Liability" policy.
The Village immediately notified Public Service of the litigation and the insurer retained counsel to undertake defense of the action. In papers submitted in the action, such counsel referred to its client as "the Village of Monticello and its police officers". After the amended complaint was forwarded to Public Service, it disclaimed coverage on the ground that the policy excluded claims based on law enforcement activities of the police department. The Village then notified American, who disclaimed coverage on the ground of late notice. In the answer to the amended complaint and in further correspondence and papers, Public Service limited its representation to the Village. The police officers then individually retained counsel to represent them in the Federal action.
In July of 1976, the police officers commenced this declaratory judgment action against both American and Public Service seeking a declaration that the insurers were obligated to provide them with a defense and coverage. Upon motion of the police officers, Special Term (Casey, J.) granted judgment in favor of Public Service based on the policy exclusion for police activities and in favor of the police officers against American, finding that the officers gave timely notice to that insurer. The police officers did not appeal. American did appeal, and this court, finding that a question of fact existed as to whether the police officers gave timely notice, reversed and remitted the matter for further proceedings (Blackman v. American Home Assur. Co., 58 A.D.2d 723, 396 N.Y.S.2d 291).
Subsequently, in July of 1977, the Federal action was settled. One portion of the settlement was that Sanabria's claims against the police officers would be settled for $460,000 (within the $500,000 limit of the Public Service policy). However, in consideration of the police officers' assigning to Sanabria their rights to continue pursuing coverage by the two insurers, Sanabria agreed not to attempt to collect the settlement from the police officers, but to attempt to collect from the insurers. The police officers assigned their claims against Public Service for legal fees to the Village, which had actually paid such fees. The complaint in the instant action was then amended to add Sanabria, the Village and the Sullivan County Commissioner of Social Services 1 as plaintiffs. Further, this declaratory judgment action was converted into one for money damages.
After a nonjury trial, Trial Term held that the prior order in favor of Public Service was based on a misrepresentation by the insurer to the court of the applicability of the exclusion relied upon. Trial Term further held that Public Service was obligated to defend and indemnify the police officers under the insurance policy. Trial Term also held that the police officers gave timely notice to American, but noted that it was an excess carrier and that the settlement was within the limit of the Public Service policy. A judgment was then entered in favor of Sanabria in the amount of $449,000 2 and in favor of the Village in the amount of $39,000 for legal fees. Public Service has appealed from the judgment.
Initially, we note that it was proper for Trial Term to vacate so much of the prior order of Special Term as held that coverage under the Public Service policy was excluded. It is clear that the prior decision of Special Term was based on a misrepresentation of facts by Public Service. Thus, Trial Term's granting of the motion to vacate was an...
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