Sportsfield Specialities, Inc. v. Twin City Fire Ins. Co.

Citation45 Misc.3d 1201,2012 N.Y. Slip Op. 52509,999 N.Y.S.2d 798
Decision Date02 November 2012
Docket NumberNo. 2011–1216.,2011–1216.
PartiesIn the Matter of SPORTSFIELD SPECIALITIES, INC., Plaintiff v. TWIN CITY FIRE INSURANCE COMPANY and Castlepoint Insurance Company, Defendants.
CourtUnited States State Supreme Court of Delaware

OPINION TEXT STARTS HERE

Kevin M. Young, Esq., Young, Sommer, Ward, Ritzenberg, Baker & Moore, LLC, for plaintiff, Sportsfield Specialities, Inc.

Stephen M. Lazare, Esq., Lazare, Potter & Giacovas, LLP, for defendant Twin City Fire Insurance Company.

Dan D. Kohane, Esq., Hurwitz & Fine, PC, for defendant CastlePoint Insurance Company.

CARL F. BECKER, J.

This matter comes before the Court on plaintiff Sportsfield Specialities, Inc., (“Sportsfield”) motion for partial Summary Judgment filed on January 18, 2012 against Defendants Twin City Fire Insurance Company (Twin City) and CastlePoint Fire Insurance Company (CastlePoint) and defendant's cross-motions for Summary Judgment against Sportsfield filed on March 7 and March 5, 2012, respectively and Sportsfield's responses filed on March 23, 2012 and the further responses of defendants Twin City and CastlePoint both filed on April 9, 2012.

Background
A. The underlying action

On September 30, 2009, ABT, Inc., a North Carolina corporation, filed a complaint for Declaratory Judgment and Complaint for Damages against Sportsfield and Peter Juszczyk in the General Court of Justice, Superior Court Division, Iredell County, North Carolina.1 Sportsfield removed the case to the United States District Court for the Western District of North Carolina. 2 Thereafter, ABT amended the original complaint to allege breach of contract against its former employee, Juszczyk; tortious interference with contract and business relations against Sportsfield; unfair and deceptive trade practices against Sportsfield and Juszczyk; computer trespass against Juszczyk; misappropriation of trade secrets against Sportsfield and Juszczyk; and sought injunctive relief against Sportsfield and Juszczyk.3 This document was filed on November 5, 2009.4 On August 10, 2010, the District Court entered a Memorandum and Order Granting Preliminary Injunction in Favor of Plaintiff ABT.5

A jury trial was held and on July 28, 2011, a Verdict Form was filed in the District Court which set forth the jury's findings. The jury found for ABT on the following causes of action: a) breach of contract against Juszczyk; b) computer trespass in violation of N .C. Gen.Stat. § 14–458 against Juszczyk; c) tortious interference with contract by Sportsfield; d) unfair and deceptive trade practices in violation of N.C. Gen.Stat. § 75–1.1 against both Sportsfield and Juszczyk; and misappropriation of trade secrets in violation of N.C. Gen.Stat. § 66–152, et seq. against Sportsfield and Juszczyk. The jury found that the total damages sustained by ABT, Inc. from Sportsfield's actions was $1,677,183.6 It also found that the damages sustained by ABT, Inc. as a result of the actions of both Sportsfield and Juszczyk was $1,863,537. The verdict sheet has a notation by the judge that this latter amount was reduced to $46,588.50 with consent of all parties.7 After the jury verdict was announced, counsel for ABT made an oral motion for the Unfair and Deceptive Trade Practices Act (UDPTA”) award to be trebled pursuant to NC Gen.Stat. § 75–16. In an order filed August 4, 2011, the District Court granted this motion and trebled the damages awards assessed to Sportsfield ($559,061) and Juszczyk ($46,588.50) for violating the UDPTA. 8 On December 21, 2011, the District Court entered judgments in favor of ABT and against Sportsfield ($2,795,305) Juszczyk ($279,531) and jointly and severally against Sportsfield and Juszczyk ($139,765.50) .9

On January 18, 2012, Sportsfield filed a Notice of Appeal to the United States Court of Appeals for the Fourth Circuit from the order entered on December 21, 2011.10 On January 25, 2012, ABT and Sportsfield submitted a Joint Notice of Satisfaction of Judgment to the District Court.11

B. Insurance

Twin City issued Commercial General Liability Policy no. 01 CES OF0469 to Sportsfield effective July 1, 2009 to July 1, 2010 (Twin City policy” or “primary policy”) through its agent/broker Harding Brooks Associates, LLC (“Harding”) of Vestal, NY.12 On November 6, 2009, an employee of Harding faxed a “General Liability Notice of Occurrence/Form” to Claims Dept.—Hartford 13. The cover letter states that it is accompanied by a letter from the lawyer for the above insured. Actually, the letter is from counsel for ABT, Inc., and the fax also included a copy of the state court complaint initially filed by ABT in September of 2009 and a copy of a Noncompetition Agreement between ABT, Inc and Peter Juszczyk.14 On February 8, 2010, Speciality Risk Services wrote to Sportsfield, on behalf of Twin City, denying an obligation to defend or indemnify Sportsfield for the claims made or damages alleged in the complaint.15 It should be noted that the Speciality Services letter refers to the wrong dates of coverage, i.e., July 1, 2008 to July 1, 2009 rather than July 1, 2009 to July 1, 2010, which dates are not in dispute by the parties to this action. On August 17, 2011, counsel for Sportsfield wrote to Twin City seeking reimbursement of Sportsfield's defense costs and indemnification up to the limits of the policy.16 On October 14, 2011, counsel for Twin City sent a letter to counsel for Sportsfield which set forth in detail its reasons for declining coverage.17

CastlePoint Insurance Company issued a commercial umbrella policy to Burton F. Clark, Inc., effective July 1, 2009 to July 1, 2010, through Harding. An endorsement, form no. TG CU 00 08 added Sportsfield as an additional insured. 18

On August 18, 2011, counsel for Sportsfield wrote to CastlePoint and demanded that CastlePoint reimburse its past defense costs and pay all continuing costs going forward as well as indemnification for any judgment awarded for the conduct alleged in the complaint.19 In a letter dated September 11, 2011, CastlePoint denied coverage for the incident, claim and lawsuit. 20

C. The instant litigation

On November 3, 2011, Sportsfield filed an action in Delaware County Supreme Court against Twin City and CastlePoint which alleges the following causes of action:

1) against Twin City for breach of its duty to defend under the primary policy;

2) against Twin City for breach of its duty to indemnify under the primary policy;

3) against Twin City for a declaratory judgment; declaring the respective rights of Sportsfield and Twin City;

4) against Twin City for a declaratory judgment that its disclaimer prejudiced Sportsfield with regard to the CastlePoint umbrella policy;

5) against CastlePoint for breach of its duty to defend and indemnify under the umbrella policy and

6) against CastlePoint for a declaratory judgment that CastlePoint has breached its defense and/or indemnity obligations under the umbrella policy.

Twin City Insurance filed an answer dated January 13, 2012 responding to the six causes of action and offered eighteen defenses.

CastlePoint Insurance Company filed an answer with eight affirmative defenses dated January 4, 2012.

On January 18, 2012, Sportsfield filed a motion seeking partial summary judgment on its first, third, fifth and sixth causes of action.

CastlePoint filed an affidavit and memorandum of law in opposition to plaintiff's motion for summary judgment and in support of it's own cross-motion on March 5, 2012.

On March 7, 2012, Twin City filed a notice of cross-motion, affidavit and memorandum of law in support of its cross motion for summary judgment and in opposition to plaintiff's motion for partial summary judgment.

Sportsfield filed an affidavit and memorandum of law in support of its opposition to Twin City's cross-motion for summary judgment and reply to Twin City's opposition to Sportsfield's own motion for partial summary judgment on March 23, 2012. On the same date, Sportsfield filed a memorandum of law in opposition to CastlePoint's cross-motion for summary judgment and in reply to CastlePoint's opposition to Sportsfield's own motion for partial summary judgment.

Twin City and CastlePoint each filed memoranda of law in further support of their own cross-motions and in opposition to plaintiff's motion for partial summary judgment on April 9, 2012.

Legal Standard
A. The Legal Standard for Summary Judgment

Under N.Y. CPLR Rule 3212, a court shall grant a motion for summary judgment 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. The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case. Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 317 (1985). 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, 1004 (1965). To grant summary judgment it must clearly appear that no material and triable issue of fact is presented, and summary judgment should not be granted where there is any doubt as to the existence of fact issues. Sillman v. Twentieth Century–Fox Film Corp., 3 N.Y.2d 395, 404, 165 N.Y.S.2d 498, 505 (1957)

B. Duty to Defend

Insurer's duty to defend is not contingent on insurer's duty to indemnify should insured be found liable, nor is it material that complaint against insured asserts additional claims which fall outside policy's general coverage or within its exclusory provisions, but duty to defend rests solely on whether complaint alleges any facts or grounds which bring action within protection purchased. Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 310, 486 N.Y.S.2d 873, 876 (1984). When...

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