The City of New York v. All. of Nonprofits for Ins.

• Decision Date: 20 January 2023
• Docket Number: Index No. 451467/2020,Motion Seq. No. 001
• Citation: 2023 NY Slip Op 30216 (U)
• Parties: THE CITY OF NEW YORK, Plaintiff, v. ALLIANCE OF NONPROFITS FOR INSURANCE, Defendant.
• Court: New York Supreme Court

2023 NY Slip Op 30216(U)

THE CITY OF NEW YORK, Plaintiff, v. ALLIANCE OF NONPROFITS FOR INSURANCE, Defendant.

Index No. 451467/2020, Motion Seq. No. 001

Supreme Court, New York County

January 20, 2023

Unpublished Opinion

MOTION DATE 12/08/2020

PRESENT: HON. LOUIS L. NOCK JUSTICE

DECISION + ORDER ON MOTION

LOUIS L. NOCK, J.S.C.

The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32 33, 34, 35, 36, 37, 38, 39, 40, 41, 43, and 44 were read on this motion for SUMMARY JUDGMENT.

Upon the foregoing documents, it is ORDERED that plaintiff's motion for summary judgment is granted and defendant's cross motion for summary judgment is denied, for the reasons set forth in the moving and reply papers (NYSCEF Doc. Nos 9-10, 43-44), and the exhibits attached thereto, in which the court concurs.

As more specifically set forth therein, plaintiff City of New York (the "City") is an additional insured under a policy of insurance issued by defendant Alliance of Nonprofits for Insurance ("ANI") a Risk Retention Group chartered in Vermont, to nonparty Highland Park Community Development Corporation ("Highland Park"). The City engaged Highland Park to operate a homeless shelter located at 2520 Tilden Avenue, Brooklyn, New York (the "shelter"). Pursuant to its contract with the City, Highland Park was responsible for maintaining the grounds of the shelter (contract, NYSCEF Doc. No. 14, Appendix B, § 13.03[C][1]) and complying with Title 18, Part 900 of the New York Codes, Rules, and Regulations (18 NYCRRR §§ 900.1, et seq.) and "all other applicable laws" (contract, NYSCEF Doc. No. 14, Appendix B, § 13.03).

In an underlying personal injury action captioned as Nicole Leach v City of New York, New York City Department of Homeless Services, 2520 Tilden Fee, LLC, and Mason Services, LLC, pending in Supreme Court, Kings County, under index Number 523833/2017 (the "Leach action"), the plaintiff, Nicole Leach, alleges that she stepped on a garbage bag outside of the shelter and injured her foot (notice of claim, NYSCEF Doc. No. 18; Leach action complaint, NYSCEF Doc. No. 19). The City, on January 22, 2018, tendered the defense of the Leach action to ANI, and forwarded to ANI a copy of the complaint and Highland Park's certificate of insurance (Comarou affirmation, NYSCEF Doc. No. 10, ¶ 15). In follow-up conversations, the City also forwarded its contract with Highland Park, the agreement extending the contract, and the notice of claim that Nicole Leach sent to the City (id.). On February 19, 2018, ANI disclaimed coverage, on the grounds that the complaint in the Leach action did not name Highland Park as a defendant or allege that Highland Park was responsible for maintenance of the sidewalk outside the shelter or the garbage bags placed on the sidewalk and therefore the Leach action did not arise out of Highland Park's acts or omissions (disclaimer letter, NYSCEF Doc. No. 24 at 4).

As an initial matter, ANI raises several grounds to disclaim coverage, including late notice and exceptions to the additional insured endorsements of the ANI policy, that were not raised in the disclaimer letter. Under New York law, defenses to coverage not raised in the disclaimer letter are waived (Insurance Law § 3420[d][2]; Hartford Underwriting Ins. Co. v Greenman-Pederson, Inc., 111 A.D.3d 562, 563 [1st Dept 2013]). ANI argues that because it is a Risk Retention Group it is covered by the Liability Risk Retention Act and exempt from this provision of the Insurance Law (see generally Wadsworth v Allied Professionals Ins. Co., 748 F.3d 100 [2d Cir 2014]). Assuming for purposes of deciding the motion that ANI was acting as a Risk Retention Group and is not covered by Insurance Law § 3420, ANI remains subject to the laws of its chartering state, in this case Vermont (Wadsworth, 748 F.3d at 103; see Hala v Orange Regional Med. Ctr., 178 A.D.3d 151, 153 [2d Dept 2019] [analyzing claim regarding insured of a Risk Retention Group under law of domicile state as well as New York]). Like New York, Vermont also requires that insurers state all known defenses in the disclaimer or else waive them (Northshire Communications, Inc. v AIU Ins. Co., 174 Vt 295, 299 [2002]). Accordingly, other than the defense that the Leach action does not arise out of Highland Park's acts or omissions, all defenses raised in ANI's opposition have been waived by ANI's failure to include them in its disclaimer of coverage.

The duty to defend under an insurance policy is exceedingly broad and extends beyond the limits of the duty to indemnify, covering any situation where the allegations of the complaint "suggest a reasonable possibility of coverage" (Automobile Ins. Co. of Hartford v Cook, 7 N.Y.3d 131, 137 [2006] [internal quotations and citation marks omitted]). "Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course" (id.). "If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be" (id. [internal quotations and citation marks omitted]). The duty remains "even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered" (id. [internal quotations and citation marks omitted]).

"The unambiguous provisions of an insurance policy, as with any written contract, must be afforded their plain and ordinary meaning" (Broad St., LLC v Gulf Ins. Co., 37 A.D.3d 126, 130-31 [1st Dept 2006]). The policy should be read as a whole, and no particular words or phrases should receive undue emphasis (Bailey v Fish & Neave, 8 N.Y.3d 523, 528 [2007]). Courts should give effect to every clause and word of an insurance contract (Northville Indus. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 89 N.Y.2d 621, 633 [1997]). An interpretation is incorrect if "some provisions are rendered meaningless" (County of Columbia v Continental Ins. Co., 83 N.Y.2d 618, 628 [1996]). It is the insured's burden to show that the provisions of a policy provide coverage (BP A.C. Corp. v One Beacon Ins. Group, ...