US UNDERWRITERS INS. v. CONGREGATION B'NAI

• Decision Date: 05 October 1995
• Docket Number: No. 93-CV-5806 (JG).,93-CV-5806 (JG).
• Citation: 900 F. Supp. 641
• Parties: U.S. UNDERWRITERS INSURANCE CO., Plaintiff, v. CONGREGATION B'NAI ISRAEL and Wessa Eskandar, Defendants.
• Court: U.S. District Court — Eastern District of New York

900 F. Supp. 641

U.S. UNDERWRITERS INSURANCE CO., Plaintiff, v. CONGREGATION B'NAI ISRAEL and Wessa Eskandar, Defendants.

No. 93-CV-5806 (JG).

United States District Court, E.D. New York.

October 5, 1995.

COPYRIGHT MATERIAL OMITTED

Richard S. Sklarin, Thurm & Heller, New York City, for Plaintiff.

Alan C. Trachman, Meissner, Kleinberg & Finkel, New York City, for Defendants.

MEMORANDUM AND ORDER

GLEESON, District Judge:

U.S. Underwriters Insurance Company ("U.S. Underwriters") has brought this action under 28 U.S.C. § 2201 against Congregation B'nai Israel ("the Congregation") and Wessa Eskandar. U.S. Underwriters seeks a declaration that it is not obligated to defend and indemnify the Congregation in a personal injury action brought against it by Eskandar. Before me are cross-motions for summary judgment by U.S. Underwriters and the Congregation. For the following reasons, U.S. Underwriters' motion is granted, and the cross-motion is denied.

BACKGROUND

On February 16, 1993, U.S. Underwriters issued a general liability policy ("the policy") to the Congregation, Yeshiva Shearith Hapletah, Congregation Beth Baruch, Beth Chana School For Girls, Yeshiva Yesode Hatorah, and Congregation Hatorah Vehamitzvah. Two provisions of the insurance policy are of particular relevance to this case.

First, the policy contains an "Independent Contractors Exclusion," which reads:

It is agreed that this policy shall not apply to Bodily Injury, Personal Injury or Property Damage arising out of operations performed for any insured by independent contractors or acts or omissions of any insured in connection with his general supervision of such operations.

(Declaration of Richard S. Sklarin, Esq., Ex. G) ("Sklarin Decl.")

Second, the policy contains a provision obligating the insured to notify U.S. Underwriters promptly in the event of an "occurrence, claim or suit." Specifically, the provision states:

In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable.

(Id.).

The current dispute began on June 28, 1993, when Wessa Eskandar, and employee of Sais Construction, Inc., fell off a ladder while working in a building at 620 Bedford Avenue, Brooklyn, New' York. Eskandar was seriously injured and had to be taken to the hospital.

Rabbi Jacob Silberman was the administrator of Yeshiva Shearith Hapletah, Beth Chana School for Girls, and Yeshiva Yesode Hatorah, religious schools which occupied 620 Bedford Avenue and other nearby buildings. He testified at his deposition that he learned about the accident by "word of mouth" a "day or two" after it happened. All he remembered being told was that "somebody fell and they took him to the hospital." (Declaration of Alan C. Trachman, Esq., Ex. A at 33-34) ("Trachman Decl.")

On September 28, 1993, Eskandar sued the Congregation in state court, alleging that it (a) owned the 620 Bedford Avenue premises; (b) had hired Sais Construction to perform renovations of that building; and (c) was therefore statutorily liable to Eskandar for his injuries. The alleged basis for the Congregation's liability is Section 240 of the Labor Law of the State of New York, under which a property owner is strictly liable for injuries sustained by a subcontractor's employee while using defective or improperly placed scaffolding or other equipment governed by the statute. Weaver v. Lazarus, 93 A.D.2d 859, 461 N.Y.S.2d 363 (2d Dep't 1983) (scaffolding); Bland v. Manocherian, 66 N.Y.2d 452, 497 N.Y.S.2d 880, 488 N.E.2d 810 (1985) (ladder).

Eskandar's complaint was apparently served on or about November 3, 1993. Within a day or two, Rabbi Silberman forwarded a copy to the insurance broker, and U.S. Underwriters was notified of the claim by the broker.¹ On January 12, 1994 U.S. Underwriters served written notice of its intent to disclaim liability to defend and indemnify the Congregation by serving the summons and complaint in this action.

DISCUSSION

U.S. Underwriters contends that it is not obligated to defend or indemnify the Congregation for two reasons. First, it argues that the "Independent Contractors Exclusion" clause governs Eskandar's lawsuit against the Congregation, and relieves U.S. Underwriters of any duty to defend or indemnify the Congregation. Second, U.S. Underwriters claims that it may disclaim coverage under the policy because of the late notice of Eskandar's accident provided to U.S. Underwriter by the Congregation.

The Congregation denies that the exclusion applies to Eskandar's underlying action, and asserts that it gave timely notice of that action. In addition, the Congregation cross-moves for summary judgment on the ground that U.S. Underwriters did not give the Congregation timely notice of its intention to disclaim coverage.

The rules governing the remedy of summary judgment are as follows:

First, summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Second, the burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists. In considering that, third, all ambiguities must be resolved and all inferences drawn in favor of the party against whom summary judgment is sought. Fourth, the moving party may obtain summary judgment by showing that little or no evidence may be found in support of the nonmoving party's case. When no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper.

Gallo v. Prudential Residential Services, 22 F.3d 1219, 1223-24 (2d Cir.1994) (citations omitted).

A. The Independent Contractors Exclusion

Under New York law,² a court must give unambiguous provisions of insurance contracts their plain and ordinary meaning. Sanabria v. American Home Assurance Co., 68 N.Y.2d 866, 508 N.Y.S.2d 416, 501 N.E.2d 24 (1986); see also State v. Capital Mutual Ins. Co., 213 A.D.2d 888, 623 N.Y.S.2d 660, 661 (3rd Dep't 1995). Exclusionary clauses are of course subject to the same rule, and a "court is not permitted to construe such a clause in a way that drains it of its only intended meaning." Commissioners of the State Ins. Fund v. Insurance Co. of North America, 80 N.Y.2d 992, 994, 592 N.Y.S.2d 648, 607 N.E.2d 795 (1992); Levy v. National Union Fire Ins. Co. of Pittsburgh, 710 F.Supp. 474, 476 (S.D.N.Y.1989).

However, "whenever an ambiguity is found in the provisions of an insurance policy, any doubt about the existence of insurance coverage should be resolved in favor of the insured and against the insurance carrier." Soundview Assoc. v. New Hampshire Ins. Co., ___ A.D.2d ___, 625 N.Y.S.2d 659 (2d Dep't 1995). Moreover, when an insurer seeks to invoke an exclusionary clause in order to disclaim coverage, it has the burden of demonstrating that the exclusion applies "in clear and unmistakable language," which is "subject to no other reasonable interpretation." Mount Vernon Fire Ins. Co., 797 F.Supp. at 180 (quoting Seaboard Surety Co. v. Gillette, 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 (1984)). Put another way, U.S. Underwriters must show that the allegations contained in Eskandar's complaint fall "solely and entirely" within an unambiguous exclusion from the policy's coverage. Avondale Ins. Inc. v. Travelers Indem. Co., 887 F.2d 1200, 1204 (2d Cir.1989); State of New York v. AMRO Realty Corp., 936 F.2d 1420, 1426 (2d Cir. 1991).

U.S. Underwriters argues that the independent contractors exclusion is clear and unambiguous. The clause excludes coverage for personal injuries "arising out of operations performed for any insured by independent contractors;" Eskandar was an employee of such an independent contractor, and his alleged injuries arose out of the operations it performed on the Congregation's premises. Thus, the exclusion clause seems clearly intended to apply to precisely this type of claim. The Congregation counters by arguing that the Yeshiva Shearith Hapletah — not the Congregation — contracted with Sais Construction for the renovations. Therefore, the Congregation claims, Sais did not perform any operations for the Congregation within the meaning of the independent contractors clause.

This argument has no merit. First, the plain language of the independent contractors's exclusion provides that U.S. Underwriters may disclaim all coverage for "work performed for any insured by independent contractors." Both the Congregation and the Yeshiva are among the six entities that are collectively defined as the "insured" in the policy. (Sklarin Decl., Ex. G at Endorsement 1). It is thus undisputed that Sais Construction was an independent contractor hired by the insured. The plain meaning of the exclusion thus allows U.S. Underwriters to disclaim coverage with respect to claims by Eskandar against all of the insured entities.

Second, the undisputed facts belie the Congregation's suggestion that there are meaningful distinctions among the various insured entities. Rabbi Silberman testified that Yeshiva Shearith Hapletah, the Beth Chana School for Girls, and Yeshiva Yesode Hatorah were all "under one umbrella." (Trachman Decl., Ex. A at 13.) Yeshiva Shearith Hapletah and Beth Chana had the same Board of Directors, and those entities, the Congregation, and Yeshiva Yesode Hatorah all shared the same phone number and office at 616 Bedford Avenue, Brooklyn. Rabbi Silberman, although nominally not an employee...