Velleman v. Continental Ins. Co., Inc.

• Decision Date: 09 August 1994
• Citation: 162 Misc.2d 95,616 N.Y.S.2d 146
• Parties: Paul VELLEMAN, Plaintiff, v. CONTINENTAL INSURANCE COMPANY, INC., Defendant.
• Court: New York Supreme Court

Page 146

616 N.Y.S.2d 146

162 Misc.2d 95

Paul VELLEMAN, Plaintiff, v. CONTINENTAL INSURANCE COMPANY, INC., Defendant.

Supreme Court, Tompkins County.

Aug. 9, 1994.

Adams, Theisen, May & Rossiter by Judith A. Rossiter, Ithaca, for plaintiff.

Levene, Goulden & Thompson by Michael Wright, Binghamton, for defendant.

PHILLIP R. RUMSEY, Justice.

MOTION

Plaintiff Paul Velleman moves for summary judgment in this declaratory judgment action to have the court declare that Continental Insurance Company, Inc. ("Continental") must defend and indemnify him in an action pending in Supreme Court, ¹ (referred to herein as Mix v. Velleman ) and to award him damages, legal fees, costs and disbursements. CPLR 3212. Plaintiff also moves for a protective order from Continental's discovery demand seeking the production of Velleman's tax returns.

CROSS-MOTION

Continental cross-moves for summary judgment pursuant to CPLR 3212 for a declaration that it has no obligation to defend and indemnify Velleman, or, in the alternative, granting it an order compelling the production of Velleman's tax returns as requested in Continental's discovery demands.

FACTS

Velleman is the owner of and resides in a home located at 15 Lisa Lane, Ithaca, New York. The home has a self-contained apartment on the ground level with an entrance at the rear of the building. Velleman leases the apartment to Data Description, Inc., a software design business in which Velleman is a stockholder and officer.

Velleman and Continental entered into an insurance agreement, referred to herein as the "policy", providing homeowner's coverage to Velleman effective March 26, 1992. (Continental's Exhibit "K").

During October 1992 Velleman began remodeling the home at 15 Lisa Lane; the construction consisted of an addition at the rear of the building, reconstruction of the walkway around the home, and landscaping work.

In or about October 1992, Robert Mix, a United Parcel Services ("UPS") employee, allegedly slipped and fell on the Velleman property. In March 1993, Carmelita Mix, personal representative of Robert Mix, now deceased, commenced a legal action against Velleman personally as well as against Velleman's corporation. ²

Velleman gave notice of the claim under the policy to Continental's agent. By letter dated May 7, 1994 Continental disclaimed coverage to Velleman under the policy based upon a restriction in the policy which states in pertinent part:

B. ... We do not cover liability:

(a) arising out of the business pursuits of a Covered Person of the rental or holding for rental of any part of any premises by any Covered Person, except:

(2) activities which are ordinarily incident to non-business pursuits.... (Continental's Exhibit "K", pg 20)

DISCUSSION

On these motions for summary judgment, both parties agree that there is no question of fact with regard to the relevant events, and no material issue of fact that would preclude the grant of summary judgment. Declaratory judgment is an appropriate vehicle to test Continental's right to disclaim coverage and deny any duty to defend or indemnify Velleman (see, Prashker v. U.S. Guarantee Co., 1 N.Y.2d 584, 154 N.Y.S.2d 910, 136 N.E.2d 871).

An insurer's obligation to defend is broader than its obligation to pay, and declaratory judgment will be granted requiring it to defend whenever the complaint alleges facts and circumstances, some of which would, if proved, fall within the risk covered by the policy (24B Carmody-Wait 2d, NY Prac § 147:82, at 315).

"... (N)evertheless, it is equally well settled that the obligation of an insurer to defend does not extend to claims which are not covered by the policy or which are expressly excluded from coverage. (citations omitted)" (30 West 15th Street Owners Corp. v. Travelers Insurance Company, 165 A.D.2d 731, 563 N.Y.S.2d 784).

The complaint in Mix v. Velleman (Continental's Exhibit "C") essentially alleges that Robert Mix was directed by his employer to pick up a package at the offices of The Data Desk located at 15 Lisa Lane (Complaint p 12); that as a result of construction the regular walkway was obstructed (Complaint p 10); as a consequence, an opening in a hedge row provided the only access to the defendant's commercial offices (Complaint p 15); that the defendant had placed a sign on the building reading "DELIVERIES" with an arrow pointing south (Complaint p 13); that precipitation had caused the pathway leading to the defendant's commercial premises to become muddy and slippery (Complaint p 18); Robert Mix attempted to walk down the pathway in accordance with the instructions contained on the sign (Complaint p 19); because of the dangerous condition of the pathway Robert Mix slipped and sustained injuries (Complaint p 20).

Velleman argues that the fall was related primarily to the on-going construction work and that it occurred outside the professional office; therefore, there must be coverage under the policy. The question is not, as urged by Velleman, why Robert Mix fell, but why he was at the premises.

Velleman testified that in the course of his business deliveries were common. Typically there would be a delivery each day and perhaps a pickup, and the deliveries would be made by more than one shipper. (Continental's Exhibit "E", pgs 21, 22).

The evidence submitted to the court indisputably establishes that the liability sought to be covered arose out of the business activities located on the premises. Furthermore, the complaint explicitly addresses the business located at the premises and is devoid of any allegations which even faintly suggest a reasonable possibility of coverage. (Colon v. Aetna Life & Cas. Ins. Co., 66 N.Y.2d 6, 494 N.Y.S.2d 688, 484 N.E.2d 1040).

Under these facts, the "business pursuits" exclusion in the policy is applicable (see, Callahan v. American Motorists Insurance Co., 56 Misc.2d 734, 289...