Walker v. Erie Ins. Co.

• Decision Date: 10 November 2022
• Docket Number: 601,CA 21-00865
• Citation: 210 A.D.3d 1375,178 N.Y.S.3d 650
• Parties: Juanita WALKER, Plaintiff-Respondent-Appellant, v. ERIE INSURANCE COMPANY and Erie Insurance Company of New York, Defendants-Appellants-Respondents.
• Court: New York Supreme Court — Appellate Division

210 A.D.3d 1375

178 N.Y.S.3d 650

Juanita WALKER, Plaintiff-Respondent-Appellant,

v.ERIE INSURANCE COMPANY and Erie Insurance Company of New York, Defendants-Appellants-Respondents.

601

CA 21-00865

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: November 10, 2022

HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR DEFENDANTS-APPELLANTS-RESPONDENTS.

WEBSTER SZANYI LLP, BUFFALO (KEVIN A. SZANYI OF COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.

PRESENT: WHALEN, P.J., SMITH, CENTRA, PERADOTTO, AND NEMOYER, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that said appeal insofar as taken by defendant Erie Insurance Company of New York is unanimously dismissed and the order is modified on the law by granting the cross motion of defendant Erie Insurance Company insofar as it seeks summary judgment dismissing the complaint to the extent that it alleges that the professional liability exclusion, if properly noticed to the insured, does not apply to preclude coverage for the underlying claims, and as modified the order is affirmed without costs.

Memorandum: Plaintiff contracted the bacterial infection Methicillin-Resistant Staphylococcus Aureus (MRSA) during a pedicure performed at a nail salon (hereinafter, insured) that was insured pursuant to a policy with commercial general liability coverage issued by Erie Insurance Company (defendant). Plaintiff commenced a personal injury action alleging that the insured's negligence caused her injuries. The insured requested coverage under the policy, but defendant disclaimed on the basis that the policy contained an endorsement consisting of a professional liability exclusion that precluded coverage for the underlying action. A judgment was ultimately entered against the insured in the underlying action and plaintiff subsequently commenced the present action alleging that, pursuant to Insurance Law § 3420, she was entitled to recover the damages under the judgment pursuant to the terms of the policy issued by defendant to the insured. Defendants appeal and plaintiff cross-appeals from an order that, upon granting plaintiff's motion for leave to reargue, denied plaintiff's motion for summary judgment on the complaint and denied defendant's cross motion for summary judgment dismissing the complaint.

Preliminarily, we note that defendant Erie Insurance Company of New York is not an aggrieved party, and we thus dismiss the appeal insofar as taken by that defendant (see CPLR 5511 ; Kirbis v. LPCiminelli, Inc. , 90 A.D.3d 1581, 1582, 935 N.Y.S.2d 783 [4th Dept. 2011] ).

Defendant contends on its appeal that Supreme Court erred in denying its cross motion because construction of the professional liability exclusion is a question of law for the court to decide, the exclusion is unambiguous, and the exclusion precludes coverage for plaintiff's injuries inasmuch as the evidence establishes that plaintiff contracted MRSA due to the rendering of a cosmetic service or treatment, namely, the professional pedicure performed by the insured. Plaintiff contends on her cross appeal that the court erred in denying her motion for summary judgment because the subject exclusion is inapplicable given that she was injured due to preparatory acts taken by the insured prior to and unconnected with any specific cosmetic treatment, and any ambiguity must be construed in favor of coverage. Plaintiff also contends in response to defendant's appeal that the court properly denied defendant's cross motion because defendant failed to meet its initial burden of establishing that the insured had notice of the exclusion. We conclude that the court should have granted defendant's cross motion for summary judgment dismissing the complaint to the extent that the complaint alleges that the professional liability exclusion, if properly noticed to the insured, does not apply to preclude coverage for the underlying claims. We therefore modify the order accordingly.

"In determining a dispute over insurance coverage, [courts] first look to the language of the policy" and, "[a]s with the construction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court" ( Lend Lease [US] Constr. LMB Inc. v. Zurich Am. Ins. Co. , 28 N.Y.3d 675, 681-682, 49 N.Y.S.3d 65, 71 N.E.3d 556 [2017] [internal quotation marks omitted]). "Insurance contracts must be interpreted according to common speech and consistent with the reasonable expectations of the average insured" ( Cragg v. Allstate Indem. Corp. , 17 N.Y.3d 118, 122, 926 N.Y.S.2d 867, 950 N.E.2d 500 [2011] ). "[W]henever an insurer wishes to exclude certain coverage from its policy obligations, it must do so ‘in clear and unmistakable’ language" ( Seaboard Sur. Co. v. Gillette Co. , 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 [1984] ). "Any such exclusions or exceptions from policy coverage must be specific and clear in order to be enforced. They are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction" ( id. ). "To the extent that there is any ambiguity in an exclusionary clause, [courts] construe the provision in favor of the insured" ( Cragg , 17 N.Y.3d at 122, 926 N.Y.S.2d 867, 950 N.E.2d 500 ; see Breed v. Insurance Co. of N. Am. , 46 N.Y.2d 351, 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280 [1978], rearg denied 46 N.Y.2d 940, 415 N.Y.S.2d 1027, 388 N.E.2d 372 [1979] ). Thus, "[i]n order to establish that an exclusion defeats coverage, the insurer has the ‘heavy burden’ of establishing that the exclusion is expressed in clear and unmistakable language, is subject to no other reasonable interpretation, and is applicable to the facts" ( Georgetown Capital Group, Inc. v. Everest Natl. Ins. Co. , 104 A.D.3d 1150, 1152, 961 N.Y.S.2d 622 [4th Dept. 2013], quoting Continental Cas. Co. v. Rapid-American Corp. , 80 N.Y.2d 640, 654-655, 593 N.Y.S.2d 966, 609 N.E.2d 506 [1993] ; see Seaboard Sur. Co. , 64 N.Y.2d at 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 ; Hillcrest Coatings, Inc. v. Colony Ins. Co. , 151 A.D.3d 1643, 1645, 56 N.Y.S.3d 394 [4th Dept. 2017] ).

Here, the professional liability exclusion states—in clear and unmistakable language—that the insured's policy "does not apply to ‘bodily injury’ ... due to ... [t]he rendering of or failure to render cosmetic ... services or treatments." We agree with defendant that, contrary to plaintiff's contention, "[t]here is no ambiguity in the wording of the exclusion" inasmuch as it is susceptible of only one reasonable interpretation: there is no coverage for bodily injury due to (i.e., "caused by") the rendering (i.e., the performance) of a cosmetic service or treatment (e.g., a pedicure) ( Beauty by Encore of Hicksville, Inc. v. Commercial Union Ins. Co. , 92 A.D.2d 855, 856, 459 N.Y.S.2d 848 [2d Dept. 1983] ). Thus, employing " ‘the test to determine whether an insurance contract is ambiguous [by] focus[ing] on the reasonable expectations of the average insured upon reading the policy and employing common speech’ " ( Universal Am. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa. , 25 N.Y.3d 675, 680, 16 N.Y.S.3d 21, 37 N.E.3d 78 [2015] ), we conclude that the exclusion is unambiguous because the average insured would understand the policy to exclude coverage for injuries caused by the performance of acts that constitute part of the pedicure service (see Beauty by Encore of Hicksville , 92 A.D.2d at 856, 459 N.Y.S.2d 848 ).

Plaintiff nonetheless insists on a different reading, i.e., that the policy excludes only "injuries due to the manner in which the cosmetic service is performed" such that "the manner in which the pedicure was performed must be the cause of the injury," which would not include preparatory tasks undertaken before a customer arrives for cosmetic treatment. We reject plaintiff's proposed reading. "Courts may not, through their interpretation of a contract, add or excise terms or distort the meaning of any particular words or phrases, thereby creating a new contract under the guise of interpreting the parties’ own agreement[ ]" ( Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc. , 30 N.Y.3d 572, 581, 69 N.Y.S.3d 520, 92 N.E.3d 743 [2017] ; see Slattery Skanska Inc. v. American Home Assur. Co. , 67 A.D.3d 1, 14, 885 N.Y.S.2d 264 [1st Dept. 2009] ). That, however, is precisely what plaintiff asks us to do by adopting her reading of the exclusion. Nowhere does the exclusion limit its reach to "the manner" of performance, which, under plaintiff's view, means only those precise physical acts undertaken contemporaneous with the cosmetic service upon the customer's person, but does not include any tasks taken in preparation for the service. Rather, as our analysis of the exclusion language makes clear, the policy excludes coverage for injuries caused by the performance of acts that constitute part of the pedicure service (see Beauty by Encore of Hicksville , 92 A.D.2d at 856, 459 N.Y.S.2d 848 ; Brockbank v. Travelers Ins. Co. , 12 A.D.2d 691, 691, 207 N.Y.S.2d 723 [3d Dept. 1960], lv denied 9 N.Y.2d 609, 210 N.Y.S.2d 1025, 172 N.E.2d 293 [1961] ).

Plaintiff's further assertion that any other interpretation but her own would swallow the coverage otherwise provided by the policy is incorrect. Contrary to plaintiff's suggestion, if a ceiling tile fell on and injured a patron during a cosmetic service, the matter would be a premises case, not a professional liability case, and the exclusion would not apply because the injury was not caused by acts that constituted part of the professional cosmetic service, but rather by an act or omission (lack of premises maintenance) or a condition (loose ceiling tile) independent of, and thus not part of, the cosmetic service (see Beauty by Encore of Hicksville , 92 A.D.2d at 855-856, 459 N.Y.S.2d 848 ). We thus conclude that "[t]he enforcement...