WESTVIEW v. GUARANTY INS. CO.
| Decision Date | 26 October 2000 |
| Citation | 740 N.E.2d 220,95 N.Y.2d 334,717 N.Y.S.2d 75 |
| Parties | WESTVIEW ASSOCIATES et al., Appellants, v. GUARANTY NATIONAL INSURANCE COMPANY, Respondent, et al., Defendant. |
| Court | New York Court of Appeals Court of Appeals |
Schillinger & Finsterwald, L. L. P., New York City (Peter Schillinger and Lori J. Finsterwald of counsel), for appellants.
Traub Eglin Lieberman Straus, Hawthorne (Stephen D. Straus and Brian S. Frank of counsel), for respondent.
Gabriella Humphrey, an infant represented by her parents, brought an action against the owner of the building in which she resides, and others, claiming injuries caused by the ingestion of lead paint. The action presently before us, brought by the building owner and others (plaintiffs), seeks a declaration that defendant insurer, Guaranty National Insurance Company, must defend and indemnify them in that action.
On August 2, 1994, plaintiffs entered into a commercial general liability insurance policy (the underlying policy) with the defendant which provided coverage for personal injuries occurring at premises located at 124 West 72nd Street in Manhattan during the period June 20, 1994 to June 20, 1995. Paragraph 6 of the rider to that policy contained a specific exclusion for injuries caused by lead paint.1
On August 4, 1994, plaintiffs purchased an umbrella policy from defendant covering the same period as the underlying policy. The umbrella policy contained two types of coverage— Coverage A and Coverage B. Coverage A provided excess coverage for damages exceeding the policy limits of the underlying policy. Coverage A reads in pertinent part: (emphasis supplied).
Coverage B of the umbrella policy provided additional primary coverage for certain claims not already covered by the underlying policy. Coverage B reads as follows:
"With respect to any loss covered by the terms and conditions of this policy, but not covered as warranted by the `Underlying Policies' listed on Schedule A, or any other `Underlying Insured,' we will pay on your behalf for loss caused by an `Occurrence' which is in excess of the `Retained Limit' for liability imposed on you by law or assumed by you under contract for `Bodily Injury,' `Personal Injury,' `Property Damage' or `Advertising Injury'" (emphasis supplied).
Coverage B did not contain an incorporation clause. In addition, the umbrella policy contained a clause specifically excluding coverage for injuries caused by pollution.
On September 18, 1995, Gabriella Humphrey, an infant tenant in the building owned by Westview Associates, represented by her parents, brought suit against plaintiffs for injuries allegedly sustained by exposure to lead paint during the period covered by the policies. By letters dated October 5, 1995, plaintiffs requested that defendant defend and indemnify them in the Humphrey personal injury action. By separate letters dated October 20, 1995, defendant disclaimed any duty to defend or indemnify plaintiffs under both the underlying and the umbrella policy. Defendant relied on the specific exclusion for lead paint in paragraph 6 of the underlying policy and the pollution exclusions in both policies.
Following receipt of the disclaimers, plaintiffs commenced the instant action, seeking a declaration that defendant was required to defend and indemnify them in the Humphrey action. Supreme Court granted plaintiffs' motion for summary judgment, holding that defendant had a duty to defend the underlying action under Coverage B of the umbrella policy. The court held that although the lead paint exclusion was incorporated into Coverage A of the umbrella policy and precluded coverage under that portion of the policy, it was not incorporated into Coverage B. In addition, the court held that the pollution exclusion in the umbrella policy did not bar coverage for the lead paint claim. The court held in abeyance the issue of whether defendant had a duty to indemnify. The Appellate Division reversed, holding that the lead paint exclusion in the primary policy was incorporated into the entire umbrella policy. In the view of the Appellate Division, the interpretation adopted by Supreme Court "negates the clause incorporating the exclusions" and makes the incorporation provision in Coverage A meaningless. This Court granted leave to appeal.
The umbrella policy provides for two separate and distinct types of coverage—Coverage A and Coverage B. Coverage A provides excess coverage for injuries already covered by the underlying policy. In this regard, Coverage A contains a provision specifically incorporating the "coverage provisions" of the underlying policy. Indeed by definition, "excess" coverage covers the same types of claims as the primary policy, but for additional amounts. In addition, the incorporation clause in Coverage A was properly read to incorporate the exclusions in the underlying policy (see, New York Univ. v Continental Ins. Co., 87 NY2d 308, 323
[]).
Coverage B, by contrast, provides additional primary coverage for injuries not covered in the underlying policy. Unlike Coverage A, Coverage B does not incorporate the exclusions contained in the underlying policy. Significantly, there is no incorporation-by-reference clause in Coverage B and no exclusion for lead paint appears there. Exclusions must be specific and cannot be extended by mere interpretation or implication (see, Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311
; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652).
Moreover, the umbrella policy contains specific exclusions for other types of injuries including alcohol,...
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