Selective Ins. Co. of Am. v Chu & Gassman Consulting Engr's, P.C.

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Selective Ins. Co. of Am. v Chu & Gassman Consulting Engr's, P.C. 2012 NY Slip Op 31078(U) April 19, 2012 Supreme Court, New York County Docket Number: 112116/10 Judge: Richard F. Braun Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE $TATE OF NEW YORK The fallowing papers, numbered 1 to Cross- Moti orS: , - NEW VQRK bOuNT ware road pn this m o t l o w f o r Yyv m a id f i 1 7 e [* 2] SUPlWME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 23 X SELECTIVE INSURANCE COMPANY OF AMERICA, _ - - - _ - - _ _ - - - - - _ - - - - - 1 I _ _ _ _ _ _ _ I _ _ _ _ _ _ c _ _ _ ~ Plaintiff, Index No. 112116/10 Q!m B ¬ ¬ Q -againstCHU & GASSMAN CONSULTING ENGINEERS, P.C., CONTINENTAL CASUALTY COMPANY, INC., DONNA MONTELLO, AS ADMINISTRATRIX OF THE ESTATE OF GENNARO MONTELLO and DONNA MONTELLO, INDIVIDUALLY, and DAVID MOSTYN AND LISA MOSTYN, RICHARD F. BRAUN, J.: FILED NEW YORK COUNTY .CLERK S OFFICE This is a declaratory judgment action brought to determine the defense and indemnification obligations of two liability insurers with respect to a personal injury action and a wrongful death action arising from the collapse of an industrial conveyor belt. The parties have moved for relief as follows: (a) Defendant Continental C s a t Company, Inc. ( Continental ) moves for summary auly judgment (CPLR 3212) declaring that plaintiff Selective Insurance Company of America ( Selective ) must defend defendant insured Chu & Gassman Consulting Engineers, P.C. ( Chu ) on a primary basis and reimburse Continental for certain defense costs. (b) Chu cross-moves for the same declaration, dismissal of plaintiffs amended complaint, and attorney s fees in connection with the instant action. (c) Selective cross-moves for summary judgment declaring that Selective is relieved from any policy obligations under the insurance policy exclusions for professional services and errors and omissions. [* 3] Intl. S. Ins. Co., 71 AD3d 561, 562 [latDept 20101.) Moreover, [tlo be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision (citation omitted). (Frontier Insulation Conks. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997].) If any claims asserted arguably arise from covered events, the insurer must defend the entire action. (id.) Where a professional services exclusion is invoked, the trier of fact must look to the nature of the conduct under scrutiny rather than to the title or position of those involved, as well as to the underlying complaint, the contract under which [the insured] was to perform....9, (Reliance Ins. Co. v National Union Fire Ins. Co. of Pittsburgh, Pa,, 262 AD2d 64, 65 [l* Dept 19991 [citation and internal quotation marks omitted] .) The exclusion does not apply where the insured merely enforces the terms of its contract or safety rules without drawing upon engineering or other professional knowledge. (id.) The direct and third-party claims against Chu assert claims for ordinary negligence, and contract, common law and statutory violations in connection with construction and demolition that could conceivably fall outside the exclusion for professional, supervisory, inspection, or engineering services (I$ Westpoint Intl., Inc. v American Intl. S, Ins. Co., 71 AD3d 561, 562 [ Although the underlying complaint contains some causes of action that are arguably subject to the insurance policy s contract liability exclusion, it alleges, in addition to a single cause of action for breach of contract, several causes of action sounding in tort and alleging statutory 3 [* 4] violations. ]). The plaintiffs and other parties do not assert that all of Chu s conduct involved supervision and inspection. In urging summary judgment under the exclusion, Selective has submitted a subcontract and purchase orders claimed to be between Chu and an entity apparently alleged to be affiliated with third-party defendants in the underlying actions. Selective argues that the documents show that Chu was responsible for resident engineering, and electrical and mechanical inspection support, and notes that the word engineer appears in Chu s corporate name and that Chu is described as an architect in the declarations page of the policy. The court may not even consider this evidence in determining the duty to defend. It is well-established that a liability insurer has a duty to defend its insured in a pending lawsuit if the pleadings allege a covered occurrence, even though the facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered (citation omitted). (Fitzpatrick v American Honda Motor Co., 78 0 NY2d 6 1,63 [ 19911; accord Savik, Murray & Aurora Constr. Mgt. Co., LLC v ITT Hartford Ins. Group, 86 AD3d 490,494 [lBt Dept. 201 11.) With respect to Selective s invocation of the errors and omissions exclusion, there is no need to examine the legal applicability of the clause. In neither of the two partial disclaimer letters by Selective did it invoke that exclusion. Rather, Selective relied exclusively upon the professional services exclusion, and did not raise the errors and omissions exclusion until Selective made its instant cross-motion. Accordingly, any defense under the exclusion has been waived (Estee Lauder Inc. v OneBeacon Ins. Group, LLC, 62 AD3d 3 3 , 35 [latDept 20091). In any event, the same analysis applicable to the professional services exclusion would apply. The pleadings allege negligence and statutory claims which might conceivably fall outside of the 4 [* 5] (1) consulting; (2) evaluating; (3) advising; (4) instructing; (5) testing; (6) reporting; or otherwise providing or failing to provide services provision of the errors and omissions exclusion. Chu and Continental are entitled to a declaration that the Selective policy, like Continental s, provides primary coverage. Because both policies contain other insurancey provisions, the clauses cancel each other out, and the insurers are required to provide primary coverage on a pro rata basis (Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682, 687 [1999]; Sport Rock Intl., Inc. v American Cas. Co. of Reading, Pa., 65 AD3d 12, 19 [lSt Dept 20091). Furthermore, because Continental s policy provides for a $50,000 self-insured retention, Selective is responsible for the first part of defense costs up to that amount before the two insurers are required to share the costs (see New York State Thruway Auth. v KTA-Tutor Eng g Sews., P.C., 78 AD3d 1566, 1568 [4 hDept 20101). Finally, Chu is entitled to attorney s fees incurred in connection with this insurance declaratory judgement action. An insured is entitled to such fees when it has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations ... (citations omitted). (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21 [1979]; accord Reliance Ins. Co. v National Union Fire Ins. Co. of Pittsburgh, Pa., 262 AD2d at 66.) Selective placed Chu in that position by commencing this action. Thus, by this court s separate decision and order, dated April 17, 201 1, the motion by Continental and the cross motion by Chu were granted in their entirety. Selective s cross motion WBS denied. The branch of Chu s cross motion seeking dismissal of the amended complaint cannot be granted, as it is not appropriate to dismiss a declaratory judgment cause of action on the merits but, if the claim is meritless, a declaration should be made in the opposite direction 5 [* 6] (see 200 Genesee St. Corp. v City of Utica, 6 NY3d 761, 762 [2006]; Sirius Am. Ins. Co. v Burlington Ins. Co., 81 AD3d 562, 563 [la Dept 201 1). Dated: New York, New York April 19,2012 FILED ~. RICHARD F. BRAUN, J.S.C. 6 -

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