Merchants Mut. Ins. Co. v Esposito

[*1] Merchants Mut. Ins. Co. v Esposito 2007 NY Slip Op 51401(U) [16 Misc 3d 1112(A)] Decided on June 7, 2007 Supreme Court, Nassau County Feinman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through October 5, 2007; it will not be published in the printed Official Reports.

Decided on June 7, 2007
Supreme Court, Nassau County

Merchants Mutual Insurance Company, Plaintiff,

against

Salvatore Esposito, Giuseppe Esposito and Angela Esposito, Defendants.



11512/06



Cascone & Kluepfel, LLP

Hutchinson & Hutchinson, P.C.

Fogarty, Felicione & Duffy, P.C.

Thomas Feinman, J.

RELIEF REQUESTED

The plaintiff, Merchants Mutual Insurance Company, (hereinafter referred to as "Merchants"), moves for an Order pursuant to CPLR §3211(b) and §3212(b) declaring that Merchants has no obligation to defend the defendants, Salvatore Esposito, (hereinafter referred to as "Salvatore"), and Giuseppe Esposito, (hereinafter referred to as "Giuseppe"), in the underlying personal injury action entitled Angelo Esposito v. Salvatore Esposito and Giuseppe Esposito, currently pending in the Supreme Court, County of Nassau, under Index Number 5405/04, or to indemnify them for any judgment which may be rendered in the underlying action. The defendant, Angela Esposito, (hereinafter referred to as "Angela"), also plaintiff in the underlying action, cross-moves for an Order pursuant to CPLR §3212 declaring that the plaintiff, Merchants, has an obligation to provide coverage and a defense to Salvatore and Giuseppe in the underlying personal injury action, and to indemnify them for any judgment that may be rendered in the underlying action, [*2]and opposes Merchant's motion. The defendants, Salvatore and Giuseppe, submit opposition to Merchant's motion and support Angela's cross-motion. The plaintiff, Merchants, submits an affirmation in opposition and in reply. The plaintiff, Angela, submits a reply affirmation.

BACKGROUND

Angela initiated a personal injury action against Salvatore and Giuseppe for injuries she sustained when she tripped and fell at the premises known as 25 East Avenue, Glen Cove, New York, on October 4, 2002. Angela claims that she tripped and fell on an unsafe and defective staircase that leads from the main floor of the premises to the basement level.

Salvatore and Giuseppe, brothers and co-owners of the subject premises, received interest in the premises from their father. The premises consisted of a basement and two stories above. The first floor was occupied by Salvatore, Angela and their children. The second floor was occupied by Giuseppe and his family.

Upon the record herein, it is undisputed that as divorce proceedings between Salvatore and Angela commenced, Salvatore moved out of the premises on November 8, 1998, and did not return to the premises. Additionally, it is undisputed that Giuseppe Esposito and his family moved out of the premises on November 8, 1998.

The applicable portions of Merchants' homeowners insurance policy provides that personal liability coverage is not afforded for bodily injury to the policy holder, or an "insured". The policy defines "insured" as "you and residents of your household who are: (a) Your relatives; or (b) Other persons under the age of 21 and in the care of any person named above". (Emphasis added.)

Merchants argues that its policy does not afford coverage to Salvatore and Giuseppe for Angela's claimed injuries as Angela was an "insured" on the date of the accident. Merchants provides that on the date of the incident, October 4, 2002, Angela was still a "relative" as Angela and Salvatore were still married. Merchants refers to Angela and Salvatore's Judgment of Divorce which is dated January 15, 2003. Therefore, Merchants contends that as Angela was a relative, and a resident of the household, she is an insured, and the policy exclusion applies.

The defendants herein submit that Angela was not a "resident of your household" as defined in the subject policy, as she was not a "resident of the insured's [Salvatore's] household" and therefore, the purported policy exclusion, to wit, exclusion of coverage for bodily injuries sustained by an "insured", does not apply. Additionally, the defendants submit that Merchants' untimely disclaimer is unreasonable as a matter of law. [*3]

DISCUSSION

The applicable policy exclusion at bar excludes personal liability coverage for bodily injury to "you and residents of your household". The policy defines "insured" as, inter alia, "residents of your household" who are relatives, or under the age of 21 and in the case of any person named above. However, there is no definition of "household" in the policy. Here, as the insurance policy as to household is uncertain in its meaning, all ambiguity must be resolved in favor of the insured against the insurer. (Schaut v. Firemen's Ins. Co. Of Newark, N.J., 130 AD2d 477).

When an insurer attempts to limit liability by use of an ambiguously worded provision which is subject to more than one reasonable construction, the Courts will construe it strictly against the insurer. (Hollander v. Nationwide Mut. Ins. Co., 60 AD2d 380; Ruder & Finn v. Seaboard Sur. Co., 5 NY2d 663)."The term household' has been characterized as ambiguous or devoid of any fixed meaning in similar contents", and as such, its interpretation requires an inquiry into the intent of the

parties. (General Assurance Co. v. Schmitt, 265 AD2d 299). The interpretation must reflect the reasonable expectation of an ordinary businessman when making an insurance contract, and the meaning which would be given by the average man. (Id.)

Moreover, the circumstances particular to each case must be considered in construing the meaning of the term. (Id.) Whether a person is a "resident" of an insured's household, for coverage purposes, requires more than temporary or physical presence and requires at least some degree of

permanence and intention to remain. (Lindner v. Wilkerson, 2 AD3d 500). For purposes of a provision on a homeowner's policy excluding coverage for injury to a "resident of insured's household", a resident is one who lives in the household with a certain degree of permanency and intention to remain. (Canfield v. Peerless Ins. Co., 262 AD2d 934).

Here, the defendants, Salvatore and Giuseppe, were co-owners of the subject property and insureds under the policy. While Angela appears to have been married to Salvatore at the time of the incident, as their divorce was not yet finalized, and therefore, may have been a "relative", under the circumstances at bar, her status as a "relative" is not the determining factor. First, it must be determined whether Angela was a resident of the "household" who is a relative. Therefore, at issue is whether Angela was a member of either of the named insured's household, to wit, either Salvatore's or Giuseppe's household. Upon the record herein, Angela was not a resident of either Salvatore's or Giuseppe's household. Salvatore and Giuseppe moved out of the premises in1998, approximately four years prior to the incident. Salvatore moved out in 1998, did not return, and maintained his own separate household.

In any event, there is merit to the defendants' argument that the disclaimer issued by Merchants was untimely and unreasonable. Merchants interposed an Answer for Salvatore and Giuseppe on or about August 3, 2004, without a reservation of rights, and disclaimed coverage on [*4]or about September 15, 2005. Merchants submits that it issued its disclaimer on September 15, 2005, and not earlier, because Merchants didn't receive a copy of the Judgment of Divorce until September 13, 2005. However, Merchants had questioned Salvatore about the status of his marriage on May 3, 2004. Merchants had in its possession Salvatore's recorded statement of May 3, 2004 whereby Salvatore stated that he wasn't sure of the date that his divorce was finalized, but guessed about last year, hence, approximately sometime in 2003. Merchants' approximate one year and four month delay in sending out their disclaimer letter is unreasonable as a matter of law. (Moore v. Ewing, 9 AD3d 484). The insurer's obligation to provide a prompt disclaimer is triggered when the insurer has a reasonable basis upon which to disclaim coverage, whereby the insurer cannot delay indefinitely all issues of fact regarding the insurer's coverage obligations. (Matter of American Express Prop. Cas. Co. v. Vinci, 18 AD3d 655).

CONCLUSION

In light of the foregoing, the plaintiff's motion is denied and the defendant's cross-motion is granted. Therefore, the plaintiff, Merchants, is obligated to provide coverage and a defense to Salvatore and Giuseppe in the underlying personal injury action, and to indemnify the defendants from any judgment that may be rendered in the underlying action.

The moving defendant in the cross-motion is hereby directed to Settle Judgment on Notice. A copy of this order with notice of entry shall accompany the proposed judgment.



E N T E R :

________________________________

J.S.C.

Dated: June 7, 2007

cc: Cascone & Kluepfel, LLP

Hutchinson & Hutchinson, P.C.

Fogarty, Felicione & Duffy, P.C.