Peerless Ins. Co. v Evanston Ins. Co.

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Peerless Ins. Co. v Evanston Ins. Co. 2013 NY Slip Op 30635(U) March 27, 2013 Sup Ct, Suffolk County Docket Number: 12-6350 Judge: W. Gerard Asher 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] INDEX NO. SHORT FORM ORDER 12-6350 STJPREME COURT - STATE OF NEW YORK I.A.S. PART 32 - SUFFOLK COUNTY PRESENT: Hon. W. GERARD ASHER Justice of the Supreme Court PEERLESS INSURANCE COMPANY, Plaintiff, MOTION DATE 5/22/12 ADJ. DATE 11/20/12 Mot. Seq. #002 - MotD MOUND COTTON WOLLAN & GREENGRASS Attorney for Plaintiff One Battery Park Plaza New York, New York 10004 CALLAN, KOSTER, BRADY & BRENNAN, LLP Attorney for Defendant Evanston Ins. Co. One Whitehall Street New York, New York 10004 - against - EVANSTON INSURANCE COMPANY, FRANK GAGLIANO, GREGORY ADLER, SECOND GENERATION RECYCLING INC. d/b/a PLANET EARTH RECYCLING and PLANET RECOVERY, INCI. and DONALD OSTERLOH, Defendants. GORDON & REES Attorney for Defendants Gagliano, Adler & Second Generation Recycling 90 Broad Street, 23rd Floor New York, New York 10004 DONALD OSTERLOH 14 Great Oak Road St. James, New York 11780 Upon the following papers numbered 1 to 33 read on this motion for summary judgment; Notice of Motion/ Order ; Answering Affidavits to Show Cause and supporting papers 1-20 ;Notice of Cross Motion and supporting papers and supporting papers 2 1-27 ; Replying Affidavits and supporting papers 28-3 1; 32-33 ; Other plaintiffs memorand= of law; plaintiffs reply memorandum of law; letter dated July 25,20 12 from Callan, Koster, Brady & Brennan, LLP to the court, w/att.; letter dated July 25,20 12 from Mound Cotton Wollan & Greengrass to the court; )it is, ( s ORDERED that the motion by the plaintiff for an order pursuant to CPLR 32 12, granting partial summary judgment against defendant Evanston Insurance Company (i) declaring that Evanston Insurance Company has a duty to defend defendant Donald Osterloh in the underlying wrongful death action entitled Calixte v ViZZegas (Sup Ct, Nassau County, Index No. 11-3536), and (ii) declaring that the [* 2] Peerless Ins. Co. v. Evanston Ins. Co. Index No. 12-6350 Page 2 insurance policy issued by the plaintiff is excess to the insurance policy issued by Evanston Insurance Company and that Evanston Insurance Company must reimburse the plaintiff for the costs incurred in defending Donald Osterloh in the underlying action, is granted to the extent indicated below, and is otherwise denied. This insurance coverage dispute arises from a motor vehicle accident which took place on Sunrise Highway in Amityville, New York on October 25,2010. The accident occurred when a westbound school bus collided with a tanker truck which was exiting a driveway in front of the commercial property known as 199 Sunrise Highway (New York State Route 27). It appears that the operator of the school bus, Piters Calixte, died as a result of the accident. Defendant Donald Osterloh is the owner of the property. At the time of the accident, Osterloh leased the northernmost portion of the property, known as 199C Sunrise Highway, to defendants Frank Gagliano and Gregory Adler. Gagliano and Adler are the principals of defendant Second Generation Recycling Inc. d/b/a Planet Earth Recycling and Planet Recovery, Inc. ( Planet ), which operates a recycling facility on the property. In effect on the date of the accident (in accordance with the parties lease) was a commercial liability policy issued by defendant Evanston Insurance Company ( Evanston ), designating Planet as the named insured and Osterloh as an additional insured. The additional insured endorsement provides, in relevant part, as follows: This endorsement modifies insurance provided under the following: C0MME:RCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE 1. Designation of Premises (Part Leased to You): 199C Sunrise Highway Amityville, NY 1 1701 2. Name of Person or Organization (Additional Insured): E.D. Sage Inc. & Donald Osterich [sic] *** WHO IS AN INSURED (Section 11) is amended to include as an insured the person or As provided in the lease, Tenant covenants to provide * * * a comprehensive policy of liability insurance * * * protecting Landlord and Tenant and any designee of Landlord against any liability whatsoever occasioned by accident on or about the demised premises or the building in which the demised premises is a part, or any appurtenances thereto. [* 3] Peerless Ins. Co. v. Evanston Ins. Co. Index No. 12-6350 Page 3 organization shown in the Schedule but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Schedule * * *. The Evanston policy s Commercial General Liability Coverage Part also provides, in relevant part, as follows: SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS *** 4. Other Insurance. If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: a. Primary Insurance This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below. b. Excess Insurance This insurance is excess over: (1) Any valid and collectible insurance available to you covering liability for damages arising o u t of your premises, operations, products and/or completed operations. *** C. Method of Sharing If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each party contributes equal amounts until it has paid its applicable [* 4] Peerless Ins. Co. v. Evanston Ins. CO. Index No. 12-6350 Page 4 limit of insurance or none of the loss remains, whichever comes first. Also in effect on that date was a commercial liability policy issued by the plaintiff, Peerless Insurance Company ( Peerless ), designating Osterloh and E.D. Sage Inc. as named insureds and covering all of Osterloh s commercial properties, including the leased premises. The Peerless policy :; Commercial General Liability Coverage Form provides, in relevant part, as follows: SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS *** 4. Other Insurance If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited i2s follows: a. Primary Insurance This insurance is primary except when b. below applies * * *. b. Excess Insurance This insurance is excess over: *** (2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement. When this insurance is excess, we will have no duty under Coverages A and B to defend the insured against any suit if any other insurer has a duty to defend the insured against that suit . In or about February 201 1, Molide Calixte, as the administrator of the decedent s estate, commenced a wrongful death action naming Osterloh and Planet as defendants, among others. As pleaded in the complaint, the accident took place at or near westbound New York State Route 27 in front of 199 New York State R.oute 27 also known as Sunrise Highway. [* 5] Peerless Ins. Co. v. Evanston Ins. Co. Index No. 12-6350 Page 5 On or about April 6,201 1, Osterloh tendered the suit to Peerless. It is undisputed that Peerless proceeded to undertake the defense of its insured. However, after reviewing a copy of the lease, Peerless tendered Osterloh s defense and indemnification to Gagliano and Adler. They, in turn, denied any obligation to defend or indemnify Osterloh. By letter dated November 22, 201 1, Evanston likewise declined the tender. Taking the position that the accident did not occur within the leased premises, Evanston asserted that Osterloh is an additional insured only with respect to liability arising out of the ownership, maintenance or use of the leased premises and, therefore, is not entitled to coverage. This action followed. By way of this action, Peerless seeks judgment (i) declaring that Evanston has breached its duty to defend Osterloh in the underlying suit; (ii) declaring that its policy is excess to and does not contriblcite with the Evanston policy or alternatively, (iii) declaring that Evanston has a duty to contribute on a pro rata basis to the costs of Osterloh s defense and indemnity in the underlying suit; and (iv) declaring that Evanston is liable to Peerless for all and/or half the costs incurred in Osterloh s defense to date.2 Now, in response to Peerless s motion for summary judgment, Evanston agrees, subject to its full reservation of rights, to share in the defense of Osterloh in the underlying action, but continues to contest the issue of allocation of coverage. As Evanston no longer disputes that it has a duty to defend Osterloh, this case no longer presents a genuine controversy relative to that issue (see New York Pub. Interest Research Group v Carey, 42 NY2d 527, 399 NYS2d 621 [I 9771). In order to maintain an action for a declaratory judgment, a party must present a concrete, actual controversy for adjudication (Fragoso v Romano, 268 AD2d 457, 702 NYS2d 333 [2000]). Consequently, that branch of the motion which is for summary judgment declaring that Evanston has such a duty is denied as moot, and the analysis proceeds to the issue of priority of coverage. Where, as here, there are multiple insurers covering the same risk, a court will look to the other insurance provisions in the policies to determine the insurers respective obligations. New York applies a functional analysis to separate lines of insurance, and an insurance policy should be read in light of the role it is to play (Graphic Arts Mut. Ins. Co. v Bakers Mut. Ins. Co., 45 NY2d 55 1, 558). We seek the purpose of the insurance policy, in part, by reference to the commonsense meaning of the terms that describe the policy s coverage vis-a-vis other insurance (Lumbermens Mut. Cas. Co. v Allstate Ins. Co., 5 1 NY2d 65 1,656-657). (Jefferson Ins. Co. v Travelers Indem. Co., 92 NY2d 363, 372, 681 NYS2d 208,213 [1998]). As a general rule, unless it would distort the plain meaning of the policy terms involved, where two or more policies cover the same risk and each purports to be excess, the excess clauses negate each other and * Upon review of the court s records, it appears that the underlying action was marked disposed on February 19, 20 13. [* 6] Peerless Ins. Co. v. Evanston Ins. Co. Index No. 12-6350 Page 6 each insurer is required to contribute in such proportion as its policy limit bears to the total of the policy limits (State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369,492 NYS2d 534 [1985]; Lumbermenjr Mut. Cas. Co. vAllstate Ins. Co., 51 NY2d 651,435 NYS2d 953 [1980]). However, if one party s policy is primary relative to the other policy, then the party issuing the primary policy must pay up to the limits of its policy before the excess coverage becomes effective (see Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682,685 NYS2d 41 1 [1999]). Here, since it is apparent that the Peerless policy and the Evanston policy cover the same risk, it is incumbent on the court to compare the other insurance clauses in the two policies (see id.). So compared, it is evident that the Evanston policy is primary and that the Peerless policy is excess. The relevant clause in the Peerless policy provides that its coverage is excess to [alny other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured. This language unambiguously applies to a named insured who is an additional insured in another policy. Since Osterloh is an additional insured under the Evanston policy, the Peerless policy provides him with coverage excess to that provided him under the Evanston policy (see QBE Ins. Corp. v Public Serv. Mut. Ins. Co., 102 AD3d 442, 958 NYS2d 103 [2013]). While Evanston contends that the relevant clause in its policy, providing that its coverage is excess to [alny valid and collectible insurance available to you covering liability for damages arising out of your premises, operations, products and/or completed operations, cancels out the relevant clause in the Peerless policy and obligates the insurers to share equally in the defense on a primary basis, the court is unpersuaded. Specifically, the court cannot agree that the term you as employed in that clause-a term expressly defined as the Named Insured shown in the Declarations and any other person or organization qualifying as a Named Insured under this policy -refers to Osterloh or to any insured other than Planet. Since Planet is not an insured under the Peerless policy, the Peerless policy does not constitute valid and collectible insurance available to Planet within the meaning of that clause and the clause is not triggered, rendering the Evanston policy primary. Accordingly, Peerless is entitled to the entry of judgment in its favor declaring that the insurance coverage provided by Peerless is excess to that provided by Evanston and that Evanston must fully reimburse Peerless for all defense costs incurred (see Osorio v Kenart Realty, 48 AD3d 650, 852 NYS2d 3 17 [2008]). The court directs that the claims as to which summary judgment was granted are hereby severed and that any remaining claims shall continue (see CPLR 3212 [e] [l]). J.S.C. -FINAL DISPOSITION X NON-FINAL DISPOSITION

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