Darwin Natl. Assur. Co. v Capacity Coverage Co. of N.J.
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Darwin Natl. Assur. Co. v Capacity Coverage Co. of N.J. 2015 NY Slip Op 31518(U) August 12, 2015 Supreme Court, New York County Docket Number: 153611/2015 Judge: Cynthia S. Kern Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: Part 55 ---------------------------------------------------------------------x DARWTN NATIONAL ASSURANCE COMPANY n/k/a ALLIED WORLD SPECIALTY INSURANCE COMPANY, Index No. 153611/2015 Plaintiff, -against- DECISION/ORDER CAPACITY COVERAGE COMPANY OF NEW JERSEY, ARM-CPACITY OF NEW YORK, LLC, VIKTOR GECAJ and GJONAJ REALTY & MANAGEMENT CORPORATION, Defendants. ---------------------------------------------------------------------X HON. CYNTHIA KERN, J.S.C. Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion for : ~~~~~~~~~~~~~~~~~~~ Papers ;Numbered Notice of Motion and Affidavits Annexed ................................... . Affidavits in Opposition ........................................................ . Replying Affidavits ..................................................................... . Exhibits ..................................................................................... . 2 3 4 Plaintiff commenced the instant action seeking a judgment declaring that it has no duty to ' ;! defend or indemnify defendants in an underlying personal injury action. \Defendants Capacity i Coverage Company of New Jersey ("Capacity") and ARM-Capacity of New York, LLC ("ARM") (collectively referred to herein as "moving defendants") now ~ove for an order ;I pursuant to CPLR § 321 l(a)(7) dismissing plaintiffs complaint as asserted against them in its .1 entirety. For the reasons set forth below, moving defendants' motion is denied. The relevant facts are as follows. This is a declaratory judgment action wherein plaintiff, a professional liability insurance carrier, seeks a declaration that it has no duty to [* 2] defend or indemnify defendants in connection with a lawsuit filed against ARM in the Supreme i 1 court of the State of New York, Bronx County, entitled Gjonaj Realty & Management Corp. and ,, 28-47 Webb Avenue Associates. LLC v. ARM-Capacity ofNew York, LLC (the "Gjonaj Action"). In 2011, defendant Viktor Gecaj ("Gecaj") sued his employer, Gjonaj Realty & Management Corporation ("Gjonaj") for personal injury in an action entitled Gecaj v. Gjonaj, et al. (the "Gecaj Action"). Gjonaj defaulted in the action and a default judgment was entered against it in the amount of$975,000. Subsequently, Gjonaj commenced the Gjonaj Action, alleging that ARM, its insurance 'I broker, agreed to forward any and all documents related to the Gecaj Action to American ;i Western, Gjonaj's insurance carrier. Gjonaj further alleged that ARM failed to forward I .1 documents to American Western and, as a result, the aforesaid default judgment was entered against Gjonaj. Sometime prior to the commencement of the Gjonaj Action, plaintiff issued an Insurance Agents and Broker Professional Liability Policy to defendant Capacity for the policy period July 26, 2014 to July 26, 2015 (the "Darwin Policy"). Pursuant to Endorsement 21 of the Darwin I Policy, ARM, Capacity's affiliate, is also a Named Insured of the Darwin Policy. After the commencement of the Gjonaj Action, ARM sought insurance coverage u·~der the Darwin Policy 1i for defense and any indemnity obligation in the Gjonaj Action. Plaintitt;,Provided ARM with defense in the Gjonaj Action while also expressly reserving its right to expenses in the event it is ~ntitled re~oup any defense to deny insurance coverage. On or about April I 3, 2015, plaintiff commenced this action seekipg a declaration that ARM is not entitled to coverage for the Gjonaj Action under the Darwin Policy. Specifically, 2 [* 3] plaintiff contends in its first cause of action that insurance coverage is barred by the Darwin Policy's "Prior and Pending Litigation Exclusion" and in its second caus~ of action that coverage is barred by the Darwin Policy's "Prior Knowledge Exclusion." Thus, in its third cause of I action, plaintiff seeks to recoup all defense expenses it paid on behalf of ARM in the Gjonaj f Moving defendants now move to dismiss all these causes of action on the ground that Action. they fail to state a cause of action upon which relief may be granted. On a motion addressed to the sufficiency of the complaint, the facts pleaded are assumed to be true and accorded every favorable inference. Marone v. Marone, 5.0 N.Y.2d 481 (1980). Moreover, "a complaint should not be dismissed on a pleading motion soilong as, when plaintiffs allegations are given the benefit of every possible inference, a ~ause of action exists." r Rosen v. Raum, 164 A.D.2d 809 (I ' 1 Dept. 1990). "Where a pleading is attacked for alleged ' inadequacy in its statements, [the] inquiry should be limited to 'whether ii states in some I recognizable form any cause of action known to our law."' Foley v. D 'Agostino, 21 A.D.2d 60, 64-65 (I" Dept 1977) (quoting Dulberg v. Mock, 1 N.Y.2d 54, 56 (1956)). ·• . In the present case, as an initial matter, moving defendants' motion to dismiss plaintiffs first cause of action seeking a declaration that there is no duty to defend or indemnify moving defendants under the Darwin Policy in connection with the Gjonaj Action pursuant to the Prior and Pending Litigation Exel usion on the ground that it fails to state a cau~e of action is denied. The complaint alleges that the Darwin Policy's Prior and Pending Litigation Exclusion states as I follows: A. This policy shall not apply to any Claim, Loss, or Defense Expenses based, arising out of, directly or indirectly resulting for, in consequence of or in any way involving: 3 [* 4] 4. any fact, circumstance, situation, transaction, event or Wrongful Act: ... a. underlying or alleged in any prior and/or pending litigation, or administrative or regulatory proceeding or investigation, of which any Executive Officer had received written notice before July 26, 2013. The complaint further alleges that ARM received notice of the Gecaj Action, and the allegations that form the basis of the Gjonaj Action, prior to July 26, 2013. These allegations, contrary to moving defendants' contention, are sufficient to state a claim for a judgment declaring that plaintiff has no duty to defend or indemnify ARM in the underlying Gjonaj Action based on the Darwin Policy's Prior or Pending Litigation Exclusion. To the extent moving defendants contend that the first cause of action must be dismissed as the Gecaj and Gjonaj Actions lack the factual nexus required in order to trigger the Policy's Prior or Pending Litigation Exclusion, such contention is unavailing on tqe present motion to dismiss as such argument pertains to the merits of plaintiffs claim and is only appropriate on a summary judgment motion. Indeed, on a motion to dismiss, the plaintiff need only allege that such nexus exists. Additionally, moving defendants' motion to dismiss plaintiffs se~ond cause of action seeking a declaration that there is no duty to defend or indemnify moving defendants under the Darwin Policy in connection with the Gjonaj Action pursuant to the Prior'Knowledge Exclusion on the ground that it fails to state a cause of action is also denied. The complaint alleges that the Darwin Policy's Prior Knowledge Exclusion provides that there is no cov~rage where an "Executive Officer," as defined by the policy, had knowledge, prior to July 26, 2013, of any fact circumstance, situation, transaction, event or wrongful act, or had reasonable expectation of such that could give rise to a claim. The Complaint further alleges that ARM received notice of the 4 [* 5] Gecaj Action, and the allegations that form the basis of the Gjonaj Action, prior to July 26, 2013. \I Thus, plaintiffs complaint adequately states a claim for a declaratory jutlgment declaring that plaintiff has no duty to defend or indemnify moving defendants under the Darwin Policy in i connection with the Gjonaj Action pursuant to the Prior Knowledge Exclusion . ., ., Finally, based on the foregoing, moving defendants' motion to dismiss plaintiffs thirdcause of action seeking the recovery of its defense expenses incurred in the defense of ARM in the Gjonaj Action is denied as moving defendants only ground for dismi~sing this cause of action was based on this court dismissing plaintiffs other two causes of action.·! Accordingly, as this court has determined that plaintiff has sufficiently stated causes of action for a declaratory 1 judgment declaring that it has no duty to defend or indemnify ARM in c~ nnection with the Gjonaj Action, there is no basis to dismiss plaintiffs third cause of actiort. Accordingly, based on the foregoing, moving defendants' motion is denied in its entirety. ·; This constitutes the decision and order of the court. Enter:----+-~-~+-=---- J.S.C. CYNTHIA S. KERN . 5 J,S.C,
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