New York Insurance Coverage Law Update

Court Rules Acts Of Alleged Sexual Abuse Over Years Are Multiple Occurrences Implicating Multiple SIRs

A mother of a minor girl sued the Roman Catholic Diocese of Brooklyn, alleging that the Reverend James Smith had sexually abused the girl over a number of years. The Diocese then sued its insurer for reimbursement of defense costs and the settlement of the action. The court found that the sexual abuse allegedly occurred over a seven-year period, at different times and at multiple locations, and that the insurer therefore was entitled to judgment declaring that the alleged acts of sexual abuse in the underlying action constituted multiple occurrences; that the settlement amount was to be allocated over the seven triggered policy periods; and that the Diocese had to exhaust the $250,000 self-insured retention for each of the implicated policies. [Roman Catholic Diocese of Brooklyn v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2011 N.Y. Slip Op. 06554 (App. Div. 2d Dep’t Sept. 20, 2011).]

Homeowner Had No Standing To Bring Direct Action Against Contractor’s Insurer

Contending that her home had been damaged after a contractor removed the roof, the homeowner sued the insurer that had issued the contractor a third-party general liability insurance policy. The insurer argued that the suit was an improper direct action and should be dismissed. The court agreed. The court explained that because the homeowner had not obtained a judgment against the contractor as required by New York Insurance Law §3420(b)(1), she could not maintain a direct action against the insurer to cover her claim against the contractor. Moreover, the court continued, the homeowner was not an intended third-party beneficiary under the contractor’s policy but was, at most, only an “incidental beneficiary” under the policy. In any event, the court concluded, all of the homeowner’s claims were barred by the policy exclusion for roofing operations. [Josma v. Interboro Ins. Co., 2011 N.Y. Slip Op. 32578(U) (Sup. Ct. Nassau Co. Sept. 27, 2011).]

Independent Contractors Exclusion Bars Coverage For Suit By Employee of Subcontractor

A contractor insured under a commercial general liability policy hired a sub-contractor to perform spackling at a construction site. After one of the subcontractor’s employees allegedly was injured and brought suit, the contractor’s insurer maintained that it had no obligation to defend or indemnify the insured contractor based upon the policy’s Independent Contractors Exclusion. The court found that the insured contractor did not control or supervise the work of the subcontractor’s employee, and ruled that the subcontractor was an independent con-tractor. The subcontractor’s employee, therefore, fell “squarely within the terms of the Independent Contractors Exclusion.” The court then granted summary judgment in favor of the insurer against the insured contractor. [Tower Ins. Co. of N.Y. v. Citywide Interior Contrs., Inc., 2011 N.Y. Slip Op. 32509(U) (Sup. Ct. N.Y. Co. Sept. 21, 2011).]

No Liability Coverage For Failure To Meet Statutory Obligation To Obtain Workers’ Compensation Insurance

An insurer argued that it had no duty to defend or to indemnify its insured under a farm owner’s liability policy with respect to a workers’ compensation award issued against the insured farm owner in connection with the death of a farm worker. The court agreed, pointing out that the policy limited coverage to suits against the insured for damages because of bodily injury. However, the workers’ compensation claim made on behalf of the decedent established that his estate had elected to forego the recovery of damages through a civil action and instead had sought to pursue a claim for workers’ compensation insurance benefits that the farm owner should have obtained for him. The court found that the farm owner’s liability arose from its failure to meet its statutory obligation to obtain workers’ compensation insurance, rather than from the bodily injury sustained by the decedent. The court ruled that there was no coverage for such liability under the farm policy. [Farm Family Cas. Ins. Co. v. Brady Farms, Inc., 2011 N.Y. Slip Op. 6723 (App. Div. 4th Dep’t Sept. 30, 2011).]