New York Insurance Coverage Update

April 1, 2014 | Insurance Coverage

Court Finds No Duty To Defend Based Upon “Auto Business” Exclusion After Looking At Judicial Admissions Outside Underlying Complaint

Sam’s Tires & Automotive, Inc., sent Clarence Riffle to deliver tires in a truck owned by its president, Jerry Rosato. Riffle struck a motorcycle operated by Kyle Wagner, who sued. Rosato’s personal auto insurer, Travelers, defended Rosato, but disclaimed coverage to Riffle and Sam’s Tires based upon the policy’s “auto business” exclusion. The exclusion pre-cluded coverage for vehicles used in an “auto business,” except for Rosato and his employees.  Erie Insurance defended Riffle and Rosato under a business auto policy issued to Sam’s Tires.  The parties settled.  Erie filed a DJ seeking a declaration that Travelers breached its obligation to defend and indemnify Riffle, and Travelers counter-claimed to enforce Rosato’s judgment against Riffle and Sam’s Tires in the underlying action.  

The court granted summary judgment in favor of Travelers. The court first rejected Erie’s argument that Travelers’ disclaimer was ineffective because it lacked the specificity required by New York Insurance Law § 3420(d), holding that the disclaimer “clearly invoked” the “auto business” exclusion. Then, the court held that Travelers had no duty to defend or to indemnify Riffle in the underlying action.  The court observed that a court may look to limited material outside the “four corners” of the underlying complaint to determine whether a duty to defend exists, including “judicial admissions in pleadings and other submissions.”  Although the underlying com-plaint alleged that Riffle was employed by Rosato and/or Sam’s Tires, this “ambiguity was clarified by the responsive pleadings, when Sam’s Tires, Riffle and Rosato all admitted that Riffle was acting only on behalf of Sam’s Tires at the time of the accident.”  Finally, the court held that Erie must pay to Travelers the judgment obtained by Rosato against Riffle and Sam’s Tires in the underlying action and that the anti-subrogation doctrine was not a bar as Erie had argued. [Erie Ins. Co. v. Travelers Property Cas. Co. of America, No. 1:13-CV-00092 (N.D.N.Y. Apr. 4, 2014).]

“Roofing Operations” Exclusion Barred Coverage Even Though Worker Alleged He Was Injured While Working On Only Part Of Roof

A worker who alleged that he was injured while working on a roof sued the contractor. The contractor’s insurer denied coverage based upon the policy’s “roofing operations” exclusion. The worker and contractor argued that the exclusion did not apply because the worker was only replacing a portion of the roof. The court ruled in favor of the insurer, finding nothing that limited the exclusion to projects involving the replacement or re-covering of an entire roof. [Utica First Ins. Co. v. Mumpus Restorations, Inc., 2014 N.Y. Slip Op. 02034 (App. Div. 2d Dep’t Mar. 26, 2014).]

Court Finds “In Transit” Coverage For Money Allegedly Stolen From A Vault 

Insureds asserted that principals of an armored car company stole their cash while it was being processed at the armored car company’s vault before being delivered to the insureds’ check-cashing businesses and ATMs. The court found that the losses were covered under an insurance bond’s “in transit” clause. It rejected the insurer’s argument that the clause provided coverage only when the money was inside of, or being loaded onto or unloaded from, an “armored vehicle.” Rather, the court determined, the armored car company’s act of collecting money and transporting it to its vault, to place it in the form necessary for its transportation and delivery to the insureds’ locations, was “one continuous shipment process.” [CashZone Check Cashing Corp. v. Vigilant Ins. Co.,2014 N.Y. Slip Op. 01565 (App.Div. 1st Dep’t  Mar. 11, 2014).]

Court Rejects MVAIC’s Defense Where It Did Not Send Letters Scheduling IMEs Within 30 Days After Receiving Health Care Provider’s Claim 

A health care provider sued the Motor Vehicle Accident Indemnification Corp-oration (“MVAIC”) to recover assigned first-party no-fault benefits. The trial court ruled in favor of the provider and the appellate court affirmed. MVAIC’s letters scheduling independent medical examinations (“IMEs”) of the provider’s assignor were mailed more than 30 days after MVAIC received the provider’s claim.  Accordingly, the court ruled that MVAIC was precluded from raising the defense that the failure to appear for the IMEs constituted a failure to comply with a condition precedent to coverage. [Bay Ls Med. Supplies, Inc. v. MVAIC, 2014 N.Y. Slip Op. 50417(U) (App. Term 2d Dep’t March 11, 2014).]

Share this article:

Related Publications

Get legal updates and news delivered to your inbox