Nautilus Insurance Company v. 93 Lounge Inc. et al
Filing
53
ORDER granting (45) Motion for Summary Judgment in case 1:14-cv-01029-KAM-VMS and in 1:15-cv-00166-KAM-VMS. For the reasons stated in the attached Memorandum and Order plaintiff's motion for summary judgment is GRANTED. It is declared that the p lain language of the Policy relieves Nautilus of any duty to defend or indemnify 93 Lounge or any other party with respect to the claims in the Underlying Actions. Furthermore, it is declared that Nautilus owes no duty to pay for Mr. Rodriguez' s, Ms. Ashley Encalada's, and Vanessa Encalada's, or any other party's medical expenses associated with the Underlying Actions. Should plaintiff seek to pursue its request for reasonable costs, plaintiff shall submit an application, s upported by documentation as required by the Second Circuit, for reasonable costs within fourteen days of this order. The Clerk of Court is respectfully directed to enter judgment for plaintiff and to close this case. Ordered by Judge Kiyo A. Matsumoto on 3/31/2017. (Fletcher, Camille)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------X
NAUTILUS INSURANCE COMPANY,
MEMORANDUM AND ORDER
14-CV-01029 (KAM)(ST)
Plaintiff,
-against-
93 LOUNGE INC., LUIS RODRIGUEZ,
EILEEN P. HUGHES, and
CHARLES AMADO, JR.,
Defendants.
--------------------------------------X
--------------------------------------X
NAUTILUS INSURANCE COMPANY,
15-CV-0166 (KAM)(ST)
Plaintiff,
-against-
(CONSOLIDATED)
93 LOUNGE INC., ASHLEY ENCALADA,
VANESSA ENCALADA, EILEEN P. Hughes,
and CHARLES AMADO, JR.
Defendants.
--------------------------------------X
KIYO A. MATSUMOTO, United States District Judge:
Plaintiff Nautilus Insurance Company (“plaintiff” or
“Nautilus”) commenced a diversity action on February 18, 2014,
against defendants 93 Lounge Inc. (“93 Lounge”), Luis Rodriguez,
1
Eileen P. Hughes and Charles Amado, Jr.
Nautilus commenced a
second diversity action on January 13, 2015, against 93 Lounge,
Ashley Encalada, Vanessa Encalada, Eileen P. Hughes and Charles
Amado, Jr.
The two actions were consolidated on June 23, 2016.
All defendants except 93 Lounge have been dismissed.
Presently
before
the
court
is
Nautilus’
motion
for
summary judgment. (Motion for Summary Judgment, ECF Nos. 37, 45.)
Nautilus seeks a declaratory judgment pursuant to 28 U.S.C. § 2201
declaring that: a) it has no duty to defend or indemnify 93 Lounge
or any party with respect to the claims in two lawsuits filed in
the Supreme Court of New York, Kings County related to a motor
vehicle accident that occurred on January 1, 2013, on 93rd street
in Kings County, New York; b) it has no duty to pay Luis Rodriguez,
Ashley Encalada, Vanessa Encalada, 93 Lounge or any party for any
medical
expenses
with
respect
to
Luis
Rodriguez’s,
Ashley
Encalada’s or Vanessa Encalada’s alleged injuries; c) and for its
costs of suit incurred herein, including reasonable attorneys’
fees.
For the reasons set forth below, the Nautilus’ motion for
summary judgment is granted, except as to attorneys’ fees.
Background
Rule 56.1 of the Local Civil Rules of the United States
District Courts for the Southern and Eastern Districts of New York
(“Local Rule 56.1”) requires a party moving for summary judgment
to submit a statement of the undisputed facts on which the moving
2
party relies to grant summary judgment, together with citation to
the admissible evidence of record supporting each such fact.
Local Rule §§ 56.1(a), (d).
See
The facts described below have been
taken from the plaintiff’s Rule 56.1 statement.
(See Plaintiff’s
Rule 56.1 Statement (“Pl’s. 56.1”), ECF No. 46.).
Defendants
have not opposed the motion and therefore did not submit opposing
Rule 56.1 statements.
Accordingly, based on the court’s review of
the plaintiff’s 56.1 Statement and supporting exhibits, the court
finds that the facts set forth in plaintiff’s Rule 56.1 statement
are deemed admitted.
(2d Cir. 2003)
Giannullo v. City of N.Y., 322 F.3d 139, 140
(“If the opposing party then fails to controvert
a fact so set forth in the moving party’s Rule 56.1 statement,
that fact will be deemed admitted.”) (citing Local Rule 56.1(c));
see also Vermont Teddy Bear Co., Inc. v. 1–800 Beargram Co., 373
F.3d 241, 246 (2d Cir. 2004) (holding district court was required
to decide whether movant for summary judgment was entitled to
judgment as matter of law even though motion was unopposed).
The
court
all
resolves
all
conflicts
in
the
evidence
and
draws
reasonable inferences in favor of defendant, the nonmoving party.
See Smith v. Cty. of Suffolk, 776 F.3d 114, 121 (2d Cir. 2015)
(“We ‘resolve all ambiguities and draw all permissible factual
inferences in favor of the party against whom summary judgment is
sought.’”) (quoting Lederman v. N.Y.C. Dep’t of Parks & Recreation,
731 F.3d 199, 202 (2d Cir. 2013)).
3
Nautilus Insurance company issued a Commercial General
Liability policy to 93 Lounge, under policy number NN212293 (the
“Policy”) with effective dates of June 2, 2012 through June 2,
2013.
(Pl’s. 56.1, ECF No. 46 at ¶ 1.)
Under the Policy coverage
may be excluded on several bases.
The first exclusion upon which plaintiff relies is the
Liquor Liability exclusion.
(Id. at 2.)
The Liquor Liability
exclusion in the Policy was amended by an endorsement to the Policy
(S009 (02/95)), which removed language that limited the scope of
the
exclusion
manufacturing,
to
insureds
distributing,
alcoholic beverages.”
who
were
selling,
“in
the
serving
business
or
of
furnishing
(Compare Curran Aff., Ex. 1, ECF No. 47-1,
Commercial General Liability Coverage Form (CG 00 01 12 04) at 2
with Curran Aff. Ex. 3, ECF No. 47-3.)
The endorsement reads as
follows:
“Exclusion – Total Liquor Liability”
This endorsement modifies insurance provided
under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
Exclusion c. under Paragraph 2., Exclusions of
COVERAGE A. Bodily Injury and Property Damage
(Section I – Coverages) is replaced by the
following:
c. Liquor Liability
“Bodily injury” or “property damage” for which
any insured or his indemnitee may be held
liable by reason of:
4
(1)
(2)
(3)
Causing or contributing to the intoxication
of any person;
The furnishing of alcoholic beverages to a
person under the legal drinking age or under
the influence of alcohol; or
Any
statute,
ordinance
or
regulation
relating to the sale, gift, distribution or
use of alcoholic beverages.
All other Terms and Conditions of this Policy
remain unchanged.
S009 (02/95)
(Curran Aff., Ex. 3, ECF No. 47-3 (emphasis in original).)
Plaintiff
also
relies
on
the
Aircraft,
“Auto”
Watercraft exclusion. (Curran Aff., Ex. 4, ECF No. 47-4.)
or
The
Aircraft, “Auto” or Watercraft exclusion in the Policy was amended
by an endorsement to the Policy, which removed references to the
“insured.”
(Compare Curran Aff., Ex. 1, ECF No. 47-1, Commercial
General Liability Coverage Form (CG 00 01 12 04) at 4 with Curran
Aff. Ex. 4, ECF No. 47-4.)
THIS ENDORSEMENT
CAREFULLY
The endorsement reads as follows:
CHANGES
THE
POLICY
PLEASE
EXCLUSION – AIRCRAFT, AUTO OR WATERCRAFT
This endorsement modifies insurance provided
under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
Exclusion g. Aircraft, Auto or Watercraft
under Paragraph 2., Exclusions of Section I –
Coverage A - Bodily Injury and Property Damage
Liability is replaced by the following:
5
READ
IT
2. Exclusions
This insurance does not apply to:
g. Aircraft, Auto or Watercraft
“Bodily injury” or “property damage” arising
out of the ownership, maintenance, use or
entrustment to others of any aircraft, “auto”
or watercraft. Use includes operation and
“loading or unloading”.
This exclusion applies even if the claims
allege negligence or other wrongdoing in the
supervision, hiring, employment, training or
monitoring of others, if the “occurrence”
which caused the “bodily injury” or “property
damage” involved the ownership, maintenance,
use or entrustment to others of any aircraft,
“auto” or watercraft.
This exclusion does not apply to:
(1)
(2)
A watercraft while ashore on premises you own
or rent; or
“Bodily injury” or “property damage” arising
out of:
a) The operation of machinery or equipment
that is attached to, or part of, a land
vehicle that would qualify under the
definition of “mobile equipment” if it
were not subject to a compulsory or
financial responsibility law or other
motor vehicle insurance law in the state
where it is licensed or principally
garaged; or
b) The operation of any of the machinery or
equipment listed in Paragraph f.(2) or
f.(3), of the definition of “mobile
equipment” as follows:
i. Cherry pickers and similar devices
mounted on automobile or truck
chassis and used to raise or lower
workers; and
ii. Air
compressors,
pumps
and
generators,
including
spraying,
6
welding,
building
cleaning,
geophysical exploration, lighting
and well servicing equipment.
All other terms and conditions of this policy
remain unchanged.
L204 (06/06)
(Curran Aff., Ex. 4, ECF No. 47-4 (emphasis in original).)
The
Policy defines “auto,” in relevant part, as a “land motor vehicle.”
(Curran Aff., Ex. 1, ECF No. 47-1, Commercial General Liability
Coverage Form (CG 00 01 12 04) at 12.)
The Policy also contains
a “Coverage C. Medical Payments” provision, which provides that
Nautilus will not pay medical expenses for “bodily injury” excluded
under Coverage A.
(Curran Aff., Ex. 1, ECF No. 47-1, Commercial
General Liability Coverage Form (CG 00 01 12 04) at 7; Ex. 5, ECF
No. 47-5.)
On or about April 4, 2013, defendant Mr. Luis Rodriguez
commenced an action in New York State Supreme Court, Kings County,
against 93 Lounge, HVT, Inc., Eileen P. Hughes and Charles Amado,
Jr. in New York State Supreme Court, Kings County.
(Pl’s. 56.1,
ECF No. 46 at ¶ 6; Curran Aff., Ex. 6, ECF No. 47-6.)
In his
complaint, Mr. Rodriguez alleges that he was injured on January 1,
2013, while walking on 93rd Street in Kings County, New York when
he was struck by a motor vehicle owned by Ms. Hughes and driven by
Mr. Amado (the “Accident”).
(Pl’s. 56.1, ECF No. 46 at ¶ 7; Curran
Aff., Ex. 6, ECF No. 47-6 at ¶¶ 21-27.)
Mr. Rodriguez also alleges
that, prior to the Accident, Mr. Amado was a patron at 93 Lounge
7
and Mr. Amado was sold, served and consumed alcoholic beverages
while he was intoxicated at 93 Lounge. (Pl’s. 56.1, ECF No. 46 at
¶ 8; Curran Aff., Ex. 6, ECF No. 47-6 at ¶¶ 29-34.)
Mr. Rodriguez
further alleges that 93 Lounge is liable for his injuries because
it contributed to Mr. Amado’s intoxication in violation of various
New York State Laws, including the General Obligations Law 11-101
and Alcohol Beverage Control Law 65.
(Pl’s. 56.1, ECF No. 46 at
¶ 8; Curran Aff., Ex. 6, ECF No. 47-6 at ¶¶ 32-34.)
On February 3, 2013, Nautilus was notified about the
Accident and Mr. Rodriguez’s claim.
On March 4, 2013, after
conducting an investigation of the Accident and reviewing the
allegations regarding the Accident and the terms of the Policy,
Nautilus issued a Reservation of Rights letter to 93 Lounge.
(Pl’s. 56.1, ECF No. 46 at ¶ 9; Curran Aff., Ex. 7, ECF No. 477.) When reserving its rights to disclaim coverage, Nautilus cited
to the Policy’s “Exclusion – Total Liquor Liability,” and noted
that this provision may bar coverage for claims arising out of the
Accident.
(Pl’s. 56.1, ECF No. 46 at ¶ 10; Curran Aff., Ex. 7,
ECF No. 47-7 at 4.)
Nautilus also reserved its right to rely upon
other applicable exclusions in the Policy.
(Pl’s. 56.1, ECF No.
46 at ¶ 11; Curran Aff., Ex. 7, ECF No. 47-7 at 5-6.)
Nautilus received a copy of Mr. Rodriguez’s complaint on
August 16, 2013.
Accident
and
On August 19, 2013, after investigating the
reviewing
the
allegations
8
in
Mr.
Rodriguez’s
complaint and the terms of the Policy, Nautilus agreed to provide
a
defense
to
93
Lounge
Reservation of Rights.
in
Mr.
Rodriguez’s
lawsuit
under
a
(Pl’s. 56.1, ECF No. 46 at ¶ 12; Curran
Aff., Ex. 8, ECF No. 47-8.)
In its letter, Nautilus noted that
there were causes of action that were not covered by the Policy.
(Pl’s. 56.1, ECF No. 46 at ¶ 13; Curran Aff., Ex. 8, ECF No. 47-8
at 2.) Nautilus again cited the Policy’s “Exclusion – Total Liquor
Liability” provision and noted that it may bar coverage for the
suit, and again reserved its rights to rely on other applicable
provisions in the Policy.
It also advised 93 Lounge that the
Policy does not provide coverage for claims arising out of 93
Lounge’s furnishing of alcohol to its customers.
(Pl’s. 56.1, ECF
No. 46 at ¶ 14-15; Curran Aff., Ex. 8, ECF No. 47-8 at 4-5.)
On or around June 2014, Nautilus received a copy of Ms.
Ashley and Vanessa Encalada’s pleadings also filed in New York
State Supreme Court, Kings County, against Eileen Hughes, Charles
Amato, HVT, Inc., and 93 Lounge. 1
(Pl’s. 56.1, ECF No. 46 at ¶
16; Curran Aff., Ex. 8, ECF No. 47-9.)
The Encaladas alleged in
their amended complaint that they were injured on January 1, 2013,
while walking along 93rd street in Kings County, New York when
they were struck by a motor vehicle owned by Ms. Hughes and
operated by Mr. Amado.
They further allege that the Accident was
1
The state court proceedings brought by Mr. Rodriguez, and Ms. Ashley and
Vanessa Encalada are hereinafter known as the “Underlying Actions.”
9
caused by the negligent operation of the motor vehicle. (Pl’s.
56.1, ECF No. 46 at ¶ 17; Curran Aff., Ex. 9, ECF No. 47-9 at ¶¶
10-28.)
The Encaladas also allege that, prior to the Accident,
Mr. Amado was a patron at 93 Lounge and Mr. Amado was sold, served
and consumed alcoholic beverages while he was intoxicated at 93
Lounge,
and
intoxication.
therefore,
93
Lounge
contributed
to
Mr.
Amado’s
(Pl’s. 56.1, ECF No. 46 at ¶ 18; Curran Aff., Ex.
9, ECF No. 47-9 at ¶ 36-37.)
The Encaladas further allege that 93
Lounge is liable for their injuries because 93 Lounge’s conduct
violated
various
New
York
State
Laws,
including
the
General
Obligations Law 11-101 and Alcohol Beverage Control Law 65. (Pl’s.
56.1, ECF No. 46 at ¶ 18; Curran Aff., Ex. 6, ECF No. 47-9 at ¶¶
38-42.)
On October 28, 2014, after investigating the Accident
and reviewing the Encaladas’ allegations and the terms of the
Policy, Nautilus agreed to provide a defense to 93 Lounge in the
Encalada’s lawsuit under a Reservation of Rights.
(Pl’s. 56.1,
ECF No. 46 at ¶ 19; Curran Aff., Ex. 10, ECF No. 47-10.)
In its
letter to 93 Lounge, Nautilus noted that there were causes of
action which were not covered by the policy. (Pl’s. 56.1, ECF No.
46 at ¶ 20; Curran Aff., Ex. 10, ECF No. 47-10 at 3.)
Nautilus
cited the Policy’s “Exclusion – Total Liquor Liability” and the
“Aircraft, Auto, or Watercraft” exclusion provisions.
Nautilus
noted that these provisions may bar coverage for the suit, and
10
reserved its rights to rely on other applicable provisions in the
Policy.
It also advised 93 Lounge that the Policy does not provide
coverage for claims arising out of 93 Lounge’s furnishing of
alcohol to its customers.
(Pl’s. 56.1, ECF No. 46 at ¶ 21-23;
Curran Aff., Ex. 10, ECF No. 47-10 at 3-5.)
During
its
investigation
of
the
Encaladas’
claims,
Nautilus learned that 93 Lounge had a separate Liquor Liability
Policy, and that the pleadings in the Underlying Actions had also
been submitted to 93 Lounge’s liquor liability carrier, Founders
Insurance.
(Pl’s. 56.1, ECF No. 46 at ¶ 24.)
Founders Insurance
appointed counsel who is defending 93 Lounge in the Underlying
Actions.
(Id. at ¶ 25.)
Prior to filing the present action, Nautilus, in the
letters it sent to 93 Lounge, reserved its right to disclaim
coverage and to seek a declaration of non-coverage.
(Id. at ¶ 26;
Curran Aff., Ex. 8, ECF No. 47-8 at 5; Curran Aff., Ex. 10, ECF
No. 47-10 at 4.).
On February 18, 2014 and January 13, 2015,
Nautilus commenced these actions seeking a declaration that it had
no duty to defend or indemnify 93 Lounge or any party in the
Underlying Actions. (See Complaints, ECF Nos. 1.) The two actions
14-CV-1029 and 15-CV-0166 were consolidated on June 23, 2016. (See
Docket Entries dated June 23, 2016.) All the individual defendants
have been dismissed from these actions.
(See Stipulations of
Dismissals, No. 15-cv-00166, ECF Nos. 9, 16, 36; No. 14-cv-1029,
11
ECF No. 28.)
The only remaining defendant is 93 Lounge.
Defendant
93 Lounge advised the court on June 28, 2016, that it would not
oppose plaintiff’s summary judgment motion.
(See Letter dated
June 28, 2016, ECF No. 43.)
STANDARD OF REVIEW
I.
Motion for Summary Judgment
Summary judgment is proper only when, construing the
evidence in the light most favorable to the non-movant, “there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a);
see also Doninger v. Niehoff, 642 F.3d 334, 344 (2d Cir. 2011).
The role of the court is not “‘to weigh the evidence and determine
the truth of the matter but to determine whether there is a genuine
issue for trial.’”
Cioffi v. Averill Park Cent. Sch. Dist. Bd. of
Educ., 444 F.3d 158, 162 (2d Cir. 2006) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L.Ed.2d
202 (1986)).
“A motion for summary judgment is proper where the
issues to be resolved are questions of law, not fact.
Thus,
summary judgment is appropriate in the present case because ‘the
determination of the duty to defend is a question of law answered
by comparing the allegations of the complaint (underlying action)
to the provisions of the policy.’”
United Nat. Ins. Co. v.
Horning, Ltd., 882 F. Supp. 310, 312 (W.D.N.Y. 1995) (quoting
National Grange Mut. Ins. Co. v. Continental Cas. Ins. Co., 650 F.
12
Supp. 1404, 1408 (S.D.N.Y. 1986)).
DISCUSSION
Plaintiff seeks a declaration that under the Policy, it
has no duty to defend or indemnify 93 Lounge or any other party
for the injuries alleged to have been suffered by Mr. Rodriguez,
Ms. Ashley Encalada and Ms. Vanessa Encalada, or to pay for any
medical or other expenses associated with the Underlying Actions.
“In New York, 2 ‘an insurer’s obligation to furnish its insured with
a defense is heavy indeed, and, of course, broader than its duty
to pay.’” 3
Ma-Do Bars, Inc. v. Penn-Am. Ins. Co., No. 1:09-CV-901
(GLS) (DRH), 2010 WL 5138475, at *3 (N.D.N.Y. Dec. 9, 2010)(quoting
Int’l Paper Co. v. Cont’l Cas. Co., 35 N.Y.2d 322, 326 (N.Y.
1974)); see also Horning, 882 F. Supp. at 312 (“The duty to defend,
under New York law, has been interpreted as ‘heavier and broader’
2 The court is sitting in diversity so New York choice of law rules apply. See
Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 147 (2d Cir. 2008) (citing
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S. Ct. 1020,
85 L.Ed. 1477 (1941). In New York, “‘the traditionally determinative choice
of law factor [is] the place of contracting.’” Id. (quoting Zurich Ins. Co.
v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 618 N.Y.S.2d 609, 642
N.E.2d 1065 (1994). “In the insurance law context, New York recognizes the
precept that a court should apply ‘the local law of the state which the
parties understood was to be the principal location of the insured risk.’”
Schwartz, 539 F.3d at 152 (quoting Restatement (Second) of Conflict of Laws §
193 (1971)); see also Zurich, 84 N.Y.2d at 318, 618 N.Y.S.2d 609, 642 N.E.2d
1065 (considering “what the parties understood to be the location of the
risk”). Here, the location of the risk, 93 Lounge’s place of business, was
in Kings County, New York. Therefore, the court applies New York law.
3 Unlike “an insurer’s broad duty to defend, the duty to indemnify is
determined by the actual basis for the insured’s liability to a third person
and does not turn on the pleadings, but rather on whether the loss, as
established by the facts, is covered by the policy.” U.S. Underwriters Ins.
Co. v. Falcon Constr. Corp., No. 02 CV 4179(BSJ), 2004 WL 1497563, at *5
(S.D.N.Y. July 1, 2004) (citation and internal quotation marks omitted).
13
than the duty to indemnify.”) (citing Servidone Construction Corp.
v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 423–24, 488
N.Y.S.2d 139, 477 N.E.2d 441 (1985)).
“The insurer must defend
the insured in any matter covered by the policy where the insured
may be held liable for damages, regardless of the likelihood of
success on the underlying claim.”
Horning, 882 F. Supp. at 312
(citing Avondale Industries, Inc. v. Travelers Indem. Co., 123
F.R.D. 80, 82 (S.D.N.Y.1988), aff’d 887 F.2d 1200 (2d Cir. 1989),
cert. denied, 496 U.S. 906, 110 S. Ct. 2588, 110 L.Ed.2d 269
(1990).
To succeed on a claim that the terms of the policy bar
coverage, the insurer must “demonstrate that the allegations of an
underlying
complaint
place
that
pleading
solely
and
entirely
within the exclusions of the policy and that the allegations are
subject to no other interpretation.”
CGS Indus., Inc. v. Charter
Oak Fire Ins. Co., 720 F.3d 71, 77 (2d Cir. 2013) (citation and
internal quotation marks omitted). “The insurer must establish
that the exclusion is stated in clear and unmistakable language,
is subject to no other reasonable interpretation, and applies in
the particular case and that its interpretation of the exclusion
is the only construction that could fairly be placed thereon.”
Ocean Partners, LLC v. North River Ins. Co., 546 F. Supp. 2d 101,
110
(S.D.N.Y.
omitted).
2008)
(citation
and
internal
quotation
marks
After “an insurer establishes that a policy exclusion
14
applies, the burden shifts to the policyholder to prove that an
exception to that exclusion applies.”
Ment Bros. Iron Works Co.,
Inc. v. Interstate Fire & Cas. Co., 702 F.3d 118, 122 (2d Cir.
2012).
Notwithstanding this burden shift, any ambiguity in the
policy’s language must be construed against the insurer and in
favor of the insured.
Id. at 124.
The test for ambiguity in an
insurance contract is whether “an ordinary business man in applying
for insurance and reading the language of these policies would
have thought himself covered against precisely the damage claims
now asserted.”
U.S. Specialty Ins. Co. v. LeBeau, Inc., 847 F.
Supp. 2d 500, 504 (W.D.N.Y. 2012) (quoting Kenyon v. Security Ins.
Co. of Hartford, 163 Misc.2d 991, 626 N.Y.S.2d 347, 350 (N.Y. Sup.
Ct. 1993)) (modifications omitted); see also Thomas J. Lipton,
Inc. v. Liberty Mut. Ins. Co., 34 N.Y.2d 356, 357 N.Y.S.2d 705,
314 N.E.2d 37, 39 (N.Y. 1974) (same).
“‘Ambiguity exists where
the terms of an insurance contract could suggest more than one
meaning when viewed objectively by a reasonably intelligent person
who has examined the context of the entire integrated agreement.’”
LeBeau, Inc., 847 F. Supp. 2d at 503 (quoting 40 Gardenville, LLC
v. Travelers Prop. Cas. of Am., 387 F. Supp. 2d 205, 212 (W.D.N.Y.
2005) (modifications omitted)).
Applying these standards to the case at bar, the court
finds that the “Liquor Liability” exclusion and the “Aircraft,
Auto or Watercraft” exclusion are unambiguous, and that they
15
clearly
apply
to
the
claims
at
issue
here.
Accordingly,
plaintiff’s motion for summary judgment is granted.
1. LIQUOR LIABILITY EXCLUSION
In its summary judgment motion, Nautilus argues that it
has no duty to defend or indemnify any party in the Underlying
Actions because the Policy’s Liquor Liability exclusion applies.
First, the court finds that the Liquor Liability exclusion is
unambiguous
because
an
“ordinary
business
man”
would
have
reasonably believed that claims arising out of furnishing alcohol
to a person, thereby contributing to the person’s intoxication,
would be barred from coverage.
The Liquor Liability exclusion, in
relevant part, expressly excludes coverage for claims where the
insured is potentially liable or is held liable for “causing or
contributing to the intoxication of any person” and for “furnishing
[] alcoholic beverages to a person . . . under the influence of
alcohol.”
(Curran Aff., Ex. 1, ECF No. 47-1, Commercial General
Liability Coverage Form (CG 00 01 12 04) at 2; Ex. 3, ECF No. 473.)
The complaints in the Underlying Actions both allege
that 93 Lounge served Mr. Amado alcohol when they knew, or should
have known, that Mr. Amado was intoxicated, causing him to operate
a motor vehicle while under the influence of alcohol, which led to
the Accident that injured Mr. Rodriguez, Ms. Ashley Encalada, and
Vanessa Encalada.
Upon a review of the complaints from the
16
Underlying Actions, the court finds no other bases for liability
that does not derive from, arise out of, or is independent of 93
Lounge serving alcohol to Mr. Amado, thereby contributing to Mr.
Amado’s intoxication.
Thus, all claims brought by Mr. Rodriguez,
and Ms. Ashley and Vanessa Encalada against 93 Lounge in the
Underlying Action are excluded by the Policy.
See Ma-Do Bars,
2010 WL 5138475, at *4 (“Where a claim alleged in the complaint
arises out of an operative act that is excluded from coverage,”
then all claims that “cannot be established without proving the
operative act” are also excluded.) (citing Mount Vernon Fire Ins.
Co. v. Creative Hous. Ltd., 88 N.Y.2d 347, 350–52 (N.Y. 1996)).
Courts have found similar Liquor Liability exclusions
unambiguous and excluded coverage where the allegations were based
on the insured providing alcohol to the injured party.
In N.Y.
Mut. Underwriters v. Burdick, 196 A.D.2d 668, 669–70, 601 N.Y.S.2d
37 (1993), it was alleged that the insured was negligent in
training her employees in the “appropriate manner of serving
alcoholic beverages”, the insured’s employees served substantial
quantities of alcohol to a person who was in an intoxicated state,
failed to control the person, and failed to “perceive the dangerous
condition created” by the presence of the individual and his
“continuous consumption of alcoholic beverages.”
Id.
The court
found that all the allegations either directly or indirectly arose
out of the insured’s business of selling and serving alcoholic
17
beverages and, as such, they were excluded under the insurer’s
policy.
(Id.)
The court in Cole’s Rest., Inc. v. N. River Ins. Co., 85
A.D.2d 894, 894, 446 N.Y.S.2d 734 (1981), similarly held that there
was “no factual basis or legal theory which may be developed at
trial that could obligate the insurance companies to pay,” and
that the allegations clearly fell within the exclusion of the
policy.
In Cole’s, the relevant insurance policy contained an
exclusion for bodily injury or property damage resulting from the
sale
of
liquor
in
violation
of
the
Dram
Shop
Act
(General
Obligations Law, § 11-101) and for other improper sale of alcohol.
The allegations concerned the insured’s employees serving a patron
alcohol immediately before an accident, when the employees knew or
should have known that the patron had become intoxicated.
(Id.)
As in Burdick and in Cole’s, the allegations in the
Underlying
alcohol
to
Actions
Mr.
arise
Amado,
from
93
leading
to
Lounge’s
Mr.
allegedly
Amado
driving
serving
while
intoxicated which caused the Accident that injured Mr. Rodriguez,
Ms. Ashley Encalada, and Ms. Vanessa Encalada.
Accordingly, the
court finds as a matter of law that the claims alleged in the
Underlying
Actions
are
exclusion in the Policy.
excluded
as
per
the
Liquor
Liability
See Ma-Do Bars, 2010 WL 5138475, at *6
(finding that the liquor liability exclusion barred claim alleging
that the provision of alcoholic beverages contributed to the
18
party’s intoxication and caused the injuries and violated New York
State law); Handlebar Inc. v. Utica First Ins. Co., 290 A.D.2d
633, 635, 735 N.Y.S.2d 249 (2002) (holding that the injured party’s
“allegations concerning a violation of the Dram Shop Act——that
alcoholic beverages were continually served to Greaves while he
was
visibly
exclusion
intoxicated——fall
relieving
indemnify”).
the
squarely
insurer
Consequently,
of
within
any
pursuant
to
the
duty
the
Dram
to
Shop
defend
Liquor
or
Liability
Exclusion, Nautilus does not a have a duty to defend or indemnify
93 Lounge or any party in the Underlying action.
2. AIRCRAFT, AUTO
OR
WATERCRAFT EXCLUSION
In its summary judgment motion, Nautilus also argues
that it has no duty to defend or indemnify any party in the
Underlying Actions pursuant to the Policy’s Aircraft, Auto or
Watercraft
exclusion.
determining
whether
The
an
first
“ordinary
step
in
business
the
man”
analysis
would
is
have
reasonably believed that the Policy’s Aircraft, Auto or Watercraft
exclusion for “bodily injury . . . arising out of the ownership,
maintenance, use or entrustment to others of any . . . ‘auto’”
would exclude such injuries regardless of whether they were, as
here, caused by the use of an automobile by a third party, with no
formal relationship to the insured.
47-4.)
(Curran Aff., Ex. 4, ECF No.
The court finds that the Aircraft, Auto or Watercraft
exclusion clearly and unambiguously excludes coverage for any and
19
all personal injuries “arising out of the . . . use . . . of any
. . . auto[mobile],” including use by third parties, and that an
ordinary
businessperson
otherwise.
(Id.)
could
Nothing
not
in
the
have
reasonably
language
of
the
believed
exclusion
indicates that the exclusion was limited to only the insureds and
others with a formal relationships with the insured.
Other courts have found similar “auto exclusions” to be
unambiguous.
In LeBeau, Inc., 847 F. Supp. 2d at 504, the court
found unambiguous a policy exclusion for injuries “arising out of
the use . . . of any auto,” and held that it excluded “coverage
for any and all personal injuries ‘arising out of the . . . use .
. . of any automobile,’ including use by third parties.”
auto
exclusion
and
endorsement
at
issue
here
are
Id.
The
virtually
identical to those in LeBeau.
As in LeBeau, the auto exclusion here was amended by the
endorsement removing references to the “insured.”
847 F. Supp. 2d at 504-05.
LeBeau, Inc.,
The endorsement also removed, in the
section that specifies what “the exclusion does not apply to,”
references to ownership and liability assumed under any “insured
contract.”
(Compare Curran Aff., Ex. 1, ECF No. 47-1, Commercial
General Liability Coverage Form (CG 00 01 12 04) at 4 with Curran
Aff. Ex. 4, ECF No. 47-4.)
revisions
“serve
to
Thus, as in LeBeau, the endorsement’s
highlight
and
clarify
the
total
lack
of
coverage for injuries arising out of the use of an automobile.”
20
LeBeau, Inc., 847 F. Supp. 2d at 505.
exclusion
inconsistent
with
the
Nor is the language in the
rest
of
the
Policy.
“The
modifications [in the endorsement] serve solely to specify that
while injuries caused by aircraft and watercraft owned, operated
or loaned to ‘any insured’ continue to be excluded, just as
specified in the original policy language, the exclusion for
injuries caused by the ‘ownership . . . use or entrustment to
others of any auto’ is no longer limited solely to insureds.”
Id.;
(Curran Aff. Ex. 4, ECF No. 47-4.)
Thus, the court agrees with the rationale of LeBeau and
finds that the Policy, including the Aircraft “Auto,” or Watercraft
exclusion, as amended by the endorsement, was unambiguous and that
the “ordinary business man” would have interpreted the Policy to
exclude claims for bodily injuries arising out of the use of an
automobile.
LeBeau, Inc., 847 F. Supp. 2d at 505-06; see also,
DMP Contracting Corp. v. Essex Ins. Co., 76 A.D.3d 844, 845-47,
907
N.Y.S.2d
487
(1st
Dept.
2010),
(finding
that
the
“plain
meaning” of an exclusion for “bodily injury . . . arising out of
. . .
not
any auto” is that bodily injury occurring as described is
covered,
whether
or
not
it
is
the
insured
who
owned,
maintained, used or entrusted to others the subject automobile.”);
Ruge v. Utica First Ins. Co., 32 A.D.3d 424, 424-26, 819 N.Y.S.2d
564 (2d Dept. 2006) (finding no ambiguity as to the plain and
ordinary meaning of the auto exclusion, which excluded coverage
21
“for
bodily
injury,
property
damage,
personal
injury
or
advertising injury that arises out of the ownership, operation,
maintenance,
use,
occupancy,
renting,
loaning,
entrusting,
supervision, loading or unloading of . . . an auto” and holding
that
a
claim
seeking
coverage
for
injuries
sustained
in
an
automobile accident was excluded as per the auto exclusion).
Further,
the
Aircraft,
Auto
or
Watercraft
specifically contemplates the circumstances here.
exclusion
That is, the
exclusion specifies that it will apply in circumstances where the
claims allege “negligence or other wrongdoing in the supervision,
hiring, employment, training or monitoring of others, if the
‘occurrence’ which caused the ‘bodily injury’ . . . involved the
ownership, maintenance, use or entrustment to others of any . . .
auto[mobile].”
(Curran Aff., Ex. 4, ECF No. 47-4.)
As discussed
above, the crux of the allegations in the Underlying Actions are
that 93 Lounge negligently served alcohol to Mr. Amado when it
knew, or should have known, that he was intoxicated, and would
operate
an
automobile
while
intoxicated,
thereby
causing
the
accident which injured Mr. Rodriguez, Ms. Ashley Encalada, and Ms.
Vanessa Encalada.
Accordingly, the court finds as a matter of law
that the claims alleged in the Underlying Actions are excluded
under the Aircraft, Auto or Watercraft exclusion the in the Policy.
Consequently,
Nautilus
does
not
a
have
a
duty
to
defend
indemnify 93 Lounge or any party in the Underlying action.
22
or
3. MEDICAL PAYMENTS EXCLUSION
Nautilus
argues
further
that
it
is
entitled
to
a
declaration that it does not have a duty to pay Mr. Rodriguez, Ms.
Ashley and Vanessa Encalada, 93 Lounge or any party for any medical
expenses with respect to the injuries alleged in the Underlying
Actions because the claims in the Underlying Action are excluded
from coverage under the Liquor Liability and the Aircraft, Auto or
Watercraft exclusions.
The Policy contains a “Coverage C Medical
Payments” provision, which provides that Nautilus will not pay
medical expenses for “bodily injury” excluded under Coverage A.
(Curran Aff., Ex. 1, ECF No. 47-1, Commercial General Liability
Coverage Form (CG 00 01 12 04) at 7; Ex. 5, ECF No. 47-5.).
Here, the injuries alleged in the Underlying Action are
excluded under Coverage A pursuant to the Liquor Liability and the
Aircraft, Auto or Watercraft exclusion, as set forth above.
Thus,
any medical expenses claimed by Mr. Rodriguez, Ms. Ashley Encalada
and Vanessa Encalada or any other party to the Underlying Actions
would fall under the “Coverage C Medical Payments” exclusion
provision.
Accordingly, Nautilus cannot be held liable to any
party for any medical expenses incurred in connection with Mr.
Rodriguez’s, Ms. Ashley Encalada’s and Ms. Vanessa Encalada’s
alleged injuries in the Underlying Actions.
23
CONCLUSION
It is without question that under New York law the
insurer bears the burden of establishing that an exclusionary
clause applies.
Nautilus Ins. Co. v. Barfield Realty Corp., No.
11 CIV. 7425 JPO, 2012 WL 4889280, at *11 (S.D.N.Y. Oct. 16,
2012)(citing
Shelby Realty LLC v. Nat’l Surety Corp. & Fireman’s
Fund Ins. Co., No. 06–Civ–3260, 2007 WL 1180651 at *3 (S.D.N.Y.
April 11, 2007)).
However, where the insurer meets its burden,
and where the terms of a policy are unambiguous, summary judgment
is appropriate.
Here, Nautilus has met its burden.
Accordingly, Nautilus’ motion for summary judgment is
GRANTED.
It is declared that the plain language of the Policy
relieves Nautilus of any duty to defend or indemnify 93 Lounge or
any other party with respect to the claims in the Underlying
Actions.
Furthermore, it is declared that Nautilus owes no duty
to pay for Mr. Rodriguez’s, Ms. Ashley Encalada’s, and Vanessa
Encalada’s, or any other party’s medical expenses associated with
the Underlying Actions.
Should plaintiff seek to pursue its
request
costs,
for
reasonable
plaintiff
shall
submit
an
application, supported by documentation as required by the Second
Circuit, for reasonable costs within fourteen days of this order.
24
The Clerk of Court is respectfully directed to enter
judgment for plaintiff and to close this case.
SO ORDERED.
Dated:
March 31, 2017
Brooklyn, New York
___________/s/______________
Kiyo A. Matsumoto
United States District Judge
25
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