Harleysville Worcester Insurance Company v. Sharma, M.D. et al
MEMORANDUM AND ORDER denying 44 Motion for Summary Judgment; denying 52 Motion for Summary Judgment; denying 58 Motion for Summary Judgment. For the reasons stated herein, the motions 44 , 52 , and 58 are denied. A pretrial conference has been scheduled for February 16, 2017at10:30 a.m. in Courtroom 940 of the Central Islip courthouse. A trial date will be set at that time. (Ordered by Judge Leonard D. Wexler on 1/18/2017.) (Fagan, Linda)
IN CLERK'S OFFICE
U.S. DISTRICT COURT E.D.N.Y.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
HARLEYSVILLE WORCESTER INSURANCE
JAN 18 2017
LONG ISLAND OFFICE
MEMORANDUM AND ORDER
MOHAN SHARMA, M.D., HITA SHARMA, M.D.,
CARING MEDICAL, LLC, SUKHADATA, LLC,
SUFFOLK FAMILY MEDICINE ASSOCIATES,
P.C., and JANE DOE, a Mentally Disabled Person,
Individually, and by her Mother and Natural
Guardian, Mary Doe,
RIKER, DANZIG, SCHERER, HYLAND & PERRETTI, LLP
BY: Lance J. Kalik, Esq. and Peter M. Perkowski, Jr.
Attorneys for Plaintiff
500 Fifth A venue, 49th Floor
New York, New York 10110
SCHWARTZ LAW, P.C.
BY: Matthew J. Conroy, Esq.
Attorneys for Defendants Hita Sharma, Mohan Sharma, Caring Medical, LLC and
666 Old Country Road, 9th Floor
Garden City, New York 11530
SIMON LESSER, P.C.
BY: Leonard F. Lesser, Esq.
Attorneys for Defendant Jane Doe
355 Lexington A venue, 1oth Floor
New York, New York 10017
WE)(LER, District Judge:
Plaintiff Harleysville Insurance ("plaintiff," "Harleysville" or the "Insurer") commenced
this diversity action for a declaration that it is not obligated to defend or indemnify its insureds in
an underlying action brought against them by defendant Jane Doe in New York Supreme Court.
Action"). An Amended Complaint in the Underlying Action was filed on April 11, 2014. The
Amended Complaint states causes of action for (1) medical negligence and malpractice, (2)
sexual assault, (3) civil battery, (4) negligent infliction of emotional distress, (5) intentional
infliction of emotional distress, (6) negligent hiring, supervision, and retention, and (7)
fraudulent conveyance. The fraudulent conveyance claim concerns the sale of the medical
practice to Sethi on January 15, 2014 for $300,000.
B. Mohan Sharma's Medical Condition
On November 15, 2013, about one month after his arrest, Sharma presented at
the emergency room at Flushing Hospital Medical Center with complaints of weakness,
headache, dizziness, slurred speech, nausea, and difficulty swallowing and was admitted to the
stroke unit. Declaration of Leonard F. Lesser ("Lesser Decl."), Ex. Q, DE . Treatment notes
from the hospital indicate that Sharma had been taking medication for migraine headaches for a
long time, that he had been suffering from loss of interest and depression-like symptoms for over
a year, and that he was taking Lexapro. Later on the same day, Sharma was transferred to North
Shore University Hospital. The records from North Shore describe Sharma as having a history
of migraines, depression, cognitive decline over a year, and "changes in level of consciousness
with staring, possibly subtle cognitive dysfunction over the past year" and that he "might have
been having seizures and cognitive deterioration related to his as yet undiagnosed underlying
condition." The notes indicated a working diagnosis of"Leukoencepalopathy with white matter
changes with left sided weakness." Lesser Decl., Ex. R. Sharma was discharged after five days
and pursued outpatient treatment over the ensuing months. By February 2014, one doctor noted
that Sharma was suffering from "Memory Loss as well as an abnormal MRI. At this time he is
unable to participate in any meaningful conversation and will not be able to work." Lesser Decl.,
Ex. T. None of the records provide any opinion regarding Sharma's condition on the date of the
incident, October 11, 2013.
It appears undisputed that Mohan Sharma is currently incapacitated from organic causes.
Harleysville states that upon information and belief, the Underlying Action was stayed in
December 2014 due to Mohan Sharma's mental incapacity, and Doe's counsel states that he was
informed by the Assistant District Attorney on the criminal matter that "the prosecution will be
consenting to Sharma's status as a mentally incapacitated person, pursuant to Crim Proc. Law
§730.40, whereby a Final Order of Observation will be issued and the felony complaints against
him dismissed on that basis." Lesser Decl., ~24, DE .
Sharma was not deposed in this
action due to his condition.
C. The Insurance Coverage
1. The Policy and Relevant Exclusions
Harleysville issued a business owners policy, bearing policy number BOP073213G (the
"Policy"), to Sukhdata and Caring Medical as named insureds for the period of November 2,
2012 to November 2, 2013 and with limits of$1,000,000 per occurrence and $2,000,000 in the
aggregate. The policy covers "sums that the insured becomes legally obligated to pay as
damages because of 'bodily injury,' 'property damage' or 'personal and advertising injury' to
which this insurance applies." Policy, §II(A)(1)(a). It applies to "bodily injury" only if it "is
caused by an 'occurrence' that takes place in the 'coverage territory."' Policy, §II(A)(1)(b)(1)(a).
"Bodily injury" is defined as "bodily injury, sickness or disease sustained by a person, including
ment!!l anguish or death resulting from any of these at any time." Policy, §II(F)(6), as amended
by Endorsement. "Occurrence" is defined as "an accident, including continuous or repeated
exposure to substantially the same general harmful conditions." Policy, §II(F)(13).
There are various Exclusions precluding coverage contained in the Policy, two of which
may be implicated in this case. The Policy does not apply to bodily injury "expected or intended
from the standpoint of the insured." Policy, §II(B)(1)(a). It also does not apply where the bodily
injury was "caused by the rendering or failure to render any professional service" including
"[m]edical, surgical, dental, x-ray or nursing services treatment, advice or instruction," and
"[a]ny health or therapeutic service treatment, advice or instruction." Policy,
2. Harleysville's Coverage Positions
The Underlying Action was commenced on or about February 11, 2014. Hita Sharma
forwarded a copy to Harleysville, and Harleysville acknowledged the claim on or about February
25, 2014. On March 26, 2014, Harleysville sent a Notice of Partial Disclaimer of Coverage and
Offer of Defense under Reservation of Rights letter to Sharma, Hita Sharma, Sukhadata, and
Caring Medical. In that letter, Harleysville took the position that it had no duty to defend or
indemnify Sharma, but offered to defend Hita Sharma, Caring Medical, and Sukhadata subject to
a reservation of rights.
As to Sharma, Harleysville advised that his sexual assault of Doe was not an occurrence
within the meaning of the Policy, and that coverage was also excluded as expected or intended
by the insured. Harleysville further disclaimed coverage for all insureds as to all the counts of
the complaint alleging intentional conduct - sexual assault, battery, intentional infliction of
emotional distress, and fraudulent conveyance - and the medical malpractice/ negligence claim
as excluded under the professional services exclusion.
Notwithstanding its disclaimer and subject to a full reservation of rights, Harleysville
initially agreed to defend Hita Sharma, Caring Medical, and Sukhdata. By letter dated April 11,
2014, however, Harleysville modified its coverage position. The letter indicates that Hita
Sharma had informed Harleysville that she was not employed by, affiliated with, or had any
ownership role with Caring Medical. As this left Mohan Sharma as the sole owner of Caring
Medical, and Harleysville had previously disclaimed coverage for Sharma, the insurer
determined that it would not defend or indemnify Caring Medical. Harleysville continued to
agree to defend Sukhdata and Hita Sharma, in her capacity as a principal of Sukhadata, subject to
a full reservation of rights.
D. Procedural History
Harleysville commenced this declaratory judgment action on April17, 2014. Defendant
Dinesh Sethi entered into a stipulation to be bound be the judgment in this action and was
dismissed as a defendant. See DE . 1 After discovery, the parties submitted the motions for
summary judgment that are the subject of this order.
A. Summary Judgment
Pursuant to Rule 56 ofthe Federal Rules of Civil Procedure, summary judgment is
appropriate only if "the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter oflaw." FED. R. CIV. P. 56(a); see Anderson v.
Liberty Lobby, Inc., 477 U.S. 242,247-48, 106 S. Ct. 2505 (1986). In determining a motion for
summary judgment, the court "is not to weigh the evidence but is instead required to view the
evidence in the light most favorable to the party opposing summary judgment, to draw all
It is unclear what, if any, role is played in this case by defendant Suffolk Family Medicine Associates, P.C.
("SFMA"). According to the complaint, SFMA "was a domestic professional corporation" with its principal place
of business at the Smithtown Building, and was owned, operated, maintained, supervised, managed and controlled
by Mohan Sharma and/or Hita Sharma. SFMA answered the complaint and is represented by the same counsel as
the Sharma and corporate defendants, but it is not a named insured on the Policy and has not moved for summary
reasonable inferences favor of that party, and to eschew credibility assessments." Amnesty Am. v.
Town ofW Hartford, 361 F.3d 113, 122 (2d Cir. 2004). After the moving party has met its
burden, the opposing party '"must do more than simply show that there is some metaphysical
doubt as to the material facts .... [T]he nonmoving party must come forward with specific facts
showing that there is a genuine issue for trial."' Caldarola v. Calabrese, 298 F.3d 156, 160 (2d
Cir.2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87,
106 S.Ct. 1348 (1986)).
B. Duty to Defend and Indemnify
Generally, "[a]n insured seeking to recover for a loss under an insurance policy has the
burden of proving that a loss occurred and also that the loss was a covered event within the terms
of the policy." Gongolewski v. Travelers Ins. Co., 252 A.D.2d 569, 675 N.Y.S.2d 299, 299 (2d
Dep't 1998) (internal quotation marks omitted). An insurer has two distinct duties to its insured
- to indemnify and to defend. An insurance company's duty to defend under New York law is
"broader than its duty to pay." Allianz Ins. Co. v. Lerner, 416 F.3d 109, 115 (2d Cir. 2005)
(quoting Ruder & Finn Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663,422 N.E.2d 518,439 N.Y.S.2d
858 (1981)). "The duty to defend is measured against the allegations of pleadings but the duty to
pay is determined by the actual basis for the insured's liability to a third person." Atlantic Cas.
Ins. Co. v. Value Waterproofing, Inc., 918 F. Supp. 2d 243,252 (S.D.N.Y. 2013) (internal
quotation marks and citation omitted), a.ff'd, 548 F. App'x 716, 717 (2d Cir. 2013) (summary
An insurer must defend if there is a reasonable possibility that the insured will be held
liable for an act or omission covered by the policy. See Century 21, Inc. v. Diamond State Ins.
Co., 442 F.3d 79, 82-83 (2d Cir. 2006) ("a defense obligation may be avoided only where there
is no possible factual or legal basis on which an insurer's duty to indemnify under any provision
of the policy could be held to attach." (internal quotation and citation omitted)). In determining
whether an insurer has the duty to defend, the analysis focuses on the four comers ofthe
underlying complaint. If the claims asserted therein '"rationally' fall within coverage of the
policy at issue, there is an obligation to defend." Abrams, Fensterman, Fensterman, Eisman,
Greenberg, Formato & Einiger, LLP v. Underwriters at Lloyd's, London, 918 F. Supp. 2d 114,
120 (E.D.N.Y. 2013) (quoting Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304,476 N.E.2d
272, 486 N.Y.S.2d 873 (1984)). If, however, "any one exclusion applies there can be no
coverage." See Maroney v. New York Cent. Mut. Fire Ins. Co., 5 N.Y.3d 467, 839 N.E.2d 886,
805 N.Y.S.2d 533, 535 (2005) (internal quotation and citations omitted). In order to "negate
coverage by virtue of an exclusion, an 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." Parks Real Estate Purchasing Grp. v. St. Paul Fire & Marine Ins. Co., 472
F.3d 33, 42 (2d Cir. 2006) (internal alteration and quotation omitted).
A. Does the Incident Constitute an Occurrence Within the Meaning of the Policy?
The threshold question presented is whether the incident of October 11, 2013 was an
"occurrence" within the meaning of the Policy. Although the Policy defines "occurrence" as an
"accident," the term "accident" is not defined. Harleysville urges use of a dictionary definition
that an accident is "an event that is not planned or intended: an event that occurs by chance,"
PI's Memorandum of Law at 12, DE [44-1], and argues that the incident of October 11,2013
cannot be an accident because sexual assault is an intentional act. Defendants claim that Mohan
Sharma did not have the capacity to form the requisite intent to commit the alleged sexual assault
and thus the incident was a covered occurrence.
The parties do not dispute that Sharma sexually assaulted Doe on October 11, 2013, nor
do they contest Sharma's current mental capacity. The key issue in dispute is Sharma's capacity
on October 11, 2013 and whether his conduct on that date was "intentional." Defendants claim
that the conduct was not intentional because of Sharma's medical condition, while Harleysville
argues that his medical condition is irrelevant as intent is inferred by the nature of the act.
On the current record, there is insufficient evidence to determine Sharma's medical
condition on or before October 11, 2013, the date of the incident involving Doe that led to his
arrest, or the effect that condition had on his capacity to form intent. Defendants have provided
various records from Sharma's treating physicians that suggest that the condition existed for
some time, but the first records are dated November 15, 2013. Neither side has provided
admissible expert testimony regarding whether Sharma was incapacitated on the date in question.
On the other hand, there is testimony that Sharma continued to see patients and acted normally in
the time leading to the incident.
The Court finds that Sharma's ability to form the requisite intent on October 11, 2013 is a
material issue of fact necessary for the determination of whether there was an occurrence or
accident within the meaning of the Policy. Accordingly, the motions for summary judgment are
B. Expected or Intended Exclusion
Harleysville further bases its denial of coverage on the Expected and Intended Exclusion,
which excludes "bodily injury" that is "expected and intended from the standpoint of the
insured." Policy (b). As there is a question of fact as to whether there was an occurrence under
the policy, a determination of whether the expected or intended exclusion applies is premature.
Nonetheless, Harleysville's arguments regarding application of the exclusion still warrant brief
Under New York law, Harleysville argues, intent to cause injury is inferred from certain
acts, including sexual assaults. See Allstate Ins. Co. v. Mugavero, 79 N.Y.2d 153, 589 N.E.2d
365, 581 N.Y.S.2d 142 (1992). In Mugavero, a case involving sexual assault of a child, the
Court of Appeals found that harm is inferred from that act regardless of the actor's subjective
intent. The case does not, however, stand for the proposition that the act itself is always
intentional. Indeed, the actor's capacity to commit the act was not at issue in Mugavero, as that
Court specifically noted that none of the parties contended that the sexual conduct "could have
been anything other than intentional." Mugavero, 79 N.Y. 2d at 159.; see also Dodge v. Legion
Ins. Co., 102 F. Supp. 2d 144, 151 (S.D.N.Y. 2000)(interpreting Mugavero and noting that in
"if the act is intentional, so is the harm, and the courts will not inquire into the
perpetrator's subjective intent to cause the injury" (emphasis supplied)). Here, Sharma's
capacity to form the requisite intent to commit the act itself is at issue. See, e.g., Dinneny v.
Allstate Ins. Co., 295 A.D.2d 797, 799, 744 N.Y.S.2d 74 (3rd Dep't 2002) (a triable issue of fact
existed as to whether "at the time of the attack," the insured "may have been suffering from
Alzheimer's-type dementia, with delusions" even though injuries were clearly expected when
insured struck another person with a hatchet). Of course, if it is ultimately determined that
Sharma did act intentionally on October 11, 2013, the harm from that act will be inferred
pursuant to Mugavero and the expected and intended exclusion will likely apply. 2
The parties have raised additional grounds for summary judgment, however, the Court fmds that the issue of
Sharma's intent should be determined first and declines to address the remaining arguments at this time.
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