Bullseye Restaurant, Inc. et al v. James River Insurance Company

Filing 21

ORDER granting in part and denying in part 18 Motion for Judgment as a Matter of Law : Defendant'ss motion is granted to the extent that it is entitled to a declaration that it owes no duty to provide coverage to the Plaintiffs for the claims asserted by Van Derham, Gibson, Saucedo and Zales in the Underlying Action, but otherwise denied. See attached Memorandum & Order. Ordered by Judge Denis R. Hurley on 5/8/2019. (Gapinski, Michele)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------------------------X
BULLSEYE RESTAURANT, INC., d/b/a THE
SCENE, and DANIEL BRENNAN
MEMORANDUM &
ORDER
17-CV-2996 (DRH)(GRB)

Plaintiffs,
-againstJAMES RIVER INSURANCE COMPANY
Defendant.
-------------------------------------------------------X
APPEARANCES:
For Plaintiff
John L. Juliano, P.C.
39 Doyle Court
East Northport, New York, 11731
By:
Jonathan C. Juliano, Esq.
For Defendant:
Wade Clark Mulcahy LLP
180 Maiden Lane, Suite 901
New York, New York 10038
By:
Christopher J. Soverow, Esq.
HURLEY, Senior District Judge:

Plaintiffs Bullseye Restaurant, Inc. d/b/a The Scene (“Bullseye”) and Daniel
Brennan (“Brennan”) (collectively “Plaintiffs”) commenced this action seeking a
declaratory judgment that defendant James River Insurance Company (“Defendant” or
“JRIC”) is obligated to indemnify and defend it in connection with an action entitled Van
Derham v. Bullseye Restaurant, E.D.N.Y. Civil Action No. 16-490 (the “Underlying
Action”). Presently before the Court is Defendant’s motion for summary judgment
dismissing Plaintiffs’ complaint and declaring that JRIC owes “no duty to provide
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coverage to the Plaintiffs or any other party[1] with respect to [claims] asserted in the
lawsuit” Van Derham v. Bullseye Rest. Inc. (E.D.N.Y. Civil Action No. 16-490) (the
“Underlying Action”). (Bullseye’s Notice of Motion (DE 18)). For the reasons set forth
below, the motion is granted in part and denied in part.
BACKGROUND
The following facts are taken from the parties’ 56.1 Statements and are
undisputed unless otherwise noted.
I.

History of Bullseye and Insurance Coverage By JRIC
Bullseye operates a bar restaurant that also functions as a “gentlemen’s club”

under the name “the Scene,” which opened in 2001. Bullseye Media was the initial
operating entity for the Scene. In 2010 Angelo Abbatiello (“Abbatiello”) arranged for
defendant Bullseye’s incorporation and began operating the business, with Abbatiello
owning all the stock. In 2014 Brennan became the owner of Bullseye and as such
oversaw its business operations, including promotions, except for the period from
approximately May 2015 through February or March 2016 when he took a leave of
absence for personal reasons. During Brennan’s leave of absence, Abbatiello assumed all
of Brennan’s responsibilities. When Bullseye’s then current insurer went out of business,
Abbatiello engaged the Robert S. Fede Insurance Agency to obtain coverage for
Bullseye. (Pls.’ 56.1 Resp. at ¶¶ 8-22.)
Thereafter, JRIC issued a Liquor Liability and Commercial General Liability to
Bullseye under Policy Number 00067929-0 (the “Policy”), initially effective 8/3/2015 to
8/3/ 2016. However, JRIC, by notice dated September 28, 2015 and admittedly received

1

The notice of motion does not specify who the “other party” to the instant action might be.

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by Bullseye, cancelled the Policy effective October 1, 2015 for nonpayment of premiums.
(Pls.’ 56.1 Resp. at ¶¶23-29.) The Court notes that while Plaintiffs dispute that the Policy
period ended on October 1, 2015, they do not cite any record evidence in support thereof
and do not dispute that JRIC cancelled the policy effective October 1, 2015. (See id. ¶¶
26, 27). They merely assert that Bullseye paid “approximately $6375.00 representing
“advance premium’ for the policy and therefor at the very lease [sic] the [] policy was in
effect for a portion of the time period” during which the acts giving rise to the claims in
the Underlying Action occurred. (Pls.’ Opp. Mem. at 2.)
II.

The Underlying Action and History of the Claim
On February 1, 2016,2 Katarina Van Derham (“Van Derham”), Cielo Jean Gibson

(“Gibson”), Gabby Jean Saucedo (“Saucedo”), Mariana Davalos (“Davalos”), and
Chantel Zales (“Zales”) filed the Underlying Action as plaintiffs against Bullseye and
Brennan. According to the complaint therein, the plaintiffs are famous models whose
images Bullseye and Brennan used, without their consent or payment therefor, as part of
Bulleye’s promotions on social media, which images created the appearance that those
plaintiffs either worked as dancers at the Scene or otherwise endorsed the business when
in fact they neither worked at or endorsed the Scene. The complaint in the Underlying
Action alleges the following causes of action: (1) False Endorsement under § 43 of the
Lanham Ac, 28 U.S.C. §1125 (a)(1); (2) invasion of privacy under N.Y. Civ. Rts. Law §§
50-51; (3) deceptive trade practices under N.Y. Gen. Bus. Law § 349; (4) defamation and
defamation per se; (5) negligence; (6) conversion; (7) unjust enrichment; and (8) quantum
meruit. Attached to the complaint in the Underlying Action are the following promotions:

2

Although the parties agree that the commencement date of the Underlying Action is February 1, 2016,
according to the docket therein the complaint was filed on January 31, 2016.

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(1) a Facebook post for the Scene allegedly depicting Van Derham, published on
December 1-17, 2015; (2) a Facebook post published on December 14, 2015, allegedly
featuring Gibson; (3) a Facebook post published on October 19, 2015, allegedly featuring
Saucedo; (4) an image allegedly featuring Davalos, published on the Scene’s webpage,
undated, and on its Facebook page, published on September 9, 12, 13, and 14, 2015; and
(5) a Facebook post published on October 7, 2015, allegedly featuring Zales. According
to the docket in the Underlying Action, Bullseye and Brennan were served with process
on March 3, 2016. (Pls.’ 56.1 Resp. at ¶¶ 30-33; Van Derham v. Bullseye Restaurant Inc.,
Civil Action No. 16-490 (E.D.N.Y.) at DE 6.)
Bullseye and Brennan instituted a third party action against Neo Producttions Ltd,
Michael DelRosso, Brian Gordon and Envato Pty. Ltd., the promoters and/or advertisers
hired by Bullseye who it claims were responsible for construction of the advertising, and
the management of Bullseye’ website and social media posts. Del Rosso asserted as an
affirmative defense that he did not produce the promotions at issue but purchased images
from a vendor known as Envato Ltd. d/b/a PhotoDune.net (“Envato”) and provided
invoices as support. Although Bullseye had sued Envato in the Underlying Action, it
stipulated to their dismissal without prejudice in or about November 2016; according to
Plaintiffs they stipulated to the dismissal after “it was discovered that none of the images
at issue in the [Underlying Action] were images held by and licensed to Envato.”
Subsequent to undertaking advertising efforts on behalf of Bullseye, Nuzzi, whom the
parties agree was responsible for at least some of the promotion at issue in the
Underlying Action, died. (Pls.’ 56.1 Resp. at ¶77-80.)

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Written notice of the Underlying Action was provided by Plaintiffs to JRC on
November 1, 2016.3 JRIC acknowledged receipt of the claim on November 8, 2016 and
asked Plaintiffs to provide any additional information. (Pls.’ 56.1 Resp. at ¶¶ 34-35.)
III.

JRIC Disclaims Coverage
On December 7, 2016, JRIC disclaimed coverage for the claims in the underlying

Action.4 Citing various policy provision as support therefor, the disclaimer stated (1) it
was denying coverage “for any claims arising from any promoting published either
before or after the effective dates of the Policy;” (2) reserving “the right to deny coverage
to the extent [its] rights were prejudiced by the late notice of claim provided by the
Plaintiffs;” (3) denied coverage “based on the RECORDING AND DISTRIBUTION OF
MATERIAL OR INFORMATION IN VIOLATION OF LAW EXCLUSION;” (4)
denied coverage “based on the FIDUCIARY EXCLUSION;” (5) reserved the right to
deny coverage to Brennan to the extent he did not qualify as an insured;”5 and (6)
reserved the right to deny coverage based on the “Knowing Violation of Rights of
Another” and “Materials Published with Knowledge of Falsity” exclusions.6 (Pls.’ 56.1
Resp. at ¶¶38-46 (capitalization in original).)

3

The Court notes that although Plaintiffs contend that notice of the Underlying Action “was made to
Plaintiff’s [sic] broker, Robert S. Fede Insurance Agency and IPFS Corporation (‘IPFS’) earlier” (Pls.’ 56.1
at ¶ 34) no supporting reference to the record is provided in support thereof.
4
The Court notes that the same disclaimers and reservation contained in the text are cited as affirmative
defenses in JRIC’s Answer.
5
JRIC has withdrawn this reservation and concedes that Brennan qualifies as an insured. ((Pls.’ 56.1 at ¶
44.)
6
This last reservation is not addressed in the current motion.

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IV.

Bullseye’s Advertising Practices and Records
Prior to his leave of absence, Brennan oversaw all promotions, including

arranging for promotions of guest dancers, pursuant to a contact and with their
permission, in newspapers. (Pls.’ 56.1 Resp. at ¶16.)
During Brennan’s leave of absence, Abbatiello oversaw promotions. Abbatiello
hired Anthony Nuzzi (d/b/a/ Neo Productions, Ltd.), Del Rosso, and Gordon, whom he
met through their patronage of Bullseye to prepare and place advertising and manage
Bullseye’s website and social media posts. Plaintiffs deny any knowledge that these
advertisers were doing anything illegal or in violation of statute in connection with
Bullseye’s promotions or with use of images in those promotions. According to
Abbatiello’s deposition testimony neither Nuzzi nor Del Rosso provided advanced copies
of promotion prior to publication; he could not recall if Gordon provided advance copies
for approval prior to publication. (Pls.’ 56.1 Resp. at ¶17, 53-57; Pls.’ 56.1
Counterstatement at ¶ 2-4, 9-10.)
During discovery JRIC demanded copies of any and all communications between
Bullseye or its representatives and any advertiser. In response Plaintiffs produced
invoices and emails regarding the activities of DelRosso and Gordon, including at least
one email sent directly to Abbatiello. Although Plaintiff produced these documents in
discovery in this matter, they were originally produced by DelRosso in the Underlying
Action as part of his initial disclosures pursuant to Fed. R. Civ. P. 26(a). After a search of
their various email accounts, Plaintiffs did not find any emails from DelRosso, Gordon,
or Nuzzi to Bullseye, Brennan or Abbatiello. No written communications between
Bullseye or its representatives and Nuzzi were produced by Plaintiffs to JRIC; according

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to Plaintiffs they produced all the documents that were in their possession. (Pls.’ 56.1
Resp. at ¶¶ 56-63.)
Bullseye and Brennan instituted a third party action against the promoters and/or
advertisers hired by Bullseye who were responsible for construction of the advertising,
and the management of Bullseye’ website and social media posts. Del Rosso asserted as
an affirmative defense that he did not produce the promotions at issue but purchased
images from a vendor known as Envato Ltd. d/b/a PhotoDune.net (“Envato”) and
provided invoices as support. Although Bullseye had sued Envato in the Underlying
Action, it stipulated to their dismissal without prejudice in or about November 2016;
according to Plaintiffs they stipulated to the dismissal after “it was discovered that none
of the images at issue in the [Underlying Action] were images held by and licensed to
Envato.” Subsequent to undertaking advertising efforts on behalf of Bullseye, Nuzzi,
whom the parties agree was responsible for at least some of the promotion at issue in the
Underlying Action, died. (Pls.’ 56.1 Resp. at ¶77-80.)
DISCUSSION
I.

Summary Judgment Standard
Summary judgment, pursuant to Rule 56, is appropriate only where the movant

“shows that 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). The relevant governing law in
each case determines which facts are material; "[o]nly disputes over facts that might
affect the outcome of the suit under the governing law will properly preclude the entry of
summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When
making this determination, a court must view all facts “in the light most favorable” to the

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non-movant, Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014), and “resolve all ambiguities
and draw all permissible factual inferences in favor of the [non-movant],” Johnson v.
Killian, 680 F.3d 234, 236 (2d Cir. 2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137
(2d Cir. 2003)). Thus, “[s]ummary judgment is appropriate [only] where the record taken
as a whole could not lead a rational trier of fact to find for the [non-movant].” Id.
(quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986))
(internal quotation marks omitted).
To defeat a summary judgment motion properly supported by affidavits,
depositions, or other documentation, the non-movant must offer similar materials setting
forth specific facts demonstrating that there is a genuine dispute of material fact to be
tried. Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). The non-movant must present
more than a "scintilla of evidence," Fabrikant v. French, 691 F.3d 193, 205 (2d Cir.
2012) (quoting Anderson, 477 U.S. at 252), or "some metaphysical doubt as to the
material facts," Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (quoting
Matsushita, 475 U.S. at 586-87), and “may not rely on conclusory allegations or
unsubstantiated speculation,” Id. (quoting FDIC v. Great Am. Ins. Co., 607 F.3d 288, 292
(2d Cir. 2010).
The district court considering a summary judgment motion must also be
"mindful . . . of the underlying standards and burdens of proof," Pickett v. RTS
Helicopter, 128 F.3d 925, 928 (5th Cir. 1997) (citing Anderson, 477 U.S. at 252), because
the "evidentiary burdens that the respective parties will bear at trial guide district courts
in their determination[s] of summary judgment motions," Brady v. Town of Colchester,
863 F.2d 205, 211 (2d Cir. 1988). "[W]here the [non-movant] will bear the burden of

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proof on an issue at trial, the moving party may satisfy its burden by pointing to an
absence of evidence to support an essential element of the [non-movant’s] case.”
Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 486 (2d Cir. 2014) (quoting
Brady, 863 F.2d at 210-11) (internal quotation marks omitted). Where a movant without
the underlying burden of proof offers evidence that the non-movant has failed to establish
his claim, the burden shifts to the non-movant to offer "persuasive evidence that his claim
is not 'implausible.' " Brady, 863 F.2d at 211 (citing Matsushita, 475 U.S. at 587). “[A]
complete failure of proof concerning an essential element of the [non-movant’s] case
necessarily renders all other facts immaterial.” Crawford, 758 F.3d at 486 (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
II.

General Principles of Regrading Construction of an Insurance Contract
“The construction of an insurance contract is ordinarily a matter of law to be

determined by the court.” U.S. Underwriters Ins. Co. v. Affordable Hous. Found., Inc.,
256 F. Supp. 2d 176, 180 (S.D.N.Y. 2003), aff'd, 88 F. App’x 441 (2d Cir. 2004). Policy
terms are ambiguous if they are “capable of more than one meaning when viewed
objectively by a reasonably intelligent person who has examined the context of the entire
integrated agreement and who is cognizant of the customs, practices, usages and
terminology as generally understood in the particular trade or business.” Olin Corp. v.
Am. Home Assur. Co., 704 F.3d 89, 99 (2d Cir. 2012) (internal quotation marks omitted).
On the other hand, “[p]olicy terms are unambiguous where they provide ‘a definite and
precise meaning, unattended by danger of misconception in the purport of the contract
itself, and concerning which there is no reasonable basis for a difference of opinion.’ ”
Liberty Mut. Ins. Co. v. Fairbanks Co., 170 F. Supp. 3d 634, 642 (S.D.N.Y. 2016)

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(quoting Olin Corp., 704 F.3d at 99). Courts must interpret unambiguous contract
provisions according to their “plain and ordinary meaning,” 10 Ellicott Square Court
Corp. v. Mountain Valley Indem. Co., 634 F.3d 112, 120 (2d Cir. 2011), and “give effect
to the intent of the parties as expressed in the clear language of the contract.” Fed. Ins.
Co., v. American Home Assur. Co., 639 F.3d 557, 567 (2d Cir. 2011) (internal quotation
marks omitted).
“Where contractual language is ambiguous and subject to varying reasonable
interpretations, intent becomes an issue of fact and summary judgment is inappropriate . .
. . Only where the language is unambiguous may the district court construe it as a matter
of law and grant summary judgment accordingly.” Palmieri v. Allstate Ins. Co., 445 F.3d
179, 187 (2d Cir. 2006) (internal quotation marks and citations omitted). If a contract
term is “susceptible to at least two reasonable interpretations,” summary judgment is
inappropriate because the meaning of an ambiguous contract term is “generally an issue
of fact, requiring the trier of fact to determine the parties' intent.” U.S. Naval Inst. v.
Charter Commc'ns, Inc., 875 F.2d 1044, 1048 (2d Cir. 1989) (internal citations omitted).
In contrast, if the contractual terms are unambiguous, the dispute is properly resolved on
summary judgment, and the court must “give effect to the intent of the parties as
expressed in the clear language of the contract.” Mount Vernon Fire Ins. Co. v. Belize
N.Y., Inc., 277 F.3d 232, 236 (2d Cir. 2002) (internal quotation marks and citation
omitted).
Finally, “[w]hen an exclusion clause is relied upon to deny coverage, the burden
rests upon the insurance company to demonstrate that the allegations of the complaint can
be interpreted only to exclude coverage.” Quaco v. Liberty Insur. Underwriters Inc.,

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2018 WL 4572249, at *4 (S.D.N.Y. Sept. 23, 2018) (quoting Town of Massena v.
Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 444, 749 N.Y.S.2d 456, (2002).
Policy exclusions are to be strictly and narrowly construed and are not to be extended by
interpretation or implication. East Ramapo Cent. Sch. Dist. v. New York Schools Ins.
Reciprocal, 150 A.D.3d 683, 686 (2d Dept. 2017) (citing Pioneer Tower Owners Assn. v.
State Farm Fire & Cas. Co., 12 N.Y.3d 302, 307, 880 N.Y.S.2d 885; Seaboard Sur. Co.
v. Gillette Co., 64 N.Y.2d at 311, 486 N.Y.S.2d 873).
III.

The Parties’ Contentions
According to JRIC, “[c]overage is barred for the claims of all but one of the five

Underlying Plaintiffs by virtue of the date of publication of the advertisements” as they
fall outside the coverage dates of the Policy. In addition, the claims in the underlying
action fall squarely within the exclusion barring coverage for any advertising injury
arising from the violation of any statute or law and within the fiduciary exclusion. Lastly,
it asserts coverage is barred as a matter of law due to Plaintiffs failure to provide timely
notice of the Underlying Action.
In response, Plaintiffs argue that JRIC did not suffer prejudice as a result of any
late notice. They further assert that as some of the claims arguably arise from covered
events, JRIC is required to defend the entire action. Lastly, they maintain that the
exclusions relied on by JRIC are not applicable to bar the duty to defend and/or to
indemnify.
Before addressing the arguments raised, it is appropriate to set forth the relevant
Policy provisions. It is to this task that the Court now turns.

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II.

The Relevant Policy Provisions.
Section1 of the Policy entitled “Coverages” is divided into three parts, only one of

is relevant here: Coverage B entitled “Personal and Advertising Injury Liability.”7
“Personal and Advertising Injury Liability” coverage applies to “personal and
advertising injury” caused by an offense arising out of the insured’s business “but only if
the offense was committed in the ‘coverage territory’ during the policy period.” (Policy8
at Section 1B(1).) The policy contains the following definition of such injury:
“Personal and advertising injury” means injury including consequential “bodily
injury”, arising out of one or more of the following offenses:
a.
False arrest, detention, or imprisonment;
b.
Malicious prosecution;
c.
The wrongful eviction from, wrongful entry into, or invasion of the right
of private occupancy of a room, dwelling or premises that a person
occupies, committed by or on behalf of its owner, landlord or lessor;
d.
Oral or written publication, in any manner, or material that slanders or
libels a person or organization or disparages a person’s or organization’s
goods, products or services;
e.
Oral or written publication, in any manner of material that violates a
person’s right of privacy;
f.
The use of another’s advertising idea in your “advertisement” or
g.
Infringing upon another’s copyright, trade dress or slogan in your
“advertisement”.
(Id. Section V(14).) Among other things, the Policy excludes coverage for personal and
advertising injury that is (1) caused by the knowing violation of the rights of another; (2)
arises out of (a) materials published with knowledge of falsity or (b) materials published
prior to the policy period. It also contains the following exclusion provision:
Distribution of Material in Violation Of Statutes
“Personal and advertising injury” arising directly or indirectly out of any
action or omission that violates or is alleged to violate:

7

Coverage A is entitled “Bodily Injury and Property Damage Liability” and only covers injury or loss of
tangible property; Coverage C is entitled “Medical Payments.”
8
The Policy is Ex. A to the Soverow Declaration.

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(1) The Telephone Consumer Protection Act (TCPA), including any
amendment of or addition to such law; or
(2) the CAN-SPAM Act of 2003, including any amendment of or addition
to such law; or
(3) Any statute, ordinance, or regulation, other than the TCPA or CANSpam Act of 2003, that prohibits or limits the sending, transmitting,
communicating or distribution of material or information.
(Id. Section 1(B) (2) (a)-(c), & (p) (emphasis in original).)9
II.

Coverage Dates
Relying on the coverage dates, i.e., August 3, 2015 to October 1, 2015, JRIC

argues that coverage is barred for the claims of all but one of the plaintiffs in the
Underlying Action. The Court agrees.
The Policy clearly states that it covers only offenses committed during the policy
period. Here, the claims of four of the five plaintiffs in the underlying action, viz. Van
Derham, Gibson, Saucedo and Zales, relate to Facebook posts occurring after the policy
was cancelled. As noted earlier, there is no record evidence to which the Court was
directed to support extending the policy period past the date the Policy was cancelled by
JRIC. Thus, JRIC is entitled to dismissal of Plaintiffs’ claims for coverage as to those
four plaintiffs and a declaration that there is no coverage as to the claims of these four
plaintiffs in the Underlying Action.
However, at least one of the alleged claims of Davalos, i.e., the publication of her
image on Bullseye’s Facebook page on September 9, 12, 13, and 14, 2015, occurred
during the policy period. As to Davos’ claim regarding the undated posting of her image

9

Contrary to the representation in Defendant’s memorandum in support, see p. 8, the policy at issue does
not contain an exclusion for personal and advertising injury that violates or is alleged to violate the Fair
Credit Reporting Act and the Fair and Accurate Credit Transaction Act. See Policy at 1(B)(2)(p).

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on Plaintiff’s webpage, there is at least the possibility of coverage given the lack of a
publication date.
As the policy coverage dates do not preclude coverage for Davos’ claims, the
Court will now proceed to address the remainder of JRIC’s arguments.
III.

The Distribution of Materials in Violation of Statute Exclusion
Relying upon the third subpart of the exclusion entitled “Distribution of Materials

in Violation Of Statute” (“the Statutory Exclusion”), JRIC argues there is no coverage for
the claims asserted in the Underlying Action. According to JRIC as this exclusion “bar[s]
coverage for any advertising injury arising from a federal or state law” and the common
element of all the claims asserted in the underlying action is that their images were
misappropriated for give the false impression that they worked or endorsed The Scene
and as they did not and were not paid for their images, Bullseye violated federal and state
laws. (Def.’s Mem. at 7-8.) The interpretation proffered by JRIC, which would preclude
coverage for any violation of state or federal law, appears to be too broad.
Given that this exclusion first references the TCPA and CAN-SPAM Act of 2003,
a brief discussion of those statutes is in order.
In general, the CAN-SPAM Act, 15 U.S.C. § 7701 et seq., prohibits the
transmission of commercial electronic mail messages to a protected computer which
include header information or subject headings that are materially misleading. See Yahoo!
Inc. v. XYZ Companies, 872 F. Supp. 2d 300, 304 (S.D.N.Y. 2011).
The TCPA was enacted “to protect consumers from unrestricted telemarketing,
which [Congress] determined could be an intrusive invasion of privacy.” Reyes v. Lincoln
Auto. Financial Servs., 861 F.3d 51, 55 (2d Cir. 2017) (internal quotation marks omitted).

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To address this problem, the act prohibits, among other things, “the making of calls
‘using any automatic telephone dialing system or an artificial or prerecorded voice . . . to
any telephone number assigned to a . . . cellular telephone service . . . .” 47 U.S.C. §
227(b)(1)(A)(iii); see Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368 (2012). To prove a
violation of the TCPA, a plaintiff must show that a call was placed to a cell or wireless
phone by the use of any automated dialing system without the prior consent of the
recipient. See Echevvaria v. Diversified Consultants, Inc., 2014 WL 929275, at *4
(S.D.N.Y. Feb. 28, 2014).
The common denominator of both these statutes is that they regulate only
communications or information distributed, for want of a better term, electronically. The
statutory causes of action asserted in the Underlying Action, in contrast, are not so
limited to electronic communications. See, e.g. 15 U.S.C. § 1125(a)1) (prohibiting the use
in commerce of “any” false or misleading description which misrepresents the nature,
characteristic, qualities or origin of goods, services or commercial activities); N.Y. Civ.
Rts. Law § 51 (Creating a private right of action for “[a]ny person whose name, portrait
picture or voice is used within this state for advertising purposes or for the purpose of
trade without the written consent first obtained . . . .”); N.Y Gen. Bus. L §349(a)
(declaring “[d]eceptive acts or practices in the conduct of any business, trade or
commerce or in the furnishing of any service” in New York “unlawful.”)
As the Statutory Exclusion follows the exclusions specifically referencing the
TCPA and the CAN-SPAM Act, a possible interpretation is that the Statutory Exclusion
applies not to all claims arising from federal and state statutes but only those that
similarly “prohibit[] or limit[] the sending, transmitting, communicating or distribution of

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material or information.” Cf. Tverskoy v. Ramaswami, 83 A.D.3d 1195, 920 N.Y.S.2d
803, 806 (3d Dep't 2011) (“[U]nder the rule of statutory construction known as ejusdem
generis, such a catch-all provision following a list of specific items in a statute will
generally be interpreted to include only items of the same type as those listed.” (emphasis
added)). In other words, one possible interpretation of the Statutory Exclusion is that is
covers only statutes which similarly are limited to the electronic transmission of
communications and information.
Additionally, a “contract should be construed so as to give full meaning and effect
to all of its provisions.” Chesapeake Energy Corp. v. Bank of N.Y. Mellon Tr. Co., N.A.,
773 F.3d 110, 114 (2d Cir. 2014) (internal quotation marks, citation, and alterations
omitted). In determining whether a contract provision is ambiguous “the court must read
the disputed provision within the context of the entire agreement and must safeguard
against adopting an interpretation that renders another provision superfluous.” Quinio v.
Aaia, 344 F. Supp. 3d 464, 471 (E.D.N.Y. 2018) (citing Sayers v. Rochester Telephone
Corp., 7 F.3d 1091, 1094 (2d Cir. 1993). To give the Statutory Exclusion the effect that
JRIC urges would render superfluous other exclusions such as the exclusion for personal
and advertising injury arising out of “a criminal act” or the infringement of copyright,
patent, trademark . . . or other intellectual property rights.” Crimes are creatures of
statute and intellectual property rights are governed, at least in some instance, by statutes
that broadly speaking prohibit or limit the distribution of material or information such as
the Copyright Act, and the Lanham Act.
When insurance contracts contain an exclusion provision, “ ‘[t]he insurer
generally bears the burden of proving that the claim falls within the scope of an exclusion

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. . . [by] establish[ing] that the exclusion is stated in clear and unmistakable language, is
subject to no other reasonable interpretation, and applies in the particular case.’ ” Seneca
Ins. Co. v. Kemper Ins. Co., 2004 WL 1145830, at *10 (S.D.N.Y. May 21, 2004)
(quoting Vill. of Sylvan Beach v. Travelers Indem. Co., 55 F.3d 114, 115–16 (2d
Cir.1995)), aff'd, 133 F. App’x 770 (2d Cir. 2005) (summary order); see also Seaboard
Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 (1984)
(stating that exclusions “are not to be extended by interpretation or implication, but are to
be accorded a strict and narrow construction” (internal citation omitted)). An exclusion
from coverage must be “ ‘specific and clear.’ ” Essex Ins. Co. v. Pingley, 41 A.D.3d 774,
776, 839 N.Y.S.2d 208 (2d Dept. 2007) (quoting Seaboard Sur. Co. v. Gillette Co., 64
N.Y.2d 304, 311, 486 N.Y.S.2d 873 (1984)), and any ambiguity must be construed most
strongly against the insurer, see, e.g., Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d at
383, 763 N.Y.S.2d 790 (2003). Given that the Statutory Exclusion is subject to a
reasonable interpretation other than that proffered by JRIC, its motion for summary
judgment is denied to the extent it relies upon this exclusion.
IV.

Late Notice
Pursuant to N.Y. Insurance Law § 3420(a)(5) an insurer may not deny coverage

under a liability policy based on the failure of the insured to give timely notice of claim
unless the insurer suffers prejudice as a result of the delay. An insurer is prejudiced if
“the failure to timely provide notice materially impairs the ability of the insurer to
investigate or defend the claim,” Id. § 3420(c)(2)(C). If notice of the claim was given to
the insurer within two years of the time required under the policy, then the burden of
demonstrating prejudice lies with the insurer. Id. § 3420(c)(2)(A). General assertions of

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prejudice, such being deprived of the opportunity to participate in phases of an
underlying litigation are insufficient to demonstrate prejudice. “While [the insurer] need
not show there would have been a different outcome, it must identify something it could
have done differently in discovery, at summary judgment, or at mediation, or identify
different defenses or strategies it could have pursued.” Harleysville Worchester Ins. Co.
v. Wesco Ins. Co., 752 F. App’x 90, 94 (2d Cir. Feb. 1, 2019).
Here, JRIC claims that the “nine month delay [measured from the time the action
was commenced] in providing it with notice prejudiced it” as Bullseye “made no effort
to preserve their records” relevant to the claims in the Underlying Action and thus the
plaintiffs in the Underlying Action “are well positioned to move for inferences against
interest due to spoliation of evidence” prejudicing JRIC’s rights. (Def.’s Mem. at 11-12.)
The Court is underwhelmed by this argument.
Initially, the Court notes that the starting point of any delay is not measured from
when the Underlying Action was commenced but rather from the date Plaintiffs were
served with the complaint in the Underlying Action, absent any evidence they had earlier
knowledge of the suit. According to the return of service filed in the underlying action,
that did not occur until March 3, 2016. See Van Derham v. Bullseye Restaurant Inc., Civil
Action No. 16-490 (E.D.N.Y.) at DE 6.) It is from that date that any delay is measured.
Here, there was a delay of eight months in providing notice. Such a delay is
untimely as a matter of law, but the question remains as to any resulting prejudice. New
York State Elec. & Gas. Corp. v. Century Indem. Co., -- F. App’x --, 2019 WL 1817781,
*2 (2d Cir. Apr. 25, 2019) (holding delay from July to November untimely as a matter of
law) (citing Am. Home Assur. Co. v. Republic Ins. Co., 984 F.2d 76, 86 (2d Cir. 1993).)

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Turning to the question of prejudice, JRIC’s claim of such is, at the present time,
mere conjecture. No spoliation motion has been made, no less granted, in the Underlying
Action. Moreover, any such motion would have to be supported by, among other things,
evidence that Bullseye destroyed documents at a time when it was obligated to institute a
litigation hold. See generally, Pyskaty v. Wide World of Cars, LLC, 2019 WL 917153, *7
(S.D.N.Y. Feb. 25, 2019) (“A party seeking spoliation sanctions must demonstrate: ‘(1)
that the party having control over the evidence had an obligation to preserve it at the time
it was destroyed; (2) that the records were destroyed with a “culpable state of mind” and
(3) that the destroyed evidence was “relevant” to the party’s claim or defense such that a
reasonable trier of fact could find that it would support that claim or defense.’”) (quoting
Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 430 (S.D.N.Y. 2004)). That the
documents that Bullseye produced in this litigation came from discovery it received in
the Underlying Action does not necessarily equate to Bullseye having destroyed records
after it became aware of the Underlying Action. It is possible that relevant documents
were disposed of before the obligation to impose a litigation hold arose.
Accordingly, JRIC is not entitled to summary judgment on the grounds that the
notice of claim from Bullseye was untimely to the prejudice of JRIC.
IV.

The Fiduciary Exclusion
JRIC maintains that the claims of misappropriation and conversion giving rise to a

false endorsement fall within all three sub-parts of the “Fiduciary Exclusion” of the
Policy. That exclusion reads:
This policy does not apply to any claim arising out of
1.
Coercion, conversion or misappropriation of other’s funds or
property;

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2.
Any dishonest, fraudulent, criminal, malicious acts or omissions of
the insured, partner or employee or any person for whom you are legally
responsible; or
3.
Any activities or operations performed in the capacity of a
fiduciary.
Policy (DE 18-2 at p. 60.)
Turning first to the “conversion or misappropriation” subpart, it would appear that
in the event such a claim were to succeed, coverage would not exist. Other than disputing
that the merits of the claim, Plaintiffs do not contend otherwise. As to the second subpart,
there is a question of fact, based on the materials submitted on this motion, as to whether
any of the acts or omission alleged were “dishonest, fraudulent, criminal or malicious,” as
opposed to negligent.
With respect to the third and final subpart, JRIC asserts that as Abbatiello’s
activities were performed in the capacity of a fiduciary as he was not only “the manager
of Bullseye and a former owner, but he was acting on behalf of the sole stock holder [sic]
of Bullseye when overseeing the promotions at issue in the Underlying Actions.” (Def.’s
Mem. at 9). However, it does not cite any caselaw to support that proposition.
To determine whether a fiduciary relationship exists between two parties, “New
York law inquires whether one person has reposed trust or confidence in the integrity and
fidelity of another who thereby gains a resulting superiority or influence over the first.”
Teachers Ins. & Annuity Assoc. of Am. v. Wometco Ent., Inc., 833 F. Supp. 344, 349–50
(S.D.N.Y.1993) (citations omitted). And the law in New York is that no fiduciary
relationship arises from an employment relationship. See BGC Partners, Inc. v. Avison
Youn (Canada) Inc, 75 N.Y.S.3d 1 (1st Dept. 2018). Here, the record permits an inference

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that Abbatiello was merely an employee. Accordingly, JRIC is not entitled to summary
judgment to the extent it relies upon the fiduciary exclusion.
CONCLUSION
For the reasons set forth above, JRIC’s motion is granted to the extent that it is
entitled to a declaration that JRIC owes no duty to provide coverage to the Plaintiffs for
the claims asserted by Van Derham, Gibson, Saucedo and Zales in the Underlying
Action, but otherwise denied.
SO ORDERED.
Dated: Central Islip, New York
May 8, 2019

s/ Denis R. Hurley
Denis R. Hurley
United States District Judge

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