Merritt Environmental Consulting Corporation v. Great Divide Insurance Company et al

Filing 20

ORDER ADOPTING REPORT AND RECOMMENDATIONS - For the reasons set forth above, plaintiff's objections are overruled, the Report is accepted in its entirety and, for the reasons set forth in the Report, defendants' motion to dismiss plaintiff& #039;s claims against them pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure is granted; plaintiff's claims against BSUM are voluntarily dismissed in their entirety pursuant to Rule 41(a) of the Federal Rules of Civil Procedure; and plaintiff's claims against Great Divide are dismissed in their entirety with prejudice for failure to state a claim for relief. The Clerk of the Court shall enter judgment in accordance with this Order and close this case. SO Ordered by Judge Sandra J. Feuerstein on 11/26/2018. (Tirado, Chelsea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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MERRITT ENVIRONMENTAL CONSULTING
CORPORATION,
Plaintiff,

FILED 
CLERK 

3:25 pm, Nov 26, 2018

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

ORDER
17-CV-7495 (SJF)(AYS)

-againstGREAT DIVIDE INSURANCE COMPANY and
BERKLEY SPECIALTY UNDERWRITING MANAGERS,
Defendant.
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FEUERSTEIN, District Judge:

Pending before the Court are the objections of plaintiff Merritt Environmental Consulting
Corporation (“plaintiff” or “Merritt”) to the Report and Recommendation of the Honorable Anne
Y. Shields, United States Magistrate Judge, dated October 10, 2018 (Athe Report@),
recommending that the motion of defendants Great Divide Insurance Company (“Great Divide”)
and Berkley Specialty Underwriting Managers (“BSUM”) (collectively, “defendants”) to dismiss
plaintiff’s claims against them pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure
for failure to state a claim be granted. For the reasons set forth below, Magistrate Judge Shields’s
Report is accepted in its entirety.

I.

Standard of Review
Any party may serve and file written objections to a report and recommendation of a

magistrate judge on a dispositive matter within fourteen (14) days after being served with a copy
thereof. 28 U.S.C. ' 636(b)(1); Fed. R. Civ. P. 72(b)(2). Any portion of such a report and
recommendation to which a timely objection has been made is reviewed de novo. See 28 U.S.C.
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' 636(b)(1); Fed. R. Civ. P. 72(b)(3). Whether or not proper objections have been filed, the
district judge may, after review, accept, reject, or modify any of the magistrate judge’s findings
or recommendations. 28 U.S.C. ' 636(b)(1); Fed. R. Civ. P. 72(b).

II.

Plaintiff’s Objections
Plaintiff contends, inter alia, that Magistrate Judge Shields: (i) “incorrectly interpret[ed]

the law governing the application of the radioactive matter exclusion relied upon by Great Divide
to deny coverage to Merritt[,]” (Plf. Obj. at 1); (ii) “mistakenly characterize[d] New York law
regarding key language in the radioactive matter exclusion of the Policy and, as a result,
erroneously conclude[d] that the exclusion applies here[,]” (id. at 5); and (iii) erroneously
applied an “overly broad interpretation of ‘but for’ causation to the phrase ‘arising out of.’” (Id.
at 6-7; see also Id. at 8 [“Merritt specifically objects to the Report’s characterization and
subsequent application of New York law regarding application of the phrase ‘arising out of’ in
this case. . . .”]) In addition, plaintiff contends that “[t]he Report’s recommendation that the
motion to dismiss be granted on the basis that radioactive matter is the ‘but for’ cause of the
allegations against Merritt is . . . premature at this time.” (Id. at 7).
Upon de novo review of the Report and all motion papers, and consideration of plaintiff’s
objections to the Report and defendants’ responses thereto, plaintiff’s objections are overruled
and the Report is accepted in its entirety. In the context of an insurance policy exclusion, “[t]he
New York Court of Appeals has held that the phrase ‘arising out of’ is ‘ordinarily understood to
mean originating from, incident to, or having connection with[,]’” Federal Ins. Co. v. American
Home Assur. Co., 639 F.3d 557, 568 (2d Cir. 2011) (quoting Maroney v. N.Y. Cent. Mut. Fire
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Ins. Co., 5 N.Y.3d 467, 472, 805 N.Y.S.2d 533, 839 N.E.2d 886 (2005) (internal quotations and
citation omitted)), and “requires only that there be some causal relationship between the injury
and the risk for which coverage is provided.” Id. (quoting Maroney, 5 N.Y.3d at 472, 805
N.Y.S.2d 533). Magistrate Judge Shields properly applied a “but for” test to determine, based
upon the complaints in the underlying lawsuits and the language of the relevant provisions of the
subject Policy, that the “arising out of exclusion” at issue, i.e., the radioactive matter exclusion in
the subject Policy, applies and bars coverage for the underlying lawsuits. See Mount Vernon Fire
Ins. Co. v. Creative Hous. Ltd., 88 N.Y.2d 347, 350, 645 N.Y.S.2d 433, 668 N.E.2d 404 (1996);
Country-Wide Ins. Co. v. Excelsior Ins. Co., 147 A.D.3d 407, 409, 46 N.Y.S.2d 96 (N.Y. App.
Div. 2017).

III.

Conclusion
For the reasons set forth above, plaintiff’s objections are overruled, the Report is

accepted in its entirety and, for the reasons set forth in the Report, defendants’ motion to dismiss
plaintiff’s claims against them pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure
is granted; plaintiff’s claims against BSUM are voluntarily dismissed in their entirety pursuant to
Rule 41(a) of the Federal Rules of Civil Procedure; and plaintiff’s claims against Great Divide

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are dismissed in their entirety with prejudice for failure to state a claim for relief. The Clerk of
the Court shall enter judgment in accordance with this Order and close this case.
SO ORDERED.

_________/s/____________
Sandra J. Feuerstein
United States District Judge

Dated: November 26, 2018
Central Islip, New York

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