IBA Molecular North America, Inc. v. ST. Paul Fire and Marine Insurance Company et al
Filing
23
OPINION re: 16 CROSS MOTION for Summary Judgment against General Star filed by IBA Molecular North America, Inc., 8 MOTION for Summary Judgment filed by St. Paul Fire and Marine Insurance Company. This declaratory judgment action arises ou t of an automobile accident that occurred in 2001, while an employee of Pharmacologic PET, LLC, the predecessor to plaintiff IBA Molecular North America (IBA Molecular), was driving a company automobile during an apparent crime spree and, while runni ng from the police in the car, hit a police officer. IBA received insurance coverage from its primary automobile insurance policy, but the damages paid exceeded the policy limits of that policy. IBA is now seeking insurance coverage under an umbrella insurance policy issued by defendant General Star Indemnity Company (General Star), or alternatively under a commercial general liability (CGL) policy issued by St. Paul Fire and Marine Insurance Company (St. Paul). The CGL policy contains an auto e xclusion which, St. Paul argues, mandates summary judgment in its favor. St. Paul moves for judgment on the basis of the auto exclusion. For the foregoing reasons, the motion of St. Paul and IBA based on the auto exclusion is granted. The motion of IBA for summary judgment against General Star is denied. This opinion resolves the motions listed under document numbers 8 and 16 on the docket of case 11 Civ. 1862. (Signed by Judge Thomas P. Griesa on 9/27/2012) (ja)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------x
:
:
IBA MOLECULAR NORTH AMERICA,
:
INC.
:
Plaintiff,
:
:
:
v.
:
:
:
ST. PAUL FIRE AND MARINE
:
INSURANCE CO. and GENERAL STAR
:
INDEMNITY CO.,
:
:
Defendants.
:
:
--------------------------------------------x
11 Civ. 1862
OPINION
This declaratory judgment action arises out of an automobile accident
that occurred in 2001, while an employee of Pharmacologic PET, LLC, the
predecessor to plaintiff IBA Molecular North America (“IBA Molecular”), was
driving a company automobile during an apparent crime spree and, while
running from the police in the car, hit a police officer. IBA received insurance
coverage from its primary automobile insurance policy, but the damages paid
exceeded the policy limits of that policy. IBA is now seeking insurance
coverage under an umbrella insurance policy issued by defendant General Star
Indemnity Company (“General Star”), or alternatively under a commercial
general liability (“CGL”) policy issued by St. Paul Fire and Marine Insurance
Company (“St. Paul”). The CGL policy contains an “auto exclusion” which, St.
Paul argues, mandates summary judgment in its favor.
St. Paul moves for judgment on the basis of the auto exclusion. IBA
joins this motion. IBA also requests summary judgment on its claim against
General Star.
The motion of St. Paul and IBA based on the auto exclusion is granted.
The motion of IBA for summary judgment against General Star is denied
because there appear to be issues between IBA and General Star which cannot
be resolved on the present motion.
FACTS
On September 21, 2001, Andrew Britt was involved in an automobile
accident with Dennis Bridges that caused injury to Britt. At the time of the
accident, Bridges was an employee of Pharmacologic, driving an automobile
owned by Pharmacologic. Britt was a police officer attempting to apprehend
Bridges during what the parties appear to agree was a “crime spree”
perpetrated by Bridges, which involved Bridges committing various crimes in
Albany, New York and then fleeing from the police in one of Pharmacologic’s
automobiles. As a result of the car accident, Britt suffered injuries. Bridges
was convicted of assault, reckless endangerment, and criminal possession of
stolen property, and sentenced to 25 years to life, which he is currently serving
in state prison.
Britt and his wife sued Pharmacologic and Bridges in New York Supreme
Court. Pharmacologic placed Hartford Fire Insurance Company and General
-2-
Star on notice of the suit at that time. Hartford and General Star, respectively,
had issued Pharmacalogic primary automobile and umbrella insurance
policies. Defendant St. Paul, the issuer of a CGL policy, was not put on notice
of the suit at this time.
In late January 2008, Britt notified St. Paul of the accident and sought to
have St. Paul cover the accident. In February 2008, St. Paul disclaimed
liability on the basis of the auto exclusion and late notice.
The present motion only concerns the automobile exclusion.
In February 2008, a jury found Pharmacologic and Bridges liable. It
found that Bridges was negligent, and that Pharmacologic was negligent in
hiring Bridges and entrusting a vehicle to him. It awarded Britt a verdict of
over $3 million dollars.
IBA, the successor in interest to Pharmacologic, ultimately settled the
negligent hiring and negligent entrustment claims for $1.2 million. Of the $1.2
million, Hartford paid $500,000, its policy limit. General Star and St. Paul
both refused to pay the remaining $700,000, leaving Pharmacologic to fund the
remaining $700,000 itself while pursuing General Star and St. Paul in
litigation.
The parties now dispute whether St. Paul or General Star is required to
cover the remainder of the damages sustained by Pharmacologic. The following
is pertinent language from the relevant insurance policies.
The Hartford automobile insurance policy has a limit of $500,000 per
accident, and contains the following language:
-3-
We will pay all sums an ‘insured’ legally must pay as damages
because of ‘bodily injury’ or ‘property damage’ to which this
insurance applies, caused by an ‘accident’ and resulting from the
ownership, maintenance or use of a covered ‘auto.’
Hartford was placed on notice of the lawsuit filed by Britt, defended the suit,
and ultimately helped to fund the settlement of the claims against
Pharmacologic.
General Star’s umbrella insurance policy has an aggregate policy limit of
$3,000,000. It provides coverage for “bodily injury” or “property damage” that
occurs during the policy period and is caused by an “occurrence,” which is
defined as an “accident.” The policy also contains a long and detailed list of
exclusions, but no exclusion for incidents arising from the ownership,
maintenance, or use of an automobile.
Finally, the St. Paul CGL policy provides up to $1,000,000 of coverage for
amounts that an insured is required to pay for “bodily injury” or “property
damage” caused by an “event,” which is defined as an “accident.” It contains
an automobile exclusion, precluding coverage of certain incidents:
We won’t cover bodily injury, property damage or medical expenses
that result from the
Ownership, maintenance, use or operation;
Loading or unloading; or
Entrustment to others;
Of any auto owned, operated, rented, leased or borrowed by any
protected person.
The Claims and the Motions
In the complaint, IBA claims that either, or both, of General Star and St.
Paul are required to pay for the $700,000 in excess damages it suffered over
-4-
the $500,000 Hartford policy limit. However, in its motion, IBA relies on the
theory that St. Paul is not liable, but General Star is. St. Paul and IBA contend
that St. Paul is not liable because this accident comes within the automobile
exclusion in its policy. General Star contends that St. Paul’s automobile
exclusion does not apply here. St. Paul has moved for summary judgment on
and IBA joins St. Paul’s motion and IBA has filed its own motion for summary
judgment on the same grounds, along with the claim that General Star is
liable.
DISCUSSION
St. Paul’s Liability and the Automobile Exclusion
As noted above, IBA and St. Paul argue that the automobile exclusion in
St. Paul’s insurance policy prevents St. Paul from having to pay any damages
in the underlying lawsuit, which resulted from an automobile accident.
General Star’s theory as to why St. Paul’s automobile exclusion does not
apply is that “negligent hiring” is a so-called “non auto” theory of liability.
General Star goes on to argue that, since negligent hiring is a “non auto” theory
of liability, claims of negligent hiring are covered by St. Paul’s policy, even
where the insured negligently hires an employee who gets into an automobile
accident.
New York’s Second Department has held that an automobile exclusion
applies to damages paid as a result of an automobile accident that occurred
after the insured’s negligent hiring resulted in the insured sending an
unlicensed and intoxicated taxi driver to pick up a customer. The court in
-5-
Ruggerio v. Aetna Life & Casualty Co. stated that defendant’s insured’s
negligent actions in hiring an incompetent and unqualified driver and
dispatching him when he was intoxicated do no more than provide reasons or
subfactors’ explaining why the accident arose out of the operation of an
automobile and are therefore also excluded from coverage under the policy.
484 N.Y.S.2d 106, 106-107 (2d Dep’t 1985). The First Department took the
same approach in New Hampshire Insurance Company v. Jefferson Insurance
Company, 624 N.Y.S.2d 392, 395 (1st Dep’t 1995), holding that even though
the plaintiff alleged a theory of liability—negligent supervision of campers—that
had nothing to do with automobiles, without the resulting automobile accident
there would be no cause of action, so the automobile exclusion applied. The
court also stated that it is necessary to observe only that, whatever theory of
liability the resourceful attorney may fashion from the circumstances of a client
struck by an automobile, it remains that the immediate and efficient cause of
the injury is, in fact, the automobile.
In this case, Britt was injured as a result of Bridges’ use of one of
Pharmacologic’s automobiles, placing the injury squarely within the automobile
exclusion. The claim of negligent hiring does not change the fact that the
negligent hiring here resulted in a car accident, which is not covered. See
Ruggerio, 484 N.Y.S.2d at 106-07. Also the jury verdict in the underlying
litigation found Pharmacologic liable not just for negligent hiring, but also for
negligent entrustment. By its terms, the auto exclusion in the insurance policy
expressly excluded claims resulting from “entrustment” of an automobile.
-6-
General Star also argues at length that the automobile exclusion only
applies where there is “permissive use” of the automobile. This argument finds
no support in the language of the CGL Policy, which does not condition the
exclusion on permissive use, nor does General Star offer any case law
suggesting that this limitation should be read into the policy.
General Star also relies on National Casualty Company v. American
Safety Casualty Insurance Company, 812 F. Supp. 2d 505, 514 n.7 (S.D.N.Y.
2011), in which the court noted that claims for negligent hiring are legally
unrelated to accidents resulting from the employee’s use of a covered
automobile. However, the facts of that case make inapplicable to the present
case. In that case, the issue was whether an automobile insurer was obliged to
cover an incident of “road rage,” where, after one driver cut off another driver,
the two drivers exited their vehicles and got into a fight, leaving one driver
severely injured. The court appropriately determined that the injuries at issue
occurred after both passengers exited their cars and started fighting, not due to
the use or operation of any automobile, such as an automobile accident, and
held that the automobile policy did not cover the incident. Id. at 513-14.
Finally, in an effort to avoid summary judgment in St. Paul’s favor,
General Star argues that St. Paul did not timely disclaim coverage for this
accident pursuant to New York Insurance Law § 3420(d). Under § 3420(d)(2)
If under a liability policy issued or delivered in this state, an
insurer shall disclaim liability or deny coverage for death or bodily
injury arising out of a motor vehicle accident or any other type of
accident occurring within this state, it shall give written notice as
soon as is reasonably possible of such disclaimer of liability or
denial of coverage to the insured and the injured person or any
-7-
other claimant.
General Star argues that St. Paul’s disclaimer was defective because it did not
disclaim coverage until seven years after the accident (in 2008), and did not
provide General Star with notice of its disclaimer. However, it is undisputed
that notice of the suit was not provided to St. Paul until January of 2008, when
Britt notified St. Paul, and St. Paul’s disclaimer was sent less than 30 days
later in February of 2008. General Star asserts that the timeliness of St. Paul’s
disclaimer is a factual issue, but General Star has done nothing to contradict
St. Paul’s version of events, which tells the story—under oath—of a sufficiently
prompt notice of disclaimer to comply with § 3420(d)(2). Of course, St. Paul
was not required to disclaim coverage (and could not have done so) before it
knew of the incident, so its disclaimer seven years after the fact was timely.
Moreover, the plain language of that section does not require that General Star
receive a copy of the disclaimer—only the “insured and the injured person or
any other claimant.”
Therefore, St. Paul is entitled to summary judgment dismissing the claim
against it.
General Star’s Liability
As described above, St. Paul’s motion focuses entirely on the automobile
exclusion, which as described above, excludes coverage for this accident. IBA’s
motion incorporates St. Paul’s motion but also states that General Star is
obligated to pay the excess over what Hartford paid. However, IBA’s motion
does not establish this through an analysis of the umbrella policy and the
-8-
relevant facts. General Star opposes IBA's request for summary judgment,
pointing to various defenses it might assert against IBA's claim. Thus IBA has
not established that it is entitled to judgment against General Star, and IBA's
motion is denied to the extent it seeks a judgment against General Star.
CONCLUSION
For the foregoing reasons, the motion of St. Paul and IBA based on the
auto exclusion is granted. The motion of IBA for summary judgment against
General Star is denied.
This opinion resolves the motions listed under document numbers 8 and
16 on the docket of case 11 Civ. 1862.
So ordered.
Dated: New York, New York
September 27, 2012
(/I~{)~
I USDCSD~~
DOCtThriE1\ivrr
Thomas P. Griesa
U.S. District Judge
rCI"'D 'l.., . . (~ AT T'l FILED
_" 1-'" ""l'-.T"l
J..-,.\...~."
'C'Y
~
DOC
"'II
k
"I.",U.
#~
:; DATE FILED:
..
.
1t£ !i1~:d
-9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?