AIX Specialty Ins. Co. v. Penn Burgers LLC, 2024 NY Slip Op 51575(U)

This is a subrogation and declaratory judgment action arising from a personal injury accident on October 9, 2015, near a Burger King drive-through.
Plaintiffs: AIX Specialty Insurance Company (AIX), 797 Pennsylvania LLC (the property owner), and Renaissance Realty Group LLC claimed coverage and indemnification from Utica First Insurance Company and tenant Penn Burgers LLC.
In the underlying personal injury trial, the jury found plaintiff Audrey Minter 25% at fault and the non-party landlords 75%; but verdicts were directed in favor of 797 Pennsylvania LLC and Penn Burgers LLC on liability.
Plaintiffs alleged Penn Burgers failed to procure adequate liability insurance as required by lease, and Utica First had duties to defend and indemnify them as additional insureds.
Defendants contended there was no coverage duty due to lack of negligence/liability and that prior determinations precluded plaintiffs’ claims.
Motions (1) by Penn Burgers to dismiss and (2) by plaintiffs for summary judgment as to Utica First's duties were decided in this order.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Penn Burgers breach lease by not naming plaintiffs as additional insureds?	Penn Burgers failed to obtain policy naming plaintiffs as additional insureds.	Proper insurance was obtained; no breach of lease occurred.	No breach; plaintiffs were additional insureds under Utica First’s policy.
Did Utica First have a duty to defend plaintiffs in the underlying action?	Duty exists if complaint potentially within policy’s coverage.	No duty because accident was outside covered premises/responsibility.	Duty to defend applied; Utica First must reimburse defense costs.
Did Utica First have a duty to indemnify plaintiffs for the Minter settlement?	Indemnity owed as additional insureds facing injury claims.	No duty—no insured party found liable; accident not within policy scope.	No duty to indemnify since plaintiffs found not liable at trial.
Were res judicata/collateral estoppel bars applicable from the underlying case?	Issues were not fully litigated or addressed among current parties.	Previous directed verdict resolved all liabilities and obligations.	No bar; insurance/contractual issues not expressly decided previously by underlying court.

Continental Cas. Co. v. Rapid-American Corp., 80 N.Y.2d 640 (duty to defend is broader than duty to indemnify)
Fieldston Prop. Owners Assn., Inc. v. Hermitage Ins. Co., Inc., 16 N.Y.3d 257 (duty to defend exists if complaint allegations potentially fall within policy coverage)
Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435 (even potential coverage in complaint triggers duty to defend)
Chappaqua Cent. Sch. Dist. v. Philadelphia Indem. Ins. Co., 148 A.D.3d 980 (additional insured entitled to same coverage as named insured)