Mount Vernon Fire Insurance Company v. Munoz Trucking Corp.
1:13-cv-06268
| S.D.N.Y. | Sep 30, 2016Background
- Mount Vernon issued a commercial general liability (CGL) policy to Munoz covering 11/11/2010–11/11/2011; the policy contains an Auto Exclusion barring coverage for bodily injury arising out of the ownership, use, or entrustment of any auto owned or operated by an insured, and a written-contract-triggered Additional Insured endorsement.
- Mastroluca sued Munoz, Mendez, Rebco, Ulloa-Tapia and several contractors after Munoz/Mendez vehicles allegedly struck and killed Laurence Renard while hauling debris from the Second Avenue Subway Project; the complaint alleges interrelated agency/alter-ego relationships and that the accident arose from operation of a dump truck.
- Mount Vernon investigated after learning of the incident in early February 2011, interviewed insured representatives on March 3, 2011, and issued a coverage disclaimer to Munoz and other parties on March 15, 2011, citing the Auto Exclusion; later disclaimers were sent in 2012 after the underlying complaint was filed.
- Defendants claimed additional-insured status under the policy; the record contains no written contract showing Munoz agreed to name any of the defendants as additional insureds before the accident.
- Mount Vernon moved for declaratory judgment seeking a ruling that it has no duty to defend or indemnify under the policy; the court addressed duty to defend, additional-insured status, indemnity ripeness, and timeliness of the disclaimer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants (other than Munoz) are additional insureds under the policy | No additional insured coverage exists because no written contract requires Munoz to add them | Some defendants claim they qualify (e.g., via lease/agreements) | No additional insureds: defendants failed to produce a written contract proving entitlement |
| Whether Mount Vernon owes Munoz a duty to defend under the Auto Exclusion | Auto Exclusion applies because allegations tie injury to ownership/use/operation/entrustment of an insured auto | Dispute over who owned/operated the truck and whether some allegations relate to non-auto conduct creates triable issues | Duty to defend Munoz is precluded: the complaint’s allegations fall solely within the Auto Exclusion |
| Whether Mount Vernon owes Munoz a duty to indemnify | Mount Vernon argues indemnity also excluded if Munoz is sole owner/operator/ employer | Defendants contend factual issues (ownership, employment) could make Munoz indemnifiable | Indemnity not ripe: factual determinations in the underlying action may show Munoz is not covered by the Auto Exclusion, so court defers indemnity ruling |
| Whether Mount Vernon’s March 15, 2011 disclaimer was untimely and subject to estoppel | Disclaimer was timely after a reasonably prompt investigation and interview; therefore not estopped | Defendants argue delay (between notice and disclaimer) was unreasonable | Disclaimer to Munoz was reasonable as a matter of law given investigation timeline; no estoppel |
Key Cases Cited
- Century 21, Inc. v. Diamond State Ins. Co., 442 F.3d 79 (2d Cir.) (insurer’s duty to defend is triggered if complaint potentially alleges covered risk)
- Servidone Constr. Corp. v. Sec. Ins. Co. of Hartford, 64 N.Y.2d 419 (N.Y.) (duty to defend measured by pleadings; duty to indemnify determined by actual liability)
- Webster ex rel. Webster v. Mount Vernon Fire Ins. Co., 368 F.3d 209 (2d Cir.) (disclaimer must be given "as soon as is reasonably possible" and a prompt investigation can justify delay)
- Auto. Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131 (N.Y.) (insurer’s duty to defend is notably broad)
- Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304 (N.Y.) (insurer must defend even if covered allegations are false or groundless)