| Burlington Ins. Co. v Guma Constr. Corp. |
| 2009 NY Slip Op 07216 [66 AD3d 622] |
| October 6, 2009 |
| Appellate Division, Second Department |
| Burlington Insurance Company, Appellant, v GumaConstruction Corp., Respondent. |
—[*1] Goldberg & Rimberg, PLLC, New York, N.Y. (Israel Goldberg and Brad Coven of counsel),for respondent.
In an action for a judgment declaring that the plaintiff is not obligated to defend andindemnify the defendant Guma Construction Corp. in an action entitled Sorrentino v 255Water Street Associates, LLC, pending in the Supreme Court, Kings County, under indexNo. 29581/05, the plaintiff appeals, as limited by its brief, from so much of an order of theSupreme Court, Kings County (Held, J.), dated March 13, 2008, as granted that branch of thedefendant's motion which was for summary judgment declaring that the plaintiff is obligated todefend it in the underlying action, and referred the issue of indemnification to the trial court inthe underlying action.
Ordered that the order is modified, on the law, by deleting the provision thereof whichreferred the issue of indemnification to the trial court in the underlying action; as so modified,the order is affirmed insofar as appealed from, with costs to the defendant.
Burlington Insurance Company (hereinafter Burlington) issued a commercial generalliability insurance policy to Guma Construction Corp. (hereinafter Guma) covering Guma for aperiod of one year beginning February 5, 2004. The policy contained a "classification limitation"endorsement, which provided that the policy would apply only to losses arising out of thoseoperations listed in the "classifications" section of a commercial general liability coveragedeclarations form. Guma listed "Garbage, Ash or Refuse Collecting" in the "classification"section of the form.
On February 18, 2004 there was a fire at a building where Guma was performing work. As aresult of the fire, firefighter John Sorrentino sustained personal injuries. On September 27, 2005Sorrentino commenced an action (hereinafter the underlying action) against Guma, amongothers, alleging that Guma negligently performed certain "construction, alteration, renovation,and/or demolition, work, labor and/or other services" on the subject building. The complaint inthe underlying action further alleged that Guma improperly removed pipe as part of the work itperformed, and used one or more torches in connection with the work it performed. Gumaforwarded a copy of the complaint in the underlying action to Burlington and, by letter datedFebruary 16, 2006, Burlington acknowledged receipt of that complaint and informed Guma thatit [*2]was going to conduct an investigation of the matter. InOctober 2006 Burlington issued a disclaimer of coverage. The disclaimer was based uponGuma's breach of the "classification limitation" endorsement clause in the contract. Burlingtonexplained that Guma had made misrepresentations in its application for insurance by describingits business as "garbage, ash or refuse collecting," when it was actually "supervising the removalof pipes."
In December 2006 Burlington commenced this action against Guma for a judgmentdeclaring that it was not obligated to defend Guma in the underlying action or indemnify Gumafor any liability attributed to it. In November 2007 Guma moved for summary judgmentdeclaring that Burlington is obligated to defend it in the underlying action and to indemnify it forany recovery by Sorrentino against it in the underlying action. In its motion, Guma contendedthat the disclaimer was untimely (see Insurance Law § 3420 [d]). Burlingtonopposed the motion and, in reply, Guma argued that a reading of the allegations in the complaintsuggested a reasonable possibility of coverage, and that Burlington consequently had a duty todefend it, which duty is broader than its obligation to indemnify. In an order dated March 13,2008, the Supreme Court granted that branch of Guma's motion which for summary judgmentdeclaring that Burlington has an obligation to defend Guma in the underlying action, and"referred" the indemnity issue to the trial court in the underlying action.
Initially, Burlington argues that the Supreme Court improperly considered an argumentraised for the first time in reply papers. We disagree. We recognize that, ordinarily, courts do notconsider issues first mentioned in reply in support of a motion for summary judgment (see Matter of Forest Riv., Inc. v Stewart,34 AD3d 474 [2006]; Calderone v Harrel, 237 AD2d 318 [1997]). The reasonbehind this rule is to prevent the opposing party from being deprived of a fair opportunity torespond to the argument. Here, Burlington, in its brief, does not contend that it suffered anyprejudice as a result of the new argument raised by Guma in its reply affirmation; nor does itcontend that it would have offered additional or different evidence in opposing the argument.Thus, under the circumstances of this case, we find that the Supreme Court providently exercisedits discretion in considering the argument raised in the reply affirmation submitted by Guma (see generally Feliciano v New York CityHealth & Hosps. Corp., 62 AD3d 537, 538 [2009]; Home Ins. Co. v Leprino Foods Co., 7 AD3d 471, 472 [2004];Davison v Order Ecumenical, 281 AD2d 383 [2001]; cf. Held v Kaufman, 91NY2d 425, 430 [1998]).
Burlington also contends that the Supreme Court's determination that it has a duty to defendGuma was premature because discovery in this action had not yet been completed. However,since the allegations in the complaint suggest a reasonable possibility of coverage, Guma isentitled to summary judgment declaring that Burlington has an obligation to defend it in theunderlying action (see Automobile Ins.Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]). Any evidence that would beobtained through discovery would be irrelevant on this issue since "[e]ven where there existextrinsic facts suggesting that the claim may ultimately prove meritless or outside the policy'scoverage, the insurer cannot avoid its commitment to provide a defense" (Fitzpatrick vAmerican Honda Motor Co., 78 NY2d 61, 66 [1991]).
Burlington is correct, on the other hand, that the Supreme Court erred in "referring" theindemnification issue to the trial court in the underlying action, to which Burlington is not aparty. Moreover, "[i]t is generally recognized that, even where common facts exist, it isprejudicial to insurers to have the issue of insurance coverage tried before the jury that considersthe underlying liability claims" (Christensen v Weeks, 15 AD3d 330, 331 [2005] [internal quotationmarks omitted]; see Kelly v Yannotti, 4 NY2d 603 [1958]).
The parties' remaining contentions are without merit or not properly before this Court.Mastro, J.P., Balkin, Dickerson and Lott, JJ., concur.