| Roman Catholic Diocese of Brooklyn v National Union Fire Ins. Co. ofPittsburgh, Pa. |
| 2011 NY Slip Op 06554 [87 AD3d 1057] |
| September 20, 2011 |
| Appellate Division, Second Department |
| Roman Catholic Diocese of Brooklyn et al.,Respondents, v National Union Fire Insurance Company of Pittsburgh, Pa., Appellant, etal., Defendant. |
—[*1] Herzfeld & Rubin, P.C., New York, N.Y. (David B. Hamm and Linda M. Brown of counsel),for respondents.
In an action, inter alia, to recover damages for breach of contract and for a judgmentdeclaring that the defendant National Union Fire Insurance Company of Pittsburgh, Pa., isobligated to indemnify the plaintiffs, up to the limits of the subject insurance policies in excess ofa $250,000 self-insured retention, for all costs and expenses incurred in connection with thedefense and settlement of an underlying action entitled N.-L. v Smith, commenced in theSupreme Court, Queens County, under index No. 25918/03, the defendant National Union FireInsurance Company of Pittsburgh, Pa., appeals, as limited by its notice of appeal and brief, fromso much of an order of the Supreme Court, Kings County (Solomon, J.), dated March 12, 2010,as denied those branches of its motion which were for summary judgment, in effect, declaringthat the alleged acts of sexual abuse in the underlying action constitute multiple occurrences, thatthe settlement amount and any "additional consideration" are to be allocated on a pro rata basisover seven policy periods, and that the plaintiffs must exhaust a $250,000 self-insured retentionfor each commercial general liability policy implicated, and granted those branches of theplaintiffs' cross motion which were for summary judgment dismissing its fourth and sixthaffirmative defenses.
Ordered that the order is reversed insofar as appealed from, on the law, with costs, thosebranches of the motion of the defendant National Union Fire Insurance Company of Pittsburgh,Pa., which were for summary judgment, in effect, declaring that the alleged acts of sexual abusein the underlying action constitute multiple occurrences, that the settlement amount and any"additional consideration" are to be allocated on a pro rata basis over seven policy periods, andthat the plaintiffs must exhaust a $250,000 self-insured retention for each commercial generalliability policy implicated are granted, those branches of the plaintiffs' cross motion which werefor summary judgment dismissing the fourth and sixth affirmative defenses of the defendantNational Union Fire Insurance Company of Pittsburgh, Pa., are denied, and the matter is remittedto the Supreme Court, Kings County, for the entry of a judgment, inter alia, declaring that thealleged acts of sexual abuse in the underlying action constitute multiple occurrences, that thesettlement amount and any "additional consideration" are to be allocated on a pro rata basis overseven policy periods, and that [*2]the plaintiffs must exhaust a$250,000 self-insured retention for each commercial general liability policy implicated.
In November 2003, Jeanne M. N.-L., individually and as mother and natural guardian ofAlexandra L., a minor under the age of 18 years, commenced an action against the plaintiffsherein and against Reverend James Smith, alleging that Smith sexually abused and otherwiseassaulted Alexandra. The complaint, as amplified by the bill of particulars, alleged that the sexualabuse commenced "just after" Alexandra's tenth birthday which was on August 10, 1996, andcontinued until "in or about March to May 2002." The abuse allegedly occurred at different timesduring the day and week, and at multiple locations. The underlying action ultimately was settledfor the sum of $2,000,000 plus "additional consideration."
The defendant National Union Fire Insurance Company of Pittsburgh, Pa. (hereinafterNational), issued three annual commercial general liability (hereinafter CGL) policies to theplaintiffs for the period of August 31, 1995, through August 31, 1998. Nonparty Illinois NationalInsurance Company issued three annual CGL policies to the plaintiffs for the period of August31, 1998, through August 31, 2001. Each of the six policies provided insurance with an "eachoccurrence limit" of $750,000, and included an endorsement which provided, in part, that thelimits for each of the coverages provided by the policy would apply "excess of a $250,000," peroccurrence, self-insured retention (hereinafter SIR). Between 1995-2002, the plaintiffs alsomaintained umbrella coverage with the defendant Westchester Fire Insurance Company, pursuantto seven annual policies.
In January 2009 the plaintiffs commenced this action against National and Westchesterseeking damages for breach of contract and a judgment declaring that National and Westchesterwere obligated to pay all costs and expenses incurred in connection with the defense andsettlement of the underlying action. The plaintiffs sought coverage solely under the NationalCGL policies and the Westchester umbrella policies in effect between 1995-1996 and 1996-1997.In an order dated March 12, 2010, the Supreme Court, inter alia, denied those branches ofNational's motion which were for summary judgment, in effect, declaring that the alleged acts ofsexual abuse in the underlying action constitute multiple occurrences, that the settlement amountand any "additional consideration" are to be allocated on a pro rata basis over seven policyperiods, and that the plaintiffs must exhaust a $250,000 self-insured retention for eachcommercial general liability policy implicated, and granted those branches of the plaintiffs' crossmotion which were for summary judgment dismissing National's fourth and sixth affirmativedefenses. This appeal by National ensued.
"Where there is on-going and progressive injury that spans many years . . . thequestion 'is whether each [triggered] policy is liable for the entirety of [the liability for the injury]or whether each policy is responsible for paying only the portion of the [liability] somehowattributable to the amount of injury during the policy period' " (Olin Corp. v Insurance Co. ofN. Am., 221 F3d 307, 322 [2000], quoting In re Prudential Lines Inc., 158 F3d 65,84 [1998]).
Here, National established its prima facie entitlement to judgment as a matter of lawdeclaring that the settlement amount and any "additional consideration" are to be allocated on apro rata basis over seven policy periods. In determining a dispute over insurance coverage, courtsmust first look to the language of the policy (see Consolidated Edison Co. of N.Y. v AllstateIns. Co., 98 NY2d 208, 221 [2002]). The subject National CGL policies provide, in pertinentpart, that: "This insurance applies to 'bodily injury' . . . only if . . . [t]he'bodily injury' . . . is caused by an 'occurrence' " and "[t]he 'bodily injury'. . . occurs during the policy period." Significantly, the policies provideindemnification for liability as a result of bodily injury occurring during the policy period. Thus,"[p]ro rata allocation under these facts, while not explicitly mandated by the policies, isconsistent with the language of the policies" (id. at 224).
In opposition, the plaintiffs failed to raise a triable issue of fact. The plaintiffs seek toallocate the settlement amount using the "joint and several" method, pursuant to which an insuredmay choose any one of the applicable policies it wishes, and demand payment for the entire claim[*3]under that single policy, up to the policy limit (see OlinCorp. v Insurance Co. of N. Am., 221 F3d at 322; Consolidated Edison Co. of N.Y. vAllstate Ins. Co., 98 NY2d at 221-222). However, joint and several allocation is inconsistentwith the unambiguous language of the National policies providing coverage for bodily injury thatresulted from an occurrence "during the policy period" (Consolidated Edison Co. of N.Y. vAllstate Ins. Co., 98 NY2d at 224 [emphasis added]; cf. Olin Corp. v Insurance Co. of N.Am., 221 F3d at 323-324). "[C]ollecting all the indemnity from a particular policypresupposes ability to pin an accident to a particular policy period" (Consolidated Edison Co.of N.Y. v Allstate Ins. Co., 98 NY2d at 224). Here, however, it cannot be determined to whatextent the bodily injury allegedly sustained occurred during a particular policy period.Accordingly, the Supreme Court should have granted that branch of National's motion which wasfor summary judgment, in effect, declaring that the settlement amount and any "additionalconsideration" are to be allocated on a pro rata basis over seven policy periods (see CrucibleMaterials Corp. v Certain Underwriters at Lloyd's London, 681 F Supp 2d 216, 226 [2010];Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d at 216, 225; Serio vPublic Serv. Mut. Ins. Co., 304 AD2d 167, 172 [2003]).
National also established its prima facie entitlement to judgment as a matter of law declaringthat the alleged acts of sexual abuse in the underlying action constitute multiple occurrences, andthat the plaintiffs must exhaust a $250,000 self-insured retention for each of the two CGL policyimplicated. "Occurrence" is defined in the National policies as "an accident, including continuousor repeated exposure to substantially the same general harmful conditions." This language doesnot reflect an intent by the parties to aggregate claims for the purpose of subjecting them to asingle policy deductible or SIR (seeAppalachian Ins. Co. v General Elec. Co., 8 NY3d 162, 173 n 3 [2007]; ExxonMobil Corp. v Certain Underwritersat Lloyd's, London, 50 AD3d 434, 434-435 [2008]; International Flavors & Fragrances, Inc. v Royal Ins. Co. of Am., 46AD3d 224, 226 [2007]).
"In the absence of a specific aggregation-of-claims provision precisely identifying theoperative incident or occasion giving rise to liability, the court must apply the 'unfortunate events'test (see Arthur A. Johnson Corp. v Indemnity Ins. Co. of N. Am., 7 NY2d 222 [1959])to determine whether the underlying multiple claims constitute multiple 'occurrences' under thepolicy" (ExxonMobil Corp. v Certain Underwriters at Lloyd's, London, 50 AD3d at 435).In this regard, courts "must analyze the temporal and spatial relationships between the incidentsand the extent to which they were part of an undisrupted continuum to determine whether theycan . . . be viewed as a single unfortunate event—a single occurrence"(Appalachian Ins. Co. v General Elec. Co., 8 NY3d at 174).
Here, the sexual abuse allegedly occurred over a seven-year period, at different times, and atmultiple locations. Thus, it cannot be said that there was a close temporal and spatial relationshipbetween the acts of sexual abuse (id.). Under the circumstances, National demonstrated,prima facie, that the alleged acts of sexual abuse constituted multiple occurrences (seeInterstate Fire & Cas. Co. v Archdiocese of Portland in Oregon, 35 F3d 1325, 1331 [1994];Society of R.C. Church of Diocese of Lafayette & Lake Charles, Inc. v Interstate Fire & Cas.Co., 26 F3d 1359, 1365 [1994]; Safeguard Ins. Co. v Angel Guardian Home, 946 FSupp 221, 231 [1996]; Roman Catholic Diocese of Joliet, Inc. v Interstate Fire Ins. Co. [StateReport Title: Roman Catholic Diocese v Lee], 292 Ill App 3d 447, 456, 685 NE2d 932[1997]). Moreover, where, as here, "multiple policies are triggered and liability is allocated toeach, each policy's deductible is applicable" (Olin Corp. v Insurance Co. of N. Am., 221F3d at 328). In opposition to National's prima facie showing, the plaintiffs failed to raise a triableissue of fact. Accordingly, the Supreme Court should have granted those branches of National'smotion which were for summary judgment, in effect, declaring that the alleged acts of sexualabuse in the underlying action constitute multiple occurrences, and that the plaintiffs mustexhaust a $250,000 self-insured retention for each of the two CGL policy implicated.
Turning to the plaintiffs' cross motion, the plaintiffs failed to establish their prima facieentitlement to judgment as a matter of law dismissing National's fourth affirmative defense onthe ground that National waived that defense pursuant to Insurance Law § 3420 (d).National's fourth affirmative defense alleged that "[t]o the extent coverage exists for plaintiffs'claim, it is subject to multiple [SIRs] under the Policies." The SIRs, which are contained inendorsements, do not [*4]implicate exclusions in the policies.Therefore, "the time requirements for disclaiming coverage under Insurance Law § 3420(d) are inapplicable" (Power Auth. of State of N.Y. v National Union Fire Ins. Co. ofPittsburgh, 306 AD2d 139, 140 [2003]; see Pav-Lak Indus., Inc. v Arch Ins. Co., 56 AD3d 287, 288[2008]). Accordingly, the Supreme Court should have denied that branch of the plaintiffs' crossmotion which was for summary judgment dismissing National's fourth affirmative defense.
Finally, the plaintiffs failed to establish their prima facie entitlement to judgment as a matterof law dismissing National's sixth affirmative defense. Thus, the Supreme Court should havedenied that branch of the plaintiffs' cross motion, regardless of the sufficiency of the oppositionpapers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]).
Since this is, in part, an action for a declaratory judgment, we remit the matter to theSupreme Court, Kings County, for the entry of a judgment, inter alia, declaring that the allegedacts of sexual abuse in the underlying action constitute multiple occurrences, that the settlementamount and any "additional consideration" are to be allocated on a pro rata basis over sevenpolicy periods, and that the plaintiffs must exhaust a $250,000 self-insured retention for eachCGL policy implicated (see Lanza v Wagner, 11 NY2d 317, 334 [1962], appealdismissed 371 US 74 [1962], cert denied 371 US 901 [1962]). Mastro, J.P.,Dickerson, Chambers and Roman, JJ., concur.