| Scottsdale Indem. Co. v Beckerman |
| 2014 NY Slip Op 06071 [120 AD3d 1215] |
| September 10, 2014 |
| Appellate Division, Second Department |
[*1]
| Scottsdale Indemnity Company,Appellant, v Julianne W. Beckerman, Individually and as Mayor of theIncorporated Village of Muttontown,Respondents, et al., Defendants. |
Carroll, McNulty & Kull LLC, New York, N.Y. (Ann M. Odelson and JoshuaC. Weisberg of counsel), for appellant.
Leventhal, Cursio, Mullaney & Sliney, LLP, Roslyn, N.Y. (Steven G. Leventhalof counsel), for respondents.
In an action for a judgment declaring, inter alia, that the plaintiff, ScottsdaleIndemnity Company, is not obligated to defend or indemnify the defendants Julianne W.Beckerman, individually and as Mayor of the Incorporated Village of Muttontown, CarlJuul-Nielson, J. Randolph Bartholomew, Steven Fine, and Pat Miller, individually and intheir official capacities as Members of the Board of Trustees of the Incorporated Villageof Muttontown, Vivian Van Wagner, as Village Clerk of the Incorporated Village ofMuttontown, the Board of Trustees of the Incorporated Village of Muttontown, and theIncorporated Village of Muttontown in an underlying hybrid action for a declaratoryjudgment and proceeding pursuant to CPLR article 78 entitled Lexjac, LLC vBeckerman, pending in the Supreme Court, Nassau County, under index No. 12654/07, and an underlying action to recover damages for alleged violationsof Federal constitutional rights entitled Lexjac, LLC v Beckerman, pending in theUnited States District Court for the Eastern District of New York, under Case No. 2007Civ. 4614, the plaintiff appeals (1) as limited by its brief, from so much of an order of theSupreme Court, Nassau County (Feinman, J.), dated December 13, 2012, as denied itsmotion for summary judgment declaring that it is not obligated to defend or indemnifythose defendants in the underlying matters, and granted that branch of the cross motionof those defendants which was for summary judgment dismissing the complaint insofaras asserted against them and declaring that the plaintiff is so obligated, and (2) from ajudgment of the same court dated March 27, 2013, which, upon the order, is in favor ofthose defendants and against it dismissing the complaint insofar as asserted against thosedefendants.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the judgment is reversed, on the law, the plaintiff's motion for summaryjudgment declaring that it is not obligated to defend or indemnify the defendants JulianneW. Beckerman, individually and as Mayor of the Incorporated Village of Muttontown,Carl Juul-Nielson, J. Randolph Bartholomew, Steven Fine, and Pat Miller, individuallyand in their official capacities as Members of the Board of Trustees of the IncorporatedVillage of Muttontown, Vivian Van Wagner, as Village Clerk of the IncorporatedVillage of Muttontown, the Board of Trustees of [*2]theIncorporated Village of Muttontown, and the Incorporated Village of Muttontown in theunderlying matters is granted, those branches of the cross motion of those defendantswhich were for summary judgment dismissing the complaint insofar as asserted againstthem and declaring that the plaintiff is so obligated is denied, the order is modifiedaccordingly, and the matter is remitted to the Supreme Court, Nassau County, for theentry of a judgment, inter alia, declaring that the plaintiff is not obligated to defend orindemnify those defendants in the underlying matters; and it is further,
Ordered that one bill of costs is awarded to the plaintiff, payable by therespondents.
The appeal from the intermediate order must be dismissed because the right of directappeal therefrom terminated with the entry of judgment in the action (see Matter ofAho, 39 NY2d 241 [1976]). The issues raised on appeal from the order are broughtup for review and have been considered on the appeal from the judgment (seeCPLR 5501 [a]).
At issue in this case is the taking, by the Village of Muttontown, of a 1.1-acre parcelof real property from the defendants Richard Entel and his limited liability company,Lexjac, LLC (hereinafter together the Entel defendants). A predecessor in interest to theEntel defendants offered to dedicate the parcel to the Village as parkland, but the Villagedid not accept the dedication (see Foreal Homes v Incorporated Vil. ofMuttontown, 128 AD2d 585 [1987], affd 71 NY2d 821 [1988]). In 2005, theBoard of Trustees of the Village of Muttontown (hereinafter the Board of Trustees), withEntel, who was then a member, recusing himself, officially declined the offer ofdedication, and Lexjac, LLC, delivered a conservation easement over the parcel to theVillage. In 2007, after a hotly contested mayoral election between Entel and thedefendant Julianne W. Beckerman, in which Beckerman prevailed, the Village rescindedits 2005 resolution declining the dedication, and thereupon accepted the dedication.
The Entel defendants challenged that taking by commencing an action in the UnitedStates District Court against, among others, Beckerman, individually and as Mayor of theVillage, Carl Juul-Nielson, J. Randolph Bartholomew, Steven Fine, and Pat Miller,individually and in their official capacities as members of the Board of Trustees, theBoard of Trustees, and the Village alleging (1) a violation of the right to equalprotection, (2) a deprivation of substantive due process, (3) a deprivation of proceduraldue process, and (4) a violation of the right to free speech. In 2011, after the Enteldefendants were awarded summary judgment on the cause of action alleging adeprivation of procedural due process, the remaining causes of action in the federal courtaction were dismissed. The Entel defendants also commenced a hybrid action andproceeding in the Supreme Court, Nassau County, against Beckerman, individually andas Mayor of the Village, Vivian Van Wagner, as Clerk of the Village, the Board ofTrustees, and the Village, seeking (1) damages for breach of a contract allegedly createdby the 2005 resolution of the Board of Trustees declining the offer of dedication, (2) ajudgment declaring that the Village failed to comply with the Eminent Domain ProcedureLaw, (3) to quiet title to the parcel in dispute, (4) damages for a de facto taking, (5) theannulment of the 2007 resolution accepting the dedication on the ground that thedetermination adopting the resolution was arbitrary and capricious, (6) the annulment ofthe 2007 resolution on the ground that the acceptance of the parcel did not comply withthe State Environmental Quality Review Act (ECL art 8), and (7) to compel the Villageto decline the dedication.
The plaintiff is an insurance carrier that insured the Village and its officials forclaims arising from public officials' wrongful acts. However, the relevant insurancepolicy contained an exclusion for "[a]ny injury or damage arising out of or resulting froma taking that involves or is in any way related to the principles of eminent domain,inverse condemnation . . . or dedication by adverse use or by whatever nameused." In 2012, the plaintiff commenced the instant action against Beckerman, VanWagner, the individual members of the Board of Trustees, the Board of Trustees itself,and the Village (hereinafter collectively the Village defendants) for a judgment declaringthat the exclusion absolves the plaintiff from defending and indemnifying the Village, itsagencies, and its officials in relation to the Entel defendants' remaining claims in both theunderlying federal and state-court matters (see QBE Ins. Corp. v Jinx-Proof Inc., 22 NY3d 1105[2014]).
[*3] An insurer's contractual duty todefend is liberally construed, and is broader than the duty to indemnify (see Fieldston Prop. Owners Assn.,Inc. v Hermitage Ins. Co., Inc., 16 NY3d 257, 264 [2011]). The duty to defend" 'arises whenever the allegations in a complaint state a cause of action that givesrise to the reasonable possibility of recovery under the policy' " (id.,quoting Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 [1991]; see BP A.C. Corp. v One BeaconIns. Group, 8 NY3d 708, 714 [2007]). "The duty to defend is not triggered,however, when the only interpretation of the allegations against the insured is that thefactual predicate for the claim falls wholly within a policy exclusion" (Yangtze Realty, LLC v Sirius Am.Ins. Co., 90 AD3d 744, 744-745 [2011] [internal quotation marks omitted]; see Automobile Ins. Co. ofHartford v Cook, 7 NY3d 131, 137 [2006]; Town of Massena v HealthcareUnderwriters Mut. Ins. Co., 98 NY2d 435, 444 [2002]).
Policy exclusions "are subject to strict construction and must be read narrowly"(Automobile Ins. Co. of Hartford v Cook, 7 NY3d at 137), and any ambiguitiesin the insurance policy are to be construed against the insurer (see Ace Wire &Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398 [1983]; Lancer Ins. Co. v Marine MotorSales, Inc., 84 AD3d 1318 [2011]). However, unambiguous provisions ofinsurance contracts will be given their "plain and ordinary" meaning (Sanabria vAmerican Home Assur. Co., 68 NY2d 866, 868 [1986]; see ABM Mgmt. Corp. vHarleysville Worcester Ins. Co., 112 AD3d 763, 764 [2013]).
In the context of a policy exclusion, the phrase "arising out of" is unambiguous, andis interpreted broadly to mean "originating from, incident to, or having connection with"(Maroney v New York Cent.Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005] [internal quotation marks omitted];see Regal Constr. Corp. vNational Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38 [2010];Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 350-352 [1996]; Natural Organics, Inc. vOneBeacon Am. Ins. Co., 102 AD3d 756, 759 [2013]; Dzielski v Essex Ins. Co., 90AD3d 1493, 1497 [2011], revd on dissenting op 19 NY3d 871, 873 [2012]).A "but-for" test applies to determine the applicability of an "arising out of" exclusion(see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d at 350-352; U.S.Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821 [1995]). In other words, if theplaintiff in an underlying action or proceeding alleges the existence of facts clearlyfalling within such an exclusion, and none of the causes of action that he or she assertscould exist but for the existence of the excluded activity or state of affairs, the insurer isunder no obligation to defend the action (see Mount Vernon Fire Ins. Co. v CreativeHous., 88 NY2d at 350-352; U.S. Underwriters Ins. Co. v Val-Blue Corp., 85NY2d at 823; Natural Organics, Inc. v OneBeacon Am. Ins. Co., 102 AD3d at759).
Here, the plaintiff established its prima facie entitlement to judgment as a matter oflaw by demonstrating that the remaining claims asserted by the Entel defendants in theunderlying federal and state-court matters all arose out of "a taking that involves or is inany way related to the principles of eminent domain, inverse condemnation. . . or dedication," a situation that is specifically excluded from coverage bythe clear and unambiguous language of the policy (see Mount Vernon Fire Ins. Co. vCreative Hous., 88 NY2d at 352; U.S. Underwriters Ins. Co. v Val-BlueCorp., 85 NY2d at 823). In opposition to the plaintiff's showing, the Villagedefendants failed to raise a triable issue of fact.
The parties' remaining contentions either are without merit or need not be addressedin light of our determination.
Accordingly, the Supreme Court should have granted the plaintiff's motion forsummary judgment declaring that it is not obligated to defend or indemnify the Villagedefendants in the underlying federal and state-court matters, and denied those branchesof the Village defendants' cross motion which were for summary judgment dismissingthe complaint insofar as asserted against them (see Lanza v Wagner, 11 NY2d317, 334 [1962]) and declaring that the plaintiff is so obligated.
Since this is a declaratory judgment action, the matter must be remitted to theSupreme Court, Nassau County, for the entry of a judgment declaring that the plaintiff isnot obligated to defend or indemnify the Village defendants in the underlying federal andstate-court [*4]matters (see Lanza v Wagner, 11NY2d at 334). Mastro, J.P., Dickerson, Hinds-Radix and Duffy, JJ., concur.