Trucking Wrongful Death Case Where the Plaintiff is Seeking Indemnification Under an Insurance Contract*

This is an appeal from a lower court for an order granting the plaintiff's motion.

In August 1998, the plaintiff contracted with the State of New York to perform highway construction work. That contract contained various provisions regarding insurance and indemnification in the event the State was sued as the result of an accident related to the project.

In September 1999, Art Rode, one of the plaintiff's employees, was killed when a pick-up truck operated by another of the plaintiff's employees struck him. Rodes' estate subsequently commenced a trucking wrongful death suit against the State, for which the State sought defense and indemnification from the plaintiff's insurance carriers.

The defendants Comm Writer's Insurance Company and Denier State Insurance Company disclaimed coverage. The State launched this trucking wrongful death action against the plaintiff requesting indemnification and alleging breach of contract based on lack of proper insurance coverage.

Comm opposed the plaintiff's motion and Denier cross-moved for summary judgment dismissing the plaintiff's trucking wrongful death complaint. The lower court granted the plaintiff's motion for summary judgment as to Comm and, as to Denier, denied both the plaintiff's motion and Denier's cross motion as moot. These appeals ensued.

The crux of Comm's appeal in this trucking wrongful death suit is that no timely disclaimer was required because the plaintiff's claim falls outside the scope of the policy's coverage. This Court does not agree. To be sure, "an insurance company is not subject to the timely disclaimer provisions contained in Insurance Law where no coverage existed under the policy."

A distinction is to be drawn between the denial of a claim based on an exclusion of coverage and the denial of a claim based upon non-coverage. "In the former situation, the policy covers the claim but for the applicability of the exclusion and, therefore, a notice of disclaimer is required. In the latter, the claim is not within the ambit of the policy and, therefore, mandating coverage on the basis of an insurer's failure to serve a timely notice of disclaimer would create coverage where none previously existed."

Based upon this court´s review of the policy as a whole, the policy issued by Comm provided coverage for the claims asserted against the plaintiff and, as such, Comm's failure to tender a timely disclaimer precludes it from asserting the relevant exclusion as a defense.

Paragraph 1 (a) of Comm's insurance contract provides: "We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages.

Tort liability means a liability that would be imposed by law in the absence of any contract or agreement."

If Comm wanted to invoke the exclusionary language in its contract, it was required to issue a timely notice of disclaimer in this trucking wrongful death action, which it failed to do. Hence, Comm has waived its defense in this regard and the lower court properly granted the plaintiff's motion for summary judgment against Comm.

As a final matter, both the plaintiff and Denier contend that the lower court erred in denying their respective motions for summary judgment. Of the various arguments raised by the parties, only one warrants discussion.

Comm was listed as an underlying insured. Having concluded that the terms of Comm's policy obligated it to defend and indemnify the plaintiff in the action brought against it by the State, valid and collectible underlying coverage exists and, hence, the plaintiff is a proper insured under the contract with Denier.

The lower court should have granted the plaintiff's motion for summary judgment and declared that Denier is liable to the plaintiff for indemnification for any judgment against the plaintiff in the action brought by the State that exceeds the limits of the plaintiff's underlying insurance.

The order and judgment of the lower court was modified by reversing the plaintiff's motion seeking a declaration that the defendant Denier is liable to the plaintiff for indemnification for any judgment that exceeds the limits of the plaintiff's insurance. The motion was therefore granted and affirmed.