Allegations of Underlying Complaint Found to Fall Wholly Within Policy Exclusions

CGL – DUTY TO DEFEND AND INDEMNIFY
Global Constr. Co., LLC v. Essex Ins. Co.
(2nd Dept., decided 6/17/2008)

It has long been the rule in New York that a liability insurer must defend its insured whenever the allegations of a complaint in an underlying action suggest a reasonable possibility of coverage. However, when there is no possible factual or legal basis upon which the insurer might eventually be held to be obligated to indemnify the claimant under any provision of the insurance policy, or when the only interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion, the duty to defend is not triggered and summary judgment may be warranted.

In this case, Essex successfully cross-moved for summary judgment, Putnam County Supreme Court ruling that Essex was not obligated to defend or indemnity the plaintiff, its insured, in an underlying personal injury action.

In AFFIRMING that decision, the Second Department ruled:

Here, the defendant established, as a matter of law, that there was no factual or legal basis upon which it might eventually be obligated to indemnify its insureds, the plaintiffs [sic] in the underlying action, and that the only interpretation of the allegations in the complaint are that they fell wholly within specific policy exclusions (citations omitted). In opposition, the plaintiffs failed to raise a triable issue of fact.

The short decision does not summarize the underlying complaint or identify the exclusions negating coverage.