Case Name: Zurich Insurance Company et al., Respondents-Appellants, v. Travelers Indemnity Company et al., Appellants-Respondents, et al., Defendants; Travelers Indemnity Company, Third-Party Plaintiff-Appellant-Respondent, v. International Insurance Company, Third-Party Defendant-Appellant-Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1992-06-30
Citations: 184 A.D.2d 454
Docket Number: 
Parties: Zurich Insurance Company et al., Respondents-Appellants, v Travelers Indemnity Company et al., Appellants-Respondents, et al., Defendants. Travelers Indemnity Company, Third-Party Plaintiff-Appellant-Respondent, v International Insurance Company, Third-Party Defendant-Appellant-Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 184
Pages: 454–462

Head Matter:
Zurich Insurance Company et al., Respondents-Appellants, v Travelers Indemnity Company et al., Appellants-Respondents, et al., Defendants. Travelers Indemnity Company, Third-Party Plaintiff-Appellant-Respondent, v International Insurance Company, Third-Party Defendant-Appellant-Respondent.

Opinion:
Order, Supreme Court, New York County (Harold Tompkins, J.), entered on or about July 17, 1991, which denied the motion and cross-motions of the respective parties seeking summary judgment, affirmed, without costs.
This action concerns apportionment of a $775,000 settlement reached in a personal injury action originally brought in Federal court. The action arose out of an automobile accident which occurred in New York State. The car was rented from Avis Rent-A-Car by Pascal DiPaola, an employee of defendant Morton Thiokol, but was operated by a companion, Arthur Morgan, who concededly was a general employee of plaintiff Allstates Design & Development Company. Morgan, who at the time was working with DiPaola pursuant to a personal services contract between Allstates and Thiokol, was killed in the accident which occurred while he and DiPaola were returning to New York after performing work for Thiokol in Connecticut. Allstates and its automobile liability insurer, Zurich Insurance Company, commenced this action against Morton Thiokol and its business automobile insurer, International Insurance Company, Avis, Morgan's estate and Morgan's individual automobile liability insurer, Travelers Indemnity Company, seeking an adjudication of the various insurers' coverage responsibilities with respect to the accident.
It can be said of this case that it presents what has been termed " 'a court's nightmare' ", i.e., the task of "establishing a pecking order among multiple insurers covering the same risk" (State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 372). The task is complicated further in this case by the various agreements regarding the risk entered into by the various insureds. While all of the parties may agree that summary judgment is appropriate, each party relies on its own version of the facts and inferences to be drawn therefrom. Consequently, numerous issues of fact exist which preclude an award of summary judgment in this case at this juncture (Rotuba Extruders v Ceppos, 46 NY2d 223, 231).
The question of whether Morgan, Allstates' general employee, was also Thiokol's special employee at the time of the accident is an issue of fact (see, O'Brien v Garden Way Mfg., 72 AD2d 860). The settlement in which Avis contributed $100,000 on behalf of Allstates and Morgan, Travelers contributed $300,000 on behalf of Morgan and Zurich contributed $375,000 on behalf of Allstates was reached before any findings of fact were made. Consequently, Morgan's employment status was never determined by the Federal court. The parties in this litigation should not be bound by the allegations in the pleadings served and filed by DiPaola as plaintiff in the Federal action. Moreover, it cannot be said that the uncertainty as to Morgan's employment status was fully considered in the settlement of the Federal action; the issues concerning apportionment were not fully explored and the parties thereto expressly reserved their rights with respect to any and all insurance coverage claims arising out of the settled action.
The determination of Morgan's employment status is relevant to several unresolved coverage issues, not the least of which is that of whether, and the extent to which, Allstates is to be held vicariously liable for Morgan's negligence. Determination of Morgan's employment status is directly relevant also to the applicability of the so called, "Wiz Aid Agreement", pursuant to which Avis would provide $1,000,000 in primary liability coverage to Thiokol employees operating Avis-owned vehicles in the course of Morton Thiokol business. Specifically, the agreement allows Thiokol to permit "any licensed driver with whom the Company [Thiokol] has business dealings, including business associates, customers, prospective employees, and suppliers to use the vehicle during its rental". However, it also provides that any such person who is a permitted driver but who is not an employee of Thiokol shall only be entitled to the benefit of the insurance coverage provided by the rental agreement. If Morgan is determined not to have been a special employee of Thiokol, then the provisions of the rental agreement would control. However, if Morgan is determined to have been a special employee of Thiokol, then further issues are raised with respect to the nature of the coverage he is entitled to under the agreement and the applicability of the fellow employee exclusions contained in the standard automobile liability policy procured by Avis for the purposes of providing coverage pursuant to the "Wiz Aid Agreement".
Additional triable issues of fact are raised by ambiguities in sharply conflicting clauses of the various policies and related agreements (see, Ehrlich v Abrams Instrument Corp., 53 AD2d 825). For example, the scope of Allstates' liability, if any, pursuant to the broad hold-harmless clause in the personal services contract, executed by Thiokol and Allstates and the separately executed hold-harmless agreement, denominated a "release", executed by Allstates is ambiguous. In addition the distinctions between "your car", "non-owned car" and "substituted car" and the exclusion for a car "for a fee" in Travelers' policy covering Morgan individually are ambiguous.
In addition to the above, questions exist with respect to certain exclusions in Zurich's policy issued to Allstates, which could be triggered if Morgan is determined to have been a Thiokol special employee at the time of the accident, and with respect to whether Zurich is seeking subrogation against its own insured (see, Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465, 472). The parties' intent with respect to the choice-of-law issues raised cannot be determined from the various agreements (see, Steinbach v Aetna Cas. & Sur. Co., 81 AD2d 382, 385). This is significant, since this being a matter of loss allocation and not of regulation of conduct, a "grouping of contacts" analysis is appropriate (see, Salsman v Barden & Robeson Corp., 164 AD2d 481, 484). Also, it has not been demonstrated that the Travelers' policy was issued or delivered in New York. Therefore Insurance Law § 3420 (d) does not apply, and the remaining parties may seek estoppel of Travelers' disclaimer of coverage only at common law. This requires a showing of prejudice, which raises yet another question of fact (see, e.g., American Stevedores v Sun Ins. Off., 42 Misc 2d 516, 518, affd 23 AD2d 966). Concur—Ross, Asch and Smith, JJ.