Court Opinion

ID: 6013493
Source: CourtListenerOpinion
Date Created: 2022-01-13 11:04:26.952946+00
Date Added: 2024-06-11T08:50:27.291965
License: Public Domain

—Judgment modified on the law and as modified affirmed with costs to defendants Merchants Mutual Insurance Company and Utica Mutual Insurance Company and judgment granted in accordance with the following Memorandum: Frontier Insulation Contractors, Inc. (Frontier), commenced this action against various insurers, including defendants Merchants Mutual Insurance Company (Merchants Mutual) and Utica Mutual Insurance Company (Utica Mutual). Based on a policy issued by Utica Mutual in effect from May 1, 1955 to May 1, 1956 and five policies issued by Merchants Mutual in effect from May 1, 1970 to May 1, 1975, Frontier sought a declaration that those defendants have a duty to defend and indemnify Frontier in 21 underlying actions seeking recovery for personal injuries allegedly resulting from the underlying plaintiffs’ *895exposure to asbestos insulation manufactured, sold, distributed, supplied and/or installed by Frontier, an insulation contractor.
Merchants Mutual appeals from a judgment (denominated order) of Supreme Court insofar as it granted Frontier’s motion for partial summary judgment declaring that Merchants Mutual is obligated to defend and indemnify Frontier in 18 of the 21 underlying actions; dismissed various affirmative defenses alleging that Merchants Mutual has no duty to defend and indemnify; and denied Merchant Mutual’s cross motion for summary judgment. Utica Mutual appeals from the judgment insofar as it granted Frontier’s motion for partial summary judgment declaring that Utica Mutual is obligated to defend and indemnify Frontier in 15 of the 21 underlying actions, dismissed various affirmative defenses, and denied Utica Mutual’s cross motion for summary judgment. Frontier cross-appeals.
We modify the judgment by denying Frontier’s motion, granting the respective cross motions of Merchants Mutual and Utica Mutual, and declaring that those defendants have no obligation to defend or indemnify Frontier in the underlying actions.
It is well established that the duty of an insurer to defend is broader than its duty to indemnify (Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669, rearg denied 54 NY2d 753). The duty of an insurer to defend its insured arises where the allegations within the four corners of the complaint state a cause of action that gives rise to a reasonable possibility of recovery under the policy, or, as the dissent rightly points out, where the insurer has actual "knowledge of facts which potentially bring the claim within the policy’s indemnity coverage” and which establish a "reasonable possibility of coverage” (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 66). For purposes of this appeal, we liberally construe all of the underlying complaints as alleging injuries resulting from Frontier’s installation or application of asbestos insulation, and we further impute actual knowledge of such facts to the insurers. We nonetheless note that, contrary to the dissent’s apparent position, the record provides no basis for concluding that the insurers have "actual knowledge of facts establishing” that the underlying plaintiffs sustained their injuries while exposed to asbestos during the course of Frontier’s installation operations (Fitzpatrick v American Honda Motor Co., supra, at 67), i.e., before Frontier relinquished possession of the insulation.
We conclude that the allegations of the underlying complaints fall squarely within the "products hazard” coverage (1) *896demonstrably not purchased by Frontier and thus "not covered” as part of the Merchants Mutual policies, and (2) specifically excluded from coverage by the Utica Mutual policy. The Merchants Mutual policies define "products hazard” to include "any bodily injury and property damage arising out of the named insured’s products” provided that such bodily injury or damage occurs away from the insured’s premises and after physical possession of such products has been relinquished by the insured. Similarly, the Utica Mutual policy defines "products hazard” to mean "the handling or use of,- the existence of any condition in or a warranty of’ the named insured’s products. In each instance, the policies define the named insured’s products to include "goods or products manufactured, sold, handled or distributed by the named insured” (emphasis supplied).
The underlying allegations of injury from exposure to asbestos installation installed or applied by Frontier fall within the policies’ clear and unambiguous definition of a "products hazard” (cf., Matter of Celotex Corp., 149 Bankr 997, 1000-1001 [Bankr MD Fla 1993]; Fibreboard Corp. v Hartford Acc. & Indem. Co., 16 Cal App 4th 492, 497, 500-505, 20 Cal Rptr 2d 376, 378-379, 380-384 [1st Dist 1993]). Installation constitutes the handling or distribution of the product installed even though the product is supplied in combination with the service of installation. Indeed, the underlying complaints seek to impose liability for the hazardous and injurious nature of the underlying defendants’ "products”, including the "asbestos containing products” allegedly negligently installed and applied by Frontier. Further, the negligent installation claims asserted against Frontier will require proof that the insulation material itself was injurious. Because none of the underlying complaints alleges any cause of action sufficiently removed from the allegedly defective and injurious nature of the asbestos to warrant classifying Frontier’s liability as something other than a "products hazard” (cf., Johnson v Studyvin, 828 F Supp 877, 884; Matter of Celotex Corp., supra, at 1000-1001; Fibreboard Corp. v Hartford Acc. & Indem. Co., supra, 16 Cal App 4th, at 501-502, 20 Cal Rptr 2d, at 381), defendants have no obligation to defend or indemnify Frontier.
In light of our disposition, it is unnecessary to reach the remaining contentions of the parties.
All concur except Green and Fallon, JJ., who dissent in the following Memorandum: