Court Opinion

ID: 5792929
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:12:56.101537+00
Date Added: 2024-06-11T08:42:19.986155
License: Public Domain

Kane, J. (dissenting).
Although this is a particularly close issue, I must vote to reverse the judgment and direct defendant to defend plaintiff in the action brought by Americana. Common experience informs one that a runaway strap may break without necessarily causing injury to the remainder of the binding to which it had been attached. Nevertheless, Americana’s complaint alleges that its distributor “ returned -the ski bindings as damaged ”. It is apparent that the insurer in Advanced Refrigeration & Appliance Co. v. Insurance Co. of North Amer. (supra) would have, been required to defend in that case if the hotel had alleged spoilage of its foodstuffs placed in the insured refrigeration system instead of simply claiming, as it did, that *55the unit failed to perform with resultant repair expense. In my view Americana is maintaining more than the mere failure of the strap to function; it claims actual spoilage of its bindings as a result. To the extent that the complaint alleges damage to Americana’s profits and goodwill, it might be that defendant’s policy does not protect against such risks as only such “ property damage ” defined as “ injury to or destruction of tangible property ” is covered by the policy terms. However, since some injury to the binding proper appears to be alleged, I cannot agree with the majority’s contention that the only damage was to the insured product within policy exclusion (1).
More troublesome is policy exclusion (k) restricting coverage for damages resulting from the product’s failure to serve its intended function when the failure is due to a design or specification deficiency, but not when damage results from the product’s il active malfunctioning.” Americana avers damage to its bindings “ due to the breakage of the strap stitching when put in use ”. It is certainly possible that this occurrence could be attributed to a thread or material design defect for which coverage would not be available under defendant’s policy. Yet it seems equally possible that proof could be adduced to show that, though properly designed, the stitching failure was the result of active malfunctioning. Although this distinction will be vital from defendant’s standpoint of coverage, it should be remembered that we are here dealing only with its broader duty to defend the underlying action. I am not presently prepared to say that Americana will be unable to establish, under any theory of proof, actual damage to its bindings from the active malfunctioning of plaintiff’s component runaway straps for which defendant’s coverage could be available (cf. Lionel Freedman, Inc. v; Glens Falls Ins. Co., 27 N Y 2d 364).
Accordingly, Special Term should have granted partial declaratory judgment to plaintiff requiring respondent to defend against Americana’s action at least until such time as the evidence dispelled any substantial possibility of coverage for the damage alleged.
-Staley, Jb., J. P., Sweeney and Reynolds, JJ., concur with Gbeenblott, J.; Bane, J., dissents and votes to reverse in an opinion.
Judgment affirmed, with costs.