Court Opinion

ID: 5903813
Source: CourtListenerOpinion
Date Created: 2022-01-13 03:30:01.725443+00
Date Added: 2024-06-11T08:45:26.098787
License: Public Domain

Murphy, P. J.
(dissenting). The facts are fairly and comprehensively set forth in the majority opinion, as is the law applicable in those situations where an insured seeks to compel an insurer to undertake its defense in a liability action. This, however, is not a situation in which the insured has requested a defense. Rather, here, one insurer, Zurich, is suing other insurers, Atlantic and Centennial, to contribute monetarily to a defense which Zurich is already providing and will continue to provide to parties indisputably covered under its policy of insurance.
It is, of course, true that an insurer’s duty to defend is broader than its duty to indemnify (Seaboard Sur. Co. v *389Gillette Co., 64 NY2d 304, 310; International Paper Co. v Continental Cas. Co., 35 NY2d 322, 326; Lionel Freedman, Inc. v Glens Falls Ins. Co., 27 NY2d 364, 368), the reason being that the purchase of liability insurance would be often rendered pointless if the insured were nevertheless left exposed to the considerable financial costs of defending an action until such time, if ever, as it was conclusively determined that there existed a duty on the insurer’s part to indemnify. An insurer is, therefore, independently obligated to afford its insured a defense regardless of whether the scope of the policy is ultimately found to embrace the conduct or omissions of the insured, provided that the allegations of the complaint in the underlying liability action, liberally construed, bring the action within the protection purchased by the insured. (Seaboard Sur. Co. v Gillette Co., supra, at 310; Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669-670.) A declaratory judgment action, having as its principal and usually dispositive focus the allegations in the underlying complaint, provides the insured an expeditious means of enforcing his right to a defense.
As plaintiff Zurich concedes, however, there is no question in this case of an insured being denied a defense. The only question is whether Zurich will be forced to bear the entire cost of the defense or is entitled to contribution from Atlantic and Centennial. That is a question which need not and indeed ought not be answered on an expedited basis by means of a declaratory judgment; it can and should await determination of the relevant factual issues in the liability action. It is there that the issues respecting the relationship between the two defendants, Bents and Lorenz, and the named insured under the policy issued by present defendant insurers Atlantic and Centennial, i.e., Westchester United Methodist Church, are most appropriately resolved. As has been stated, "the policy in this State has been to deny the declaratory judgment where the matter in dispute can be determined in the basic negligence action but to permit the action when the dispute is such that it depends on matters outside of the negligence action or will not arise in the negligence action as a part of the lawsuit.” (Nationwide Mut. Ins. Co. v Dennis, 14 AD2d 188, 189; Allstate Ins. Co. v Santiago, 98 AD2d 608; see also, Everlast Sporting Goods Mfg. Co. v Aetna Ins. Co., 23 AD2d 641; Cordial Greens Country Club v Aetna Cas. & Sur. Co., 41 NY2d 996.)
I do not question the obligation of an insurer to defend a named insured or party claiming a relation to the named *390insured entitling him or her to coverage under the policy issued the named insured. What is questioned is whether someone who is not a named insured, and who not only fails to allege any relationship with the named insured, but, as here, affirmatively denies such relationship, is entitled to a defense for which he has made no demand.
Clearly, it is not the purpose of a declaratory proceeding to create coverage where none exists, or is even claimed to exist by a putative insured. Indeed, there is usually no question of coverage in declaratory proceedings brought to compel a defense since the plaintiff therein is almost always the named insured; as the threshold issue of coverage is usually uncontested, the only question ordinarily presented is whether the scope of the admitted coverage encompasses the allegations in the underlying complaint. In the rare declaratory action to compel a defense brought by someone other than the named insured, there at least exist allegations by the claimed beneficiary of the coverage of some relation to the named insured which would bring the claimant within the contemplated coverage. Moreover, in those cases where someone other than the named insured has been afforded a defense, the situation has been one in which the putative insured would have otherwise gone undefended or would have had to bear the costs of defending on his own, a circumstance which might in certain situations adversely affect the named insured. (See, Colon v Aetna Life & Cas. Ins. Co., 66 NY2d 6, 9-10, discussed infra.)
The single case cited by the majority in which a party other than a named insured was found to have been entitled to a defense — even though it was ultimately determined that the putative insured was not in fact covered under the policy of insurance — is Colon v Aetna Life & Cas. Ins. Co. (supra). There, the plaintiff, Colon, sought from the insurer, Aetna, and was denied, a defense, claiming that he was covered under the omnibus clause of Aetna’s automobile insurance policy; he claimed he had been given permission by the named insured to use the vehicle he had been driving at the time of the accident. Aetna had disclaimed coverage relying exclusively on its own investigation. In upholding Colon’s right to a defense, the court relied essentially upon policy considerations, as it had to since it had already been determined in the context of the then completed liability action that Colon was not in fact an insured. The court observed that the effective defense of the driver was in the insured’s interest, and that *391insureds would be best protected if the burden of providing a defense was placed initially on the insurer instead of relegating the insured to an action upon the policy (supra, at 9-10).
Plainly, the present case is distinguishable from Colon (supra). Here the putative insureds, Bents and Lorenz, have made no demand for a defense, and, while represented by independent counsel retained by their insurer Zurich have actually denied facts upon which their coverage under the policies issued by Atlantic and Centennial would necessarily be based. This is a far cry from Colon where there was not only a demand for a defense but allegations vigorously pursued by the putative insured to the effect that he was within the coverage of the policy there at issue. The denial of coverage in this case does not rest upon the insurers’ possibly self-serving investigation, as it did in Colon, but upon the sworn assertions of the very parties who would be most interested in coming within the coverage if that were a realistic possibility. It is also worth noting that the very strong presumption of permissive use and, therefore, of coverage (Leotta v Plessinger, 8 NY2d 449, 461; Carter v Travelers Ins. Co., 113 AD2d 178, 180 [Sullivan, J.]) present in Colon does not obtain here where there is absolutely no operative presumption that Bents and Lorenz were employees of defendant insurers’ named insured. Indeed, apart from the bare alternative allegations in the liability action complaint there exists no presently discernable reason to suppose that Bents and Lorenz will eventually be found to come within the coverage of defendant insurers’ policies. Finally, and perhaps most significantly, in light of the fact that the putative insureds herein are already being provided a defense by their admitted insurer, Zurich, the various policy rationale invoked in Colon to extend the benefits of coverage to one who as it turned out was not in fact an insured, are manifestly inapplicable.
If the facts eventually determined in the course of the liability action establish that defendant insurers are in fact coinsurers of Bents and Lorenz then it would, of course, be appropriate to permit Zurich to seek contribution from them for the costs of the defense. But until such time as it is established that defendants are coinsurers, or at least that there is, notwithstanding the contrary allegations in their answer, some bona fide claim by Bents and Lorenz to that effect, a claim for contribution, which is really all that plaintiff in the present action asserts, is premature. It is also *392premature to declare that defendants are not coinsurers because, as noted, the factual issue upon which that determination depends is yet to be litigated, as it should be, in the liability action.
Accordingly, the judgment of the Supreme Court, New York County (Andrew Tyler, J.), entered December 2, 1987, which adjudged and declared on consent that defendant Atlantic Mutual Insurance Company was obliged to share equally in the defense of Reverend Nathaniel Grady, but which dismissed the action insofar as it sought a declaration as to defendants’ obligation to share in the costs of defending Theresa Bents and Illse Lorenz in the underlying actions, should be affirmed.
Carro and Milonas, JJ., concur with Sullivan, J.; Murphy, P. J., and Ross, J., dissent in an opinion by Murphy, P. J.
Judgment, Supreme Court, New York County, entered on December 2, 1987, reversed, on the law, the complaint reinstated and Zurich’s motion for summary judgment granted to the extent of declaring that defendants-respondents-appellants are obliged to share with Zurich in the costs of defending "Bents” and "Lorenz” in the underlying actions. Plaintiff-appellant-respondent shall recover of defendants-respondents-appellants $75 costs and disbursements of the appeal and cross-appeal.