United States District Court, Southern District of New York
October 25, 1991
UNITED NATIONAL INSURANCE CO. PLAINTIFF,
WATERFRONT REALTY CORP., ET AL., THE TUNNEL, INC., AND LOURDES ORTIZ, DEFENDANTS.
The opinion of the court was delivered by: Lowe, District Judge.
OPINION AND ORDER
Before this court is plaintiff United National Insurance Co.'s ("UNI")
motion for summary judgment pursuant to F.R.C.P. 56, and for a
declaratory judgment stating that UNI has no duty to defend or indemnify
the defendant Waterfront Realty Corp. ("Waterfront"), and the Tunnel,
Inc. ("Tunnel") in the pending state court action entitled Lourdes Ortiz
v. The Tunnel, Inc. and Waterfront Realty Corp. Defendant Waterfront
opposes this motion and makes a cross motion for summary judgment and for
a declaratory judgment stating that UNI does have a duty to defend and
indemnify defendant Lourdes Ortiz. Ms. Ortiz also opposes the plaintiff's
summary judgment motion and makes her own cross motion for summary
judgment and sanctions against UNI pursuant to F.R.C.P. 11. For the
reasons set forth herein, UNI's motion is denied, Waterfront's motion is
granted, and Ms. Ortiz's motion is granted in part and denied in part.
The following facts are not disputed by any of the parties. In 1988,
UNI extended a General Liability Policy to the Tunnel, a dance club
located in New York City, and its landlord, Waterfront, which ran from
July 16, 1988 to July 16, 1989. Amended Complaint and Demand for Jury
Trial at ¶ 12 (hereinafter Complaint). Included in the policy is a
list of occurrences that are excluded from coverage. Among those is an
assault and battery exclusion which relieves the insurer from liability
for claims "arising out of an assault and/or battery, whether caused by
or at the instigation of, or at the direction of, or omission by, the
Insured, and/or his employees." See Ex. A to Complaint.
On July 17, 1988, Ms. Ortiz was a patron of the Tunnel. Defendant's
Memorandum of Law at 1 (hereinafter Bryer Memo). During the course of her
stay, Ms. Ortiz had occasion to use the women's bathroom. She alleges
that both the men's and women's lavatories were open to and used by both
sexes, and that this was known to employees of the Tunnel. Id. Ms. Ortiz
claims that while using a stall in the women's bathroom, an unidentified
man entered her stall, threatened her with a gun, and raped and sodomized
her. Id. She then filed suit in state court against the Tunnel and
Waterfront for the physical and emotional damage done to her as a
In response to this suit, UNI began the present action to deny any
liability to Waterfront, the Tunnel or Ms. Ortiz, arguing that the attack
on Ms. Ortiz is covered by the assault and battery exclusion. Complaint
at ¶¶ 13-18. Additionally, UNI seeks a judgment declaring (on the same
grounds) that it has no obligation to defend or indemnify Waterfront or
the Tunnel. Complaint at ¶¶ 19-23.
Under F.R.C.P. 56(c), a party's motion for summary judgment will be
granted if there is "no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." See also
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
2510, 91 L.Ed.2d 202 (1986) ("[S]ummary judgment will not lie if the
dispute about a material fact is `genuine,' that is, if the evidence is
such that a reasonable jury could return a verdict for the nonmoving
party."); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548,
2552, 91 L.Ed.2d 265 (1986)
("[T]he plain language of Rule 56(c) mandates the entry of summary
judgment . . . . against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial.")
A party opposing such a motion must do more than deny the information
contained in a properly supported motion for summary judgment. According
to F.R.Civ.P. 56(e), an opposing party "may not rest upon the mere
allegations or denials of [their] . . . . pleadings but [their]. . . .
response . . . . must set forth specific facts showing there is a genuine
issue for trial." Since the material facts in this case are not in
dispute, the sole issue to be determined here is how the assault and
battery exclusion is to be interpreted under New York law.*fn1
In support of its motion, UNI has argued that, despite Ms. Ortiz's
allegation that she was raped, the attack on her is still an assault and
battery for the purposes of the relevant exclusionary clause. Therefore,
they allege that there is no insurance coverage for the incident.
Plaintiff's Memorandum of Law at 4 (hereinafter Schwartz Memo). Using
Black's Law Dictionary as their authority, UNI goes on to submit that an
assault is simply "`any unlawful touching of another without
justification.'" Plaintiff's Reply Memorandum of Law in Further Support
at 3 (hereinafter Schwartz Reply Memo). They maintain that the language
employed in the assault and battery exclusion is clear and unambiguous on
this point. Schwartz Reply Memo at 5.
The defendants argue that UNI's reading of the assault and battery
exclusion is overbroad and that the clause is ambiguous, Waterfront
submits that there is no evidence to support UNI's contention that rape
and sodomy "are covered by the [assault and battery] clause's
exclusionary language or understood or intended by the parties to the
insurance contract to be covered by the clause." Herland Memo at 3.
It is a well-established principle of insurance law in the state of New
York that "any ambiguity in an insurance policy must be construed against
the insurer, the draftsman of the policy." Lavanant v. General Acc. Ins.
Co., 164 A.D.2d 73, 561 N.Y.S.2d 164, 168 (1st Dep't. 1990). See also
Ogden Corp. v. Travelers Indem. Co., 681 F. Supp. 169, 173 (S.D.N.Y.
1988) ("In the field of insurance contract provisions, the general rule
is to construe ambiguities in favor of the insured and against the
insurer."); Milstein v. Ortner, 65 Misc.2d 649, 318 N.Y.S.2d 629, 632
(N.Y.Civ.Ct. 1966) ("[I]f there be doubt or uncertainty as to the meaning
of language in [a] . . . . policy, any resultant ambiguity is to be
resolved against the insurance company.") This is especially true for
exclusionary clauses, where an insurance carrier is attempting to deny
liability on the basis of such an exception. Ogden Corp., 681 F. Supp. at
173; Technicon Elec. Corp. v. American Home Assur. Corp., 74 N.Y.2d 66,
73, 544 N.Y.S.2d 531, 542 N.E.2d 1048 (1989); Servidone Constr. v.
Security Insur. Co., 64 N.Y.2d 419, 421, 488 N.Y.S.2d 139, 477 N.E.2d 441
(1985). The burden is on the insurance company to prove that the claim is
not covered by the policy and that the exclusionary clause is subject to
no other interpretation except their own. Therefore, if UNI "does not
establish that . . . . [the claim] falls entirely within the policy
exclusion, it will have failed to sustain its burden." Servidone, 64
N.Y.2d at 425, 488 N.Y.S.2d 189, 477 N.E.2d 441 (emphasis added). See
also Technicon, 74 N Y2d at 73-74, 544 N.Y.S.2d 531, 542 N.E.2d 1048
("[W]hen an exclusion is relied upon to deny coverage, the insurer has
the burden of demonstrating that the `allegations
of the complaint cast that pleading solely and entirely with the policy
exclusions, and further, that the allegations, in toto, are subject to no
other interpretation.'" (quoting Internat. Paper Co. v. Continental Cas.
Co., 35 N.Y.2d 322, 325, 361 N.Y.S.2d 873, 320 N.E.2d 619 (1974))).
As mentioned earlier, UNI offers Black's Law Dictionary's definition of
assault and battery to prove that the clause is clear in meaning.
However, in the same dictionary, the definition of assault is
particularized to cover different situations. Assault and battery is thus
distinguished from assault with intent to commit rape. Black's Law
Dictionary, 5th Edition (West's Pub. 1979). Therefore UNI's own source of
their interpretation suggests that the assault and battery clause would
not cover rape and sodomy.
The distinction is further supported by the fact that UNI felt it
necessary to create a separate exclusion for sexual molestation. See Ex.
A to Complaint. The plaintiff's position that this clause is an
"additional exclusion" specifically designed to cover patrons 16 years
old or younger and is not relevant to the matter at hand is not
persuasive. Schwartz Memo at 17, n. 1. The fact remains that had the
assault and battery clause been as clear and unambiguous as UNI maintains
in covering all sexual attacks, clarification or additional coverage
would not have been necessary for any age group. Furthermore, when read
with the rest of the policy exclusions, the sexual molestation exclusion
could be interpreted to mean that only sexual assaults on patrons 16
years old or younger would be exempted; all others would be within the
scope of general liability coverage. The insured could reasonably have
read and understood the policy to have this meaning. Under New York law,
a "contract term is ambiguous . . . . if there is a `reasonable basis for
a difference of opinion.'" Ogden, 681 F. Supp. at 173 (quoting Breed v.
Insur. Co. of N.A., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d 1280
(1978)). We find that such a reasonable difference exists.
As the drafter of the policy in question, UNI had the opportunity to
set the standards and parameters for each situation they wanted to cover
or exclude. Exclusions or limitations on liability, especially, are not
enforced by courts "unless such intention is apparent from the language
employed." Milstein, 318 N.Y.S.2d at 632. This control over the drafting
of the policy is the rationale behind construing ambiguities in favor of
the insured. Union Ins. Soc'y of Canton, Ltd. v. William Gluckin & Co.,
353 F.2d 946, 951 (2nd Cir. 1965). Therefore, "[a]ny . . . . exclusions
or exceptions from policy coverage must be specific and clear in order to
be enforced. They are not to be extended by interpretation or
implication, but are to be accorded a strict and narrow construction."
Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873,
476 N.E.2d 272 (1984) (emphasis added).
In light of this analysis, we find that UNI has not satisfied its
burden of proving that the assault and battery exclusion also covers rape
and sodomy. We hold that, as a matter of law, Ms. Ortiz's claim is not
covered by the assault and battery clause in the insurance policy.
Furthermore, given our finding that Ms. Ortiz's claim is not excluded
from coverage by the assault and battery clause, UNI cannot satisfy the
burden of proving that it has no duty to defend in this matter. An
insurer faces a heavy burden when seeking to avoid its duty to defend.
Avondale Indust. Inc. v. Travelers Indem. Co., 887 F.2d 1200, 1204 (2d
Cir. 1989). In order to free itself from this responsibility, UNI would
have had to show that "as a matter of law . . . . there is no possible
factual or legal basis on which [the insurer] might eventually be held to
be obligated to indemnify [the insured] under any provision of the
insurance policy." Spoor-Lasher Co. v. Aetna Cas. & Sur. Co.,
39 N.Y.2d 875, 876, 386 N.Y.S.2d 221, 352 N.E.2d 139 (1976). Therefore,
UNI is obligated to provide their insured with legal counsel during the
course of Waterfront's litigation with Ms. Ortiz.
After a careful review of the facts and the applicable law, it is the
opinion of this Court that the plaintiff's motion for summary and
declaratory judgment must be denied. We further hold that the defendants'
motions for summary judgment be granted, as well as Waterfront's motion
for declaratory judgment. With respect to Ms. Ortiz's motion for
sanctions against the plaintiff and UNI's cross motion for sanctions
against Ms. Ortiz, we find that there is no basis for such an order and
consequently, these motions are denied. UNI is therefore ordered to
provide a defense for Waterfront and, should Ms. Ortiz be awarded a
judgment against Waterfront and the Tunnel, UNI is obligated to indemnify
them, pursuant to the policy and subject to the liability limits
It Is So Ordered.