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MOUNT VERNON FIRE INS. CO. v. CREATIVE HOUS. LTD.

June 30, 1992

MOUNT VERNON FIRE INSURANCE COMPANY, Plaintiff,
v.
CREATIVE HOUSING LTD. etc., et ano., Defendants.


SIFTON


The opinion of the court was delivered by: SIFTON

SIFTON, District Judge.

 Mount Vernon Fire Insurance Company ("Mt. Vernon") requests summary judgment in its declaratory judgment action against its insured Creative Housing Ltd. d/b/a Creative Housing Management Co. ("Creative") and Linnette Hunter ("Hunter"), who has filed a civil suit against Creative in state court. Hunter cross moves for summary judgment. For the reasons discussed above, both motions are denied.

 The following facts, except where expressly noted or denominated as allegations, are not disputed. Mt. Vernon filed this declarative judgment action to confirm that it has no duty to defend or indemnify its insured, Creative, in a suit brought by Hunter in New York State Supreme Court ("the underlying suit"). In addition, Mt. Vernon wishes this Court to order Creative to reimburse Mt. Vernon for the sums it has already expended in Creative's defense. Currently Mt. Vernon moves for summary judgment arguing that the underlying suit is outside of the policy due to an assault and battery exclusion and that protection is independently vitiated by Creative's delay in advising Mt. Vernon of the occurrence on which the underlying suit is premised.

 Mt. Vernon issued a commercial insurance policy to Creative covering premises at 277 Eastern Parkway, Brooklyn ("the premises"). The policy has an exclusion for assault and battery.

 
It is agreed that no coverage shall apply under this policy for any claim, demand or suit based on Assault and Battery, and Assault and Battery shall not be deemed an accident, whether or not committed by or at the direction of the insured. All other terms and conditions remain unchanged.

 Policy at L 202 (10/88), Exh. D. to Motion ("the Policy").

 In addition, the policy requires notice of claims by the insured in the following language:

 
(a) You must see to it that we are notified as soon as practicable of an 'occurrence' or an offense which may result in a claim. . . .
 
(b) . . . You must see to it that we receive written notice of the claim or 'suit' as soon as possible.

 Policy §§ IV(2) (a), (b) at page 7.

 Hunter alleges she was injured at the premises on April 23, 1991. According to Mt. Vernon, Lloyd Simms, an agent of Creative, was advised of this assault within one week. However, Mt. Vernon was not advised of the incident for approximately five months. Hunter sued Creative by filing the underlying suit in New York State Supreme Court. Mt. Vernon asserts it is not liable to defend or indemnify Creative because of the assault and battery exclusion and because of delay in notification. However, to date, Mt. Vernon has been defending Creative in this matter.

 The summons with notice served on Creative by Hunter characterizes the underlying suit as one "to recover damages for injuries to plaintiff caused by the negligence of the defendants." Exh. E to Motion.

 Hunter's complaint in the underlying suit states that Creative is liable to her in negligence because Creative failed in its duty of care to take appropriate action to deal with a foreseeable risk of criminal activity in the premises. Complaint P21, Exh. E to Motion. While not clearly stated, the complaint implies that Hunter was criminally assaulted on the premises. This allegation is clarified by the papers filed by Hunter in support of this motion. She alleges she was assaulted on the premises by a person or persons who were not agents, employees, or servants of Creative.

 Mt. Vernon requests summary judgment declaring it has no duty to defend or indemnify Creative in the underlying suit. In addition, Mt. Vernon requests this Court to order Creative to reimburse it for the expenses it has already incurred in defending the underlying suit. Both Hunter and Creative oppose this motion. Hunter cross moves for summary judgment that Mt. Vernon must defend and indemnify Creative for any damages which it must pay.

 DISCUSSION

 Summary judgment must be granted if there is no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party has the burden of demonstrating the absence of any disputed material facts, Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990), and the court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Id.

 The showing needed on summary judgment reflects the burden of proof in the underlying action. The court must consider "the actual quantum and quality of proof" demanded by the underlying cause of action and which party must present such proof. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Therefore, where the ultimate burden of proof is on the nonmoving party, the moving party meets its initial burden for summary judgment by "'showing' -- that is, pointing out to the district court -- that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). To survive the motion, the nonmoving party must then "make a showing sufficient to establish the existence of [the challenged] element essential to [that party's] case." Id. at 322.

 Summary judgment is appropriate "when the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).

 When other material facts are not disputed, the necessity for contract interpretation does not necessarily bar summary judgment. See, e.g., United States v. 0.35 of an Acre of Land, Westchester County, 706 F. Supp. 1064 (S.D.N.Y. 1988). However, it is appropriate only if the contract clauses are unambiguous, Thompson v. Gjivoje, 896 F.2d at 721, thus invoking the parol evidence rule. Garza v. Marine Transport Lines, Inc., 861 F.2d 23, 26 (2d Cir. 1988). The status of a clause as unambiguous is a threshold issue of law for the court. Id. at 26.

 If a contract clause is unambiguous on its face, parol evidence will not be heard to create an ambiguity. Metropolitan Life Insur. Co. v. RJR Nabisco, Inc., 906 F.2d 884, 889 (2d Cir. 1990). Furthermore, it does not become ambiguous just because suing parties urge opposite interpretations. Id.

 In this diversity suit requesting a determination of an insurer's duties for an incident in a building located in New York City, New York state law supplies the rule of decision. Klaxon Co. v. Stentor Electronic Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941) (district court sitting in diversity uses choice of law rules of state where it is located); Rosenberg v. Pillsbury Co., 718 F. Supp. 1146, 1150 (S.D.N.Y. 1989) (citing Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985) (New York uses interest analysis)); Snyder v. National Union Fire Ins. Co., 688 F. Supp. 932, 934-35 ...


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