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SEA INS. CO. v. WESTCHESTER FIRE INS. CO.

March 29, 1994

SEA INSURANCE CO., LTD., Plaintiff,
v.
WESTCHESTER FIRE INSURANCE COMPANY, Defendant.


SOTOMAYOR


The opinion of the court was delivered by: SONIA SOTOMAYOR

ORDER AND OPINION

 Plaintiff Sea Insurance Co., Ltd. ("Sea Insurance") seeks a declaratory judgment that defendant Westchester Fire Insurance Company ("Westchester") has a duty to defend Jerome and Dawn Greene (the "Greenes") in a personal injury action arising out of a fatal car accident allegedly caused by an individual in the Greenes' employ. The parties entered into a stipulation of facts and submitted this case to me as a bench trial. For the reasons discussed below, Sea Insurance's request for a declaratory judgment is denied and the complaint is dismissed.

 BACKGROUND

 The following are the relevant facts stipulated to by the parties. At the time of the accident, the Greenes owned a home at 210 Kawama Lane, Palm Beach, Florida, and had hired Elisha Townes ("Townes") to look after such home during their absence. On June 11, 1986, while driving a friend's car, Townes struck George W. Mergens ("Mergens") as she exited the driveway of 200 Kawama Lane, residential property owned by Valerie Mills ("Mills"). Townes was headed towards the Greenes' Palm Beach residence at the time of the collision. Mergens died as a result of the injuries he sustained.

 The Greenes had two homeowners' insurance policies in effect on the date of the accident. The first, issued by Sea Insurance, identified 210 Kawama Lane, Palm Beach, Florida as the Greenes' "Residence Address," and 450 Park Avenue, New York, New York as their "Mailing Address" (the "Sea Policy"). The second policy was issued by Westchester (the "Westchester Policy"). The Westchester Policy, on its declarations page, listed 130 Hunting Ridge Road, Greenwich, Connecticut as the Greenes' "insured and mailing address." The declarations page also noted that the insured maintained an "additional residence," but did not specify the address of that additional residence.

 DISCUSSION

 The sole issue presented in this case is the proper construction of two exclusions in the Westchester Policy -- the "other premises exclusion" and the "vehicle exclusion." Before addressing these exclusions in detail, it is helpful to set forth certain principles of New York law under which the exclusions must be considered. *fn1" First, under New York law, an insurer's duty to defend is both distinct from, and broader than, its duty to indemnify. Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 876, 476 N.E.2d 272 (1984); United Food Serv. Inc. v. Fidelity & Casualty Co. of N.Y., 189 A.D.2d 74, 594 N.Y.S.2d 887 (3d Dep't 1993). The duty to defend arises whenever the complaint in the underlying action contains allegations that conceivably bring the action within the scope of the litigation insurance purchased. Seaboard, 64 N.Y.2d at 310, 486 N.Y.S.2d at 876.

 Second, an insurer seeking to avoid its obligation to defend an insured based on a policy exclusion bears a heavy burden. Exclusions from coverage are construed narrowly, and "to negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case." Continental Casualty Co. v. Rapid-Am. Corp., 80 N.Y.2d 640, 652, 593 N.Y.S.2d 966, 972, 609 N.E.2d 506 (1993); Seaboard, 64 N.Y.2d at 311, 486 N.Y.S.2d at 873. Thus, an insurer will be obliged to provide a defense unless it proves that "the allegations in the underlying complaint are 'solely and entirely' within specific and unambiguous exclusions from the policy's coverage." Avondale Indus. v. Travelers Indem. Co., 887 F.2d 1200, 1205 (2d Cir. 1989), cert. denied, 496 U.S. 906, 110 S. Ct. 2588, 110 L. Ed. 2d 269.

 Third, ambiguities in an insurance policy must be construed against the insurer in favor of the insured. However, this canon of construction, known as contra proferentum, applies only as against the insured, and not "in a contest between two insurance companies." United States Fire Co. v. General Reinsurance Corp., 949 F.2d 569, 573 (2d Cir. 1991) (citing Loblaw, Inc. v. Employers' Liability Assurance Corp., 85 A.D.2d 880, 881, 446 N.Y.S.2d 743, 745 (4th Dep't 1981), aff'd 57 N.Y.2d 872, 456 N.Y.S.2d 40, 442 N.E.2d 438 (1982); Standard Marine Ins. Co. v. Federal Ins. Co., 39 A.D.2d 444, 446, 336 N.Y.S.2d 692, 695 (1st Dep't 1972) (per curiam)). Moreover, even in disputes between insureds and their insurers, ambiguities in an insurance policy will not be resolved in the insureds' favor "where the only reasonable construction which can be placed upon the words favors the insurer." Loblaw, 446 N.Y.S.2d at 745.

 With these principles in mind, I turn to the policy exclusions at issue in this case.

 A. The "Other Premises" Exclusion

 The first exclusion which Westchester contends negates its obligation to defend the Greenes is the "other premises" exclusion in Section II(1)(d) of the Westchester Policy. This provision excludes from coverage the insureds' personal liability for "bodily injury . . arising out of any premises owned or rented to any insured which is not an insured location." The Mergens Action against the Greenes triggers the "other premises" exclusion, argues Westchester, because the Greenes' alleged liability is premised on their employment of Townes at their Palm Beach residence, which is not an "insured location" under the Westchester Policy. Had Townes not been performing her duties as an employee of the Greenes' Palm Beach residence, the argument goes, there would be no theory of ...


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