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UNITED NATL. INS. CO. v. HORNING

January 25, 1995

UNITED NATIONAL INSURANCE COMPANY, Plaintiff,
v.
HORNING, LTD., DONALD BISHOP, KEVIN EDDY, 3445 SOUTH PARK AVENUE, INC., and JUDY SALANSKY, Defendants.



The opinion of the court was delivered by: CAROL E. HECKMAN

REPORT AND RECOMMENDATION

 This matter was referred to the undersigned by the Hon. Richard J. Arcara, to hear and report, in accordance with 28 U.S.C. § 636(b). Pending before the court is plaintiff's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. Plaintiff, United National Insurance Co. seeks a determination that it does not owe a defense or indemnity obligation to defendant, Horning Ltd. For the reasons set forth below, it is recommended that plaintiff's motion be granted.

 BACKGROUND

 The question before the court is whether the plaintiff United National Insurance Company ("UNIC") has a duty to defend and/or indemnify defendant Horning Ltd. ("Horning") in a lawsuit pending in New York State Supreme Court entitled Judy Salansky v. Horning Ltd., Donald Bishop, Kevin Eddy, and 3445 South Park Avenue, Inc. ("underlying action"). The insurance policy at issue, No. GA-711285, was issued by UNIC on September 24, 1992, and furnishes General Automobile Liability and Liquor Liability Insurance Coverage ("LLIC") for Horning Ltd. d/b/a/ Wildcat Cafe (Item 8, exhibit D). The central issue in this motion for summary judgment is whether the facts alleged in the underlying action fall into one of the exclusions to coverage in the insurance policy.

 In the underlying action, Judy Salansky has sued Horning Ltd., Donald Bishop, Kevin Eddy, and 3445 South Park Avenue, Inc., for personal injuries she allegedly sustained on December 21, 1992. Ms. Salansky claims that she was attacked, struck, raped, and sexually abused by defendant Donald Bishop and that the other defendants are liable under the Dram Shop Act (N.Y. Gen. Oblig. Law § 11-101) for serving alcohol to Bishop even though he was intoxicated.

 Plaintiff UNIC now seeks a declaratory judgment that it is not obligated to defend Horning in the pending lawsuit filed by Ms. Salansky. Specifically, plaintiff claims that the conduct at issue in the underlying action amounts to an assault and/or battery and thus falls into the provision that excludes from coverage claims that arise from an assault and/or battery. Horning argues that the provision is inapplicable and that UNIC's is required to defend them in the state court action.

 DISCUSSION

 Under the Fed.R.Civ.P. 56(c), summary judgment should be granted if the record demonstrates "that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." A motion for summary judgment is proper where the issues to be resolved are questions of law, not fact. Thus, summary judgment is appropriate in the present case because "the determination of the duty to defend is a question of law answered by comparing the allegations of the complaint (underlying action) to the provisions of the policy." National Grange Mut. Ins. Co. v. Continental Cas. Ins. Co., 650 F. Supp. 1404, 1408 (S.D.N.Y. 1986).

 The duty to defend, under New York law, *fn1" has been interpreted as "heavier and broader" than the duty to indemnify. Servidone Construction Co. v. Security Ins. Corp. of Hartford, 64 N.Y.2d 419, 423-24, 477 N.E.2d 441, 488 N.Y.S.2d 139 (1985). The insurer must defend the insured in any matter covered by the policy where the insured may be held liable for damages, regardless of the likelihood of success on the underlying claim. Avondale Industries, Inc. v. Travelers Indem. Co., 123 F.R.D. 80, 82 (S.D.N.Y. 1988), aff'd 887 F.2d 1200 (2d Cir. 1989), cert. denied, 496 U.S. 906, 110 L. Ed. 2d 269, 110 S. Ct. 2588 (1990). To be released from this obligation, the insurer must show that the policy does not afford coverage for any of the claims raised in the underlying action. Put another way, the insurer must show that:

 
the allegations of the complaint cast that pleading solely and entirely within the policy exceptions, and further, that the allegations, in toto, are subject to no other interpretation.

 Seaboard Surety Co. v. Gillette Co., et. al., 64 N.Y.2d 304, 476 N.E.2d 272, 486 N.Y.S.2d 873 (1984)(quoting International Paper Co. v. Continental Cas. Co., 35 N.Y.2d 322, 325, 320 N.E.2d 619, 361 N.Y.S.2d 873 (1974).

 Furthermore, any ambiguities in an insurance contract are to be construed in favor of the insured and against the insurer. National Grange Mut. Ins. v. Continental Cas. Ins., supra, 650 F. Supp. at 1408 (citations omitted). If the plain meaning of the contract can be ascertained, it will be given effect. However, if a contract term is subject to more than one reasonable interpretation, it will be considered ambiguous. Ogden Corp. v. Travelers Indem. Co., 681 F. Supp. 169, 173 (S.D.N.Y. 1988)(quoting Breed v. Insurance Co. of North America, 46 N.Y.2d 351, 353, 385 N.E.2d 1280, 413 N.Y.S.2d 352 (1978)). This is particularly true of clauses which attempt to exclude certain events from coverage:

 
Any []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 strict and narrow construction.

 Seaboard Surety Co. v. Gillette Co., supra, 64 N.Y. at 311.

 The determination of an insurer's duty to defend requires the court to compare the allegations in the complaint to the provisions of the insurance contract. Here, the insurance contract provides coverage for:

 
All sums which the insured shall become legally obligated to pay as damages because of injury to which this insurance applies, sustained by any person if such liability is imposed upon the insured by reason of the selling, serving or giving of any alcoholic beverages at or from the insured premises, and the company shall have the right and duty to defend any suit against the insured seeking damages, even ...

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