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LIBERTY MUT. INS. CO. v. YORK HUNTER

November 26, 1996

LIBERTY MUTUAL INSURANCE COMPANY, et ano., Plaintiffs, against YORK HUNTER, INC., Defendant.


The opinion of the court was delivered by: KAPLAN

 LEWIS A. KAPLAN, District Judge.

 Plaintiff insurers *fn1" in this action seek to recover unpaid insurance premiums. The defendant insured counterclaims for a declaration that the plaintiffs are obliged to defend and indemnify a joint venture in which defendant is a participant against two personal injury claims now pending in Bronx County or, in the alternative, for damages for breach of contract, fraud, prima facie tort, negligence, and breach of an allegedly implied duty of good faith. The parties have cross-moved for partial summary judgment with respect to defendant's prayer for a declaratory judgment. Plaintiffs have moved also for summary judgment dismissing defendant's alternative damage claims. As the parties have resolved Liberty's claims against the defendant by stipulation, these motions address all remaining issues in the case.

 Facts

 Defendant York Hunter, Inc. ("York Hunter") is in the construction management business and is one of two participants in a joint venture called York Hunter/ Full Spectrum/ Hill Slater ("YHFS"), which was formed in 1993 for the purpose of providing construction management services to the Dormitory Authority of the State of New York for the construction phase of work at the Brooklyn Psychiatric Center. The crux of the dispute between the parties concerns the fact that YHFS is not included as a named insured to the commercial general liability ("CGL") policy it issued to York Hunter for the period June 30, 1994 through June 30, 1995. The tale begins in mid-1993, not long after YHFS was formed.

 The 1993-94 Policy

 In July 1993, Stephen B. Blaine of York Hunter and William J. Doyle III of Trinder & Norwood, York Hunter's insurance broker, met with Dan McGrath of Liberty to discuss what would be included in York Hunter's 1993-94 CGL policy. They agreed that the policy would cover as named insureds not only York Hunter, but several York Hunter joint ventures including YHFS. (Blaine Aff. P 4) On July 16, 1993, Doyle wrote to McGrath to confirm what had transpired at the meeting and specifically referred to the agreement to include YHFS as a named insured. *fn2" (Id. & Ex. A)

 In the fall of 1993, Liberty sent the policy (No. TB2-121-080468013 [hereinafter the "1993-94 Policy"]) to Doyle, who noticed that it failed to include YHFS. He wrote to McGrath on November 1, 1993 and pointed out the omission. (Id. P 5 & Ex. B) McGrath responded in writing that the named insured would be amended as requested. (Id. P 6 & Ex. C) No amendment or policy endorsement implementing McGrath's assurance ever was issued.

 The 1994-95 Policy

 During the summer of 1994, the parties held another meeting to discuss the terms of the renewal of the 1993-94 Policy for 1994-95. Blaine states that Doyle -- in subsequent discussions with McGrath in which Blaine does not claim to have participated -- reminded McGrath that he was still awaiting a correction of the named insured for the 1993-94 Policy. McGrath, says Blaine, assured Doyle that the endorsement for the 1993-94 Policy was being processed and that the 1994-95 Policy would list YHFS as a named insured. *fn3" (Id. P 7) Subsequently, Liberty issued and sent to Doyle the renewal policy (No. TB2-121-0804680014 [hereinafter the "1994-95 Policy"]), which did not list YHFS as a named insured.

 On December 15, 1994, Doyle, who was York Hunter's broker and not Liberty's agent, prepared a Certificate of Insurance listing YHFS as a named insured *fn4" and sent a copy to Liberty's McGrath with a cover letter asking that he list YHFS as a named insured on the 1994-95 Policy as allegedly agreed. (Id. P 8 & Ex. E)

 The January 17, 1995 Meeting

 On January 17, 1995, Doyle, on behalf of York Hunter met with Liberty's Todd Jerman and Bill McGlin. According to a letter written by Doyle in December 1995 and to Blaine's hearsay affidavit, Doyle again "instructed" Liberty to correct the 1994-95 Policy to list YHFS as a named insured. It is undisputed, however, that Jerman explained to Doyle on that occasion that YHFS had not been made a named insured on the 1994-95 Policy, although he told Doyle that he was working with Liberty's underwriters to try to have it added. (Jerman Aff. PP 13-16)

 Subsequent Events

 On April 7, 1995, Doyle sent Jerman a fax enclosing copies of prior correspondence, including the November 1993 exchange between Doyle and McGrath, and voiced his conviction "that Liberty has and continues to insure the subject joint ventures." (Blaine Aff. Ex. F)

 In June 1995, two injuries occurred at the Brooklyn site being managed by YHFS resulting in the commencement in December 1995 of the two personal injury suits against YHFS which are the subject of the dispute here. (Id. P 12) On December 13, 1995, York Hunter informed Doyle that Liberty had turned down a claim, apparently one of those at issue, on the ground that YHFS was not a named insured. Doyle immediately called Jerman to complain. (Id. Ex. D) In any event, Liberty in due course disclaimed any obligation to defend or indemnify with respect to those actions on the ground that YHFS was not a named ...


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