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NEW YORK FUNERAL CHAPELS v. GLOBE INDEMNITY CO.

January 13, 1999

NEW YORK FUNERAL CHAPELS, INC., F/K/A WALTER B. COOKE, INC. AND SCI FUNERAL SERVICES OF NEW YORK, INC., PLAINTIFFS,
v.
GLOBE INDEMNITY COMPANY, DEFENDANT.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

Plaintiffs New York Funeral Chapels, Inc. f/k/a Walter B. Cooke, Inc. ("Cooke") and SCI Funeral Services, of New York, Inc. ("SCI-NY") (collectively the "Plaintiffs") have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and for an order pursuant to Rule 37 of the Federal Rules of Civil Procedure striking the answer of defendant Globe Indemnity Company ("Globe") to Plaintiffs' complaint, precluding Globe from offering any evidence at the trial of this action, and requiring Globe to pay Cooke and SCI-NY's attorney's fees for this motion. For the reasons set forth below, Plaintiffs' motion for summary judgment is granted, and their Rule 37 motion is denied.

The Parties

Plaintiff Cooke is a corporation incorporated under the laws of the State of New York having its principal place of business in the State of New York.

Plaintiff SCI-NY is a corporation incorporated under the laws of the State of New York having its principal place of business in the State of New York.

Defendant Globe Indemnity Company, is an insurance corporation incorporated under the laws of the State of Delaware having its principal place of business in the State of North Carolina, and is licensed by the Insurance Department of the State of New York.

Prior Proceedings

Plaintiffs filed their complaint on November 26, 1997, seeking insurance coverage under a policy issued by Globe to Associated Limousine & Livery Service, Inc. ("Associated") with respect to two underlying actions pending in the Supreme Court of the State of New York, Seth Lewis, Debbie Lewis and Daniel Braverman v. Mark Diagonette, NYNEX, Associated Limousine, Ernest Riggio and Garlick Funeral Home, Index No.: 133670/94 (the "Lewis Action"), and Philip Levy and Marilyn Levy v. Bernard S. Simon, Walter B. Cooke, Inc. f/k/a Boulevard-Riverside Chapels, Inc. d/b/a Boulevard-Riverside Chapels, SCI Funeral Services of New York, Inc. f/k/a Schwartz Brothers Memorial Chapel, Inc. d/b/a Schwartz Brothers-Jeffer Memorial Chapel, Vito Pepitone and Limousines Associated, Index No.: 31423/93 (the "Levy Action").

The plaintiffs in both underlying actions seek damages for "injuries
sustained while riding in or entering a limousine owned and operated by
Associated and hired by Cooke for use during funeral services. Cooke has
been named a defendant in both underlying actions, SCI-NY  been named as
a defendant in the Levy action. Both Cooke and SCI-NY contend that they
are insureds under Associated's policy, and requested that Globe defend
and indemnify them with respect to the Lewis Action and the Levy Action.
Globe maintains that Cooke had no written agreement with the owners or
drivers of the vehicles involved in the underlying incidents. Globe
contends that Cooke arranged for car service for clients by contacting
its livery service, National Funeral Car, which, in turn, hired a
limousine company such as Associated to provide a car and driver.
According to Globe, the limousine service did not work for Cooke, but for
National Funeral Car.

Globe has refused to defend and indemnify Cooke and/or Sd-NY in either action.

The Facts

Plaintiffs filed the instant motions on September 11, 1998. Oral argument was heard on November 4, 1998, at which time the motions were deemed fully submitted.

A. The Globe Policy

Globe issued a business auto policy to Labella Giaziano Funeral Chapels, Inc. (policy number GST-206950) for the period of April 24, 1993 through April 24, 1994 (the "Globe Policy"). By endorsement, the named insured on the Globe Policy was amended to read Labella Giaziano Funeral Chapels, Inc. & Associated Limousine & Livery Service, Inc. & Pyramid Funeral Service, Inc.

Section II.A.1. of the Business Auto Coverage Form contained in the Globe Policy is entitled "Who is an Insured." That provision provides, in relevant part;

The following are insureds:

a. You for any covered "auto".

  b. Anyone else while using with your permission a
  covered "auto" you own, hire or borrow. . . .
  c. Anyone else . . . who is liable for the conduct of
  an "insured" but only to the extent of that
  liability.

The Business Auto Coverage Form contained in the Globe Policy states that the words "you" and "your" ...


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