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BREWER v. VILLAGE OF OLD FIELD

March 31, 2004.

AARON BREWER, ALEX STYLIANOU, RITA BOWMAN and WILLIAM WALCOTT, individually and on behalf of all other similarly situated, Plaintiffs,-against- VILLAGE OF OLD FIELD, ROBERT BELL, individually and in his capacity as Old Field constable, JORDANA B. CASCIANO, individually and in her capacity as Old Field clerk, BARBARA DRAGONE, individually and in her capacity as Old Field treasurer, MARIANNE S. FELLER, individually and in her capacity as Old Field clerk, WILLIAM FINNAMORE, individually and in his capacity as Old Field constable, WILLIAM H. HALL, individually and in his capacity as former mayor of Old Field, LEROY HILL, individually and in his capacity as Old Field constable, HELAINE KATZ, individually and in her capacity as Old Field clerk, JEFFREY T. KRACHT, individually and in his capacity as Old Field constable, RONALD LA VITA, individually, PHILIP MORALES, individually and in his capacity as Old Field constable, MICHAEL NASTASI, individually and in his capacity as Old Field constable, WALTER ROTHSCHILD, individually, in his former capacity as Old Field Commissioner of Public Safety, and in his current capacity as Old Field Fire & Special Projects Commissioner, JAMES SIMONS, individually and in his capacity as Old Field Commissioner of Public Safety, and CARY STALLER, individually and in his capacity as Mayor of Old Field, Defendants; VILLAGE OF OLD FIELD, Third Party Plaintiff, -against- NEW YORK MUNICIPAL INSURANCE RECIPROCAL, Third Party Defendant


The opinion of the court was delivered by: ARTHUR SPATT, District Judge

MEMORANDUM OF DECISION AND ORDER

The third-party action involves a dispute over whether the third party defendant, the New York Municipal Insurance Reciprocal ("NYMIR" or the "third party defendant"), has the duty to defend and indemnify the third-party plaintiff, the Village of Old Field (the "Village" or the "third-party plaintiff") in connection with this class action lawsuit. This case is brought on behalf of that class of people who had been ticketed by the Village's constables from 1994 to the present (the "first-party action" or the "Brewer action").

Presently before the Court are the following motions: (1) a motion for summary judgment by the Village seeking, among other things, a declaration that the NYMIR has a duty to defend the Village in the Brewer action; (2) a motion for summary judgment by the NYMIR, for among other things, a declaration that it does not have an obligation to defend the Village or provide indemnification in the Brewer action; and (3) a motion by the Village, pursuant to Federal Rule of Civil Procedure ("Fed.R. Civ. P") 56(f) seeking additional discovery in order to oppose the motion for summary judgment brought by the NYMIR.

  I. BACKGROUND

  From April 1, 1994 to April 1, 2000, the Village of Old Field subscribed to the New York Municipal Insurance Reciprocal as its insurance carrier. As a NYMIR subscriber, the Village was afforded insurance coverage for a variety of exposures including, Page 4 among other things, Law Enforcement Liability.

  The Law Enforcement Liability Policy (the "Policy") provides in relevant part:
[NYMIR] will pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as damages because of WRONGFUL ACT(S) which result in:
1. PERSONAL INJURY
2. BODILY INJURY, or
3. PROPERTY DAMAGE
caused by an OCCURRENCE and arising out of the performance of the INSURED's duties to provide law enforcement and/or other departmentally approved activities as declared in the Application . . . and all operations necessary and incidental thereto.
Policy § A.
  The Policy included the following definitions:
INSURED — means the [Village] and all full or part-time and all auxiliary or volunteer law enforcement officers of the [Village].
WRONGFUL ACT — means any actual or alleged act, error, omission, neglect or breach of duty by the INSURED.
  OCCURRENCE — means an event, including continuous or repeated exposure to conditions, which results in PERSONAL INJURY, BODILY INJURY or PROPERTY DAMAGE sustained, during the policy period, by any person or organization and arising out of the performance of the INSURED'S law enforcement duties. Page 5
  PERSONAL INJURY — means:
a. Assault and battery;
b. Discrimination, unless insurance thereof is prohibited by law;
c. False arrest, detention or imprisonment, or malicious prosecution;
d. False or improper service of process;
e. Humiliation or mental distress;
f. The publication or utterance of a libel or slander or of other dafamatory or disparaging material . . .;
g. Violation of civil rights protected under 42 U.S.C. § 1981 et sequential or State Law;
h. Violation of property rights;
i. Wrongful entry, eviction or other invasion of the right of public occupancy; if such offence is committed during the policy period.
Policy § E.

  On October 10, 2000, the plaintiffs commenced the first party action by filing a Summons and Class Action Complaint (the "Initial Complaint") in the United States District Court for the Eastern District of New York. The Initial Complaint named the Village and fifteen current and former employees and/or officials in both their individual and official Page 6 capacities (the "defendants"). This action was commenced by and on behalf of that class of people who had been ticketed by the Village's constables from 1994 to the present. In particular the Brewer plaintiffs allege, among other things, that the Village created a private police force, purportedly cloaked with legitimate public authority, to enforce traffic and other laws and collect fines for alleged violations of those laws through a distinct enterprise. The complaint included violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., ("RICO") and 42 U.S.C. § 1983 ("Section 1983").

  On or about October 18, 2000, the Village tendered its defense of the Brewer action to the NYMIR. Thereafter, on November 14, 2000, NYMIR, through coverage counsel, issued a disclaimer letter, advising the Village that no coverage existed under any of the policies that were issued to the Village prior to its withdrawal from the NYMIR in or about April, 2000.

  A First Amended Class Action Complaint was filed on March 14, 2001 (the "First Amended Complaint"). On April 6, 2002, the plaintiffs filed a Second Amended Class Action Complaint (the "Second Amended Complaint"). On October 25, 2002, the Second Amended Complaint was forwarded to NYMIR by counsel to another carrier affording the Village with insurance coverage.

  In a letter dated November 7, 2002, the NYMIR, through its counsel, disclaimed coverage for the causes of action set forth in the Second Amended Complaint. Page 7

  Thereafter, on or about March 11, 2003, the Village filed this third-party complaint against the NYMIR seeking, among other things, a declaratory judgment, pursuant to 28 U.S.C. § 2201, et seq., that NYMIR is obligated to pay for the Village's defense of the Brewer action pursuant to the terms of the Policy. The third-party complaint also seeks damages for the NYMIR's alleged breach of the defense and indemnification provisions of the Policy, based on the refusal to pay by NYMIR for the Village's defense and to provide indemnification in the Brewer action.

  As stated above, presently before the Court are three separate motions: (1) a motion for summary judgment by the Village seeking, among other things, a declaration that the NYMIR has a duty to defend the Village in the Brewer action; (2) a motion for summary judgment by the NYMIR, for among other things, a declaration that it does not have an obligation to defend the Village or provide indemnification in the Brewer action; and (3) a motion by the Village, pursuant to Rule 56(f) seeking additional discovery in order to oppose the motion for summary judgment brought by the NYMIR.

  ...


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