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Iba Molecular North America, Inc. Indemnity Co v. St. Paul Fire and Marine Insurance Co. and General Star

September 27, 2012

IBA MOLECULAR NORTH AMERICA, INC. INDEMNITY CO., PLAINTIFF,
v.
ST. PAUL FIRE AND MARINE INSURANCE CO. AND GENERAL STAR
DEFENDANTS.



OPINION

This declaratory judgment action arises out of an automobile accident that occurred in 2001, while an employee of Pharmacologic PET, LLC, the predecessor to plaintiff IBA Molecular North America ("IBA Molecular"), was driving a company automobile during an apparent crime spree and, while running from the police in the car, hit a police officer. IBA received insurance coverage from its primary automobile insurance policy, but the damages paid exceeded the policy limits of that policy. IBA is now seeking insurance coverage under an umbrella insurance policy issued by defendant General Star Indemnity Company ("General Star"), or alternatively under a commercial general liability ("CGL") policy issued by St. Paul Fire and Marine Insurance Company ("St. Paul"). The CGL policy contains an "auto exclusion" which, St. Paul argues, mandates summary judgment in its favor.

St. Paul moves for judgment on the basis of the auto exclusion. IBA joins this motion. IBA also requests summary judgment on its claim against General Star.

The motion of St. Paul and IBA based on the auto exclusion is granted. The motion of IBA for summary judgment against General Star is denied because there appear to be issues between IBA and General Star which cannot be resolved on the present motion.

FACTS

On September 21, 2001, Andrew Britt was involved in an automobile accident with Dennis Bridges that caused injury to Britt. At the time of the accident, Bridges was an employee of Pharmacologic, driving an automobile owned by Pharmacologic. Britt was a police officer attempting to apprehend Bridges during what the parties appear to agree was a "crime spree" perpetrated by Bridges, which involved Bridges committing various crimes in Albany, New York and then fleeing from the police in one of Pharmacologic's automobiles. As a result of the car accident, Britt suffered injuries. Bridges was convicted of assault, reckless endangerment, and criminal possession of stolen property, and sentenced to 25 years to life, which he is currently serving in state prison.

Britt and his wife sued Pharmacologic and Bridges in New York Supreme Court. Pharmacologic placed Hartford Fire Insurance Company and General Star on notice of the suit at that time. Hartford and General Star, respectively, had issued Pharmacalogic primary automobile and umbrella insurance policies. Defendant St. Paul, the issuer of a CGL policy, was not put on notice of the suit at this time.

In late January 2008, Britt notified St. Paul of the accident and sought to have St. Paul cover the accident. In February 2008, St. Paul disclaimed liability on the basis of the auto exclusion and late notice.

The present motion only concerns the automobile exclusion.

In February 2008, a jury found Pharmacologic and Bridges liable. It found that Bridges was negligent, and that Pharmacologic was negligent in hiring Bridges and entrusting a vehicle to him. It awarded Britt a verdict of over $3 million dollars.

IBA, the successor in interest to Pharmacologic, ultimately settled the negligent hiring and negligent entrustment claims for $1.2 million. Of the $1.2 million, Hartford paid $500,000, its policy limit. General Star and St. Paul both refused to pay the remaining $700,000, leaving Pharmacologic to fund the remaining $700,000 itself while pursuing General Star and St. Paul in litigation.

The parties now dispute whether St. Paul or General Star is required to cover the remainder of the damages sustained by Pharmacologic. The following is pertinent language from the relevant insurance policies.

The Hartford automobile insurance policy has a limit of $500,000 per accident, and contains the following language:

We will pay all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto.'

Hartford was placed on notice of the lawsuit filed by Britt, defended the suit, and ultimately helped to fund the settlement of ...


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