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Nautilus Insurance Company v. Barfield Realty Corp. et al

October 16, 2012


The opinion of the court was delivered by: J. Paul Oetken, District Judge:


This is a declaratory judgment action in which Plaintiff Nautilus Insurance Company ("Nautilus") seeks a declaration that it has no duty to indemnify or defend Defendants Barfield Realty Corporation ("Barfield") and Cedar Ave Laundromat SFIC ("Cedar Ave"),*fn1 in an underlying state court action brought by Joseph Castelli ("Castelli"). Nautilus brings suit against Defendant Castelli,*fn2 seeking a declaration that it has no duty to pay his medical expenses associated with the incident giving rise to his state court lawsuit.

Plaintiff has moved for summary judgment, arguing that: (1) under the plain language of the contract between Nautilus and Barfield, there is no issue of material fact as to Nautilus' duty to indemnify or defend any of the parties associated with the underlying action, nor as to its duty to pay medical costs associated with the underlying action; and (2) Defendant Barfield's counterclaims fail to state a viable cause of action, given the plain language of the contract at issue.

For the reasons that follow, Plaintiff's motion for summary judgment is granted as to all Defendants, and Defendants' counterclaims are dismissed.


The following facts are drawn from the parties' Local Civil Rule 56.1 Statements and other submissions in connection with the instant motions, and are undisputed unless otherwise noted.*fn3

A.Procedural History

On July 25, 2011, Castelli filed a complaint in Bronx County Supreme Court against Barfield, alleging negligence and violations of New York Labor Law, for injuries allegedly suffered while working at Barfield's premises. (See Affidavit of Amy Nechamkin, ("Nechamkin Aff."), Dkt. No. 16, Exhibit 5.) On or about August 29, 2011, Nautilus received a copy of this underlying complaint. (Id. at ¶ 8.) After examining the allegations in the complaint, together with its insurance policy, Nautilus issued a letter to Defendants Barfield and Cedar Ave, disclaiming a duty to indemnify or defend in the underlying action. (Id. at ¶ 17; id. at Exhibit 6.) Nautilus stated in its letter that it would provide a gratuitous defense for Barfield in the underlying action, reserving the right to withdraw if a court determines that none of the damages claimed by Castelli were covered by the Nautilus policy. (Id. at Exhibit 6.) On October 20, 2011, Nautilus filed its complaint in the instant action in this Court, seeking a declaratory judgment determining the rights and liabilities of the parties associated with the underlying case in state court. (Complaint, Nautilus v. Barfield Realty Corp., et al., 1:11-cv-07425, Dkt. No. 1.)

B. The Underlying Action

This case arises out of those underlying personal injury claims filed by Castelli, in Bronx County Supreme Court in July 2011, against Defendant Barfield. Castelli v. Barfield Realty Corp., No. 306694/11 (N.Y. Sup. Ct. 2011). In that action, Castelli is suing Barfield for injuries sustained while an employee of JFD Contracting Company, Inc. ("JFD"). Id. Castelli was allegedly injured while working for JFD to repair the premises located at 1793 Sedgwick Avenue, in the County of the Bronx, State of New York. (See Nechamkin Aff., Exhibit 5, at ¶¶ 7, 9.) Barfield does not deny that it owns the premises located at 1793 Sedgwick Avenue. (See Defendant Barfield Realty Corp.'s Statement of Material Facts Not in Dispute, Dkt. No. 26, at ¶ 2, 11; Nautilus's Statement of Material Facts Not in Dispute, Dkt. No. 18, at ¶ 2.) Additionally, Barfield, in its memorandum opposing summary judgment, refers to Castelli as an employee of JFD. (Defendant Barfield Realty Corp.'s Reply Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment, Dkt. No. 27, at 1) ("On or about October 22, 2011 Castelli an employee of JFD was allegedly injured while working at the subject property.")

While Barfield expressly denies liability for Castelli's injuries, disputing many of the allegations in the underlying suit (see, e.g., Dkt. No. 26 at ¶¶ 19, 20, 23, 24), the merits of Castelli's claims in the state court action are not at issue here. See 28 U.S.C. § 2201(a) (noting that a declaratory judgment action is one in which the court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought").

On October 21, 2010, a fire broke out at the subject property, damaging it substantially. (Affidavit of Barrington Fields, Affirmation in Opposition to Motion, ("Barrington Aff."), Dkt. No. 25, at ¶ 8.) As a result of the fire, Barfield's president, Barrington Fields ("Fields"), contracted with JFD to "effectuate all emergency repairs at the subject property." (Id. at ¶ 11.) Fields contends that he "never oversaw, supervised, or otherwise retained control over the work performed by JFD or any of their agents" (id. at ¶ 12), and notes that Endurance American Insurance Company ("Endurance"), his original carrier, paid for the work performed by JFD. (Id.)

C. The Nautilus Policy

Nautilus undisputedly issued a commercial general liability policy (the "Policy") to Barfield and Cedar Ave for the period of June 16, 2010 through June 16, 2011. (See Dkt. No. 18, at ¶ 1; Barrington Aff., at ¶ 4; Dkt. No. 26, at ¶ 1.) This Policy, numbered NN017226, lists the location of Barfield's premises as the subject property on Sedgwick Ave (see, e.g., Nechamkin Aff., Exhibit 1, at S150(07/09); Dkt. No. 18, at ¶ 2), and includes several provisions relevant to the instant action.

First, the Policy, a commercial lines policy,*fn4 establishes in its commercial general liability coverage form that Nautilus "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." (Id. at CG0001(I)(A)(1)(a).) The Policy also states that Nautilus "will have the right and duty to defend the insured against any 'suit'" seeking personal injury or property damage. (Id.)

However, the Policy coverage for bodily injury explicitly excludes "'[b]odily injury' to:

(1) An 'employee' of the insured arising out of and in the course of: (a) Employment by the insured; or (b) Performing duties related to the conduct of the insured's business . . . ." (Id. at CG0001(I)(A)(2)(e)(1).) According to the contract, the exclusion applies "[w]hether the insured may be liable as an employer or in any other capacity." (Id.)

Second, the Policy also contains an endorsement, which alters and further clarifies the meaning of the word "employee," as used throughout the policy. (See id. at L205.) The endorsement denotes that an "employee" of the insured includes:

[A]ny person or persons who provide services directly or indirectly to any insured, regardless of where the services are performed or where the 'bodily injury' occurs including, but not limited to, a 'leased worker,' a 'temporary worker,' a 'volunteer worker,' a statutory employee, a casual worker, a seasonal worker, a contractor, a subcontractor, an independent contractor, and any person or persons hired by, loaned to, employed by, or contracted by any insured or any insured's contractor, subcontractor, or independent contractor. (See id. at L205(C) (modifying CG0001(V)(5).) This endorsement is integrated as part of the Policy and includes a notation explaining that the endorsement changes the policy, imploring its readers and signatories to "please read it carefully." (Id.) See Richner Comm., Inc. v. Tower Ins. Co. of New York, 72 A.D.3d 670, 671, 898 N.Y.S.2d 615 (2d Dep't 2010) ("A policy is read as a whole and 'in ...

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