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The City of New York v. Western Heritage Ins. Co.

United States District Court, E.D. New York

March 6, 2015

THE CITY OF NEW YORK, SCOTT V. PAULINO, and DRAGONETTI BROTHERS LANDSCAPING NURSERY AND TREE CARE, INC., Plaintiffs, -
v.
- WESTERN HERITAGE INSURANCE COMPANY, Defendant

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[Copyrighted Material Omitted]

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For The City of New York, Scott V. Paolino, Dragonetti Bothers Landscaping Nursery and Tree Care, Inc., Plaintiffs: Allen Leonard Sheridan, LEAD ATTORNEY, Howard J Newman, Saretsky Katz Dranoff & Glass LLP, New York, NY.

For Western Heritage Insurance Company, Defendant: Ann Odelson, Douglas Kevin Eisenstein, Joanna Lyn Young, Carroll McNulty & Kull, LLC, New York, NY.

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MEMORANDUM & ORDER

RAYMOND J. DEARIE, United States District Judge.

In this declaratory judgment action, the City of New York (the " City" ), Dragonetti Brothers Landscaping Nursery and Tree Care, Inc. (" Dragonetti" ), and Scott V. Paolino (" Paolino" )[1] seek an order that they are entitled to a defense and indemnity under a commercial general liability policy insured by Western Heritage Insurance Company (" Western Heritage" ), with respect to an underlying automobile accident. The parties have cross-moved for summary judgment on whether the general liability policy covers the underlying automobile accident, and whether Western Heritage validly disclaimed coverage. For the reasons set forth below, Western Heritage's motion for summary judgment is granted in part.

BACKGROUND

This declaratory judgment action arises out of an automobile accident that occurred on May 13, 2010 between an automobile that was owned by non-party John Battocchio (" Battocchio" ) and a dump truck owned by Dragonetti. Battocchio was driving northbound on the Hutchinson River Parkway near the Westchester Avenue exit in the Bronx when his vehicle collided with the rear of the dump truck, which was being driven by Paolino. Battocchio died as a result of the accident, and his estate subsequently commenced an action on July 15, 2011 against Dragonetti, the City and Paolino captioned Estate of John W. Battocchio v. Scott V. Paolino et al., Index No. 306330/11 (N.Y. Sup. Ct), The complaint in that action alleges that Paolino, who was acting as an employee of Dragonetti and as an agent of the City,

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" was operating the ... dump truck ... in a negligent, dangerous, [and] unreasonably unsafe manner." The complaint also alleges that Dragonetti and the City " were reckless, careless and negligent in the maintenance, hiring, operation, management and control of the landscaping service performed on ... May 13, 2010" and in " the operation, supervision, maintenance, management and control of the Dragonetti motor vehicle operated by Scott Paolino." The Battocchio action remains pending.

Prior to the accident, Western Heritage issued a commercial general liability policy to Dragonetti in effect for the policy period February 15, 2010 through February 15, 2011, with limits of $1 million per occurrence and a $2 million general aggregate, subject to a $5,000 per claim deductible. Pursuant to section II(2)(a) of the policy, Paolino as an employee of Dragonetti is an insured under the policy. Additionally, in accordance with a September 23, 2009 contract with the New York City Department of Parks & Recreation Capital Projects Division, Dragonetti contends, as further discussed below, that the City is an additional insured under the policy.

The policy provides in section I(1)(a) that Western Heritage " 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.... However, [Western Heritage] will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply." As set forth in section I(2)(g) of the policy, coverage does not apply to:

'Bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any ... 'auto' ... owned or operated by or rented or loaned to any insured.... This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the 'occurrence' which caused the 'bodily injury' or 'property damage' involved the ownership, maintenance, use or entrustment to others of any ... 'auto' ... that is owned or operated by or renter or loaned to any insured. This exclusion does not apply to: ... (3) Parking an 'auto' on, or on the ways next to, premises you own or rent, provided the 'auto' is not owned by or rented or loaned to you or the insured ....

On July 7, 2010, attorney Howard Newman, who had been retained to represent Dragonetti and Paolino, e-mailed the retail broker for the Western Heritage policy, advising the broker that a pre-suit claim had been made by the Battocchio estate. On July 12, 2010, the retail broker forwarded to Western Heritage certain documents received from Mr. Newman, including a notice of occurrence/claim, a copy of the police report from the accident, a copy of Battocchio's death certificate, and a copy of a letter from Mr. Newman to the Battocchio estate indicating that he represented Dragonetti and Paolino. Claim notes prepared by Western Heritage's claims analyst confirm that Western Heritage first received notice of the claim on July 12, 2010, and indicate that the claim involved an " auto collision" between Battocchio and " Scotty Paoino [sic], Dragonetti Bros Dump Truck." The claim notes also state that it was the claim analyst's plan to call the insured the ...


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