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County of Niagara v. Liberty Mutual Insurance Co.

United States District Court, W.D. New York

May 15, 2017



          JAFFE & ASHER Attorneys for Defendants Liberty Mutual, Peerless Insurance, Netherlands Insurance and Excelsior Insurance MARSHALL T. POTASHNER, of Counsel

          DUKE, HOLZMAN, PHOTIADIS & GRESENS, LLP Attorney for Defendant T.G.R. Enterprises HOWARD E. BERGER, of Counsel




         By order of Hon. Richard J. Arcara filed February 24, 2016, this action was referred to the undersigned for all pretrial matters. It is presently before the court on Defendants Netherlands Insurance Company and Excelsior Insurance Company's motion to compel and to amend the Scheduling Order, filed January 10, 2017 (Dkt. 37) and Plaintiff County of Niagara's cross-motion to quash a subpoena filed January 26, 2017 (Dkt. 41).


         This action, seeking declaratory relief as to coverage under two insurance policies issued by Defendants, was commenced on August 1, 2014 in New York Supreme Court, Niagara County, by filing Plaintiff's complaint seeking declaratory judgment, pursuant to N.Y.C.P.L.R. 3001. The action was removed by Defendants on September 3, 2014 based on this court's diversity jurisdiction. Plaintiff's motion for remand, filed October 1, 2014 (Dkt. 9), was denied upon a Report and Recommendation filed May 24, 2016 (Dkt. 22), adopted by 2016 WL 3280367 (W.D.N.Y. June 15, 2016), and Defendants' motion to dismiss was dismissed as moot by order of Judge Arcara on June 15, 2016 (Dkt. 27). Under the First Amended Scheduling Order filed January 18, 2017 (Dkt. 39), all discovery in this matter was to conclude April 28, 2017.

         By papers filed January 10, 2017, Defendants moved, pursuant to Fed.R.Civ.P. 37(d) and Fed.R.Civ.P. 45(d) (“Rule 45(d)”), to compel Plaintiff's counsel, Brian P. Crosby's, deposition (Dkt. 37) (“Defendants' motion”), and to extend the time for completion of discovery, disclosure of testifying experts and dispositive motions, attaching Declaration of Marshall T. Potashner In Support Of Motion To Compel And For Discovery Completion (Dkt. 37-1 (“Potashner Declaration”) together with Exhibits AH (Dkt. 37-2 - 37-9) (“Exh(s) __. to Potashner Declaration”). On January 26, 2017, Plaintiff filed, pursuant to Fed.R.Civ.P. 26(c) and 45(d)(3), a cross-motion to quash the subpoena and for a protective order (Dkt. 41), together with Memorandum of Law (Dkt. 40-12) (“Plaintiff's Memorandum”). On February 1, 2017, Defendants filed Reply And Opposition Declaration of Marshall T. Potashner (Dkt. 42) (“Potashner Reply Declaration”) attaching Exhibits 1-4 (Dkt. 42-1- 42-2) (“Exh(s). ___ to Potashner Reply Declaration”). On February 3, 2017, Plaintiff filed a Reply Memorandum Of Law (Dkt. 45) (“Plaintiffs' Reply”). Oral argument was conducted February 8, 2017 (Dkt. 46).

         With the court's permission during oral argument, Defendants, on February 12, 2017, filed a Letter providing additional authority in support of Defendants' motion (Dkt. 47) (“Defendants' February 12, 2017 Letter”); on February 14, 2017, Plaintiff filed the Supplemental Declaration of Michael J. Willett, Esq. (“Willett Supplemental Declaration”) in further opposition to Defendants' motion and in support of Plaintiff's cross-motion (Dkt. 48) attaching Exhibits A-C (“Exh(s). __ to Willett Supplemental Declaration”). By letter filed February 14, 2017 (Dkt. 49) Plaintiff provided arguments in rebuttal to Defendants' Reply Memorandum (“Plaintiff's February 14, 2017 Rebuttal Letter”).

         FACTS [1]

         In 2007, Plaintiff contracted with Defendant T.G.R., a general contractor (“T.G.R.”), for replacement of windows and doors on buildings located on the campus of Plaintiff Niagara County Community College (“NCCC”) on property located in Niagara County, N.Y., owned by Plaintiff Niagara County, a municipality (“the project”). The contract required T.G.R. to obtain liability insurance for T.G.R.'s owned and non-owned vehicles, comprehensive or commercial general liability in the amount of $1 million per occurrence or $2 million combined bodily injury and property damage naming Niagara County and NCCC as additional insureds, an owners and contractors protective liability policy in the amount of $1 million per occurrence, $2 million aggregate, for Niagara County, as owner of the property, and NCCC, and an umbrella or excess liability policy. In accordance with these requirements, T.G.R. obtained, through an insurance agent, Satellite Agency Network of N.Y., Inc. (“Satellite”), a general commercial liability policy for $1 million, which included coverage for non-owned vehicles for $1 million from Defendant Netherlands Insurance Company (“Netherlands”) (“the GCL Policy”), and an umbrella/excessive liability policy for $5 million (“the UE Policy”) from Defendant Excelsior Insurance Company (“Excelsior”), for the GCL Policy. T.G.R. also obtained a $1 million Owner and Contractor's policy for the County, and NCCC and its Board of Trustees (“the Niagara Entities”), from Defendant Excelsior for covered claims which may arise from the project (“the OCP Policy”). The Certificate of Insurance issued by Satellite referenced the GCL and UE Policies for the project and named Niagara County, NCCC, and the project engineer as additional insureds. Exh. B to Willett Declaration, Dkt. 40-2. An auto liability insurance policy naming Niagara County as an additional insured was also obtained by T.G.R. from Farm Family Casualty Insurance Company (“Farm Family”), in the amount of $1 million for T.G.R. owned vehicles (“the Farm Family Auto Policy”). The GCL Policy specifies as an exclusion that the policy does not apply to claims for injuries or damages in connection with the use of T.G.R.'s owned autos. See Potashner Declaration ¶ 11 (Dkt. 37-1); Exh. C to Willett Declaration (Dkt. 40-3) at 82. The UE Policy also excludes any claims for injury arising on the project from the use of autos owned by T.G.R. See Potashner Declaration ¶ 12 (Dkt. 37-1); Exh. D to Willitt Declaration (Dkt. 40-4) at 6.

         On May 27, 2008, Michael Lombardo (“Lombardo”), who was one of T.G.R.'s employees working on the project, was injured while standing in the bed of one of T.G.R.'s flatbed stake trucks loaded with new windows, weighing over 300 pounds each, being moved to a building on NCCC's campus for installation; the windows, unsecured by tie-down straps in violation of N.Y. Labor Law § 241[6] (“§ 241[6]”) and related N.Y. State Industrial Code Regulations, fell on Lombardo's right leg causing an extensive fracture and permanent injuries. Decision of Niagara County Supreme Court (Boniello, J.) dated January 12, 2015, Dkt. 37-2, at 1-2. Lombardo filed a Notice of Claim against the Niagara Entities on July 18, 2008, Exh. B to Potashner Declaration, Dkt. 37-3; Lombardo's action was commenced in New York Supreme Court, Niagara County on November 10, 2008. Id. Exh. C. T.G.R. was impleaded on February 25, 2011. Exh. D to Potashner Declaration, Dkt. 37-5.

         On August 7, 2008, Brian Crosby, attorney for the Niagara Entities, wrote a letter to Reseller Risk Management, as Defendants' representative, requesting defense and indemnification for Lombardo's Notice of Claim, Exh. E to Potashner Declaration, Dkt. 37-6 (“the Crosby August 7, 2008 Letter”). After receiving a copy of the Crosby August 7, 2008 Letter, Defendants, on August 18, 2008, sent a letter addressed to T.G.R., with a copy to Crosby, disclaiming coverage under the GCL and UE Policies. See Exh. F to Potashner Declaration, Dkt. 37-7 (“the August 13, 2008 Anderson Letter”). In this letter, Defendants cited to the owned-auto exclusions in both the GCL and UE Policies finding that given Lombardo had been injured in T.G.R.'s truck, no coverage existed under these policies and therefore disclaimed coverage. See Exh. F to Potashner Declaration at 7. On August 22, 2008, Edward J. Anderson responded on behalf of Defendants to the Crosby August 7, 2008 Letter. In his letter, Anderson informed Crosby that T.G.R. had purchased the OCP Policy for the County for the NCCC project and would defend and indemnify the County, NCCC and the Board against the Lombardo claim under the Auto and OCP Policies. Exh. E to Willett ...

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