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Erie Insurance Exchange v. J.M. Pereira & Sons, Inc.

Supreme Court of New York, Fourth Department

June 30, 2017

ERIE INSURANCE EXCHANGE, PLAINTIFF-APPELLANT,
v.
J.M. PEREIRA & SONS, INC., RPC, INC., ALSO KNOWN AS RUBBER POLYMER CORPORATION, RICARDO VEGA AND ROBERT MARCHESE, AS ADMINISTRATOR OF THE ESTATES OF ANTONIO TAPIA, DECEASED, AND GILBERTO VEGA-SANCHEZ, DECEASED, DEFENDANTS-RESPONDENTS.

          HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR PLAINTIFF-APPELLANT.

          WOODS OVIATT GILMAN LLP, ROCHESTER (ROBERT D. HOOKS OF COUNSEL), FOR DEFENDANT-RESPONDENT J.M. PEREIRA & SONS, INC.

          FOX ROTHSCHILD LLP, NEW YORK CITY (MATTHEW J. SCHENKER OF COUNSEL), FOR DEFENDANT-RESPONDENT RPC, INC., ALSO KNOWN AS RUBBER POLYMER CORPORATION.

          PRESENT: PERADOTTO, J.P., CARNI, LINDLEY, AND SCUDDER, JJ.

         Appeal from an order of the Supreme Court, Monroe County (Renee Forgensi Minarik, A.J.), entered November 12, 2015. The order, insofar as appealed from, denied plaintiff's motion for summary judgment.

         It is hereby ORDERED that the order so appealed from is affirmed without costs.

         Memorandum: Plaintiff, Erie Insurance Exchange, commenced this action seeking a declaration that it is not obligated to defend or indemnify defendant J.M. Pereira & Sons, Inc. (JMP) in an underlying personal injury action. We conclude that Supreme Court properly denied plaintiff's motion for summary judgment.

         In 2006, several employees of JMP, a Pennsylvania corporation, were either injured or killed while working for JMP in New York State. At the time of the accident, the employees were allegedly working with waterproofing products produced by defendant RPC, Inc., also known as Rubber Polymer Corporation (RPC). The injured employee and the estates of the two employees killed in the accident commenced actions against various parties, including RPC, which in turn commenced third-party actions against JMP. At the time of the accident, JMP was insured by several insurance policies, two of which had been issued by plaintiff. One policy, the "Ultraflex Policy, " provided insurance for property damage, but it has been exhausted and is not at issue on this appeal. The second policy, known as the "Business Catastrophe Liability Policy" (BCL policy), provided commercial liability umbrella coverage.

         RPC tendered its defense and indemnification to JMP, and both JMP and RPC tendered their defense and indemnification to plaintiff. Plaintiff denied the tender, contending that there was no contract or written agreement between RPC and JMP that would require defense and indemnification for the underlying claims and that RPC was not an additional insured under the BCL policy. With respect to JMP, plaintiff reserved its rights to disclaim coverage based on a policy exclusion that excluded coverage for bodily injury to JMP's employees if such injury arose out of their employment or during the course of performing their duties related to JMP's business.

         JMP was also insured by the State Workers' Insurance Fund of Pennsylvania (SWIF), which had issued a single policy containing "WORKERS COMPENSATION INSURANCE" and "EMPLOYERS LIABILITY INSURANCE." The employers liability insurance "applied to work in the State of Pennsylvania, " or employment that was "necessary or incidental to [JMP's] work" in Pennsylvania. Based on the applicability of several policy exclusions, including the geographic limitations of the policy, the SWIF denied coverage.

         Plaintiff thereafter commenced an action in Pennsylvania against JMP, RPC, the injured employee, and the estates of the two killed employees, seeking a declaration that it had no duty to defend and indemnify JMP in the underlying actions. That Pennsylvania action was dismissed "without prejudice to refile with joinder of all indispensable parties." Following that dismissal, plaintiff commenced the instant action in New York, seeking a declaration that it has no obligation to defend JMP in the underlying actions and no obligation to indemnify JMP against any obligation it may incur in those underlying actions.

         Before any depositions or any exchange of discovery between JMP and RPC, plaintiff moved for summary judgment, contending that Pennsylvania law governed interpretation of the BCL policy and that Exclusion G of that policy precluded coverage. All of the defendants opposed the motion.

         Contrary to plaintiff's contention, we need not apply Pennsylvania law in order to interpret the provisions of the various insurance policies. "The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved" (Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 N.Y.2d 219, 223). "There is no need to engage in conflicts of laws analysis absent a conflict between the laws of New York and Pennsylvania with respect to the applicability of basic tenets of contract interpretation" (National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 A.D.3d 570, 570). Here, there is no such conflict (compare Matter of Viking Pump, Inc., 27 N.Y.3d 244, 257; Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., 12 N.Y.3d 302, 307; Belt Painting Corp. v TIG Ins. Co., 100 N.Y.2d 377, 383; with Babcock & Wilcox Co. v American Nuclear Insurers, 131 A.3d 445, 456; Mutual Benefit Ins. Co. v Politsopoulos, 631 Pa 628, 640, 115 A.3d 844, 852 n 6; Penn-America Ins. Co. v Peccadillos, Inc., 27 A.3d 259, 264-265, appeal denied 613 Pa 669, 34 A.3d 832).

         Exclusion G of the BCL policy provides that coverage is excluded for bodily injuries to JMP employees "arising out of and in the course of... [e]mployment by [JMP]; or... [p]erforming duties related to the conduct of [JMP's] business." There are three exceptions to Exclusion G, two of which are relevant to this appeal. The first provides that Exclusion G "does not apply to liability assumed by the insured under an insured contract.' " Insofar as relevant to this appeal, the BCL policy defines an "insured contract" as "[t]hat part of any other contract or agreement pertaining to [JMP's] business... under which [JMP] assume[s] the tort liability of another part [ sic ] to pay for bodily injury' or ...


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