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Citizens Ins. Co. of America v. Risen Foods, LLC

United States Court of Appeals, Second Circuit

January 22, 2018

CITIZENS INSURANCE COMPANY OF AMERICA, Plaintiff-Counter-Defendant-Appellant,
v.
RISEN FOODS, LLC, PETR A. TKACH, JASON J. TANNER, CRISTINA TANNER, Defendants-Counter-Claimants-Appellees.

          Argued: October 17, 2017

         Appeal from the Nov. 23, 2016, judgment of the United States District Court for the Northern District of New York (Brenda K. Sannes, District Judge), declaring that Citizens Insurance Company of America is obligated to defend and, if necessary, indemnify Risen Foods, LLC, and Petr A. Tkach under a businessowners policy and an umbrella policy in an underlying suit brought by Jason J. Tanner and Cristina Tanner for damages arising out of a motor vehicle accident.

         Reversed.

          Michael P. Kandler, Goldberg Segalla LLP, White Plains, NY, for Plaintiff-Counter- Defendant-Appellant.

          Laurence D. Behr, Barth Sullivan Behr, Buffalo, NY, for Defendants-Counter-Claimants- Appellees.

          Before: NEWMAN and CABRANES, Circuit Judges, and CHATIGNY, [1] District Judge.

          JON O. NEWMAN, Circuit Judge.

         In this insurance coverage dispute, Citizens Insurance Company of America ("Citizens") appeals from the Nov. 23, 2016, judgment of the United States District Court for the Northern District of New York (Brenda K. Sannes, District Judge). The judgment declared that Citizens is obligated to defend and, if necessary, indemnify Risen Foods, LLC ("Risen") and Petr A. Tkach under a businessowners policy and an umbrella policy, both issued by Citizens, in an underlying suit brought by Jason J. Tanner and Cristina Tanner for damages arising out of a motor vehicle accident.

         Because we conclude that Risen's vehicle was not covered by either policy, we reverse.

         Background

         On April 29, 2013, a van owned by Risen and driven by Tkach, a Risen employee, collided with a truck driven by Tanner. Tanner suffered serious injuries. Later in 2013, Tanner and his wife, Cristina, sued Risen and Tkach for Tanner's injuries and related loss of services ("underlying suit").

         The Risen vehicle was insured under a commercial auto policy issued by State Farm Insurance Company ("State Farm") with a liability limit of $1,000,000 per occurrence. State Farm has provided defense and indemnity coverage to Risen and Tkach with respect to the underlying suit and offered close to the policy limit to settle it.

         Citizens issued to Risen a businessowners policy and an umbrella policy. Both policies bear the same policy number, OBF-9828714-00, and the SCHEDULE OF UNDERLYING POLICIES of the umbrella policy states, "This schedule is part of Policy Number: OBF-9828714-00." The businessowners policy has a limit of $1,000,000 per occurrence, and the umbrella policy has a limit of $2,000,000 per occurrence.

         The policy provisions.

         The businessowners policy in section II(A)(1), titled "Business Liability," provides:

"We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury', 'property damage' or 'personal and advertising injury' to which this insurance applies."
The businessowners policy in section II(B), titled "Exclusions," provides:
"This insurance does not apply to
. . .
"g. Aircraft, Auto or Watercraft
"'Bodily injury' or 'property damage' arising out of the ownership . . . of any . . . 'auto' . . . owned . . . by . . . any insured."

         The businessowners policy contains an endorsement captioned "HIRED AUTO AND NON-OWNED AUTO LIABILITY – NEW YORK" ("the endorsement"), which states, "This endorsement modifies insurance provided under the following: BUSINESSOWNERS POLICY." Under the heading ...


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