HARLEYSVILLE INSURANCE COMPANY v. Everest Indemnity Insurance Company, Defendant-Appellant. (2024)

Order, Supreme Court, New York County (Gerald Lebovitz, J.), entered March 14, 2023, which, to the extent appealed from as limited by the briefs, granted plaintiffs’ motion for summary judgment declaring that defendant Everest Indemnity Insurance Company was obligated to indemnify plaintiff Commercial Construction Management, Inc. (CCM) in the underlying action, unanimously reversed, on the law, with costs, and the motion denied.

Supreme Court should not have found that Everest was required to indemnify CCM. Although Everest concedes that it must defend CCM, “the duty to defend is broader than the duty to indemnify,” because only the latter “is determined by the actual basis for the insured's liability to a third person and is not measured by the allegations of the pleadings” (Bovis Lend Lease LMB Inc. v. Garito Contr., Inc., 65 A.D.3d 872, 875–876, 885 N.Y.S.2d 59 [1st Dept. 2009] [internal quotation marks omitted], appeal dismissed, 13 N.Y.3d 878, 893 N.Y.S.2d 829, 921 N.E.2d 596 [2009], appeal withdrawn, 14 N.Y.3d 884, 903 N.Y.S.2d 772, 929 N.E.2d 1007 [2010]).  In the underlying action, there has been no determination whether the plaintiff's injury was “caused, in whole or in part, by” the acts or omissions of the named insured or of those acting on its behalf (see Hanover Ins. Co. v. Philadelphia Indem. Ins. Co., 159 A.D.3d 587, 588, 73 N.Y.S.3d 549 [1st Dept. 2018];  see generally Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d 313, 321–325, 57 N.Y.S.3d 85, 79 N.E.3d 477 [2017]).  Therefore, any declaration of the duty to indemnify was premature (see Lexington Ins. Co. v. Kiska Dev. Group LLC, 182 A.D.3d 462, 464, 122 N.Y.S.3d 590 [1st Dept. 2020];  Vargas v. City of New York, 158 A.D.3d 523, 525, 71 N.Y.S.3d 415 [1st Dept. 2018];  see also Axis Surplus Ins. Co. v. GTJ Co., Inc., 139 A.D.3d 604, 605, 33 N.Y.S.3d 187 [1st Dept. 2016] [“It is after the resolution of that action where the extent of plaintiff's indemnification obligations can be fully determined”]).

Plaintiffs argue that “[w]here ․ there has been no determination of negligence in the underlying action ․ the motion court was required to resolve the issue” (WDF Inc. v. Harleysville Ins. Co. of N.Y., 193 A.D.3d 667, 667–668, 146 N.Y.S.3d 128 [1st Dept. 2021]).  This exception applies only when the underlying action has already been terminated (see id. at 668, 146 N.Y.S.3d 128, citing Servidone Constr. Corp. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 425, 488 N.Y.S.2d 139, 477 N.E.2d 441 [1985] [addressing voluntary settlement of underlying action]), as was the case in WDF (see WDF Inc. v. Harleysville Ins. Co. of New York, 2019 N.Y. Slip Op. 32931[U], *1, 2019 WL 4899035 [Sup. Ct., N.Y. County 2019], revd 193 A.D.3d 667, 146 N.Y.S.3d 128).