Mt. Hawley Insurance Company, et al., Plaintiffs–Respondents, v. American States Insurance Company, Defendant–Appellant, J & R Glassworks, Inc., Defendant. (2017)

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Order, Supreme Court, New York County (Joan M. Kenney, J.), entered on or about September 14, 2015, which, to the extent appealed from as limited by the briefs, denied defendant American States Insurance Company's cross motion for summary judgment declaring in its favor, unanimously affirmed, with costs.

Although this Court, on a prior appeal, upheld the default judgment against defendant J & R Glassworks, Inc. (139 AD3d 497, 498 [1st Dept 2016] ), American States is not entitled to declaratory relief in its favor on its cross motion for summary judgment.  In the event of a default by a defendant, that defendant admits to the allegations against it in the complaint (Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 71 [2003] ).  Here, the amended complaint states that “if” plaintiffs 537 West 27th Street Owners, LLC and Chatsworth Builders, LLC are not covered by the insurance policy issued by American States, “then” J & R breached its agreement with plaintiffs.  That is the claim that has been defaulted on.  Accordingly, should it be determined that coverage does not exist, then J & R cannot challenge whether that amounts to a breach of the agreement, since it has admitted that breach through its default.  However, the question of whether coverage exists must be resolved first.

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CLERK