AVR POWELL DEVELOPMENT CORP v. AMERICAN STATES INSURANCE COMPANY (2022)

Order, Supreme Court, New York County (Louis L. Nock, J.), entered on or about April 9, 2021, which, to the extent appealed from as limited by the briefs, granted third-party plaintiff American States Insurance Company's motion for partial summary judgment against third-party defendant Farm Family Casualty Insurance Company declaring that Farm Family owes the plaintiffs a primary duty to defend in the underlying action, and denied Farm Family's cross motion for partial summary judgment against American States to dismiss the third-party complaint, unanimously affirmed, with costs.

The court properly granted American States’ motion for summary judgment seeking a declaration that Farm Family owes plaintiffs a primary duty to defend against the claims alleged in the underlying action.  Initially, the court properly determined that the allegations in the underlying complaint suggested a reasonable possibility of coverage under the policy issued by Farm Family, thereby triggering Farm Family's duty to defend (see BP A.C. Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708, 714, 840 N.Y.S.2d 302, 871 N.E.2d 1128 [2007]).

Where its policy has been triggered, a primary insurer has a primary duty to defend its insureds, whereas an excess insurer has no obligation to do so (see General Motors Acceptance Corp. v. Nationwide Ins. Co., 4 N.Y.3d 451, 455–456, 796 N.Y.S.2d 2, 828 N.E.2d 959 [2005]).  In opposition to American States's motion for partial summary judgment seeking a declaration that Farm Family owes a primary duty to defend, Farm Family did not raise a triable issue of fact as to whether the coverage provided by its policy is excess to any potential coverage provided by American States.  In fact, Farm Family did not even dispute American States's assertion that Farm Family's policy is primary.

Farm Family's argument, that summary judgment should have been denied because its policy is either excess to American States's or because it and American States are coinsurers, is improperly raised for the first time on appeal and involves factual issues not presented to the motion court (see Mable v. 384 E. Assoc., LLC, 175 A.D.3d 1127, 1129, 107 N.Y.S.3d 284 [1st Dept. 2019];  Vanship Holdings Ltd. v. Energy Infrastructure Acquisition Corp., 65 A.D.3d 405, 408, 884 N.Y.S.2d 24 [1st Dept. 2009]).  Even if both American States and Farm Family provided concurrent coverage and are coinsurers, Farm Family would still owe the insureds a primary duty to defend, subject to apportionment of defense costs between the coinsurers (see Hospital Underwriters Mut. Ins. Co. v. National Cas. Co., 150 A.D.2d 636, 541 N.Y.S.2d 512 [2d Dept. 1989], lv denied 75 N.Y.2d 704, 552 N.Y.S.2d 927, 552 N.E.2d 175 [1990];  see also Southgate Owners Corp. v. Public Serv. Mut. Ins. Co., 241 A.D.2d 397, 398, 660 N.Y.S.2d 129 [1st Dept. 1997]).

The court properly determined that American States's motion was not premature (see CPLR 1007;  Krause v. American Guar. & Liab. Ins. Co., 22 N.Y.2d 147, 152–153, 292 N.Y.S.2d 67, 239 N.E.2d 175 [1968]).