IN RE: Sean COMBS (2019)

The Receiver breached its duty to defend when it disclaimed coverage for Combs in a personal injury action brought against him by three individuals who were injured in a 1999 shooting at a nightclub on the ground that no valid covered claims against Combs remained in the action (see Servidone Constr. Corp. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 423–424, 488 N.Y.S.2d 139, 477 N.E.2d 441 [1985] );  see also Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311–312, 486 N.Y.S.2d 873, 476 N.E.2d 272 [1984] ).  Claims for respondeat superior and negligent hiring, retention and supervision were asserted by two of the plaintiffs in the underlying action and survived summary judgment.

Having breached its contractual duty to defend Combs in the personal injury action, and having conceded that the settlement with the injured parties was reasonable, the Receiver failed to meet its burden of establishing that it is not obligated to indemnify Combs for the amounts paid in settlement (see Servidone, 64 N.Y.2d at 424–425, 488 N.Y.S.2d 139, 477 N.E.2d 441).  Contrary to the Receiver's contention, the evidence it presented is inconclusive as to whether Combs employed the person convicted of shooting the three people (see People v. Barrow, 19 A.D.3d 189, 796 N.Y.S.2d 600 [1st Dept. 2005], lv denied 6 N.Y.3d 809, 812 N.Y.S.2d 448, 449, 845 N.E.2d 1279, 1280 [2006] ), and therefore fails to demonstrate that Combs could not be subject to liability on the injured plaintiffs' claims for negligent hiring, retention and supervision, even if the respondeat superior claims are found to be excluded from coverage.

We have considered the Receiver's remaining arguments and find them unavailing.