GENERAL ACCIDENT INSURANCE COMPANY v. 35 JACKSON AVENUE CORP (1999)

In an action, inter alia, for a judgment declaring that the plaintiff insurance company has no duty to defend and indemnify the defendants 35 Jackson Avenue Corp. d/b/a Syosset Sport Center, Warren Eckel, and Brian Eckel under either a workers' compensation or business owner's liability policy issued to 35 Jackson Avenue Corp. with respect to an underlying action entitled Bruzzi v. 35 Jackson Ave. Corp., pending in Supreme Court, Nassau County, under Index No. 1639/93, (1) the defendants 35 Jackson Avenue Corp. d/b/a Syosset Sport Center, Warren Eckel, and Brian Eckel appeal from (a) an order of the Supreme Court, Nassau County (McCarty, J.), entered January 13, 1998, which granted the plaintiff's motion for summary judgment declaring that the plaintiff had no obligation to defend or indemnify them and denied their cross motion for summary judgment declaring that the plaintiff was so obligated, and (b) so much of an order of the same court, dated July 31, 1998, as, upon reargument, adhered to its original determination, and (2) the defendant John Bruzzi separately appeals from so much of the order entered January 13, 1998, as granted the plaintiff's motion for summary judgment.

ORDERED that the appeal by the defendants 35 Jackson Avenue Corp. d/b/a Syosset Sport Center, Brian Eckel, and Warren Eckel from the order entered January 13, 1998, is dismissed, as that portion of the order which granted relief as against those appellants is superseded by the order dated July 31, 1998;  and it is further,

ORDERED that the order dated July 31, 1998, is affirmed;  and it is further,

ORDERED that the order entered January 13, 1998, is affirmed insofar as appealed from by the defendant John Bruzzi;  and it is further,

ORDERED that the plaintiff is awarded one bill of costs.

The plaintiff General Accident Insurance Company (hereinafter General Accident) commenced this action for a judgment declaring that it has no duty to defend and/or indemnify the defendants 35 Jackson Avenue Corp. d/b/a Syosset Sport Center, Warren Eckel, and Brian Eckel (hereinafter the Eckel defendants), in the underlying action commenced by the defendant John Bruzzi against the Eckel defendants and the defendant Steven Stasi to recover damages allegedly sustained by Bruzzi resulting from alleged sexual assaults committed by Stasi and/or Warren Eckel.

 The Supreme Court properly determined that General Accident had no duty to defend and/or indemnify the Eckel defendants in the underlying action, since the operative acts giving rise to any recovery by Bruzzi are clearly the alleged sexual assaults.   The inclusion in the underlying complaint of causes of action to recover damages for the negligent hiring of Stasi and other causes of action “does not alter the fact that ‘the operative act[s] giving rise to any recovery’ ” are the alleged sexual assaults (Mattress Discounters of New York v. United States Fire Ins. Co., 251 A.D.2d 384, 674 N.Y.S.2d 106, quoting Mount Vernon Fire Ins. Co. v. Creative Hous., 88 N.Y.2d 347, 352, 645 N.Y.S.2d 433, 668 N.E.2d 404;  see, U.S. Underwriters Ins. Co. v. Val–Blue Corp., 85 N.Y.2d 821, 623 N.Y.S.2d 834, 647 N.E.2d 1342;  Public Service Mut. Ins. Co. v. Camp Raleigh, 233 A.D.2d 273, 650 N.Y.S.2d 136).

 Moreover, General Accident is not estopped from asserting that neither of the policies at issue covers the underlying claim.   Although it initially provided a defense to the Eckel defendants in the underlying action, General Accident reserved its rights to disclaim coverage (see, O'Dowd v. American Sur. Co., 3 N.Y.2d 347, 355, 165 N.Y.S.2d 458, 144 N.E.2d 359;  Smith Jean, Inc. v. Royal Globe Ins. Cos., 139 A.D.2d 503, 505, 526 N.Y.S.2d 604;  Royal Ins. Co. of Amer. v. State of New York, 149 Misc.2d 531, 536, 564 N.Y.S.2d 982).   Moreover, the Eckel defendants failed to demonstrate prejudice (see, Hartford Acc. & Indem. Co. v. Peck Mem. Hosp., 162 A.D.2d 659, 661, 558 N.Y.S.2d 959).

MEMORANDUM BY THE COURT.