SERRANO v. REPUBLIC INSURANCE (2008)

In a consolidated action to recover damages for personal injuries, etc., and for a judgment declaring that the defendant Republic Insurance is obligated to defend and indemnify the defendant Jose Peixoto, Jr., in the personal injury action, the plaintiffs appeal from a judgment of the Supreme Court, Westchester County (Nicolai, J.), dated January 9, 2007, which, upon an order of the same court entered December 20, 2006, denying their motion for summary judgment on the complaint insofar as asserted against the defendant Republic Insurance and granting the cross motion of the defendant Republic Insurance for summary judgment, dismissed the complaint insofar as asserted against that defendant.

ORDERED that the judgment is modified, on the law, (1) by deleting the provision thereof dismissing the complaint insofar as asserted against the defendant Republic Insurance and substituting therefor a provision declaring that Republic Insurance is not obligated to defend and indemnify Jose Peixoto, Jr., in the personal injury action, and (2) by adding a provision thereto severing the action as to the remaining defendants;  as so modified, the judgment is affirmed, with costs.

 “The duty of an insurer to defend its insured arises whenever the allegations within the four corners of the underlying complaint potentially give rise to a covered claim” (Physicians' Reciprocal Insurers v. Loeb, 291 A.D.2d 541, 542, 738 N.Y.S.2d 68;  see Belsito v. State Farm Mut. Ins. Co., 27 A.D.3d 502, 502, 811 N.Y.S.2d 762).   The duty to indemnify requires a determination that the insured is liable for a loss that is covered by the policy (see Servidone Constr. Corp. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 488 N.Y.S.2d 139, 477 N.E.2d 441).   Here, on their motion for summary judgment, the plaintiffs did not meet their prima facie burden of establishing that the allegations made in the underlying complaint potentially gave rise to a claim covered by the insurance policy at issue.   Consequently, the Supreme Court properly denied their motion for summary judgment (see Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572;  Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642).   The Supreme Court also properly granted the cross motion of Republic Insurance (hereinafter Republic) for summary judgment because Republic established, prima facie, that the allegations made in the underlying complaint did not potentially give rise to a claim covered by the policy (see Belsito v. State Farm Mut. Ins. Co., 27 A.D.3d at 503, 811 N.Y.S.2d 762), and the plaintiffs did not raise a triable issue of fact (see Zuckerman v. City of New York, 49 N.Y.2d 557, 563, 427 N.Y.S.2d 595, 404 N.E.2d 718;  Belsito v. State Farm Mut. Ins. Co., 27 A.D.3d at 503, 811 N.Y.S.2d 762).

 Since this is, in part, a declaratory judgment action, the Supreme Court should not have dismissed the complaint insofar as asserted against Republic, but should have included an appropriate declaration in favor of Republic.   Accordingly, we modify the judgment and add such a declaration (see 200 Genesee St. Corp. v. City of Utica, 6 N.Y.3d 761, 762, 811 N.Y.S.2d 288, 844 N.E.2d 742;  Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670, appeal dismissed 371 U.S. 74, 83 S.Ct. 177, 9 L.Ed.2d 163, cert. denied 371 U.S. 901, 83 S.Ct. 205, 9 L.Ed.2d 164).