CITY OF NEW YORK v. PHILADELPHIA INDEMNITY INSURANCE CO (2008)

In an action, inter alia, for a judgment declaring that the defendant is obligated to defend the plaintiff as an additional insured in an underlying action entitled Vega v. Fox, pending in the United States District Court for the Southern District of New York, under Index No. 05 CV 2286, the defendant appeals from an order and judgment (one paper) of the Supreme Court, Kings County (Solomon, J.), dated January 25, 2007, which, among other things, granted the plaintiff's motion for summary judgment and declared that it is obligated to defend the plaintiff in the underlying action.

ORDERED that the order and judgment is affirmed, with costs.

In this action, inter alia, for a judgment declaring that the defendant is obligated to defend the plaintiff as an additional insured in the underlying action, the plaintiff established its prima facie entitlement to judgment as a matter of law by tendering evidence sufficient to demonstrate, as a matter of law, that it is an additional insured as this term is defined by the subject policy, and that the allegations in the underlying complaint fall within the scope of coverage (see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642;  Zuckerman v. City of New York, 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718).   The burden then shifted to the defendant to establish the absence of coverage (see Matter of Allstate Ins. Co. v. Berger, 47 A.D.3d 708, 710, 851 N.Y.S.2d 584), which it failed to do.

 An insurer's duty to defend its insured is “exceedingly broad” (Colon v. Aetna Life & Cas. Ins. Co., 66 N.Y.2d 6, 8, 494 N.Y.S.2d 688, 484 N.E.2d 1040) and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest a reasonable possibility of coverage (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).   Insurance contracts are read in light of “common speech” (Ace Wire & Cable Co. v. Aetna Cas. & Sur. Co., 60 N.Y.2d 390, 398, 469 N.Y.S.2d 655, 457 N.E.2d 761;  see Pepsico, Inc. v. Winterthur Intl. Am. Ins. Co., 13 A.D.3d 599, 600, 788 N.Y.S.2d 142) and are to be interpreted “according to the reasonable expectations and purposes of ordinary businesspeople when making ordinary business contracts” (City of New York v. Evanston Ins. Co., 39 A.D.3d 153, 156, 830 N.Y.S.2d 299).   In interpreting an insurance policy, the policy should be read as a whole (see MDW Enters., Inc. v. CNA Ins. Co., 4 A.D.3d 338, 341, 772 N.Y.S.2d 79).

 Here, the interpretation favored by the defendant reflects “extremely narrow coverage” (City of New York v. Evanston Ins. Co., 39 A.D.3d 153, 157, 830 N.Y.S.2d 299).   Such an interpretation would rewrite the policy without regard to the plaintiff's reasonable expectations as expressed in the contract between it and the named insured, and provide a windfall for the defendant (see BP A.C. Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708, 716, 840 N.Y.S.2d 302, 871 N.E.2d 1128).

Accordingly, the Supreme Court properly granted the plaintiff's motion for summary judgment and declared that the defendant is obligated to defend the plaintiff as an additional insured in the underlying action (see Borden Leasing v. Atlantic Mut. Ins. Co., 22 A.D.3d 621, 801 N.Y.S.2d 920;  Bedford Cent. School Dist. v. Commercial Union Ins. Co., 295 A.D.2d 295, 742 N.Y.S.2d 671;  American Bridge Co. v. Acceptance Ins. Co., 293 A.D.2d 634, 636, 741 N.Y.S.2d 259).