The Travelers Indemnity Company v. Harleysville Insurance Company of New York

Background

This insurance-coverage dispute arose from claims by Leonard Caro concerning a January 14, 2016 car accident near Herbert H. Lehman College, a CUNY-affiliated college in the Bronx. Caro alleged in two state-court personal-injury proceedings that fencing installed by A.K.S. International Inc. obstructed roadway visibility and contributed to the accident. He sought to hold Genesys Engineering, PC, CUNY, and New York State responsible for his injuries. The opinion states that New York State was dismissed from the Court of Claims proceeding.

Travelers issued a general-liability policy to Genesys covering September 1, 2015, through September 1, 2016. CUNY and New York State were additional insureds under that policy. Travelers provided a defense for Genesys, CUNY, and New York State in the underlying proceedings. Harleysville issued a general-liability policy to A.K.S. covering March 24, 2015, through March 24, 2016. That policy provided additional-insured coverage to Genesys, CUNY, and New York State for liability caused, in whole or in part, by A.K.S.’s acts or omissions, and stated that coverage for an additional insured was primary.

Travelers demanded that Harleysville provide a defense. Harleysville refused, asserting that the accident did not arise from A.K.S.’s work. The parties filed cross-motions for summary judgment, which asks whether the undisputed evidence entitles a party to judgment as a matter of law.

Legal standard

Applying New York law, the court explained that an insurer’s duty to defend generally depends on comparing the allegations in the underlying complaint with the insurance policy. An insurer must defend whenever those allegations suggest a reasonable possibility of coverage, even if the underlying claims may ultimately prove false or meritless. The court also described a narrow exception allowing an insurer to rely on outside evidence that is unrelated to the merits of the underlying action and plainly places the case outside the policy’s coverage.

Analysis

The Harleysville policy covered lawsuits seeking damages for bodily injuries caused by accidents involving, in whole or in part, A.K.S.’s acts or omissions. Caro’s underlying pleadings alleged that the fencing installed by A.K.S. obstructed visibility and contributed to the accident. Accepting those allegations for purposes of the duty-to-defend analysis, the court held that the allegations plainly triggered Harleysville’s duty to defend Genesys, CUNY, and New York State.

Harleysville relied on a police report, the driver’s deposition testimony, and its expert’s opinion to argue that an SUV—not the fencing—blocked the driver’s view and caused the accident. The court held that this evidence went directly to the merits of Caro’s underlying claims. Under New York law, such evidence could not be used to defeat the duty to defend. The court distinguished a prior decision on which Harleysville relied because the outside evidence in that case was unrelated to the merits of the underlying action.

Ruling

Judge Paul G. Gardephe granted Travelers’ motion for summary judgment and denied Harleysville’s motion for summary judgment. The ruling required Harleysville to defend Genesys, CUNY, and New York State in the underlying state-court actions under the Harleysville policy.

The court did not decide Travelers’ request for reimbursement of defense costs and expenses in the order’s summary-judgment ruling. It stated that Travelers had not briefed whether an award was appropriate or provided an accounting of the requested amounts, and it set a schedule for Travelers’ application, Harleysville’s opposition, and any reply.