Greater New York Mutual Insurance Company v. Continental Casualty Company

Background

Greater New York Mutual Insurance Company (GNY) issued 444 Park Owners, Inc. a commercial general liability policy. Continental Casualty Company (CNA) issued 444 a directors-and-officers liability policy. Both policies covered the relevant period, February 1, 2018, through February 1, 2019.

The underlying state-court lawsuit, the Gale Action, concerned construction work at 444 Central Park West. Barden and Flavia Gale alleged that construction workers placed materials on their roof terrace, preventing access to it, and that workers’ presence affected their use, privacy, and enjoyment of their home. They asserted claims including breach of contract, partial constructive eviction, constructive eviction, breach of fiduciary duty, breach of the warranty of habitability, and loss of use or value.

GNY defended 444 in the Gale Action under a reservation of rights and sought a declaration that CNA had to share the defense costs on a co-primary basis. CNA took the position that its policy was excess to GNY’s policy and that it did not have to pay defense costs. Both insurers moved for summary judgment, which asks the court to decide a case or issue without a trial when no material fact is genuinely disputed.

Insurance Policies and Governing Rules

The GNY policy covered certain property damage and personal and advertising injuries. Its other-insurance provision stated that the coverage was primary, subject to conditions the court found irrelevant here.

The CNA policy covered losses resulting from a claim based on a wrongful act, and defined loss to include defense costs for a covered claim. It also covered wrongful entry, eviction, or another invasion of the right to private occupancy, but excluded losses involving damage to or loss of use of tangible property. Its other-insurance provision stated that CNA’s coverage would apply only after other valid and collectible insurance if the same loss was insured under another policy, unless that other policy was written specifically as excess over CNA’s policy.

Applying New York contract law, the court explained that an insurer must defend the entire underlying action if any allegation arguably falls within the policy’s coverage. The court held that the possible damage to the Gales’ property fell within GNY’s coverage. Therefore, GNY had a duty to defend all causes of action in the Gale Action, even if some claims were outside GNY’s coverage.

Analysis

The court rejected CNA’s argument that GNY’s broad duty to defend automatically made CNA’s policy excess. Reading CNA’s other-insurance provision together with the policy’s definitions of loss and covered claim, the court found that CNA’s policy became excess only when both policies covered the same risk or claim. GNY’s duty to defend the entire case did not by itself establish that the policies covered the same claim.

The court also distinguished decisions cited by CNA. In one cited case, the parties had conceded that both policies potentially covered at least one claim. Another case involved a broader definition of loss than the one in CNA’s policy. The court found that those decisions did not require CNA’s policy to be excess merely because GNY had a broad duty to defend.

The parties disagreed about whether the constructive-eviction and privacy-related allegations were covered by GNY’s personal-and-advertising-injury coverage. GNY argued that this coverage applied only to intentional dispossession and that the Gale Action instead alleged that 444’s construction work lasted too long and exceeded reasonable access rights. CNA argued that those allegations fell within the policy’s coverage for wrongful eviction, wrongful entry, or invasion of the right to private occupancy.

The court held that the parties’ submissions were insufficient to decide as a matter of law whether those allegations were covered under GNY’s policy. Without resolving that question, the court could not determine whether the property-damage allegation was the only allegation covered by GNY or whether CNA’s policy’s excess provision applied.

Disposition

Judge John G. Koeltl denied CNA’s motion for summary judgment and denied GNY’s cross-motion for summary judgment. The Clerk was directed to close all pending motions. The opinion did not determine which insurer ultimately had to bear or share the defense costs.