The Doe Fund, Inc. v. Berkley Insurance Company

Background

The Doe Fund, Inc. sued its insurer, Berkley Insurance Company, seeking a declaration concerning Berkley’s duty to defend and indemnify Doe in three underlying lawsuits pending in New York Supreme Court, Bronx County. Doe provides housing and social services to people with histories of homelessness, incarceration, and substance abuse. The opinion states that Doe allegedly owns and operates two Bronx properties.

The underlying lawsuits allege that people developed Legionnaires’ disease after inhaling Legionella bacteria from vapors released by a cooling tower at or near the properties. The lawsuits allege that Doe failed to maintain or cleanse the cooling tower. Berkley denied coverage, arguing that the policy’s Communicable Disease Exclusion removed these claims from coverage.

Doe’s policy covered suits seeking damages based on “bodily injury,” which included sickness or disease. The policy excluded bodily injury arising from the transmission of a “communicable disease,” but it did not define that term. The policy period ran from October 1, 2021, through October 1, 2022.

Motions and Legal Standard

Doe filed a partial motion for summary judgment concerning Berkley’s duty to defend and sought confirmation that the Matthews Action fell within the policy’s coverage. Berkley filed a cross-motion for summary judgment seeking a declaration that it had no duty to defend or indemnify Doe in the underlying actions.

Summary judgment is appropriate when there is no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law. Because the parties agreed that there were no material factual disputes, the court treated the issue as one of interpreting the policy.

The parties agreed that New York law applied. Under New York law, courts interpret an unambiguous insurance policy according to its plain and ordinary meaning. If an insurance-policy term is ambiguous, the ambiguity is construed in favor of the insured and against the insurer.

Court’s Analysis

The court held that “communicable disease” has a definite and precise meaning: a disease transmitted from one individual or animal to another. The court relied on English and medical dictionaries and other authorities supporting that definition. The court acknowledged that one dictionary used a broader definition but concluded that the term was not ambiguous because most of the cited definitions limited communicable diseases to diseases spread between humans or animals. The court also stated that it would have ruled for Doe even if the term were ambiguous, because New York law construes ambiguity against the insurer.

The court then held that Legionnaires’ disease is not a communicable disease under that meaning. The cited authorities stated that Legionnaires’ disease is transmitted through contaminated water vapor or mist and is not transmitted from person to person. The parties did not dispute that transmission occurs through water vapor or mist rather than from person to person.

Berkley relied on New York state law, the New York City Health Code, and a May 22, 2022 order from the Commissioner of the New York City Department of Health and Mental Hygiene. The court rejected those arguments. It concluded that the state and city lists identified diseases or conditions of public-health interest but did not explicitly define Legionellosis as a communicable disease. Although the agency order referred to Legionellosis as a communicable disease reportable to the Department, the court found that single source insufficient to outweigh the other authorities.

The court noted that Berkley did not dispute that the Matthews Action was covered by the policy, so it did not address Doe’s separate argument on that issue.

Disposition

The court granted Doe’s partial motion for summary judgment on Berkley’s duty to defend Doe in the underlying actions. It denied Berkley’s cross-motion for summary judgment. The parties were ordered to meet and confer about settlement and file a joint status letter by April 19, 2024. The opinion directed the Clerk of Court to terminate the docket entries for the two motions.