Napoli v. Nat'l Sur. Corp. ( 2023 )

22-1516
Napoli v. Nat’l Sur. Corp.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit,
2 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
3 New York, on the 2nd day of March, two thousand twenty-three.
4
5 PRESENT:
6 GUIDO CALABRESI,
7 MICHAEL H. PARK,
8 WILLIAM J. NARDINI,
9 Circuit Judges.
10 _____________________________________
11
12 Paul Napoli and Marie Kaiser Napoli,
13
14 Plaintiffs-Appellants,
15
16 v.
17
18 National Surety Corporation, No. 22-1516
19
20 Defendant-Appellee.*
21 _____________________________________
22
23 FOR PLAINTIFFS-APPELLANTS: MEGHAN K. FINNERTY, Offit
24 Kurman, P.A., Plymouth
25 Meeting, P.A.
26
27 FOR DEFENDANT-APPELLEE: ADAM I. STEIN, Cozen
28 O’Connor, New York, N.Y.
29
* The Clerk of Court is respectfully requested to amend the official caption as set forth above.
1 Appeal from a judgment of the United States District Court for the Southern District of
2 New York (Rakoff, J.).
3 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
4 DECREED that the judgment of the district court is AFFIRMED.
5 Paul Napoli and Marie Kaiser Napoli (“Plaintiffs”) seek a declaratory judgment that
6 Defendant National Surety Corporation (“NSC”) has a duty to defend them in a suit brought by
7 Paul Napoli’s former employee Denise Rubin. Plaintiffs have homeowner’s and excess
8 insurance policies through NSC (“NSC Policy”). The homeowner’s insurance policy provides
9 that NSC will defend a suit brought against Plaintiffs “for damages because of . . . personal injury.”
10 J. App’x at 131. But the policy excludes coverage for claims “arising out of[] business
11 activities . . . of any insured.” Id. at 133. In 2015, Denise Rubin sued Paul Napoli and law firms
12 associated with Paul Napoli for sex discrimination, breach of contract, and quantum meruit.
13 Rubin later amended her complaint to add allegations of retaliation against Paul Napoli.
14 Plaintiffs then brought this suit against NSC. NSC moved to dismiss under Rule 12(b)(6),
15 arguing that Rubin’s amended complaint fell under the business activities exclusion. The
16 magistrate judge issued a Report and Recommendation recommending that the district court grant
17 NSC’s motion to dismiss. The district court adopted the Report and Recommendation in full
18 over Plaintiffs’ objections. We assume the parties’ familiarity with the underlying facts, the
19 procedural history of the case, and the issues on appeal.
20 We review a district court’s dismissal of a complaint under Federal Rule of Civil Procedure
21 12(b)(6) de novo. See Goe v. Zucker, 43 F.4th 19, 28 (2d Cir. 2022).
2
1 The district court correctly decided that NSC has no duty to defend Plaintiffs because all
2 of the claims in Rubin’s complaint fall under the business activities exclusion of the NSC Policy.
3 The NSC Policy excludes coverage for claims “arising out of[] business activities.” J. App’x at
4 133. In the insurance context, New York courts have interpreted “arising out of” to mean
5 “originating from, incident to, or having connection with.” Fed. Ins. Co. v. Am. Home Assurance
6 Co., 639 F.3d 557, 568 (2d Cir. 2011) (quoting Maroney v. N.Y. Cent. Mut. Fire Ins. Co., 839
7 N.E.2d 886, 889 (N.Y. 2005)). Rubin’s complaint alleges that after she filed her initial complaint
8 against Paul Napoli and his law firms for employment discrimination, he “took or compelled others
9 working at his behest to take a number of retaliatory actions against her,” including filing
10 “meritless” counterclaims and new lawsuits against her, filing a “meritless” disciplinary complaint,
11 and “harassing [her] former clients.” J. App’x at 216. These claims all “originat[e] from” and
12 have a “connection with” Rubin’s employment at Paul Napoli’s law firms. See Fed. Ins. Co.,
13 639 F.3d at 568. NSC has thus shown that there is “no possible factual or legal basis on which
14 [NSC] might eventually be . . . obligated to indemnify” Plaintiffs because all of Rubin’s claims
15 fall under the business activities exclusion of the NSC Policy. See Brooklyn Ctr. for
16 Psychotherapy, Inc. v. Phila. Indem. Ins. Co., 955 F.3d 305, 310 (2d Cir. 2020) (quoting Mary &
17 Alice Ford Nursing Home Co. v. Fireman’s Ins. Co. of Newark, N.J., 86 A.D.2d 736, 737 (3d
18 Dep’t 1982)).
19 Plaintiffs’ argument that Rubin served as their personal counsel does not change the result.
20 Rubin’s complaint alleges that Plaintiffs made false allegations about her in the context of her suit
21 for employment discrimination. To find that such allegations somehow arose from Plaintiffs’
22 personal activities rather than their business activities would require us to “hypothesize or imagine
3
1 episodes or events that cannot be found among the allegations.” Stamford Wallpaper Co. v. TIG
2 Ins., 138 F.3d 75, 81 (2d Cir. 1998). The duty to defend cannot be established through a
3 “strained, implausible reading of the complaint that is linguistically conceivable but tortured and
4 unreasonable.” Century 21, Inc. v. Diamond State Ins. Co., 442 F.3d 79, 82 (2d Cir. 2006)
5 (cleaned up).
6 We have considered all of Plaintiffs’ remaining arguments and find them to be without
7 merit. For the foregoing reasons, the judgment of the district court is AFFIRMED.
8 FOR THE COURT:
9 Catherine O’Hagan Wolfe, Clerk of Court
4