Britt v. General Star Indemnity Co.

11-3182-cv
Britt v. General Star Indemnity Co.
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
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 30th day of August, two thousand twelve.
5
6 PRESENT: ROBERT A. KATZMANN,
7 RICHARD C. WESLEY,
8 PETER W. HALL,
9 Circuit Judges.
10
11 ANDREW BRITT,
12
13 Plaintiff-Appellee,
14
15 v. 11-3182
16
17 GENERAL STAR INDEMNITY COMPANY,
18
19 Defendant-Appellant.*
20
21
22
23 FOR APPELLANT: CARA TSENG DUFFIELD (Daniel J. Standish,
24 on the brief), Wiley Rein LLP,
25 Washington, D.C.
26
27 FOR APPELLEES: EDWARD B. FLINK, Flink Smith LLC, Albany,
28 N.Y.
2930
31
*
The Clerk of Court is respectfully instructed to amend the
caption to conform with the caption above.
1 Appeal from the United States District Court for the
2 Northern District of New York (Hurd, J.).
3
4 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
5 AND DECREED that the judgment of United States District
6 Court for the Northern District of New York is REVERSED.
7 Defendant-Appellant General Star Indemnity Company
8 (“General Star”) appeals from an April 4, 2011, Decision and
9 Order of the United States District Court for the Northern
10 District of New York (Hurd, J.), declaring that General Star
11 was estopped from denying coverage under a commercial
12 umbrella policy (the “Policy”) General Star issued to
13 Pharmalogic Services, LLC (“Pharmalogic”) for an auto
14 accident involving Plaintiff-Appellee Andrew Britt (“Britt”)
15 and Dennis Bridges (“Bridges”), then an employee of
16 Pharmalogic. See Britt v. Gen. Star Indem. Co., 775 F.
17 Supp. 2d 454 (N.D.N.Y. 2011)(the “Order”). In its Order,
18 the district court noted that the Policy did not cover the
19 accident because Bridges did not have Pharmalogic’s
20 permission to drive the auto. Nevertheless, it concluded
21 that General Star was estopped from denying coverage because
22 it failed to timely notify Britt under New York Insurance
23 Law section 3420(d)(2) that it was disclaiming coverage
24 because of a policy exclusion. We disagree.
2
1 New York Insurance Law section 3420(d)(2) provides:
2 If under a liability policy issued or
3 delivered in this state, an insurer shall
4 disclaim liability or deny coverage for
5 death or bodily injury arising out of a
6 motor vehicle accident . . . it shall
7 give written notice as soon as is
8 reasonably possible of such disclaimer of
9 liability or denial of coverage to the
10 insured and the injured person or any
11 other claimant.
12
13 Failure to provide a Section 3420(d) disclaimer
14 precludes denial of coverage based on a policy exclusion. A
15 Section 3420(d)(2) disclaimer is unnecessary, however, when
16 a claim falls outside the scope of the policy's definition
17 of coverage. Zappone v. Home Ins. Co., 55 N.Y.2d 131, 135-
18 36 (1982). In that situation, “the insurance policy does
19 not contemplate coverage in the first instance, and
20 requiring payment of a claim upon failure to timely disclaim
21 would create coverage where it never existed." Worcester
22 Ins. Co. v. Bettenhauser, 95 N.Y.2d 185, 188 (2000).
23 Here, the district court erred in concluding that the
24 permissive use provision “operated as a policy exclusion.”
25 Britt, 755 F. Supp. 2d at 470. The Policy is a general
26 commercial umbrella policy issued to named insureds
27 Pharmalogic and its subsidiaries; Bridges is not a named
28 insured. (Joint Appendix (“J.A.”) 141, 161.) As Britt
3
1 concedes, the permissive use provision, which is contained
2 in the section of the Policy titled “Who Is An Insured,” is
3 the only portion of the Policy that can possibly grant
4 coverage to a non-named insured involved in an auto
5 accident. (J.A. 148-49.) It provides: “With respect to
6 any (i) auto . . ., any person is an insured while driving
7 such auto . . . with [Pharmalogic’s] permission.” (J.A.
8 149.) The definition of “auto” includes any “land motor
9 vehicle” that is not “mobile equipment.” (J.A. 155.) The
10 Policy does not include a rider or declaration that
11 specifies whether only certain autos, e.g., those registered
12 to Pharmalogic, are covered by the policy. Exclusions are
13 set forth in a separate section of the Policy. (J.A. 142-
14 45.)
15 The permissive use provision is a fundamental grant of
16 Policy coverage, not an exclusion. Therefore, the district
17 court erred in concluding that General Star was required to
18 issue a Section 3420(d) disclaimer. Because the Policy does
19 not insure specific autos, specific individuals, or
20 employees generally for auto accidents, permissive use is
21 the only way to define the scope of the Policy’s coverage
22 for auto accidents. Indeed, it is the only language in the
23 clause tying coverage to Pharmalogic, the named insured. To
4
1 interpret permissive use as a Policy exclusion would mean
2 that all accidents involving any autos are covered by the
3 Policy in the first instance—there would be no limit to the
4 Policy’s coverage.
5 For the foregoing reasons, the judgment of the district
6 court is hereby REVERSED.
7 FOR THE COURT:
8 Catherine O’Hagan Wolfe, Clerk
9
5