Emp'rs Ins. Co. of Wausau v. Harleysville Preferred Ins. Co.

EMPLOYERS INSURANCE COMPANY OF WAUSAU, Plaintiff, v. HARLEYSVILLE PREFERRED INSURANCE COMPANY,THE TRAVELERS INDEMNITY COMPANY,and THE ELECTRICAL EMPLOYERS SELF INSURANCE SAFETY PLAN, Defendants.

15cv4175 (DLC)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

February 29, 2016

OPINION AND ORDER

APPEARANCES:

For the plaintiff:

Janet Jakyung Lee

Marshall Todd Potashner

Jaffe & Asher LLP

600 Third Avenue, 9th Floor

New York, NY 10016

For defendant Harleysville Preferred Insurance Company:

Brooks Howard Leonard

Lance Jon Kalik

Riker Danzig Scherer Hyland & Perretti LLP

Headquarters Plaza

One Speedwell Avenue

Morristown, NJ 07962

For defendants The Travelers Indemnity Company and Travelers

Property Casualty Company of America:

Alan C. Eagle

Joanne Mary Engeldrum

Rivkin Radler, LLP

926 Rexcorp Plaza

Uniondale, NY 11556

DENISE COTE, District Judge:

This case arises from the tragic death of Nicholas Cavataio ("Cavataio") on August 5, 2014. Cavataio was working at a construction site when a large battery fell on him as it was being unloaded from a truck. Cavataio's estate filed a lawsuit in New York state court (the "Underlying Action"). This case concerns three insurance companies, Employers Insurance Company of Wausau ("Wausau"), Travelers Indemnity Company ("Travelers"), and Harleysville Preferred Insurance Company ("Harleysville"), who dispute who among them must defend and indemnify various defendants in that state court action. The motions currently before the Court concern the insurers' duty to defend. For the reasons that follow, neither Travelers nor Harleysville has a duty to defend the Underlying Action.

Background

The following facts are undisputed, unless otherwise noted.

I. The Incident of August 5, 2014

On August 5, 2014, Cavataio was working for Hellman Electric Corporation ("Hellman") on a construction project, known as TN Task 26, to install am integrated security system at the Throgs Neck Bridge in Bronx, New York. The project was pursuant to a contract between Hellman and the Triborough Bridge and Tunnel Authority ("TBTA"), an affiliate agency of the Metropolitan Transportation Authority ("MTA").

On that day, Hellman received a delivery of two largebatteries, one weighing 760 pounds, and the other weighing 2760 pounds, from Monarch Electric Company ("Monarch"). The batteries were manufactured by the Eaton Corporation ("Eaton"). The delivery was made in a truck (the "Truck") rented from Miller Auto Leasing Corporation ("Miller"). The Truck was registered and principally garaged in New Jersey. When the batteries were delivered, Monarch employee Timothy Delaney ("Delaney") and Hellman employee Carl Wrynn ("Wrynn") unloaded the batteries from the Truck. Wrynn and Delaney used a hydraulic pallet jack to move the batteries. According to Delaney, a pallet jack is "a mobile device with wheels and has a lever on top and two large, horizontal prongs extending from the bottom." The prongs may be placed into large wooden pallets in order to hydraulically lift the pallet and its contents.

As Wrynn and Delaney unloaded the second of the large batteries, the battery fell off the truck and struck Cavataio in the head, killing him. Immediately prior to the battery falling, Delaney had moved the pallet jack and battery onto the lift gate of the Truck, and had lowered the battery to be flush with the floor of the truck and lift gate, but had not moved the lift gate. Hellman prepared a report on the incident, which stated:

Nick Cavataio was in the parking lot area assistingCarl Wrynn (Hellman Employee) and truck driver from Monarch Electrical Supply (Tim [Delaney]). They unloaded crate #1 at 765 pounds with no problem. While unloading crate #2 at 2,735 pounds Tim from Monarch turned the pallet jack around on the 3,000 pound lift gate. All of a sudden the crate tipped over so fast that Carl Wrynn and Tim [Delaney] jumped down from the truck and noticed Nick Cavataio underneath by the side of the 2,735 pound crate. Nick [Cavataio] was bleeding excessively and died on impact. Carl Wrynn called General Foreman, Joseph Sergi who immediately called 911 (ambulance); Nick Cavataio was pronounced deceased on site.

Officers of the New York City Police Department interviewed Wrynn and Delaney and prepared a police report which stated:

On August 5, 2014, at approximately 0745 hours witness [redacted] M/W/43 and witness [redacted] M/W/46 were making a delivery of a battery cabinet weighing 2760 pounds at 4260 Throgsneck Expressway at the TBTA facility. Witness #1 was inside the delivery truck using a pump jack to move the skid containing the battery cabinet towards the truck lift with the assistance of witness #2. As witness #1 and #2 moved the pallet to the truck lift the skid began to slide forward off the pump jack. Witnesses were unable to hold the battery cabinet due to the amount of the weight. Battery Cabinet fell off the lift and struck the victim Nicolas Cavataio on the head causing his demise. Victim was pronounced [dead] at 0800 h[ou]rs by EMS.

II. The Underlying Action

On November 17, 2014, Cavataio's widow, Rosanne Cavataio ("Ms. Cavataio"), on behalf of both Cavataio's estate and herself, filed a lawsuit against the MTA, Eaton, Miller, Monarch, and the TBTA, in the New York Supreme Court, BronxCounty.¹ The complaint alleges that the defendants negligently and/or recklessly caused Cavataio's death, and includes claims for (1) conscious pain and suffering, (2) wrongful death, (3) violation of New York Labor Law § 240, (4) violation of New York Labor Law § 241, (5) violation of Rule 23 of the Industrial Code of the State of New York, (6) violation of New York Labor Law § 200, and (7) loss of consortium. In her bill of particulars, Ms. Cavataio identifies several alternative theories of liability: (1) defendants' failure to use the proper pallet jack to move the battery, (2) defendants' failure to properly unload the battery from the Truck, (3) defendants' failure to use a loading dock to unload the battery, and (4) defendants' failure to park the Truck in a safe location during unloading of the batteries. On January 15, 2015, the MTA and TBTA filed a third-party complaint against Hellman for indemnification and/or contribution in connection with any damages awarded to Ms. Cavataio in the Underlying Action, and for breach of contract because Hellman failed to obtain insurance as required by its contract with the MTA and TBTA.

Wausau is currently defending Hellman, the MTA, and theTBTA in the Underlying Action, subject to a reservation of rights. Wausau contends that Travelers and Harleysville also have a duty to defend Hellman, the MTA, and the TBTA in the Underling Action.

III. The Insurance Policies

There are three insurance policies at issue in this case. Wausau issued a general commercial liability policy to Hellman (the "Wausau Policy"), and is currently defending Hellman, the MTA, and the TBTA in the Underlying Action. Harleysville issued a business auto policy to Hellman (the "Harleysville Policy"). Travelers issued a commercial auto policy to Monarch (the "Travelers Policy"). Travelers and Harleysville have disclaimed coverage for the claims in the Underlying Action.

A. The Wausau Policy

The Wausau Policy provided coverage for one year beginning on June 27, 2014, which encompassed the August 2014 accident date. The limit on coverage under the Wausau Policy is $2,000,000 per occurrence and $4,000,000 in aggregate.

B. The Travelers Policy

Travelers issued the Travelers Policy to Consolidated Electrical Distributors, Inc. ("CED"). CED has subsidiaries in numerous states, one of which is Monarch. By endorsement dated November 11, 2013, Monarch was added as an additional namedinsured under the Travelers Policy.

The Travelers Policy contains the following provisions defining who is considered an "insured":

1. Who Is An Insured

The following are "insureds":

a. You² for any covered "auto"³.

b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except:

* * *

(4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto".

* * *

c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability.

With respect to autos "principally garaged in New Jersey," these provisions are modified by an endorsement titled "New Jersey Changes," which provides:

A. Changes In Who Is An Insured

Paragraph 1.b.(4) of Who Is An Insured in the Business Auto, Motor Carrier and Truckers Coverage forms is replaced by the following:

(4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto".

However, this paragraph does not apply for coverage up to the minimum financial responsibility limits specified in N.J.S.A. 39:6B-1.

The Travelers Policy states that Travelers will pay all sums an insured "must pay as damages because of 'bodily injury' or 'property damage' . . . caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto.'" The coverage limit under the Travelers Policy is $3,000,000 per accident. The Travelers Policy further provides that Travelers has the "duty to defend any 'insured' against a 'suit' asking for such damages," but that Travelers has no duty to defend suits related to injuries for which the Travelers Policy does not provide coverage.

The Travelers Policy contains two exclusions which Travelers contends are relevant to the Underlying Action. The first is the Employee Indemnification and Employer's Liability exclusion (the "Travelers Policy Employer's Liability Exclusion"), which provides:

This insurance does not apply to any of the following:

* * *

"Bodily injury" toa. An "employee" of the "insured" arising out of and in

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