Harleysville Preferred Ins. Co. v. Allstate Prop. & Cas. Ins. Co.

HARLEYSVILLE PREFERRED INSURANCE COMPANY, Plaintiff, v. ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, et al., Defendants.

18-CV-08306 (PMH)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 22, 2021

MEMORANDUM OPINION AND ORDER

PHILIP M. HALPERN, United States District Judge:

Plaintiff Harleysville Preferred Insurance Company ("Harleysville") brings this action for a declaratory judgment against Defendants Allstate Property and Casualty Insurance Company ("Allstate"), Sun Dal Kim ("Kim"), Sun Kim Cleaners, Inc. ("Cleaners"), and Il Whan Kho ("Kho") seeking a declaration that it has no duty to defend or indemnify Kim or Cleaners in the underlying state court action entitled Kho v. Sun Kim, et al., pending in the Supreme Court of the State of New York, Westchester County, under Index Number 55408/2017 (the "Underlying Action"). Harleysville also seeks a declaration that it has no legal obligation to reimburse Kim or Cleaners for any damages, costs, expenses and/or attorneys' fees incurred in the Underlying Action. (Doc. 2, "Compl."). Harleysville seeks further a declaration that Allstate has a duty to defend and indemnify Kim and Cleaners in the Underlying Action; and finally, that Allstate is required to reimburse Harleysville for attorneys' fees and costs incurred by Harleysville in the Underlying Action.

Before the Court are motions for summary judgment pursuant to Federal Rule of Civil Procedure 56 filed by Harleysville (Doc. 28; Doc. 28-1, "Harleysville Br.") and Allstate (Doc. 30; Doc. 33, "Allstate Br.").¹ For the reasons set forth below, Harleysville's motion is DENIED and Allstate's motion is GRANTED.

BACKGROUND

The facts, as recited below, are taken from Harleysville's Complaint, its Local Civil Rule 56.1 Statement (Doc. 28-2, "Harleysville 56.1 Stmt."), Allstate's Local Civil Rule 56.1 Statement (Doc. 30-1, "Allstate 56.1 Stmt."), and the admissible evidence submitted by the parties.

I. The Underlying Action

On or about April 18, 2017, Kho filed the Underlying Action seeking to recover for personal injuries allegedly sustained while on the premises owned and maintained by Kim and Cleaners. (Compl. ¶ 13; Harleysville 56.1 Stmt. ¶ 12; Allstate 56.1 Stmt. ¶¶ 11-14; Doc. 28-5, "Kalik Cert." Ex. D, "State Compl."). Kho alleged in the Underlying Action that his injuries were caused by the negligence of Kim and Cleaners in their ownership, operation, management, supervision, maintenance, and control of the subject premises. (State Compl. ¶ 22).

Kim and Kho testified at their depositions in the Underlying Action that the accident occurred in connection with the acquisition of a "pressing machine" for use in Kim's business, the Cleaners. (Harleysville 56.1 Stmt. ¶¶ 1-2; Allstate 56.1 Stmt. ¶¶ 40-46; Kalik Cert. Ex. A, "Kim Dep." at 15:21-24, 19:18-20, 20:13-21:15, 22:23-23:11; id. Ex. B, "Kho Dep." at 27:21-29:16). On February 28, 2017, Kim and Kho traveled to Fort Lee, New Jersey, in Kim's 2009 Xterra—with a trailer attached by hitch—to pick up the pressing machine, and drove it back to the Cleaners' store. (Harleysville 56.1 Stmt. ¶¶ 2-4; Kim Dep. at 15:21-24, 20:13-21:15, 21:24-23:11; Kho Dep. at 27:21-29:16, 33:3-7). When Kim and Kho returned to the Cleaners' location in YorktownHeights, New York, Kim parked his vehicle with the trailer attached at the rear door of the store, whereupon Kim and Kho exited the vehicle. (Harleysville 56.1 Stmt. ¶¶ 4-6; Kim Dep. at 23:9-15; Kho Dep. 33:3-35:10). Kim testified that he told Kho "to get out of the way before [he] unhitched the trailer from the car because [he] knew that the machine might topple over." (Kim Dep. at 27:7-10). Kim testified further that "after [he] made sure that Mr. Kho moved out of the way, [he] unhitched the trailer, and then the accident occurred." (Id. at 27:10-12) (emphasis added). The machine fell, Kho's left leg was injured, and an ambulance was called to the scene. (Id. at 28:3-30:11).

Harleysville defended Kim and Cleaners in the Underlying Action under a reservation of rights. (Harleysville 56.1 Stmt. ¶ 13 (citing Kalik Cert. Ex. N)). On or about September 21, 2017, Harleysville provided Allstate with notice of the claim and the Underlying Action. (Id. ¶ 14; Allstate 56.1 Stmt. ¶ 26). On or about November 16, 2017, Allstate issued a disclaimer letter, denying and disclaiming liability under its policy of insurance. (Doc. 32-4).

II. The Policies

A. The Harleysville Policy

Harleysville issued a Businessowners Policy to Cleaners (the "Harleysville Policy") for a policy period from July 28, 2016 to July 28, 2017. (Harleysville 56.1 Stmt. ¶ 10 (citing Kalik Cert. Ex. E, "H. Pol.")). The "[a]vailable liability limits are $2 Million occurrence with a $4 Million aggregate" (Kalik Cert. Ex. N at 3), in connection with coverage for "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury', 'property damage' or 'personal and advertising injury' to which this insurance applies. [Harleysville] will have the right and duty to defend the insured against any 'suit' seeking those damages." (Id.; H. Pol. at 115). Asis relevant to the instant motion and this action, the Harleysville Policy contains the following exclusion:

B. Exclusions

1. Applicable to Business Liability Coverage

This insurance does not apply to:

. . .

g. "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".

This exclusion applies even if the claims allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by an insured, if the "occurrence" which caused the "bodily injury" or "property damage" involved the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft that is owned or operated by or rented or loaned to any insured.

(H. Pol. at 100 (emphasis omitted)). The Harleysville Policy defines "auto" as follows:

2. "Auto" means:

a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or

b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance or motor vehicle registration law where it is licensed or principally garaged. However, "auto" does not include "mobile equipment".

(Id. at 107). The Harleysville Policy further defines "loading and unloading" as follows:

11. "Loading or unloading" means the handling of property:

a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or "auto";

b. While it is in or on an aircraft, watercraft or "auto"; or

c. While it is being moved from an aircraft, watercraft or "auto" to the place where it is finally delivered;

but "loading or unloading" does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the aircraft, watercraft or "auto".

(Id. at 108).

B. The Allstate Policy

Allstate issued an Auto Policy to Kim and Jaesun Kim (the "Allstate Policy") for a policy period from January 10, 2017 to July 10, 2017. (Allstate 56.1 Stmt. ¶ 22; Harleysville 56.1 Stmt. ¶ 11; Doc. 31-7, "Berberich Decl." Ex. G, "A. Pol.").

The Allstate Policy provides, in relevant part, as follows:

Part I - Automobile Liability Insurance

Bodily Injury - Coverage AA

Property Damage - Coverage BB

We will pay for all damages an insured person is legally obligated to pay - because of bodily injury or property damage meaning:

(1) bodily injury, sickness, disease or death to any person, including loss of services; and

(2) damage to or destruction of property, including loss of use.

Under these coverages, your policy protects an insured person from claims for accidents arising out of the ownership, maintenance or use, loading or unloading of an insured auto.

(A. Pol. at 23 (emphasis omitted)). Thus, for coverage to apply under the Allstate Policy, the accident must arise out of the ownership, maintenance, use, loading or unloading of an auto; and the auto must be an "insured auto" as defined in the Allstate Policy. Under the Allstate Policy, an "insured auto" is defined as follows:

Insured Autos

(1) Any auto described on the Policy Declarations. This includes the four wheel private passenger auto or utility auto you replace it with.

(2) An additional four wheel private passenger auto or utility auto you become the owner of during the premium period. This auto will be covered if we insure all other private passenger autos or utility autos you own. You must, however, tell us within 60 days of acquiring the auto. You must pay any additional premium.

(3) A substitute four wheel private passenger auto or utility auto, not owned by you or a resident, being temporarily used while your insured auto is being serviced or repaired, or if your insured auto is stolen or destroyed.

(4) A non-owned auto used by you or a resident relative with the owner's permission. This auto must not be available or furnished for the regular use of an insured person.

(5) A trailer while attached to an insured auto. The trailer must be designed for use with a private passenger auto or utility auto. This trailer can't be used for business purposes with other than a private passenger auto or utility auto.

(Id. at 24 (emphasis omitted)).

III. The Instant Action and Motions for Summary Judgment

Harleysville commenced the instant action on September 12, 2018 contending that the Harleysville Policy's exclusion applies to bar coverage for the injuries allegedly sustained by Kho "arising out of the ownership, maintenance or use or entrustment to others of any aircraft, 'auto' or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and 'loading and unloading.'" (Compl. ¶ 19). Harleysville alleges that discovery in the...