Pro's Choice Beauty Care, Inc. v. Great N. Ins. Co.

190 A.D.3d 868

140 N.Y.S.3d 544

PRO'S CHOICE BEAUTY CARE, INC., appellant-respondent,

v.GREAT NORTHERN INSURANCE COMPANY, respondent-appellant.

2018–10274

Index No. 608150/16

Supreme Court, Appellate Division, Second Department, New York.

Argued—November 9, 2020

January 20, 2021

Mintz Levin Cohn Ferris Glovsky and Popeo, P.C., New York, N.Y. (Anthony J. Viola, Andre K. Cizmarik, and Kara M. Cormier of counsel), for appellant-respondent.

Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, New York, N.Y. (Katherine E. Tammaro of counsel), for respondent-appellant.

LEONARD B. AUSTIN, J.P., ROBERT J. MILLER, BETSY BARROS, FRANCESCA E. CONNOLLY, JJ.

DECISION & ORDER

In an action to recover damages for breach of contract and for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff in an underlying action entitled Bumble and Bumble, LLC v. Pro's Choice Beauty Care, Inc., commenced in the United States District Court for the Southern District of New York under Docket No. 14–CV–6911, the plaintiff appeals, and the defendant cross-appeals, from an order of the Supreme Court, Suffolk County (Elizabeth H. Emerson, J.), dated August 3, 2018. The order, insofar as appealed from, denied that branch of the plaintiff's cross motion which was summary judgment on the issue of the defendant's liability for defense costs. The order, insofar as cross-appealed from, denied the defendant's motion, in effect, for summary judgment declaring that it is not obligated to defend or indemnify the plaintiff in the underlying action.

ORDERED that the order is affirmed insofar as appealed from; and it is further,

ORDERED that the order is reversed insofar as cross-appealed from, on the law, the defendant's motion, in effect, for summary judgment declaring that it is not obligated to defend or indemnify the plaintiff in the underlying action is granted, and the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment, inter alia, declaring that the defendant is not obligated to defend or indemnify the plaintiff in the underlying action entitled Bumble and Bumble, LLC v. Pro's Choice Beauty Care, Inc., commenced in the United States District Court for the Southern District of New York under Index No. 14–CV–6911; and it is further,

ORDERED one bill of costs is awarded to the defendant.

The plaintiff purchased commercial general liability insurance from the defendant (hereinafter the policy). Nonparty Bumble and Bumble, LLC, commenced an action against, among others, the plaintiff in the United States District Court for the Southern District of New York to recover damages and for injunctive relief based on, inter alia, trademark infringement (hereinafter the underlying action). The plaintiff tendered notice of the underlying action to the defendant, and the defendant disclaimed coverage. The plaintiff ultimately settled the underlying action.

The plaintiff commenced this action against the defendant to recover damages for breach of contract and for certain declaratory relief. The defendant moved for summary judgment, in effect, declaring that it is not obligated to defend or indemnify the plaintiff in the underlying action, and the plaintiff cross-moved, inter alia, for summary judgment on the issue of the defendant's liability for defense costs. The Supreme Court denied the motion and the cross motion. The plaintiff appeals and the defendant cross-appeals.

"A duty to defend is triggered by the allegations contained in the underlying complaint" ( BP A.C. Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708, 714, 840 N.Y.S.2d 302, 871 N.E.2d 1128 ; see One Reason Rd., LLC v. Seneca Ins. Co., Inc., 163 A.D.3d 974, 83 N.Y.S.3d 235 ; Cumberland Farms, Inc. v. Tower Group, Inc., 137 A.D.3d 1068, 1070, 28 N.Y.S.3d 119 ). An insurer's duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy (see Fitzpatrick v. American Honda Motor Co., Inc., 78 N.Y.2d 61, 571 N.Y.S.2d 672, 575 N.E.2d 90 ; One Reason Rd., LLC v. Seneca Ins. Co., Inc., 163 A.D.3d 974, 83 N.Y.S.3d 235 ; QBE Ins. Corp. v. Adjo Contr. Corp., 121 A.D.3d 1064, 1079, 997 N.Y.S.2d 425 ). "If the allegations of the complaint are even potentially within the language of the insurance policy, there is a duty to defend" ( Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435, 443, 749 N.Y.S.2d 456, 779 N.E.2d 167 ).

"In determining a dispute over insurance coverage, we first look to the language of the policy" ( Consolidated Edison Co. of N.Y., Inc. v. Allstate Ins. Co., 98 N.Y.2d 208, 221, 746 N.Y.S.2d 622, 774 N.E.2d 687 ). "As with any contract, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning" ( White v. Continental Cas. Co., 9 N.Y.3d 264, 267, 848 N.Y.S.2d 603, 878 N.E.2d 1019 ). Although the insurer has the burden of proving the applicability of an exclusion (see Seaboard Sur. Co. v. Gillette Co., 64 N.Y.2d 304, 311, 486 N.Y.S.2d 873, 476 N.E.2d 272 ), it is the insured's burden to establish the existence of coverage (see Lavine v. Indemnity Ins. Co., 260 N.Y. 399, 410, 183 N.E. 897 ). Accordingly, "[where] the existence of coverage depends entirely on the applicability of [an] exception to the exclusion, the insured has the duty of demonstrating that it has been satisfied" ( Borg–Warner Corp. v. Insurance Co. of N. Am., 174 A.D.2d 24, 31, 577 N.Y.S.2d 953 ; see Platek v. Town of Hamburg, 24 N.Y.3d 688, 694, 3 N.Y.S.3d 312, 26 N.E.3d 1167 ; Castillo v. Prince Plaza, LLC, 164 A.D.3d 1418, 1419–1420, 84 N.Y.S.3d 529 ; Copacabana Realty, LLC v. Fireman's Fund Ins. Co., 130 A.D.3d 771, 772, 15 N.Y.S.3d 357 )...