Agoado Realty Corp. et al.,
United International Insurance Company,
Appellant, et al.,
2000 NY Int. 79
In this appeal we are asked to determine whether the intentional assault of a tenant by an unknown assailant is an accident and hence a covered occurrence under a landlord's insurance policy, and whether a policy exclusion for expected or intended injuries applies. We conclude that the loss is a covered occurrence and, concomitantly, that the policy exclusion does not apply to the circumstances presented here.
Plaintiff landlords owned a building in which on May
19, 1996, a tenant was murdered by an unknown assailant. On
Plaintiffs received a copy of the summons and complaint on June 9, 1997 and notified their broker. On June 20, 1997 defendant insurer received the summons and complaint, as well as a notice of occurrence. Defendant disclaimed coverage several weeks later citing provisions in the policy requiring notice as soon as practicable of any occurrence, claim or suit brought against the insured. Defendant noted that it did not receive notice of the occurrence until 397 days after the assault, nor did it receive notice of suit until 130 days after service of the summons and complaint on the Secretary of State.
Shortly thereafter, plaintiffs commenced this action
seeking a declaration that defendant was required to defend and
indemnify them in the underlying wrongful death action.
Defendant raised five affirmative defenses, the first three based
on plaintiffs' failure to notify defendant as soon as practicable
of the occurrence, the lawsuit and the claim. Almost one year
Supreme Court granted defendant's motion and denied plaintiffs' cross-motion. The Appellate Division unanimously modified. The court denied defendant's motion to amend, concluding that the wrongful death action was premised on an occurrence as defined in the policy and that Insurance Law § 3420(d) precluded late assertion of the policy's expected or intended exclusion. The court also granted partial summary judgment to plaintiffs to the extent of dismissing the second and third affirmative defenses (late notice of the lawsuit and claim). We agree with the Appellate Division's conclusion that defendant should not have been permitted to amend its answer. However, questions of fact remain as to whether plaintiffs notified defendant of their claim as soon as practicable and we therefore modify the Appellate Division order.
The policy at issue covers bodily injury and property
damage only if caused by an occurrence that takes place on the
covered premise while the policy is in effect. An "occurrence,"
as defined by the policy, is an accident. The policy also
excludes claims for bodily injury and property damage that is
Several fundamental principles of insurance law come into play in this appeal. It is well established that the duty of an insurer to defend is broader than its duty to indemnify. The duty to defend arises whenever the allegations in the complaint against the insured fall within the risks covered by the policy. If, liberally construed, the complaint is within the embrace of the policy, the insurer must come forward to defend its insured (see, Ruder & Finn Inc. v. Seaboard Sur. Co., , 52 NY2d 663, 670).
In Miller v Continental Ins. Co. (40 2 675) this
Court articulated the rule for determining whether a loss is the
result of an accident or an intentional act as those terms are
commonly used in insurance policies. The term accident is
broadly defined in our jurisprudence, utilizing an average person
standard (see, id., at 676). As we noted in Miller, true
accidents, taken literally, may be rare occurrences. Indeed,
'in the strictest sense and dealing with the region of physical
nature there is no such thing as an accident' (id., citing
Landress v Phoenix Ins. Co., 291 US 491, 499 [Cardozo, J.]).
Thus, we concluded that, in deciding whether a loss is the result
Applying these age-old principles here, we conclude that the murder constitutes an accident for purposes of determining defendant's obligations to its insured. The pleadings in the underlying action set forth a claim of negligent security, demonstrating that the incident was unexpected, unusual and unforeseeable from the insureds' standpoint. Thus, the incident is a covered occurrence under the express terms of the policy.
Similarly, defendant cannot avail itself of the policy
exclusion since that exclusion applies only to bodily injuries
that are expected or intended from the standpoint of the
It cannot seriously be argued that the murder was
intended from plaintiffs' standpoint. Indeed, although the
Mt. Vernon Fire Ins. Co. v Creative Housing Ltd. (88 2 347) is easily distinguishable. In Mt. Vernon the insurer commenced a declaratory judgment action to disclaim coverage under a specific assault and battery exclusion contained in the policy. The exclusion unambiguously provided that no coverage shall apply under this policy for any claim * * * based on Assault and Battery, and Assault and Battery shall not be deemed an accident whether or not committed by or at the direction of the insured. The question before the Court was whether the victim's claim against the insured was based on assault or negligent failure to maintain safe premises if a third party perpetrates an assault. The Court concluded, based on the policy before it, that if no cause of action would exist but for the assault, it was immaterial whether the assault was committed by the insured, an employee of the insured or by a third party (see, id., at 353). Here the insurance policy does not contain an assault and battery exclusion; Mt. Vernon does not apply.
Finally, the Appellate Division was correct in
concluding that a question of fact exists regarding the first
affirmative defense alleging that plaintiffs failed to notify
defendant as soon as practicable of the May 19, 1996 occurrence.
Accordingly, the order of the Appellate Division should be modified, without costs, by reinstating defendant-appellant's second and third affirmative defenses, and, as so modified, affirmed. The certified question should be answered in the negative.
1 The Appellate Division concluded that the exclusion could not be used as an affirmative defense because of its late assertion and the strictures of Insurance Law § 3420(d). We agree. However, since the exclusion also is directed at liability arising out of the intentional conduct of the insured, our analysis of coverage under the occurrence provision of the policy corresponds to an analysis of the exclusion.