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New York Court Denies Summary Judgment Based on Ambiguous Insured v. Insured Exclusion

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Boro Park Land Co., LLC v. Princeton Excess Surplus Lines Ins. Co., 32 N.Y.S.3d 651 (2d Dep’t 2016). In June, the New York Appellate Division Second Department, applying New York law, held that an insurer’s duty to defend was not precluded by the terms of an Insured v. Insured exclusion which the court found to be ambiguous.

Boro Park Land Co., LLC (“Boro Park”) owned certain premises located in Brooklyn, which it leased to Boro Park Operating Co., LLC (“Center”) for the operation of a nursing home. Princeton Excess Surplus Lines Insurance Company issued a Senior Living Professional Liability, General Liability, and Employee Benefits Liability policy to the Center. Boro Park was named as an additional insured under the policy. An employee of the Center brought suit against Boro Park, alleging that she was injured on the premises. Boro Park tendered the claim to the insurer, which denied coverage, relying on an Insured v. Insured exclusion which precluded coverage for “[a]ny ‘claim’ made by or for the benefit of, or in the name or right of, one current or former insured against another current or former insured.”

Affirming the trial court, the Second Department concluded that the insurer’s duty to defend and was not precluded by the Insured v. Insured exclusion. The Court found that it was not clear from the language of the exclusion whether the plaintiff in the underlying case, an employee of the named insured, constituted an “insured” for purposes of applying the exclusion. It concluded that the exclusion was “ambiguous and subject to more than one interpretation.” Thus, the insurer failed to establish its prima facie entitlement to judgment as a matter of law, so summary judgment was properly denied, and the insurer was obligated to defend the underlying action