Progressive Halcyon Insurance v. Giacometti

Appeal and cross appeal from a judgment (denominated order) of the Supreme Court, Niagara County (Richard C. Kloch, Sr., A.J.), entered January 28, 2009 in a declaratory judgment *1504action. The judgment, among other things, denied in part plaintiffs motion for summary judgment.

It is hereby ordered that the judgment so appealed from is modified on the law by granting that part of the motion of plaintiff with respect to defendant Amy G. Giacometti and granting judgment in favor of plaintiff as follows:

It is adjudged and declared that plaintiff is not obligated to defend or indemnify defendant Amy G. Giacometti in the underlying personal injury actions, by denying that part of the motion with respect to defendants Vehicle Asset Universal Leasing Trust, General Motors Acceptance Corporation and Central Originating Lease Trust and vacating the declaration, by granting in its entirety the cross motion of defendants Vehicle Asset Universal Leasing Trust, General Motors Acceptance Corporation and Central Originating Lease Trust and granting judgment in favor of those defendants as follows:

It is adjudged and declared that plaintiff is obligated to defend and indemnify those defendants in connection with the negligent entrustment cause of action in the underlying personal injury action, and as modified the judgment is affirmed without costs, and the matter is remitted to Supreme Court, Niagara County, for further proceedings in accordance with the following memorandum: These three consolidated appeals arise from an automobile accident that occurred on an interstate highway in North Carolina. Shannon M. Doyle, a defendant in appeal Nos. 2 and 3, was driving a vehicle in which there were two passengers: Amy G. Giacometti, a defendant in appeal No. 1 and the plaintiff in appeal No. 2, and Marie M. Fiocco, a defendant in appeal No. 1 (in which she was incorrectly sued as Marley M. Fiocco) and the plaintiff in appeal No. 3. For reasons that are in dispute, Doyle steered the vehicle to the left, at which time Giacometti grabbed the steering wheel and pulled it to the right. The vehicle thereafter went off the road, became airborne, and crashed among trees, injuring the three women. Doyle had leased the vehicle from Vehicle Asset Universal Leasing Trust, General Motors Acceptance Corporation (GMAC), and Central Originating Lease Trust, defendants in appeal Nos. 1 and 3 (collectively, GMAC defendants), and the vehicle was insured by Progressive Halcyon Insurance Company (Progressive), the plaintiff in appeal No. 1.

Giacometti commenced a personal injury action against Doyle in Niagara County (appeal No. 2), and Fiocco commenced a personal injury action in the same county against Doyle, the GMAC defendants, and Giacometti (appeal No. 3). Doyle also commenced a personal injury action against Giacometti in the *1505same county, the status of which cannot be discerned from the record before us. Finally, Progressive and Doyle initially commenced a declaratory judgment action in the same county, but Progressive thereafter filed an amended complaint omitting Doyle as a plaintiff (appeal No. 1), seeking judgment declaring that it is not obligated to defend or indemnify Giacometti in the underlying personal injury actions or the GMAC defendants in connection with Fiocco’s cause of action asserting that they negligently entrusted the vehicle to Doyle. By the judgment in appeal No. 1, Supreme Court, inter alia, denied that part of Progressive’s motion for summary judgment declaring that Progressive is not obligated to defend or indemnify Giacometti, and denied the cross motion of the GMAC defendants for summary judgment declaring that Progressive is obligated to defend and indemnify them in connection with the negligent entrustment cause of action in the underlying personal injury action commenced by Fiocco, and for summary judgment awarding them attorneys’ fees incurred by them in their defense of the declaratory judgment action. Progressive and the GMAC defendants each appeal from parts of that judgment. In her appeals from the orders in appeal Nos. 2 and 3, Doyle contends that the court erred in denying her motions for summary judgment dismissing the complaint in appeal No. 2, as well as the complaint in appeal No. 3 against her.

In appeal No. 1, we agree with Progressive that the court erred in denying that part of its motion for summary judgment declaring that it is not obligated to defend or indemnify Giacometti in the underlying personal injury actions. We therefore modify the judgment in appeal No. 1 accordingly. Progressive had disclaimed coverage with respect to Giacometti in those actions on the ground that Giacometti was not an insured person within the meaning of the terms of the policy issued to Doyle. That policy defines an “insured person” in relevant part as “any person with respect to an accident arising out of that person’s use of a covered vehicle with the express or implied permission of you or a relative.” We agree with Progressive that it met its burden of establishing that Giacometti had neither the express nor the implied permission of Doyle to use the vehicle. The evidence in the record, including the deposition testimony of Giacometti, establishes that she did not have express permission to take control of the steering wheel, and we further conclude on the record before us that Doyle did not impliedly consent to Giacometti’s use of the vehicle in that manner (see Allstate Ins. Co. v Gill, 192 AD2d 1123 [1993]; Electric Ins. Co. v Boutelle, 122 AD2d 332 [1986]). The deposition testimony of Giacometti “that [s]he grabbed the wheel to *1506prevent an accident does not create a question of fact on the issue of permissive use” (Allstate Ins. Co., 192 AD2d at 1123-1124). It is well settled that “[w]here the provisions of [an insurance] policy ‘are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement’ ” (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232 [1986]; see Fulmont Mut. Ins. Co. v New York Cent. Mut. Fire Ins. Co., 4 AD3d 724, 725 [2004]).

We reject the further contention of Giacometti and State Farm Insurance Company, a defendant in appeal No. 1 (State Farm), that any use of a vehicle is with permission of the owner pursuant to the presumption in Vehicle and Traffic Law § 388 (1). Initially, we agree with Giacometti and State Farm that Doyle, as the lessee of the vehicle for a period of more than 30 days, was an owner within the meaning of that statute (see §§ 128, 388 [3]). Furthermore, it is well settled that “proof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner’s permission, express or implied . . . Once the plaintiff meets its initial burden of establishing ownership, a logical inference of lawful operation with the owner’s consent may be drawn from the possession of the operator . . . This presumption may be rebutted, however, by substantial evidence sufficient to show that a vehicle was not operated with the owner’s consent” (Murdza v Zimmerman, 99 NY2d 375, 380 [2003] [internal quotation marks omitted]). Here, that presumption is inapplicable because it was overcome by substantial evidence that the use was without the permission of Doyle, and we therefore conclude that the court erred in denying that part of Progressive’s motion.

We agree with the GMAC defendants in appeal No. 1, however, that the court erred in granting that part of Progressive’s motion for summary judgment declaring that Progressive is not obligated to defend or indemnify them in connection with the negligent entrustment cause of action against them in the underlying personal injury action commenced by Fiocco and in denying as moot that part of their cross motion for summary judgment declaring that Progressive is obligated to defend and indemnify them in connection with that cause of action. We therefore further modify the judgment in appeal No. 1 accordingly. Although the court by its order in appeal No. 3 ultimately granted the motion of the GMAC defendants for summary judgment dismissing Fiocco’s complaint against them, including the negligent entrustment cause of action against them, Progressive had commenced the action in appeal No. 1 before that motion *1507was granted, and the GMAC defendants expended, inter alia, significant attorneys’ fees in their defense of that cause of action before it was dismissed against them. “It is well established that a liability insurer has a duty to defend its insured in a pending lawsuit if the pleadings allege a covered occurrence, even though facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered” (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 63 [1991]; see Petr-All Petroleum Corp. v Fireman’s Ins. Co. of Newark, 188 AD2d 139, 142 [1993]). Contrary to Progressive’s contention, the fact “[t]hat the claimed negligence here is based upon the entrustment of the motor vehicle rather than, for example, its condition, in no way alters the unarguable fact that the claim arises out of the ownership and use of the vehicle” (Progressive Cas. Ins. Co. v Jackson, 151 Misc 2d 479, 483 [1991], affd 181 AD2d 1035 [1992]). Thus, the GMAC defendants are entitled to indemnification from Progressive for their defense of Fiocco’s negligent entrustment cause of action against them.

Furthermore, with respect to the judgment in appeal No. 1, we note “that ‘an insurer’s responsibility to defend reaches the defense of any actions arising out of the occurrence,’ and defense expenses are recoverable by the insured, including those incurred in defending against an insurer seeking to avoid coverage for a particular claim” (National Grange Mut. Ins. Co. v T.C. Concrete Constr., Inc., 43 AD3d 1321, 1322 [2007], quoting Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21 [1979]). Therefore, “an insured who prevails in an action brought by an insurance company seeking a declaratory judgment that it has no duty to defend or indemnify the insured may recover attorneys’ fees regardless of whether the insurer provided a defense to the insured” (U.S. Underwriters Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 598 [2004]; see National Grange Mut. Ins. Co., 43 AD3d at 1322-1323). We therefore further modify the judgment in appeal No. 1 accordingly, and we remit the matter to Supreme Court to determine the amount of reasonable attorneys’ fees to which the GMAC defendants are entitled in the declaratory judgment action following a hearing, if necessary (see National Union Fire Ins. Co. of Pittsburgh, Pa. v City of Oswego, 295 AD2d 905, 906-907 [2002]).

We reject the contention of Doyle in appeal Nos. 2 and 3 that she established her entitlement to summary judgment dismissing the Giacometti complaint as well as the Fiocco complaint in its entirety against her. We conclude that the negligent entrustment cause of action against Doyle in the Fiocco action is lacking in merit inasmuch as we have concluded that Doyle did not *1508give Giacometti express or implied permission to take control of the steering wheel, and thus the court erred in denying that part of Doyle’s motion in appeal No. 3. We therefore modify the order in appeal No. 3 accordingly. We further conclude, however, that the court properly denied that part of the motion of Doyle in appeal No. 2 for summary judgment dismissing the complaint and properly denied that part of her motion in appeal No. 3 for summary judgment dismissing the complaint against her, with the exception of the negligent entrustment cause of action. There are issues of fact on the record before us with respect to the complaint in appeal No. 2 and the remainder of the complaint in appeal No. 3 concerning Doyle’s alleged negligence and whether such negligence caused the accident (see generally Huff v Rodriguez, 45 AD3d 1430, 1431 [2007]; Chilberg v Chilberg, 13 AD3d 1089, 1090 [2004]).

We have considered the remaining contentions of the parties and conclude that they are without merit.

All concur except Fahey, J., who dissents in part in accordance with the following memorandum.