Markevics v. Liberty Mutual Insurance

Santucci, J.,

dissents and votes to reverse the order appealed from in the following memorandum in which Thompson, J., joins: In my opinion, the homeowners’ insurance policy issued by the defendant Liberty Mutual Insurance Company (hereinafter Liberty) was never written or intended to provide dram shop coverage, and thus I vote to reverse.

Pursuant to Insurance Law § 3420 (d), an insurer has an obligation to “give written notice [of its disclaimer] as soon as is reasonably possible * * * to the insured and the injured person or any other claimant.” However, there is no reason for an insurer to timely disclaim coverage which does not exist under the policy ab initio (see, Zappone v Home Ins. Co., 55 NY2d 131). Contrary to the opinion of our colleagues in the majority, the homeowners’ policy at issue did not furnish coverage in the first instance.

As noted by the majority, Liberty’s policy states that it provides coverage for a lawsuit brought against an insured for damages because of bodily injury caused by an occurrence. It defines the term “occurrence” as an “accident.” In the majority’s opinion, it is “beyond question that a claim was made against *289[O’Brien] for damages because of bodily injury caused by an occurrence.” However, while there is no doubt that the plaintiff sustained bodily injury in an automobile accident, her claim against O’Brien does not arise from that “occurrence,” but instead arises as a result of Kerry O’Brien’s (hereinafter O’Brien) alleged “non-accidental” action of serving alcohol to the driver of the car in which the plaintiff was injured. Such action does not constitute an occurrence within the meaning of this policy.

More importantly, the plaintiff is only able to assert a claim against O’Brien by virtue of the so-called Dram Shop statute (see, General Obligations Law § 11-101). Indeed, in the absence of this statute, the plaintiff would have no legally cognizable claim against O’Brien. Therefore, insofar as O’Brien is concerned, the plaintiff’s claim is not based upon an occurrence under the policy, but is a purely statutory creation. However, nowhere in the policy is there language which would support the conclusion that liability coverage is provided for a claim asserted under General Obligations Law § 11-101.

In fact, it is unreasonable to find that this policy ever contemplated indemnification coverage for a risk (such as dram shop liability) which is so completely unrelated to the insurance coverage purposes of a homeowners’ policy. To require coverage under the circumstances presented herein (i.e., as a result of the insurer’s failure to timely disclaim) would “produce the unfair result * * * [of] imposing on the insurer an added source of indemnification which had never been contracted for and for which no premium had ever been paid’ ” (Planet Ins. Co. v Bright Bay Classic Vehicles, 75 NY2d 394, 402, quoting Zappone v Home Ins. Co., supra).

Furthermore, this conclusion is not altered by the fact that the policy contains the “business pursuits” exclusion, because in the first instance, the plaintiff’s claim does not fall within the policy’s coverage provisions (cf., Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185; Handelsman v Sea Ins. Co., 85 NY2d 96). I am also aware that this Court has recently held that an insurer is required to timely disclaim coverage under an automobile policy’s business pursuits exclusion in connection with an insured police officer’s underinsured motorist claim arising from injuries he suffered when he was struck by a vehicle while in the course of investigating another motor vehicle accident (see, Matter of Transportation Ins. Co. v Sellitto, 267 AD2d 462). However, the Sellitto case and the case at bar involve two fundamentally different types of insurance policies, automobile versus homeowners’. It is this very difference which *290makes the two cases easily distinguishable since it is clear that the automobile policy in Sellitto provided coverage, ab initio, for an underinsured motorist claim by the insured. Indeed, it is beyond cavil that underinsured motorist coverage is contemplated by an automobile insurance contract which contains such option. Thus, since the Sellitto policy did provide underinsured motorist coverage, except for the business pursuit exclusion, the insurer therein was obligated to timely disclaim based on the exclusion. Here, on the other hand, the homeowners’ policy did not provide “dram shop” coverage in the first instance, despite the fact that the policy also contained a business pursuits exclusion.

Therefore, there was no obligation upon the part of Liberty to timely disclaim (pursuant to the business pursuits exclusion) coverage which never existed, and its failure to do so does not preclude its denial of coverage for the claim asserted against O’Brien by the plaintiff (see, Matter of Prudential Prop. & Cas. Ins. Co. v Hobson, 67 NY2d 19; Matter of Worcester Ins. Co. v Bettenhauser, supra). Accordingly, I would reverse the order of the Supreme Court insofar as appealed from and declare that Liberty is not obligated to indemnify and defend O’Brien in the underlying action.