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City and Army entered into an agreement…cont

During the second renewal period of the Agreement, the infant Joseph Stanley II was placed into care with foster parent Anita Nurse. On June 6, 2006, while in the custody of Ms. Nurse, the infant was injured. On or about August 2006, a Notice of Claim, dated June 20, 2006, was served on the City. On December 7, 2006, a 50(h) hearing was held of plaintiff Joseph Stanley, father and natural guardian of the infant plaintiff. In January 2007, the City and Army were served with a summons and complaint in the Stanley action.

On June 21, 2007, five months after it had been served with the summons and complaint, City forwarded, by fax, a copy to Chesterfield, Army’s insurer, and requested that defense counsel be assigned to defend City. In a letter dated July 24, 2007, a Chesterfield claims representative denied the City’s request citing a review of the contract between the parties as the basis for the denial. The basis for the denial lacked any further specificity.

City submits that pursuant to the Agreement, Army is obligated to defend it in the Stanley personal injury action. Specifically, the City contends that the Stanley complaint alleges bodily injury arising out of Army’s work or operations and is thus within the scope of the insurance coverage that Army must provide to the City pursuant to the contract. Thus the City seeks a judgment declaring that Army is obligated to defend the City in the Stanley action and requiring Army to reimburse the City for fees incurred in defending the Stanley action from June 21, 2007, to date. Alternatively, City argues it should be granted summary judgment on its breach of contract claim in that Army failed to provide it with liability insurance coverage as required by the agreement between the parties.

The Army submits that the City’s motion must be denied for several reasons. Initially, Army argues that the City’s motion is premature as there has been no discovery in the underlying action and thus there remain questions of fact as to the City’s role in the placement and supervision of the infant plaintiff and as to whether the claim against the City in the Stanley injury action arises out of Army’s operations or out of the City’s own omissions and commissions. Specifically, Army contends that the claims against the City in the Stanley action are claims of independent acts of negligence by the City and are thus not within the ambit of the contract’s insurance provisions as the contract limits the City’s coverage as an additional insured under Army’s policy to those accidents which arise out of Army’s operations.

Additional arguments set forth by Army in opposition to the motion include: the City’s claims for defense and breach of contact are identical to claims asserted in the underlying Stanley action; Army is not an insurer against whom declaratory relief is appropriate; City failed to comply with a condition precedent to coverage in that it failed to timely notify Army of the claim against it; that the City is not entitled to defense costs because the agreement between the parties does not provide for the defense of claims brought against the City; and that there was no breach of contract inasmuch as Army’s status as a self-insurer was accepted by the City in full satisfaction of the insurance requirements of the contract. In its cross-motion for summary judgment to dismiss the complaint, Army puts forward the same arguments discussed above in its opposition to the City’s motion.

The proponent of a motion for summary judgment has the burden in the first instance of submitting admissible evidence establishing its entitlement to judgment as a matter of law. Once this burden is met, the burden shifts to the opposing party to submit proof in admissible form which raises an issue of fact requiring a trial.

Plaintiff City moves for summary judgment on this accident action for a declaration. Specifically, the City seeks an order declaring and adjudging that defendant Army has a duty to defend City in the underlying Stanley action. Army argues in opposition that the subject of this dispute is not properly the subject of a declaratory judgment action because Army, as a self-insurer, is not an insurer against whom declaratory relief is appropriate. Army further argues that this essentially a claim for indemnity with defense.

Pursuant to CPLR 3001, The supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed. The statute further provides that should a court decline to render such a judgment, it must specify its reasons. Contrary to Army’s position, the subject at issue here is precisely the type of justiciable controversy that a declaratory judgment resolves. Moreover, there is no special and separate rule for self-insurers regarding the scope of [a] defense obligation.

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