This action was commenced by the City of New York (City) for a declaration, pursuant to CPLR 3001, that defendant the S Army (Army) has a duty to defend the City in a negligence action currently pending in the Supreme Court of Kings County. That action is entitled Joseph Stanley and Aphrodite Stanley as parents and natural guardians of Infant Plaintiff Joseph Stanley II, and Joseph Stanley and Aphrodite Stanley, Individually, v. City of New York, The S Army of Greater New York and Anita Nurse, (the Stanley action). The City now moves for summary judgment declaring that the Army is obligated to assume the City’s defense in the Stanley action and requiring the Army to reimburse the City for attorneys’ fees incurred in defending the Stanley action from June 21, 2007, to date. Alternatively, the City moves for summary judgment on its third cause of action for breach of contract alleging that if the court issues a determination that S Army has no duty to defend the City, then S Army will have breached its obligations to the City by failing to provide it with liability insurance coverage for S Army’s operations as required by the Agreement that exists between the two. The Army opposes the City’s motion on several grounds and cross-moves for summary judgment dismissing the injury complaint.
On or about May 30, 2000, the City and Army entered into an agreement for the purchase of child welfare services (hereinafter, the Agreement). Pursuant to the Agreement, Army as contractor would provide child welfare services, including the placement of children in foster homes within their communities, to the City for the period March 1, 2000 to February 28, 2003. The contract was renewed twice, once in November 2002 and again in January 2006. The last renewal extended the agreement through February 28, 2009.
With respect to insurance, the Agreement provides, in relevant part: The Contractor shall carry paid up commercial general liability insurance covering both itself and the City with a limit no lower than $1,000,000 per occurrence and with a deductible no higher than $10,000. This policy shall provide coverage of at least as broad as that provided by ISO Form CG 00-01 and shall contain no additional exclusions of any kind whatever except for those mandated by law and those expressly accepted by the Department in writing. The City’s coverage thereunder shall be as additional insured, and such coverage shall be no narrower than that provided by ISO Form CG 20-26. Such policy or policies of injury insurance shall be obtained from a company, or companies, duly licensed to do business in the State of New York.
The form further provides that it is the insurer’s right and duty to defend the insured in personal injury or property damage actions, but that the insurer has no duty to defend the insured in personal injury or property damage actions to which the insurance does not apply. at Section I (A)(1)(a)(2). ISO Form CG 20-26, an endorsement regarding the designation of a person or organization as an additional insured, qualifies the City as an additional insured for coverage but only with respect to liability arising out of the operations or premises of Army as the named insured. Pursuant to the Agreement, the City had the obligation of notifying the insurer as soon as practicable of any occurrence, offense or accident lawsuit which may result in a claim. See Exhibit 3 at Section IV (2)(a) and (b).
In order to meet the insurance requirements of the Agreement, Army provided the city with a copy of its certificate of liability insurance and letters from its insurance carrier, Chesterfield Insurance Agency, Inc. As indicated in the certificate of liability insurance, Army is self-insured for commercial general liability purposes with a limit of $500,000 per occurrence. Army carries additional general liability coverage through an excess/umbrella liability policy from Chesterfield Insurance Agency, Inc., with a limit of $3,000,000 per occurrence. Id. There is no deductible for either the self-insured commercial general liability insurance or the excess/umbrella liability insurance.
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