Wade Clark Mulcahy LLP

<p style="text-align: justify;">In<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2020/02/Vazquez-v.-Markel-Insurance-Company.pdf">Vazquez v. Markel Insurance Company</a>,</em> the District Court for the N.D.N.Y., last week, denied both of the competing motions for summary judgment by the injured plaintiff and defendant insurer, sending to trial the precise factual question of: whether an individual installed a rack for daycare cots in his capacity as a real estate manager, or in his capacity as anything else, e.g., a husband, homeowner, volunteer, or independent contractor.</p>
<p style="text-align: justify;">By way of background, plaintiff Vazquez was an employee of the Mother Nurture Day Care, a daycare run by Mercedes Sidor out of the home she shared with her husband, David Sidor.  In October 2010, a rack to store cots installed by David dislodged, causing several cots to fall on Vazquez, sending her backwards into a water heater.  This resulted in a cervical disc herniation ultimately requiring surgery, and the basis for Vazquez’ sizable damages claim.  New York’s Workers Compensation Law undeniably barred Vazquez’ claims as against Mercedes, her employer.  But David presented an opportunity to seek coverage from the Sidors’ CGL policy issued by Markel – but was he too subject to the employers liability exclusion? Vazquez sued him in New York Supreme Court arguing that he was not subject to the exclusion.  The state court held that the question presented a thorny issue of fact necessitating trial.  So, David settled with Vazquez agreeing that he would not contest liability in exchange for Vazquez’ agreement to pursue relief directly from his insurers, only.  Which brings us to the current action.</p>
<p style="text-align: justify;">What David’s settlement with Vazquez failed to address was the fact that Defendant Markel had already disclaimed coverage to David for the accident – but, Markel had failed to include the injured plaintiff on that disclaimer, as it should have under New York Ins. Law s. 3420.  On that basis, Vazquez argued that Markel was estopped from holding that David was not an insured.</p>
<p style="text-align: justify;">The N.D.N.Y. held that an insurer may not be estopped from disclaiming coverage where a disclaimer would be unnecessary because the claim does not fall within the coverage terms of the insurance policy.  In other words, Markel did not timely disclaim to Vazquez, but it didn’t need to if the policy coverage terms were not triggered, noting “a timely disclaimer is still required when a claim falls within the coverage terms of a policy and is only denied because of an exclusion.”</p>
<p style="text-align: justify;">Markel, however, was not yet in the clear.  The N.D.N.Y. agreed with the trial court that if David was held to have acted as the real estate manager of the daycare, then the Markel policy would unquestionably be triggered and would cover the more than $1 million in damages assessed by the state court.  However, if he acted in any other capacity, then the Workers Compensation Law would bar coverage: “the parties must therefore complete whatever discovery remains to them, and proceed to a bench trial.”</p>
<p style="text-align: justify;">This case is an example of the ways in which clear, and oft-tested policy terms can present a morass of pitfalls when presented in the context of unique facts.</p>
<p style="text-align: justify;">Thanks to Vivian Turetsky for her contribution to this post.  Please email <a href="mailto:chayes@wcmlaw.com">Colleen E. Hayes</a> with any questions.</p>