Co-operators General Insurance Company
("Co-Operators") insured Kane under a standard printed
form "Home Insurance Policy" for a one year period
following an effective date of July 4, 2015 (the
"Policy"). In addition to the usual dwelling and personal
property coverage, the Policy provided liability coverage:
Under "Liability Coverage", there is
a reference to:
... coverage including legal liability for unintentional bodily
injury to others .... arising out of ... your personal actions
....
The relevant "Legal Liability Coverage"
provisions of the Policy provide:
The limit of insurance [$2 million] ... is the maximum amount we
will pay for all compensatory damages in respect of any one
accident or occurrence other than as provided under Additional
Agreements. We will pay all sums which you become legally liable to
pay as compensatory damages because of unintentional bodily injury
...
Personal Liability
We will pay all sums which you become legally liable to pay as
compensatory damages because of unintentional bodily injury ...
arising out of:
Personal Actions
your personal actions anywhere in the world ...
The "Definition" provisions of the Policy provide:
Bodily Injury: bodily
injury, sickness or resulting death.
Legal Liability or Legally
Liable: responsibility which courts recognize and
enforce between persons who sue one another.
Occurrence: an action or non-action
causing loss, injury or damage. All losses, injuries or damages
arising out of the same general conditions will be considered as
arising out of one single occurrence, regardless of the number of
claimants.
In addition to providing coverage, pursuant to the Policy,
Co-operators is required to defend Mr. Kane in relation to any
claim for which coverage is provided. The Policy provides under
"Additional Agreements":
If a claim is made against you for which you are insured under the
Legal Liability Coverage of this policy, we will defend you at our
cost using a lawyer of our choice. We reserve the right to
investigate, negotiate and settle any claim or suit if we decide
such course of action is appropriate.
The Action:
On July 1, 2016, Kuechle, a resident of New York, filed a
Complaint against Kane in New York. She alleged that she had
certain interactions with Mr. Kane, within the relevant period of
coverage under his policy.
Ms. Kuechle alleged four separate "Causes of Action"
against Mr. Kane, all arising from events on December 27,
2015:
- "First Cause of
Action": Mr. Kane's hotel room, he
"inflicted a battery" upon Ms. Kuechle which
"physical battery" was "unconsented to". Ms.
Kuechle alleges that as a result of the "unwanted, unconsented
to, violent, and offensive in nature physical battery"
inflicted upon her, she suffered:
... bodily injury including lacerations, extensive bleeding
requiring multiple surgeries and blood transfusions, and serious
emotional trauma ...
... serious, permanent and painful personal injuries ...
- "Second Cause of
Action": Mr Kane "...intentionally and/or
recklessly engaged in extreme and outrageous conduct towards [Ms.
Kuechle] in a manner so shocking and outrageous that it exceeded
all reasonable bounds of decency" ... as a result of Mr.
Kane's "shocking and outrageous conduct" toward her,
she suffered "severe emotional distress" and
"serious, permanent and painful personal injuries."
- "Third Cause of
Action": Ms. Kuechle alleged that Mr. Kane
"engaged in conduct unreasonably endangering" Ms.
Kuechle's "physical safety by causing her to suffer
lacerations, bleeding, multiple surgeries and blood
transfusions." She alleged that as a result of Mr. Kane's
conduct unreasonably endangering her physical safety, she suffered
"severe emotional distress, and serious, permanent and painful
personal injuries"; and
- "Fourth Cause of
Action": On December 27, 2015, [Mr. Kane] negligently
caused serious, permanent and painful personal injuries to [Ms.
Kuechle].
As a direct and proximate result of the negligence of [Mr.
Kane], [Ms. Kuechle] was caused to suffer bodily injury including
lacerations, extensive bleeding requiring multiple surgeries and
blood transfusions, and severe emotional trauma, all to her
detriment.
As a result of [Mr. Kane's] negligence [Ms. Kuechle] suffered
serious, permanent and painful personal injuries by reason of which
[Ms. Kuechle] will suffer damage in excess of the jurisdictional
limits of all lower courts which would otherwise have
jurisdiction.
Kane's New York counsel forwarded copies of the Complaint to
Co-Operators. A few months later, Co-operators' coverage
counsel wrote to Mr. Kane's counsel denying coverage under the
Policy, for both defence and indemnity. They stated:
"As Mr. Kane seeks coverage in respect of an alleged
intentional act, there is no coverage under Mr. Kane's policy
for this claim. The policy only provides coverage for
unintentional bodily injury. Alternatively, claims arising from
or in relation to sexual, physical, psychological or emotional
abuse, assault, molestation or harassment are excluded from
coverage."
Co-operators stated that the remaining allegations were derivative
of the allegations found in the First Cause of Action. Assuming
that its coverage decision would be in dispute, Co-operators filed
a petition seeking a declaration that it was not required to defend
or indemnify Mr. Kane in respect of the Action. Mr. Kane filed a
cross-petition seeking coverage and costs.
Issue: Whether Kane's insurer, Co-operators
General Insurance Company ("Co-operators"), was under an
obligation to defend a lawsuit brought against him in New York
State.
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