Plaintiff seeks to recover from its insurer the legal fees and disbursements incurred in defending an action brought by an employee in which damages were sought for personal injuries sustained on January 28, 1966 by reason of plaintiff's alleged negligence. Because of defendant's disclaimer of liability and refusal to defend the negligence action, plaintiff was required to retain counsel to represent it in the litigation which resulted in a dismissal of the action since it was ultimately determined that the injuries arose out of the employment relationship.
In January, 1965, the defendant insurance company issued a general liability policy insuring plaintiff from January 1, 1965 to January 1, 1968. The policy dealt with the defendant's duty to pay all sums for which the plaintiff insured might become liable as well as with its duty to defend suits brought against the insured. As to the first, the defendant agreed to pay such obligations for personal injuries "sustained by any person". As to the duty to defend, the defendant agreed to "Defend any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent".
Sometime after the January 28, 1966 incident, Evelyn McDermott, an employee of plaintiff, commenced an action against the plaintiff for bodily injuries in which she alleged, inter alia, that plaintiff negligently employed one John Crowther, having knowledge of his propensity and instability, he having molested her, and that there was a failure to protect her from such molestations and, further, by paragraph "SEVENTH" of the complaint that "[o]n or about January 28, 1966, the said John Crowther, an employee of the defendant, threatened plaintiff with a weapon and forced her to accompany him from the premises of the defendant to another place where by force and threats and the use of weapons and physical force on her body he held her captive, forced her to disrobe and attempted to rape her."
It is manifestly clear that the negligence complaint did not allege facts sufficient to find, on its face, that it was subject to these policy exclusions; and, as later to be discussed, if the insurer is to be relieved of a duty to defend it is obligated to demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation. As a consequence, even if the complaint fails to articulate adequately an action grounded solely in negligence, the insurer is required to defend.
We construe the complaint as one asserting a common-law right to damages for personal injuries caused by the employer's negligence and that the pleading could well be interpreted to refer clearly to an occurrence that not only took place away from the premises but also not within the scope of or during the course of the employment.
In plain and concise language, and without equivocation, the defendant obligated itself to defend any action brought against the plaintiff insured whenever the complaint alleged a cause of action in negligence covered by the policy, regardless of the ultimate factual determination of the occurrence. As we have noted,
The defendant has urged that our holding in Lionel Freedman, Inc. v. Glens Falls Ins. Co. (27 N.Y.2d 364) requires an affirmance. We do not agree. In that case neither of the two claims forming the basis for recovery were within the policy coverage. The first dealt with negligent operation of an elevator was patently within the exclusionary clause which specifically exempted the operation and maintenance of the elevator from coverage; the other dealt with an area of the building in which the insured had no interest and, thus, that complaint stated no basis for recovery whatsoever. Here, because the injuries occurred away from the employer's premises, it might well have been determined that that action did not arise out of and in the course of the employment.
An insurer's obligation to furnish its insured with a defense is heavy indeed, and, of course, broader than its duty to pay. The rule to be followed is clearly set out in Goldberg v. Lumber Mut. Cas. Ins. Co. of N. Y. (297 N.Y. 148, 154) wherein this court wrote: "Indeed, even in cases where the policies do not render the allegations by the injured party controlling, it has been said: `The distinction between liability and coverage must be kept in mind. So far as concerns the obligation of the
The insurer is cloaked with the burden of proving that the incident and claim thereunder came within the exclusions of the policy (Prashker v. United States Guar. Co., 1 N.Y.2d 584, 592; Wagman v. American Fid. & Cas. Co., 304 N.Y. 490). This burden has not been met and plaintiff must prevail.
The order of the Appellate Division should be reversed and the order of the Civil Court of the City of New York should be reinstated.
Order reversed, with costs, and order of Civil Court of City of New York, New York County, reinstated.