270_C269

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AMBIGUITY OF TERM "FURNISHED" IN DEFINITION OF "TEMPORARY WORKER" CONSTRUED IN INSURED'S FAVOR

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Giuliana Mendola (Mendola) allegedly sustained personal injuries when her vehicle was struck in the rear by a vehicle operated by Travis Schmidt (Schmidt) and commenced an action against Schmidt and Nick's Brick Oven Pizza, Inc. (Nick's). She alleged that Schmidt negligently caused the collision while delivering pizzas on behalf of Nick's and that Nick's was vicariously liable for Schmidt's negligence. Nick's notified Excelsior Insurance Company (Excelsior), its general liability carrier, of the action on a timely basis but Excelsior denied coverage based on the exclusion for bodily injury arising out of use of any automobile owned or operated by an "insured." Nick's initiated this judgment action, stating that Excelsior was obligated to defend and indemnify it. Both parties cross-moved for summary judgment. The trial court granted Nick's motion and denied Excelsior's. Excelsior appealed.

Under the general liability policy, Nick's "employees" are "insureds" and fall under the exclusion but "temporary workers" are not included under the definition of "employees," are not insureds, and are an exception to the exclusion. As a result, tortuous conduct of "temporary workers" is covered. The policy defines a "temporary worker" as "a person furnished to (Nick's) to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions."

The appellate court determined that the trial court correctly determined that Nick's made a prima facie showing that Schmidt was a temporary worker as defined because he was hired to meet seasonal or short-term workload conditions during the busy summer months before returning to college or enlisting in the military that fall. As a result, Nick's made a prima facie showing of entitlement as a matter of law and Excelsior failed to raise a triable issue of fact to rebut it.

The appellate court also determined that the trial court correctly determined that the term "furnished" as used in the policy definition of "temporary worker" was ambiguous. This was because it could not be determined if Schmidt fell into the exclusion for "employees" or the exception to that exclusion for "temporary workers." Ambiguity is a question of law for courts to determine and they enforce the approach that an exclusion from coverage must be specific and clear in order to be enforced and that ambiguities in exclusions are construed against the insurance company and in favor of the insured.

In this case, the requirement that a temporary worker be "furnished" to the insured may mean that any third party can refer a person to the insured to qualify that person as a temporary worker. It can also mean that only a recruitment and placement consultant, employment referral agency, or similar service can refer a person to the insured to qualify that person as a temporary worker. As a result, the term "furnished" is ambiguous because it does not clearly define whether any third party, including another employee, can furnish a person to the insured in order for that person to qualify as a temporary worker or whether it must be one of these other parties. The policy also did not clearly define whether an individual hired to meet seasonal or short-term workload conditions must also be "furnished" to the insured in order to qualify as a temporary worker, or whether only individuals hired to substitute for an employee on leave must be so "furnished." It affirmed the trial court's granting of summary judgment to Nick's.

Supreme Court, Appellate Division, Second Department, New York. Nick's Brick Oven Pizza, Inc., plaintiff-respondent, v. Excelsior Insurance Company, et al., appellants; Giuliana Mendola, intervenor-respondent. April 7, 2009. 61 A.D.3d 655, 877 N.Y.S.2d 359