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INSURER’S ACTION FOR A DECLARATORY JUDGMENT THAT IT WAS NOT OBLIGATED TO INDEMNIFY THE DEFENDANT SCHOOL DISTRICT FOR A SETTLEMENT REACHED IN AN UNDERLYING ACTION (WHICH ALLEGED THE SCHOOL DISTRICT DID NOT PROTECT AGAINST ANTI-SEMITIC HARASSMENT) SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the insurer’s action against the defendant school district, seeking a declaratory judgment that the insurer is not obligated to indemnify the defendants for a settlement reached in mediation, should not have been dismissed. The underlying action alleged the school district did not protect the plaintiffs from anti-Semitic harassment and discrimination. The insurer defended the action but reserved the right to disclaim coverage. A $3,000,000 (plus $1,480,000 attorney’s fees) settlement was reached. The Second Department determined the documentary evidence submitted by the school district, i.e., the insurance policies, did not conclusively establish a defense as a matter of law. Therefore the motion to dismiss the insurer’s declaratory judgment action pursuant to CPLR 3211(a)(1) and (7) should not have been granted:

The plaintiffs in the underlying action … alleged that repeated and frequent incidents of anti-Semitic harassment and discrimination against them by other students, which were reported to school officials on numerous occasions and directly observed on other occasions by school personnel, gave rise to an inference that the defendants “intended for the harassment to occur” based upon the defendants’ practices, policies, and customs in dealing with reports and observations of anti-Semitic harassment and discrimination, that the defendants “intentionally discriminated” against the plaintiffs, that the defendants’ conduct “aided and incited” unlawful discrimination, and that the defendants’ acts and omissions were “undertaken recklessly and with the intent to engage in wrongful conduct.”

While “it is not legally impossible to find accidental results flowing from intentional causes, i.e., that the resulting damage was unintended although the original act or acts leading to the damage were intentional”… , the insurance policies do not conclusively establish that the plaintiff is obligated to indemnify the defendants in the underlying action, and the other evidence submitted by the defendants did not utterly refute the factual allegations set forth in the plaintiff’s complaint. Whether the incidents set forth in the amended complaint in the underlying action were accidents present questions of fact which cannot be determined on a motion to dismiss pursuant to CPLR 3211(a)(1) and (7) … . Graphic Arts Mut. Ins. Co. v Pine Bush Cent. Sch. Dist., 2018 NY Slip Op 01565, Second Dept 3-7-18

INSURANCE LAW (INSURER’S ACTION FOR A DECLARATORY JUDGMENT THAT IT WAS NOT OBLIGATED TO INDEMNIFY THE DEFENDANT SCHOOL DISTRICT FOR A SETTLEMENT REACHED IN AN UNDERLYING ACTION (WHICH ALLEGED THE SCHOOL DISTRICT DID NOT PROTECT AGAINST ANTI-SEMITIC HARASSMENT) SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))/CIVIL PROCEDURE (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, INSURANCE LAW, (INSURER’S ACTION FOR A DECLARATORY JUDGMENT THAT IT WAS NOT OBLIGATED TO INDEMNIFY THE DEFENDANT SCHOOL DISTRICT FOR A SETTLEMENT REACHED IN AN UNDERLYING ACTION (WHICH ALLEGED THE SCHOOL DISTRICT DID NOT PROTECT AGAINST ANTI-SEMITIC HARASSMENT) SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))/CPLR 3211 (MOTION TO DISMISS ON DOCUMENTARY EVIDENCE, INSURANCE LAW, (INSURER’S ACTION FOR A DECLARATORY JUDGMENT THAT IT WAS NOT OBLIGATED TO INDEMNIFY THE DEFENDANT SCHOOL DISTRICT FOR A SETTLEMENT REACHED IN AN UNDERLYING ACTION (WHICH ALLEGED THE SCHOOL DISTRICT DID NOT PROTECT AGAINST ANTI-SEMITIC HARASSMENT) SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))/EDUCATION-SCHOOL LAW (INSURANCE LAW, CIVIL PROCEDURE, INSURER’S ACTION FOR A DECLARATORY JUDGMENT THAT IT WAS NOT OBLIGATED TO INDEMNIFY THE DEFENDANT SCHOOL DISTRICT FOR A SETTLEMENT REACHED IN AN UNDERLYING ACTION (WHICH ALLEGED THE SCHOOL DISTRICT DID NOT PROTECT AGAINST ANTI-SEMITIC HARASSMENT) SHOULD NOT HAVE BEEN DISMISSED (SECOND DEPT))

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