Security Officer Must Be an Employee to be An Insured

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It is an Issue of Fact that a Security Officer is an Insured of a CGL

In Adam O’Shei v. Utica First Insurance Company, 2021 NY Slip Op 03786, 1237 CA 19-02019, Supreme Court Of The State Of New York Appellate Division (Decided on June 11, 2021) Plaintiff was an off-duty police officer providing security for the nightclub when the bar manager killed a customer and was eventually sentenced for manslaughter.

FACTS

William Sager, Jr. (decedent) sustained fatal injuries when a bar manager at a nightclub shoved him, causing him to fall down an entire flight of stairs. The bar manager ultimately pleaded guilty to manslaughter in the first degree and was sentenced to 18 years in prison. The nightclub at issue was operated by NHJB, Inc., doing business as Molly’s Pub (NHJB), whose sole shareholder was Norman Habib.

At all relevant times, NHJB and Habib were insured by a policy issued by defendant, which disclaimed coverage when initially notified about the incident within days of its occurrence. After an action was commenced against plaintiff, NHJB, Habib, and other parties plaintiff sought coverage from defendant, which disclaimed coverage relying on an assault and battery exclusion contained within the policy.

NHJB and Habib also commenced an action seeking, among other things, a declaration that defendant was required to defend and indemnify them in the underlying lawsuit. The trial court granted in part the motion of NHJB and Habib for partial summary judgment, denied defendant’s cross motion, and ordered, among other things, that defendant was obligated to defend NHJB and Habib in the underlying action “through the completion of discovery.” On appeal the court adjudged and declared that defendant was not obligated to defend or indemnify them in the underlying action (NHJB, Inc. v Utica First Ins. Co. [appeal No. 4], 187 AD3d 1498, 1499 [4th Dept 2020]).

In the action,brought by the plaintiff security officer, the officer moved for summary judgment seeking a declaration that defendant is obligated to defend him in the underlying action. Defendant cross-moved for summary judgment on its counterclaims and sought dismissal of the complaint. As it did in the action brought by NHJB and Habib, the court granted in part plaintiff’s motion for summary judgment, denied defendant’s cross motion, and ordered that defendant was obligated to defend plaintiff in the underlying action through the completion of discovery.

ANALYSIS

Although the appellate court concluded in NHJB, Inc. that the assault and battery exclusion in the policy issued by defendant precluded insurance coverage for NHJB and Habib, the appellate court considered all of the claims in the underlying action against plaintiff are based on or arise out of the bar manager’s assault not an assault by the plaintiff.

Among other causes of action, the plaintiff in the underlying action alleged that plaintiff here unlawfully arrested decedent following the bar manager’s assault, and this cause of action is separate and distinct from the conduct to which the assault and battery exclusion would apply. Stated another way, the cause of action would still exist notwithstanding the assault.

Specifically, the court found that there was an issue of fact whether plaintiff is an insured as that term is defined in the policy, i.e., whether, at the time of the incident, he was an employee of the nightclub acting within the scope of his employment. The decision was, therefore, modified by denying plaintiff’s motion in its entirety. Since the court concluded that an issue of fact existed whether plaintiff is entitled to coverage under the policy, defendant’s further contention that it is entitled to summary judgment on that issue was rejected.

ZALMA OPINION

Assault and battery exclusions are effective. However, it is necessary in this case to see if the officer was entitled to coverage as an employee of the bar since he was not involved in the assault and battery. If he is proved to be an insured and not involved in the battery but was only alleged to have instituted a false arrest their might be coverage so the case was sent back to the trial court to determine the coverage issue.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4

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