CLARENDON NATIONAL INSURANCE COMPANY, Plaintiff,

-against-

HARTFORD INSURANCE COMPANY, PAUL WAITE, CARJON AUTO REPAIR,

INC., ROBERT EDWARDS, Defendants.

94 Civ. 5529 (AGS)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF

NEW YORK

May 8, 1998, Decided

May 8, 1998, Filed

DISPOSITION: Plaintiff's motion for summary judgment granted.
Defendant's cross-motion for summary judgment denied. Judgment entered for plaintiff on all claims.

COUNSEL: For CLARENDON AMERICA INSURANCE COMPANY, plaintiff: Ira S. Lipsius, Schindel Cooper & Farman, New York, NY.

For HARTFORD INSURANCE COMPANY, defendant: J. Patrick DeLince, Langan & Levy, Esqs., New York, NY.

JUDGES: ALLEN G. SCHWARTZ, U.S.D.J.

OPINION BY: ALLEN G. SCHWARTZ

OPINION: OPINION AND ORDER

ALLEN G. SCHWARTZ, DISTRICT JUDGE:

Plaintiff Clarendon National Insurance Company ("Clarendon") brings this action to compel defendant Hartford Insurance Company ("Hartford") (See footnote 1) to reimburse it for defense costs and a settlement payment arising from a motor vehicle accident. Before the Court are plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment. For the reasons set forth below, plaintiff's summary judgment motion is granted and defendant's cross-motion is denied.

FACTS (See footnote 2)

On or about March 11, 1990, defendant Carjon Auto Repair, Inc. ("Carjon") became the registered owner and title holder of a 1988 Ford truck. (Compl. P 9.) On a date not specified in the Complaint, Hartford issued Business Auto Policy No. 79 VZ EM 1783 to Carjon, effective July 3, 1990 through July 3, 1991. (Pl . Ex. B.) This policy specifically listed the truck as "Covered Auto No. 3."

On a date also not specified in the Complaint, Clarendon issued Garage Insurance Policy No. 00-310104 to Carjon, effective July 31, 1990 through July 31, 1991. (Pl. Ex. C.) According to its terms, the policy covered two categories of vehicle only: "Hired Autos" (defined as "only those autos you lease, hire, rent or borrow") and "Autos Left with You for Service, Repair, Storage or Safekeeping."

On January 28, 1991, the truck, while being driven by defendant Robert Edwards, a Carjon employee, was involved in an accident causing injury to defendant Paul Waite. (Pl . Ex. D.) In June of 1991, Waite sued Carjon and Edwards in state court for personal injuries. Carjon tendered the complaint to Clarendon, and Clarendon, at the time allegedly unaware that Carjon was also insured by Hartford, retained counsel to defend Carjon and Edwards. On June 28, 1994, (See footnote 3) the defense of Carjon and Edwards was tendered to Hartford, which did not respond.

On July 29, 1994, Clarendon commenced the instant action, seeking a declaration that the truck was covered by the Hartford policy, and not by the Clarendon policy, and that Hartford must assume the defense of Carjon and Edwards. Clarendon also sought reimbursement for all expenses incurred in the defense which it had provided. In January 1995, the parties appeared before a mediator, resulting in an agreement that Waite would receive $ 250,000, payment to be split equally between the insurance companies, with no prejudice to Clarendon's right to proceed with this action. Clarendon also, therefore, now seeks reimbursement for its $ 125,000 share of the payment.

On December 17, 1997, Clarendon filed the instant motion pursuant to Fed. R. Civ. P. 56, seeking summary judgment on the grounds that the plain terms of the respective policies show that Hartford, and not Clarendon, is the proper insurer. On January 13, 1998, Hartford cross-moved for summary judgment on the basis that Clarendon, for a number of reasons, is estopped from denying liability.

DISCUSSION

Summary judgment is appropriate where the evidence offered demonstrates that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Turning to the first prong of this standard, we note that, despite Hartford's unsupported assertion that "both the Clarendon policy and Hartford Policy provided coverage for the truck in question" (Def. Mem. at 2), an examination of the two policies reveals that they can be interpreted in only one way.

The face sheet of the Clarendon policy includes a column labeled "Covered Autos." Typed into this columns are the numbers "28" and "30," which are symbols referencing categories of vehicles. As noted above, the two categories to which these numbers correspond are "Hired Autos" (defined as "only those autos you lease, hire, rent or borrow") and "Autos Left with You for Service, Repair, Storage or Safekeeping." It is undisputed that Carjon owned and held title to the Ford truck, and that the truck therefore did not fall into either of these categories. The Court finds that the truck was not covered by the Clarendon policy.

Item Four of the Hartford policy is entitled "Schedule of Covered Autos You Own." Three vehicles are described in this section, the third being the Ford truck in question. There is thus no question that the truck was insured under the Hartford policy, and the Court so finds.

Having determined that no factual issues exist, the Court must next determine whether either party is entitled to judgment as a matter of law. This would appear to be a simple matter: the Hartford policy covered the Ford truck, and the Clarendon policy did not. Hartford, however, maintains that Clarendon is estopped from asserting that it did not insure the truck because: 1) Clarendon sought a declaration in state court in 1993 that Hartford was a co-insurer; 2) Hartford did not have the opportunity to select defense counsel or to decide what litigation costs were reasonable; 3) Clarendon failed to give written notice of disclaimer of liability or denial of coverage to Carjon and Edwards; and 4) Hartford participated in the settlement negotiations while under the impression that it would be responsible for only one-half of the resulting settlement.

The Court need not address each of these arguments separately, because as a group they must fail. Estoppel is an affirmative defense. Fed. R. Civ. P. 8(c). Affirmative defenses must be pled in a defendant's answer, and if they are not, they are considered to have been waived. See Travellers Int'l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1580 (2d Cir. 1994); Doubleday & Co. v. Curtis, 763 F.2d 495, 503 (2d Cir. 1985); Design Options, Inc. v. BellePointe, Inc., 940 F. Supp. 86, 92 (S.D.N.Y. 1996). In the instant case, Hartford filed its answer in September of 1994. It did not raise the affirmative defense of estoppel until it submitted its papers in response to Clarendon's motion. The Court therefore finds that this defense has been waived.

Although not necessary to our decision, the Court also notes that insurance   coverage cannot be created by estoppel. The cases which Hartford cites in support of the contrary position are simply inapposite. In those cases, (See footnote 4) coverage for the automobile or other property indisputably existed, and the insurer attempted to disclaim liability based upon some provision of the insurance policy. In situations such as the present, where an insurance policy provides no coverage whatsoever for a given automobile or item of property, New York courts have repeatedly held that a failure to disclaim coverage does not create coverage which the policy was not written to provide. See, e.g., Zappone v. Home Ins. Co., 55 N.Y.2d 131, 447 N.Y.S.2d 911, 913, 432 N.E.2d 783 (1982).

In sum, the Court finds that the Ford truck was covered by the Hartford policy, and not by the Clarendon policy, that Hartford's defense of estoppel was waived when it was not pled in the answer to the complaint, and that, in any event, the defense is not applicable here, where the Clarendon policy never provided coverage for the truck. We therefore grant Clarendon's motion for summary judgment and deny Hartford's cross-motion.

CONCLUSION

For the foregoing reasons, plaintiff's motion for summary judgment is granted. Defendant's cross-motion is denied. The Clerk of the Court is directed to enter judgment for the plaintiff on all claims. The Clerk shall thereafter close the file in this action.

SO ORDERED.

Dated: New York, New York

May 8, 1998

ALLEN G. SCHWARTZ, U.S.D.J.

Footnote 1 Although four defendants are listed in the caption, it would appear from the papers submitted that Clarendon seeks recovery only against Hartford. (return to text)

Footnote 2 The relevant undisputed facts discussed herein are drawn from the allegations of the complaint or otherwise reflected in the record, including the affidavits and exhibits submitted by the parties. (return to text)

Footnote 3 In its Memorandum of Law, Hartford admits that it, in fact, knew of the existence of the lawsuit at least since October of 1993. (return to text)

Footnote 4 Zurich Ins. Co. v. Lumbermen's Cas. Co., 233 A.D.2d 186, 649 N.Y.S.2d 660 (App. Div. 1996); Liberty Mut. Ins. Co. v. Lapicola, 184 A.D.2d 322, 584 N.Y.S.2d 834 (App. Div. 1992); Allstate Ins. Co. v. Centennial Ins. Co., 187 A.D.2d 690, 590 N.Y.S.2d 272 (App. Div. 1992); Aetna Life & Cas. v. 57th St. Management, 235 A.D.2d 379, 652 N.Y.S.2d 73 (App. Div. 1997); Lone Star Indus. v. Liberty Mutual Ins. Co., 689 F. Supp. 329 (S.D.N.Y. 1988); Boston Old Colony Ins. v. Lumbermens Mut. Cas. Co., 889 F.2d 1245 (2d Cir. 1989). (return to text)