Brother Jimmy's BBQ, Inc. v American Intl. Group,Inc.

2011 NY Slip Op 31295(U)May 10, 2011

Supreme Court, New York CountyDocket Number: 105077/09

Judge: Emily Jane GoodmanRepublished from New York State Unified Court

System's E-Courts Service.Search E-Courts (http://www.nycourts.gov/ecourts) for

any additional information on this case.This opinion is uncorrected and not selected for official

publication.

SCANNED ON 511712011

SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY

PRESENT: 'EMILY JANE G6poDsAs PART

Index Number : 105077/2009 BROTHER JIMMY'S BBQ INC INDEX NO. vs AMERICAN INTERNATIONAL GROUP MOTION DATE

Sequence Number : 007 MOTION SEQ. N O .

MOTION CAL. NO. SUMMARY JUDGMENT

The followlng papers, numbered 1 to were read on this motion to/for

Notice of Motion/ Order to Show Cause - Affidavits - Exhibits ... Answering Affldavlts - Exhibits

Replying Affidavlts

Cross-Motion: 0 Yes NO

FAPER$ NUMBERED

0 SUBMIT ORDER/ JUDG. 0 SETTLE ORDER/ JUDG.

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YO=: TAS PART 17

X BROTHER JIMMY’S BBQ, INC., BROTHER JIMMY’S NYC RESTAURANT HOLDINGS, LLC, BROTHER JIMMY’S FRANCHISING, LLC, JOSH LEIBOWITZ, MICHAEL DAQUINO and KEVIN BULLA,

r_________________________II____________-------------------”----”-

Plaintiffs,

-against- Index No. 105077/09

AMERICAN INTERNATIONAL GROUP, NC., ILLINOIS NATIONAL INSURANCE COMPANY, f AIG DOMESTIC CLAIMS, NC., LAUREN SCLAFANI, BACARDI’S USA, INC., BACARDI CORPORATION, BACARDI BOTTLING

BACARDI,

F I L E Q CORPORATION and BACARDI IMPORTS, d/b/a MAY 17 2011

NEW YORK COUNTY CLERK‘S OFFICE Defendants. B

‘ 1

Ti _______________________________________I--------------------------

EMILY JANE GOODMAN, J.S.C.: t*,

This is an insurance coverage dispute in which plaintiffs seeks defense and

indemnification in a personal injury action captioned Sclafuni v Brother Jimmy’s BBQ, h.,

Index No. 115551/08 (Sup Ct, NY County) (hereinafter, the underlying action). Defendant

Illinois National Insurance Company (Illinois National) now moves, pursuant to CPLR 3212, for

summary judgment dismissing the complaint. Plaintiffs cross-move, pursuant to CPLR 3212, for

summary judgment declaring that: (1) the commercial umbrella policy issued by Illinois National

affords coverage to plaintiffs in the underlying action; (2) Illinois National is obligated to defend

and indemnify them in the underlying action; and (3) Illinois National is obligated to reimburse

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them for attorneys’ fees expended in connection with this action and the underlying action.’

BACKGROUND

Illinois National issued a commercial umbrella policy (policy no. EBU 8685976) to

Brother Jimmy’s NYC Restaurant Holdings, LLC, Third Avenue Brother Jimmy’s, LLC, and

Amsterdam Avenue Brother Jimmy’s, LLC for the period March 7,2007 through May 12,2008

(Lahr Affirm. in Support, Exh. 4). The policy provides general liability coverage of $5,000,000

per occurrence, excess of $1,000,000 (id).

Section I, Insuring Agreement, provides as follows:

“A. We will pay on behalf of the Insured those items in excess of the Retained Limit that the Insured becomes legally obligated to pay as damages by reason of liability imposed by law because of Bodily Injury, Property Damage or Personal Injury and Advertising Injury to which this Insurance applies or because of Bodily Injury to which this insurance applies assumed by the Insured under an Insured Contract”

(id.),

Section VI, entitled LLC~ndition~,” includes the following conditions of coverage:

“G. Duties in the Event of an Occurrence, Claim or Suit

1. You must see to it that we are notified as soon as practicable of an Occurrence that may result in a claim or Suit under this policy . . .

***

2. If a claim is made or Suit is brought against any Insured which is reasonably likely to involve this policy, you must notify us in writing as soon as practicable . . . .

’By decision and order dated May 18,201 0 the amended complaint was dismissed as against American International Group, h c . and AIG Domestic Claims, Inc.

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“L. Other Insurance

If other valid and collectible insurance applies to damages that are also covered by this policy, this policy will apply excess of the Other Insurance. However, this provision will not apply if the Other Insurance is specifically written to be excess of this policy”

(id. [all bold print in original]).

Plaintiffs Brother Jimmy’s BBQ, Inc., Brother Jimmy’s NYC Restaurant Holdings, LLC,

Brother Jimmy’s Franchising, LLC (collectively, Brother Jimmy’s), Josh Leibowitz, Michael

DaQuino, and Kevin Bulla are defendants in the underlying action (id, Exh. 1). The plaintiff,

Lauren Sclafani (Sclafani), alleges that she was injured at a Brother Jimmy’s restaurant located at

428 Amsterdam Avenue on March 29,2008, when a bartender poured Bacardi 15 1 onto the

surface of the bar and lit it on fire, at which point the alcohol combusted and exploded and

engulfed her in flames (id, ‘I[ 22). She alleges that the accident resulted from the knowing,

intentional, wanton, reckless, grossly negligent, and careless misconduct by defendants with

respect to their ownership, operation, management, maintenance, supervision, and control of the

premises (id., 7 23). Sclafani also alleges that she suffered second and third degree burns,

scarring, and disfigurement as a result of the accident (id., ’I[ 24). Sclafani seeks compensatory

damages in addition to punitive damages from Brother Jimmy’s (id, f 63).

Brother Jimmy’s provided notice of the accident to its primary insurer, Praetorian

Insurance Company (Praetorian), on April 2,2008, four days after the accident (id., Exh. 5) .

Praetorian issued a commercial general liability policy to Brother Jimmy’s NYC Restaurant

Holdings, LLC for the policy period from March 7,2007 through May 12,2008 (id, Exh. 4).

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The primary policy provides general liability coverage for bodily injury of $1,000,000 per

occurrence (id.).

It appears that Praetorian thereafter assigned the loss to its third-party administrator, York

Claims Services, Inc. (York) (Catapano Aff., Exh. 3). Nora Cretter at York commenced an

investigation of the claim on April 3, 2008 (id). ADM Information Services, LLC (ADM) was

apparently retained to perform this investigation (Lahr AfFrm. in Support, Exh. 7). By letter

dated May 29, 2008, ADM informed Cretter that Kevin Bulla, the bartender, was arrested and

criminally charged as a result of the accident (id., Exh. 8). On June 9, 2008, ADM informed

Cretter about the severity of the assault charges against Bulla, and that Sclafani, who had spent

about four weeks in the Cornel1 Burn Center, would be “retaining an attorney to pursue the

matter aggressively” (id., Exh. 3).

On November 2 1, 2008, York learned that Sclafani had filed the underlying action

through an article published in the New York Post that day (Catapano Aff., Exh. 3). Cretter

advised Dara Holman at Global Coverage, Inc. to provide notice of the claim to Illinois National

(id). On December 2,2008, Holzman sent the summons and complaint and a general liability

notice of occurrence/claim to Innovative Coverage Concepts, LLC , which were subsequently

forwarded to Illinois National that same day (id., Exh. 1).

On December 4,2008, a segmentation technician employed by Illinois National’s claims

administrator, Chartis Claims, Inc., was assigned to investigate the claim (Catapano Aff.,

5) . The technician, Audrey Catapano, states that the documents provided “did not indicate when

Brother Jimmy’s became aware of the accident andor the alleged seriousness of the injuries

suffered by [J Sclda~~?’ (id, 7 6). Catapano avers that she commenced an investigation into

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whether the excess policy was potentially implicated, and as of what date Brother Jimmy’s knew

that there was potential exposure to the excess layer (id, 7 8). On December 16,2008, Catapano

spoke with Cretter at York about Sclafani’s claim, who sent her e-mail, newspaper, and internet

articles regarding the claim (id., 77 10- 12). Cretter also informed her that Sclafani sustained

second and third degree burns on her face and hands, and that she was in the burn unit for three

weeks (id., 7 12). On December 22,2008, Catapano contacted Brother Jimmy’s defense counsel,

who advised her that Sclafani’s claim may have a very high verdict, and that the outcome of the

criminal case against the bartender may be admissible in the underlying action (id, 7 13). On

December 29,2008, Catapano recommended that the claim be transferred to the Complex Unit

for further investigation and handling (id, 7 15).

On January 9,2009, AIG Domestic Claims, Inc., as claims administrator for Illinois

National, sent a letter to Brother Jimmy’s disclaiming coverage for the following reason:

“Based on the information presently available to us, this incident occurred on 03/29/08, The primary carrier was placed on notice 04/02/08. However, Illinois National received no notice of this claim until 12/02/08, over eight months after the subject accident.

“Condition G, sections 1-3, of the Illinois National policy requires an insured to notify Illinois National of any occurrence, claim or suit [as] soon as practicable. Further, if a claim is made or suit is brought against the insured that is reasonably likely to involve this policy, the insured must notify Illinois National reasonably likely to involve this policy, the insured must notify Illinois National in writing as soon as practicable. Finally, the policy provides that the insured must immediately send Illinois National copies of any demands, notices, summonses or legal papers received in connection with the claim or suit.

“Accordingly, coverage is precluded for this loss on the basis that the insured failed to notify us of the claim or suit until on or about 12/02/08, roughly eight months after the accident or occurrence. We have no information in the file at this time that

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explains the 8 months [sic] delay in reporting this claim to Illinois National.”2

(Catapano Aff., Exh. 5).

Illinois National moves for summary judgment, contending that coverage is vitiated by

Brother Jimmy’s failure to provide timely notice of the accident, Illinois National asserts that

Brother Jimmy’s did not notify it of the claim until December 2,2008, over eight months after

the accident. Illinois National further argues that its disclaimer was timely as a matter of law,

since its defense of late notice was not readily apparent when it received initial notice of the

claim. According to Illinois National, the facts forming the basis of its late notice defense only

became apparent when it conducted an investigation into the seriousness of the claim.

In opposing Illinois National’s motion, and in cross-moving for summary judgment,

plaintiffs contend that Illinois National’s 38-day delay in disclaiming coverage was untimely as a

matter of law. Alternatively, plaintiffs maintain that there are issues of fact as to whether they

had a good-faith belief in non-liability, because they reasonably believed that the value of

Sclafani’s claim would not trigger excess ~overage.~

DISCUSSION

“‘[Tlhe proponent of a summary judgment motion must make a prima facie showing of

entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the

21nitially, Illinois National also disclaimed coverage because the accident fell outside the policy period (Lahr Affirm. in Support, Exh. 9). However, by letter dated March 26,2009, Illinois conceded that the occurrence took place during the policy period because the policy was extended to May 12,2008, pursuant to Endorsement No. 17 (Rothman A f f m . in Support, Exh. 2).

’Sclafani also submitted a memorandum of law in support of plaintiffs’ cross motion for summary judgment and in opposition to Illinois National’s motion for summary judgment. Plaintiffs adopt these arguments (Rothman Affirm. in Reply, 7 5).

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absence of any material issues of fact”’ (Admiral Indem. Co. v Sudan, 82 AD3d 656 [ 1 st Dept

201 13, quoting Alvarez v Prospect Hosp., 68 NY2d 320,324 [ 19861). The burden then shifts to

,

the party opposing the motion to “present evidentiary facts in admissible form sufficient to raise

a genuine, triable issue of fact” (Mazurek v Metropolitan Museum ofArt, 27 AD3d 227,228 [ 1 st

Dept 20061, citing Zuckrman v City ofNew York, 49 NY2d 557,562 [1980]). The court’s

function on a motion for summary judgment is only to determine whether any triable issues of

fact exist, not to determine the merits of any such issues (Sheehan v Gong, 2 AD3d 166, 168 [ 1 st

Dept 20031).

Illinois National claims that Brother Jimmy’s failure to provide notice of the accident “as

soon BS practicable” vitiates the umbrella policy. “Where a liability insurance policy requires

that notice of an occurrence be given ‘as soon as practicable,’ such notice must be accorded the

carrier within a reasonable period of time” (Tower Ins. Co. of N Y v Lin Hsin Long Co., 50

AD3d 305,307 [lst Dept 20081, quoting Great Canal Realty Corp, v Seneca Ins. Co., Inc., 5

NY3d 742,743 [2005]). The failure to provide notice may be excused where the insured has a

reasonable “good-faith belief of nonliability” (Great Canal Realty Corp., 5 NY3d at 743). The

issue of reasonableness is ordinarily an issue for the jury (McGovern-Barbash Assoc., LLC v

Everest Natl. Ins. Co., 79 AD3d 98 1, 983 [2d Dept 20 lo]). Where an excess policy is at issue,

the focus is on whether the insured reasonably should have known that the claim against it would

exhaust its primary coverage and implicate its excess coverage (National Union Fire Ins. Co. of

Pittsburgh, Pa. v Connecticut Indem. Co., 52 AD3d 274,276 [lst Dept 20081; Morris Park

Contr. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 763,765 [2d Dept

20061).

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However, the court need not determine whether Brother Jimmy’s notice to Illinois

National was untimely as a matter of law, if Illinois National’s disclaimer was untimely. Under

Insurance Law 3420 (d), an insurer wishing to disclaim liability or deny coverage under a

liability insurance policy must “give written notice as soon as is reasonably possible of such

disclaimer of liability or denial of ~overage.”~ An insurer’s failure to do so ‘“precludes effective

disclaimer, even [where] the policyholder’s own notice of the incident to its insurer is untimely”’

(Mutter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772, 774 [2006], quoting First

Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 67 [2003 I). The purpose of the statute is ‘Yo

protect the insured, the injured person, and any other interested [person] who has a real stake in

the outcome, from being prejudiced by a belated denial of coverage” (Axcelsior Ins. Co. v

Antretter Con&. Corp. , 262 AD2d 124, 127 [ 1 st Dept 19991).

The insurer has the burden of justifying any delay in disclaiming (Harford Ins. Co. v

County ofNussau, 46 NY2d 1028, 1030, reurg denied47 NY2d 951 [1979]). The “‘timeliness

of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the

grounds for disclaimer of liability or denial of coverage”’ (First Fin. Ins. Co. , 1 NY3d at 68-69,

quoting Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056, rearg denied 79 NY2d 823

41nsurance Law 5 3420 (d) (2) provides that “[ilf under a liability policy issued or delivered in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.” Subsection (d) was amended by the Laws of 2008, Chapter 388, 5 5 (id.). Illinois National, in footnote in its memorandum of law, makes a feeble attempt to question the applicability of Insurance Law Q 3420 (d) (2), based on Matter of Allcity Ins. Co. [Sioubs], 5 1 AD2d 525 [ 1st Dept 19761, ufd, 41 NY2d 872 [ 19771). However, that case is inapposite because there, the plaintiff did not timely notify the primary carrier, and as a result, the excess carrier’s policy, which afforded coverage upon exhaustion of the primary coverage, was never triggered.

,

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[ 199 11). While generally the reasonableness of the delay is a question of fact requiring

consideration of all relevant circumstances surrounding a particular disclaimer (Continental Cas.

Co. v Stradford, 1 1 NY3d 443,449 [2008]), “an insurer’s explanation is insufficient as a matter

of law where the basis for denying coverage was or should have been readily apparent before the

onset of the delay” (First Fin, Ins. Co., 1 NY3d at 69). Where the ground for disclaimer was not

readily apparent, an unsatisfactory explanation will render the delay unreasonable as a matter of

law (Hunter Roberts Constr. Group, LLC v Arch Ins. Co, , 75 AD3d 404,409 [ 1 st Dept 20101).

However, an insurer’s delay in notifying the insured of a disclaimer may be excused when the

insurer conducts an “investigation into issues affecting [its] decision whether to disclaim

coverage” (First Fin. Ins. Co., 1 NY3d at 69).

Thus, courts have found delays of about 38 days to be unreasonable as a matter of law

where the basis for disclaimer was readily apparent from the insured’s notice of claim (see Bovis

Lend Lease LMB, Inc. v Royal SurpZus Lines Ins. Co., 44 AD3d 307 [l st Dept 20071 [37 days];

2833 Third Ave. Realty Assoc. v Marcus, 12 AD3d 329 [lst Dept 20041 [37 days]; West 16h St.

Tenants Carp. v Public Sen . Mut. Ins. Co., 290 AD2d 278,279 [ 1 s t Dept 20021, lv denied 98

NY2d 605 [2002] [30 days]). By contrast, similar delays have been found to be reasonable

where the insurer was presented with circumstances which required further investigation,

including the insured’s late notice to the insurer (TuZZy Constr. Co., Inc. v TIG Ins. Co., 43 AD3d

1150, 1153 [2d Dept 20071; Ace Packing Co., Inc. v CampbellSolberg Assoc., Inc., 41 AD3d 12,

15 [lst Dept 20071; DeSantis Bros. v Allstate Ins. Co., 244 AD2d 183, 184 [lst Dept 19971, lv

denied 91 NY2d 808 [1998]).

In Tully Constr. Co., Inc.,(43 AD3d at 1153, supra), the insurer first received notice of a

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claim in June 2004 arising out of a November 2000 accident (id,). The insurer disclaimed 42

days later, in August 2004 (id.). However, there was evidence that the insured’s broker had

given prior notice to the insurer (id). The insurer requested copies of the summonses and

complaints, pretrial reports, and documentation of the alleged prior notice to the insurer (id).

Thus, the Court concluded that the insurer met its burden of demonstrating that the delay was

reasonably related to its completion of a thorough and diligent investigation into whether it had

grounds for a disclaimer based on late notice (id.).

In Ace Packing Co., Inc. (41 AD3d at 14, supra), after first receiving notice of the claim,

the insurer’s adjuster sought to interview the plaintiff about “the circumstances surrounding the

accident and what plaintiff did when it first received notice of the claim and the resulting

lawsuit.” The plaintiff refused to cooperate with the adjuster for 30 days (id.). Thus, the Court

held that the 38-day delay was “due entirely to plaintiff’s refusal to cooperate With the adjuster in

its investigation” (id at 15). When the insurer first received notice of the claim, it did not know

when “plaintiff first learned of either the accident or the lawsuit” (id).

Here, the court concludes that the ground for disclaimer (late notice) was readily apparent

before the onset of the delay from the documents submitted to Illinois National, including the

summons and complaint in the underlying action. The complaint indicates that the accident

occurred at a Brother Jimmy’s establishment on March 29,2008, more than 8 months before

Illinois National received notice of the claim on December 2, 2008 (Catapano Aff., l‘/ 3, Exh. 1;

Lahr AfErm. in Support, Exh. 1 [Complaint in Sclafuni v Brother Jimmy ’s BBQ, Inc., Index No.

1 1555 1/08> 7 22). Additionally, the general liability notice of occwrence/claim states that

Sclafani was injured on March 28,2008 at a Brother Jimmy’s restaurant (Catapano Aff., Exh. 1).

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Although Illinois National asserts that the delay was attributable to an investigation into potentid

exposure to the excess layer and the seriousness of Sclafani’s injuries, there was no need for an

investigation because the ground for disclaimer was evident from the notice of claim (see Hunter

Roberts Constr. Group, LLC, 75 AD3d at 409 [insurer’s delay in disclaiming was unreasonable

where it did not explain why anything more than a “cursory inve~tigatlon’~ was necessary to

determine whether additional insured had timely notified it of the claim]; Pav-Lak Indus., Inc. v

Arch Ins. Co., 56 AD3d 287, 287-288 [ 1 st Dept 20081 [delay in disclaiming coverage was

unreasonable because there was no need for an investigation because the basis for disclaimer was

readily apparent from information available to insurer]; Schulman v Indian Harbor Ins, Co., 40

AD3d 957, 958 [2d Dept 20071 [complaint in underlying action and circumstances surrounding

initial inquiry by claims analyst provided sufficient indicia that insured may have breached

applicable notice requirement]). There is no merit to Illinois National’s claim that “[olnly after

Illinois National undertook an investigation of the seriousness of the claim did the facts forming

the basis for its late notice defense become apparent” (Defendant Memo of Law at 20) when,.

as specified in the disclaimer notice “coverage is precluded for this loss on the basis that the

insured failed to notify us of the claim or suit until on or about 12/02/08, roughly eight months

after the accident or occurrence. We have no information in the file at this time that explains the

8 months [sic] delay in reporting this claim to Illinois National.” Therefore, Illinois National’s

3 8-day delay in disclaiming coverage was unreasonable as a matter of law.

It is well settled that “[aln insurer’s duty to defend its insured is exceedingly broad, [and

that] [a]n insurer will be called upon to provide a defense whenever the allegations of the

complaint suggest . . . a reasonable possibility of coverage” (Regal Constr. Corp. v National

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Union Fire Ins. Co. ufpittsburgh, PA, 15 NY3d 34’37 [2010] [internal quotation marks and

citations omitted]). A primary insurer “has a duty to defend without any entitlement to

contribution from an excess insurer” (General Motors Acceptance Corp. v Nationwide Ins. Con, 4

NY3d 45 1,456 [2005 ] [internal quotation marks omitted]). The narrower duty to indemnify

arises only if the claim for which the insured has been judged liable lies within the policy’s

coverage (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419,424

[1985]; Westchester Fire Ins. Co. v Utica First Ins. Co., 40 AD3d 978,980 [2d Dept 20071

[when insurers agree to pay all sums which an insured becomes legally obligated to pay as

damages, there must be an establishment of legal liability for payment of damages to trigger the

insurers’ duty to indemnify the insured]). Illinois National’s 38-day delay in issuing its

disclaimer was unreasonable as a matter of law under Insurance Law 9 3420 (d), and that its

disclaimer was therefore ineffective. Pursuant to the “other insurance” clause in the umbrella

policy, the umbrella poIicy is excess over “Other Insurance” (Lahr Affirm. in Support, Exh. 4,

VI-Conditions [L]). Thus, Illinois National is obligated to take over the defense when

Praetorian’s coverage has been exhausted (see Sport Rock Intl., Inc. v American Cas. Co. of

Reading, Pa., 65 AD3d 12,29 [ 1 st Dept 20091 [excess insurer does not have duty to defend until

primary coverage is exhausted or otherwise terminated]), and, if necessary, indemnify plaintiffs

for damages incurred in the underlying action.

The court denies the branch of plaintiffs’ cross motion seeking reimbursement of legal

fees incurred in this action. It “‘is well established that an insured may not recover the expenses

incurred in bringing an affirmative action against an insurer to settle its rights under the policy”’

(Silva v F. R. Real Estate Dev. Corp., 58 AD3d 449,450 [ 1 st Dept 20091, quoting New York

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Univ. v Continental Ins. Co., 87 NY2d 308, 324 [1995]; see also West Nth St. Assoc. v Greater

N. I: Mut. Ins. Co., 250 AD2d 109, 1 14 [ 1 st Dept 19981). Nevertheless, an insured may recover

attorneys’ fees when the insured “has been cast in a defensive posture by the legal steps an

insurer takes in an effort to free itself from its policy obligations” (Mighty Midgets v Centennial

Inns. Co., 47 NY2d 12,21 [1979]). Here, plaintiffs commenced a declaratory judgment action

against Illinois National seeking a determination of their rights under the umbrella policy. Thus,

plaintiffs are not entitled to legal fees incurred in connection with this action (see e.g. Ebusco

Constructors v Aetna Ins. Con, 260 AD2d 287,291 [lst Dept 19991 [general contractor was not

entitled to attorneys’ fees in declaratory judgment action filed against insurer for defense and

indemnification]). Attorneys fees may also be recovered where the insurer acts in bad faith (Bi-

Economy Market, Inc. v Harleymille, 10 NY3d 187 [2008]), but that not alleged to be the case

here.

Plaintiffs’ request for reimbursement of attorneys’ fees incurred in defending the

underlying action is similarly denied. Where an insurer breaches its duty to defend its insured,

the insurer is liable for reasonable attorneys’ fees incurred in defending the underlying action

(Urban Resource Inst. v Nationwide Mut. Ins. Co., 19 1 AD2d 261,262 [ 1 st Dept], lv dismissed

and denied in part 82 NY2d 704 [ 19933). Plaintiffs have not shown that Illinois National

breached its duty to defend. As noted above, Illinois National’s duty to defend is triggered only

upon exhaustion of the primary policy.

CONCLUSION

Accordingly, it is

ORDERED that the motion (sequence number 007) by defendant Illinois National

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Insurance Company for summary judgment is denied; and it is further

ORDERED that the cross motion by plaintiffs Brother Jimmy’s BBQ, Inc., Brother

Jimmy’s NYC Restaurant Holdings, LLC, Brother Jimmy’s Franchising, LLC, Josh Leibowitz,

Michael DaQuino and Kevin Bulla for summary judgment declaring that they are entitled to a

defense and indemnification from defendant Illinois National Insurance Company in the

underlying action Sclufani v Brother Jimmy’s BBQ, Inc., Index No. 115551/08 (Sup Ct, NY

County), is granted in part, and is otherwise denied; and it is further

ADJUDGED and DECLARED that defendant Illinois National Insurance Company is

obligated to provide a defense to plaintiffs in the underlying action Sclufuni v Brother Jimmy ’s

BBQ, Inc., Index No. 115551/08 (Sup Ct, NY County) upon exhaustion of the $1,000,000 limit

of the insurance policy issued by Praetorian Insurance Company; and it is further

ORDEWID that so much of the complaint that seeks indemnification from defendant

Illinois National Insurance Company is severed and continued.

This Constitutes the Decision, Order and Judgment of the Court.

Dated: May 10,201 1

ENTER: n

F I L E D MAY 17 2011

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