Shapiro v. Glens Falls Ins. Co., 62 N.Y.2d 417 (1984)
An insurance policy that excludes coverage for personal injury caused intentionally by the insured does not require the insurer to defend or indemnify the insured in a slander action where the complaint alleges the insured spoke maliciously with intent to injure.
Summary
Alexander Shapiro, a limited partner in a real estate syndicate, was sued for slander by the general partners. His insurer, Glens Falls Insurance Company, refused to defend him, citing a “business pursuits” exclusion and an exclusion for intentionally caused personal injury. Shapiro then sued the insurer seeking a declaration of coverage. The court found that while the “business pursuits” exclusion did not apply, the policy’s exclusion for personal injury caused intentionally barred coverage because the slander complaint alleged Shapiro acted maliciously with intent to injure the plaintiffs. Therefore, the insurer had no duty to defend or indemnify.
Facts
Alexander Shapiro, president of a plumbing supply business, invested in a real estate syndicate as a limited partner.
The general partners of the syndicate sued Shapiro for slander, alleging he falsely and maliciously told other limited partners that the plaintiffs were “phoneying and doctoring the books and records,” “flimflamming, cheating and stealing from the investors.”
The complaint specifically stated that Shapiro’s statements were made “willfully and maliciously with intent to injure and damage the plaintiffs and their good name, reputation and credit.”
Shapiro sought coverage from his insurer, Glens Falls Insurance Company, to defend against the slander action.
Glens Falls denied coverage.
Procedural History
Shapiro commenced an action against Glens Falls Insurance Company, seeking a declaration that the insurer was obligated to defend and indemnify him in the slander action.
The lower courts’ decisions are not specified in the Court of Appeals opinion, but the Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether Glens Falls Insurance Company was obligated to defend or indemnify Shapiro in the underlying slander action, given the policy’s exclusion for personal injury caused intentionally by the insured.
Holding
No, because the insurance policy specifically excluded coverage for personal injury caused intentionally by the insured, and the slander complaint alleged that Shapiro acted maliciously and with intent to injure the plaintiffs.
Court’s Reasoning
The court focused on the policy’s definition of “occurrence” and the endorsement excluding coverage for intentional personal injury. The policy defined “occurrence” as “an accident…neither expected nor intended from the standpoint of the Insured.” An endorsement to the policy further clarified that the policy “does not apply…to any personal injury…caused intentionally by or at the direction of the Insured.”
The court reasoned that because the slander complaint alleged Shapiro spoke falsely, willfully, and maliciously with intent to injure, the exclusionary endorsement applied. This meant the alleged conduct fell squarely within the policy’s exclusion for intentional acts. The court distinguished this situation from cases involving negligence or unintentional torts, where coverage might be available.
The court acknowledged that while the policy’s general summary of coverage indicated that perils like slander were included, this summary was explicitly stated not to be the contract itself and was subject to conditions and exclusions clearly stated in the contract. The exclusionary endorsement was deemed a valid and enforceable part of the insurance contract.
The court emphasized that the nature of the claim, specifically the allegation of intentional and malicious conduct, triggered the policy exclusion, relieving Glens Falls Insurance Company of its duty to defend and indemnify Shapiro. In essence, the insurer only agreed to cover accidents, not intentional torts. The court effectively highlights the critical importance of aligning the allegations in the underlying complaint with the precise terms and exclusions of the insurance policy.