67 N.Y.2d 1042 (1986)

A declaratory judgment regarding an insurer’s obligation to indemnify is appropriate before a tort trial only if there’s no factual or legal basis for potential liability under the policy; otherwise, the insurer must typically defend an indemnity action or a direct action by the tort plaintiffs.

Summary

First State Insurance sought a declaratory judgment that it had no duty to defend or indemnify J & S United Amusement in a tort action filed by Angel Ocasio, who was injured on a ride operated by J & S. The policy excluded worker’s compensation claims, injuries to employees, and injuries caused by those illegally employed due to age. The court held that First State was not bound by the tort action’s outcome regarding Ocasio’s employment status because it wasn’t a party to that suit. While a declaratory judgment could be granted pre-trial only if no policy liability was possible, the court remitted the matter to determine if defending a future indemnity or direct action was an adequate alternative remedy for First State.

Facts

Angel Ocasio, a 15-year-old, was injured while assisting in the operation of a