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W.D.N.Y.: Insurer Must Defend Claim Despite Its Being Pleaded Under a Contract Theory

By Donald R. McMinn
May 01, 2016

In an interesting ruling last year from the U.S. District Court for the Western District of New York, the court applied New York law in rejecting an insurer's attempt to deny coverage when the insured faced an underlying liability claim arising out of its provision of adulterated apples that were used to make baby food. Thruway Produce, Inc. v. Massachusetts Bay Insurance Co., ___ F. Supp. 3d ___, 2015 WL 4459001 (W.D.N.Y. July 20, 2015).

The insured, Thruway Produce, Inc. (Thruway), moved for summary judgment seeking a declaration that it was owed a defense and, should it not prevail in the underlying lawsuit, indemnity from its insurer, Massachusetts Bay Insurance Co. (Massachusetts Bay). While the court found that as-yet-resolved factual questions about the underlying matter precluded it from issuing a declaration that Massachusetts Bay owed a duty to indemnify Thruway, the court did declare that Thruway was owed a defense. In so doing, it rejected Massachusetts Bay's arguments that Commercial General Liability (CGL) policies do not apply to an underlying liability arising out of a contract claim.

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