Roldan v. Lewis

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

SABRINA ROLDAN,

MEMORANDUM & ORDER

Plaintiff, 20-CV-03580 (HG) (MMH)

v.

ADOLFO LEWIS et al.,

Defendant.

CITY OF NEW YORK,

Third-Party Plaintiff,

v.

LEXINGTON INSURANCE CO. and

PHILADELPHIA INDEMITY INSURANCE

CO.,

Third-Party

Defendants.

HECTOR GONZALEZ, United States District Judge:

Plaintiff Sabrina Roldan sued the City of New York and various organizations and

individuals involved with her treatment in foster care between May 1997 and February 2012.

See ECF No. 186 ¶¶ 41, 175 (Underlying Second Amended Complaint, “SAC”). In this third-

party action, Third-Party Plaintiff the City of New York sues Lexington Insurance Co. and

Philadelphia Indemnity Insurance Co., insurers of the two at-issue foster care agencies in the

underlying action, seeking, among other relief, a declaration that Lexington and Philadelphia

have a duty to defend the City in that action. For the reasons explained herein, the City’s motion

is granted in part, and Lexington and Philadelphia have a duty to defend it.

BACKGROUND

A. The Underlying Action

As will be discussed further below, Ms. Roldan’s allegations cover a long period and

vary in their specificity. There are, however, a few key waypoints needed to establish the

relevant timeline. Ms. Roldan was born in 1992 and the City took her and her two siblings into

custody in 1997 because Ms. Roldan’s mother abandoned them and her father could not care for

them. SAC ¶¶ 8, 41–42. The City placed Ms. Roldan into the custody of Concord Family

Services, which the City contracted with to provide foster care services. Id. ¶¶ 14h, 43. In

October 1997, Concord moved Ms. Roldan into the foster home of Juan and Maria Rodriguez.1

Id. ¶ 44. Ms. Roldan alleges that she experienced severe sexual and physical abuse and neglect

at the hands of the Rodriguezes. Id. ¶¶ 46–59, 80–81, 83. In 2002, Concord moved Ms. Roldan

out of the Rodriguez home. Id. ¶ 83.

When Ms. Roldan was ten years old, Concord moved her into the home of Debra Shields.

Id. ¶ 85. Ms. Roldan claims that the City had previously confirmed that Ms. Shields had abused

or maltreated other children in her home. Id. ¶ 87. Concord had already placed two other male

foster children there by the time it moved in Ms. Roldan and her siblings. Id. ¶ 88. Ms. Roldan

alleges that one of those boys, among other illegal acts, tried to rape her, and that Ms. Shields

“pushed and physically assaulted [her] to punish [her] for the incident.” Id. ¶¶ 91–94. In

November 2003, Plaintiff was placed in her fourth foster home, and she alleges that between

May 1997 and December 2008, Concord placed her in more than ten different foster homes. Id.

¶¶ 96–97. Ms. Roldan claims that the City terminated its contract with Concord in “late 2008”

1 The Court includes the names of specific foster parents only for convenience and

consistency with the SAC. To be clear, none of these individuals is a Defendant in the

underlying action, and the Court expresses no view as to any potential liability on their part.

due to “gross mismanagement, fiscal impropriety including the misuse of government funds, and

criminal activity,” and that the City subsequently placed her into the custody of HeartShare

Human Services of New York and Heartshare St. Vincent’s Services (together, “HeartShare”),

which she alleges “was one of the most dangerous foster care agencies in the City.” Id. ¶¶ 99–

101. As with Concord, the City contracted with HeartShare to provide foster care services. Id.

¶ 14h.

In December 2008, HeartShare moved Ms. Roldan into Kiesha Bell’s “filthy,”

“malodorous,” and “overcrowded” home, which “adult men . . . would enter and leave

throughout the night.” Id. ¶¶ 103–06. Sometime thereafter, Ms. Roldan fled the Bell home and

went to stay with her brother in the home of Gary Hoyte, where she remained “with the

knowledge and approval” of the City and HeartShare. Id. ¶¶ 108–09. According to Ms. Roldan,

Mr. Hoyte was a “sexual predator” and HeartShare knew it. Id. ¶ 111. He “subjected [her] to

sexual abuse and sexual harassment for a period of approximately six months.” Id. ¶ 113. In

2009, HeartShare moved Ms. Roldan into the home of Dolores Shore, where Ms. Roldan alleges

that she was “sexually assaulted and terrorized on multiple occasions” by Ms. Shore’s adult son,

Max Shore, who also lived there. Id. ¶¶ 123–24. Ms. Roldan alleges that Mr. Shore tried to rape

her, and that he and his girlfriend “regularly subjected [her] to sexual harassment and sexual

threats.” Id. ¶ 127. Eventually, the City and HeartShare moved Ms. Roldan out of the Shore

home, but “left all of [her] possessions and all of [her] documents, including [her] birth

certificate” behind. Id. ¶ 130. She was then placed back into the Bell home, where she claims

she was again “mistreat[ed] and endanger[ed],” and into “numerous other foster homes” after

that. Id. ¶¶ 131–32. Later, Ms. Roldan was placed into Helen Lacy’s home, which had up to ten

other children in it, as well as Ms. Lacy’s former boyfriend, who had been charged with murder.

Id. ¶¶ 133–35. Eventually, Ms. Roldan was moved out of the Lacy home and into other foster

homes; in total, HeartShare moved her to more than ten foster homes. Id. ¶¶ 138–39.

Ms. Roldan signed herself out of foster care and left the City’s custody on February 10, 2012.

Id. ¶¶ 141, 175. Until that point, she had remained in the custody of the City and under

HeartShare’s care. Id. ¶ 176.

Based on the above conduct and more not summarized here, Ms. Roldan alleges that she

“suffered severe sexual, physical[,] and emotional abuse, in gross disregard of her constitutional,

statutory, and common law rights.” Id. ¶ 1. Among those she seeks to hold liable are the City,

Concord, and HeartShare. Id. ¶¶ 6–7. As will also be discussed in further detail below,

Ms. Roldan alleges numerous injuries, including “irreversible and permanent” “extraordinary

physical and mental injuries, pain and suffering, anguish, terror, confusion, and helplessness,”

but also “loss of funds” and the lost opportunity to continue her education. Id. ¶¶ 140, 171, 225.

B. The Third-Party Action

After Ms. Roldan initiated the underlying action, the City filed a Third-Party Complaint

against Lexington and Philadelphia. See ECF No. 22 (Third-Party Complaint). At different

points, Lexington insured Concord and Philadelphia insured Heartshare. See id. ¶¶ 36, 44.

Lexington issued a variety of insurance policies to Concord, providing coverage between July

2003 and July 2010. ECF No. 134 at 9–10 (City’s Rule 56.1 Statement and Counterstatement).2

These included general liability (“GL”) policies for the periods July 1, 2003, to July 1, 2004

(“2003 Policy”); July 1, 2004, to July 1, 2005 (“2004 Policy”); and July 1, 2005, to July 1, 2006.

(“2005 Policy”). See id. at 9. Lexington also issued primary policies, which included GL and

professional liability (“PL”) parts, for the periods July 1, 2006, to July 1, 2007 (“2006 Policy”);

2 The Court refers to the pages assigned by the Electronic Case Files system (“ECF”).

July 1, 2007, to July 1, 2008 (“2007 Policy”); July 1, 2008, to July 1, 2009 (“2008 Primary

Policy”); and July 1, 2009, to July 1, 2010 (“2009 Policy”). See id. at 9–10. In addition,

Lexington issued to Concord an umbrella policy3 for the period July 1, 2008, to July 1, 2009

(“2008 Umbrella Policy”). See id. at 10. In September 2020, the City requested that Lexington

defend it in the underlying action as an alleged additional insured4 under policies issued to

Concord. See id. at 8–9. On January 8, 2021, AIG, acting as claims administrator for the policy,

informed the City “that there is no coverage for the [underlying action]” under the 2006 and

2007 Policies. See ECF No. 134-3 at 2 (January 8, 2021, Letter from AIG to the City); ECF No.

134 at 9 (identifying the relevant policies).

Philadelphia also issued various primary liability policies to HeartShare from August 31,

2007, to May 1, 2016. See ECF No. 134 at 13. Specifically, the Philadelphia policies covered

the following periods: August 31, 2007, to August 31, 2008; August 31, 2008, to August 31,

2009; August 31, 2009, to August 31, 2010; August 31, 2010, to August 31, 2011; August 31,

2011, to August 31, 2012; August 31, 2012, to August 31, 2013; August 31, 2013, to August 31,

2014; May 1, 2014, to May 1, 2015; and May 1, 2015, to May 1, 2016. See id. at 13. On

September 28, 2020, Philadelphia informed HeartShare that it would defend its insured and its

3 “Primary insurance policies provide the first layer of insurance coverage,” while

“[u]mbrella insurance policies provide excess insurance,” or “an additional layer of coverage

after a predetermined amount of primary coverage has been exhausted.” See Utica Mut. Ins. Co.

v. Fireman’s Fund Ins. Co., 957 F.3d 337, 340 (2d Cir. 2020). Unless noted, case law quotations

in this Order accept all alterations and omit internal quotation marks, citations, and footnotes.

4 An “additional insured” provision extends insurance coverage to an entity other than the

named insured, and it “enjoy[s] the same protection as the named insured.” See Kassis v. Ohio

Cas. Ins. Co., 913 N.E.2d 933, 934 (N.Y. 2009) (emphasis omitted). The purpose of such a

provision is to “protect additional insureds from vicarious liability for the named insured’s

negligence.” See Ohio Sec. Ins. Co. v. Travelers Indem. Co. of Conn., No. 19-cv-1355, 2021 WL

797670, at *3 (S.D.N.Y. Mar. 1, 2021).

employees in the underlying action under the “Sexual Abuse or Molestation Vicarious Liability

Coverage Form (‘SPAM Form’) only of” the “2011-2012 Primary Policy” issued to Heartshare.

See ECF No. 112-6 at 3 (Sept. 28, 2020, Letter from Philadelphia to Heartshare); see also ECF

No. 112-4 at 58 (2011-2012 Primary Policy Issued by Philadelphia, “2011-2012 Primary

Policy”). Setting the SPAM form aside, the 2011-2012 Primary Policy stated that Philadelphia,

under circumstances described in the insurance agreement, “w[ould] pay those sums that the

insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property

damage’ to which this insurance applies.” See ECF No. 112-4 at 13. The 2011-2012 Primary

Policy also contained an exclusion—the Abuse or Molestation Exclusion (“Abuse Exclusion”)—

which made clear that the insurance did not cover “‘bodily injury,’ ‘property damage,’ or

‘personal and advertising injury’ arising out of” (1) “[t]he actual or threatened abuse or

molestation by anyone of any person while in the care, custody or control of any insured,” or

(2) the negligent employment, investigation, supervision, reporting to the proper authorities (or

failure to so report), or retention “of a person for whom any insured is or ever was legally

responsible and whose conduct would be excluded by” the conduct in the preceding paragraph

one. Id. at 38. The insurance policy listed the New York City Administration for Children’s

Services as an additional insured, id. at 7, but Philadelphia “disclaim[ed] coverage to the City for

the [underlying] action” under the 2011-2012 Primary Policy, see ECF No. 112-6 at 3 n.1.

In this third-party action, the City seeks a declaration that Lexington and Philadelphia

have a duty to defend it in the underlying action and pay its attorney’s fees and costs5 incurred in

5 This requested relief is encompassed by the Court’s conclusion concerning the insurers’

duty to defend because “the duty to defend is triggered by the filing of a complaint containing

allegations that could possibly bring the action within the scope of coverage provided by the

insurance policy.” See Smart Style Indus., Inc. v. Penn. Gen. Ins. Co., 930 F. Supp. 159, 163

defending that action based on its alleged status as an additional insured. ECF No. 22 ¶¶ 1, 17,

24. Philadelphia answered and filed a crossclaim seeking a declaration that Lexington’s

insurance policies “were in effect for some or all of the time period” of the underlying action.

See ECF No. 32 at 14 (Philadelphia’s Answer, Crossclaim, and Counterclaim). Philadelphia also

counterclaimed, seeking a declaratory judgment that it has no duty to defend nor indemnify the

City in the underlying action, among other relief. See id. Lexington filed an answer to the City’s

Third-Party Complaint, see ECF No. 39, and to Philadelphia’s crossclaim, see ECF No. 41.

On May 17, 2023, Philadelphia filed a motion for summary judgment, asking the Court to

rule that it has no duty to defend the City in the underlying action. See ECF No. 123

(Philadelphia’s Memorandum of Law). On the same day, Lexington filed a summary judgment

motion seeking dismissal of the City’s claim and Philadelphia’s crossclaim. See ECF No. 126-

15 (Lexington’s Memorandum of Law). On June 16, 2023, the City similarly filed a motion for

summary judgment on its claims that Philadelphia and Lexington each have a duty to defend it.

See ECF No. 136 (City’s Memorandum of Law). Philadelphia and Lexington filed Oppositions

on July 14, 2023. See ECF No. 142 (Philadelphia’s Opposition); ECF No. 143 (Lexington’s

Opposition). The City did the same on August 3, 2023. See ECF No. 144 (City’s Opposition).

On November 22, 2023, Ms. Roldan filed an Amended Complaint, which contained

several new claims, see ECF No. 145 (Underlying First Amended Complaint, “FAC”), and on

December 6, 2023, the City and certain other Defendants in the underlying action filed a motion

(S.D.N.Y. 1996). The City must be reimbursed for the fees and costs of defending the

underlying action. See Turner Constr. Co. v. Am. Mfrs. Mut. Ins. Co., 485 F. Supp. 2d 480, 490

(S.D.N.Y. 2007) (where defendants “breached their duty to defend” additional insured,

defendants were ordered to reimburse the additional insured for “reasonable attorneys’ fees and

necessary costs incurred by [the additional insured] in the defense of the underlying action[]”),

aff’d sub nom., Turner Constr. Co. v. Kemper Ins. Co., 341 F. App’x 684 (2d Cir. 2009).

to strike the FAC as not filed in conformity with Rule 15, see ECF No. 146. On the next day, the

Court entered an order requiring Ms. Roldan to explain why the FAC was procedurally proper

and directed the Third-Party Litigants to file a letter “describing their respective positions on

how, if at all, the claims in [the FAC] affect the [third-party] insurance dispute.” See Dec. 7,

2023, Text Order. On December 20, 2023, Philadelphia filed its letter, representing that FAC

“generally d[id] not affect” its position. See ECF No. 160 at 1. Philadelphia also sought leave to

file a supplemental brief in the event that the Court deemed the FAC operative. Id. at 1–2. On

the same day, the City took the same position as Philadelphia, stating that the FAC “d[id] not

materially affect the facts or law necessary to resolve the summary judgment[] motions [in the

third-party action] in their present form.” See ECF No. 161 at 1. On January 19, 2024,

Lexington adopted the same view. See ECF No. 176.

On March 18, 2024, the Court ruled that the FAC was proper under Rule 15(a)(1)(B) and

denied the motion to strike it. See Mar. 18, 2024, Text Order. The Court also directed

Ms. Roldan to file the SAC “to cure defects with respect to her allegations of diversity

jurisdiction.” Id. In addition, the Court granted Philadelphia’s request for supplemental briefing

concerning the effect of amendment on the instant summary judgment motions. See id.

Ms. Roldan filed the SAC on March 20, 2024. See ECF No. 186. Philadelphia filed its

supplemental brief on April 8, 2024, describing the differences in the SAC as “inconsequential”

to the insurance coverage dispute. See ECF No. 191 at 4 (Philadelphia’s Supplemental Brief).

Lexington took the same view. See ECF No. 192 at 5 (Lexington’s Supplemental Brief). On

April 15, 2024, the City filed a letter motion in which it claimed that the insurers’ Supplemental

Briefs went beyond the question presented by the Court concerning the effect of the SAC on the

third-party insurance dispute. See ECF No. 194 (City’s Second Motion to Strike). On the same

day, Philadelphia also filed an Opposition to Lexington’s Supplemental Brief, arguing that

Lexington has a duty to defend the City. See ECF No. 195 (Philadelphia’s Supplemental

Opposition Brief). The Court entered an Order on April 15, 2024, in which it stated that it would

construe the City’s Second Motion to Strike as its Opposition to the insurers’ Supplemental

Briefs. See Apr. 15, 2024, Text Order.

LEGAL STANDARD

Summary judgment is appropriate “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a). A court should grant summary judgment “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party

has the burden of demonstrating that there is no genuine issue of material fact. Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986). “Where the moving party demonstrates the absence of a

genuine issue of material fact, the opposing party must come forward with specific evidence

demonstrating the existence of a genuine dispute of material fact.” Brown v. Eli Lilly & Co., 654

F.3d 347, 358 (2d Cir. 2011). In deciding a summary judgment motion, any ambiguities and

inferences drawn from the facts must be viewed in the light most favorable to the nonmoving

party. LaFond v. Gen. Physics Servs. Corp., 50 F.3d 165, 171 (2d Cir. 1995).

The Court has “broad discretion” to decline to exercise jurisdiction under the Declaratory

Judgment Act and its exercise of jurisdiction is guided by the following considerations “to the

extent they are relevant” in this case:

(1) whether the declaratory judgment sought will serve a useful purpose in

clarifying or settling the legal issues involved; (2) whether such a judgment would

finalize the controversy and offer relief from uncertainty; (3) whether the

proposed remedy is being used merely for procedural fencing or a race to res

judicata; (4) whether the use of a declaratory judgment would increase friction

between sovereign legal systems or improperly encroach on the domain of a state

or foreign court; (5) whether there is a better or more effective remedy; and

(6) whether concerns for judicial efficiency and judicial economy favor declining

to exercise jurisdiction.

Admiral Ins. Co. v. Niagara Transformer Co., 57 F.4th 85, 99–100 (2d Cir. 2023). “[C]ourts

may issue a declaratory judgment on the duty to defend, while holding that the duty to indemnify

is not ripe for adjudication.” See Atl. Cas. Ins. Co. v. Value Waterproofing, Inc., 918 F. Supp. 2d

243, 261 (S.D.N.Y. 2013).

DISCUSSION

“Under New York law, an insurer’s duty to defend policyholders is ‘exceedingly broad,’

and ‘broader than the . . . duty to indemnify.’” See Travelers Indem. Co. v. Harleysville Ins. Co.,

No. 21-cv-1089, 2023 WL 6214239, at *7 (E.D.N.Y. Sept. 25, 2023) (quoting Atl. Ave. Sixteen

AD, Inc. v. Valley Forge Ins. Co., 56 N.Y.S.3d 207, 209 (N.Y. App. Div. 2017)).6 “An insurer

may refuse to defend only if it could be concluded as a matter of law that there is no possible

factual or legal basis on which the insurer might eventually be obligated to indemnify the insured

under any provision of the insurance policy.” CGS Indus., Inc. v. Charter Oak Fire Ins. Co., 720

F.3d 71, 82 (2d Cir. 2013). To be sure, the duty to defend “is not an interminable one.”

Harleysville, 2023 WL 6214239, at *7. But “[i]f the complaint contains any facts or allegations

which bring the claim even potentially within the protection purchased, the insurer is obligated to

defend.” See Technicon Elecs. Corp. v. Am. Home Assur. Co., 542 N.E.2d 1048, 1050 (N.Y.

1989). Accordingly, “[w]here several claims arise from the same set of facts, if any of the claims

6 The parties agree that New York law controls this dispute, which is “sufficient to

establish choice of law.” See Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 566–67 (2d

Cir. 2011).

are covered by the policy, the insurer consequently has a duty to defend the entire action under

any of the policies, including the uncovered claims.” CGS, 720 F.3d at 83; see also Great Am.

Ins. Co. v. Houlihan Lawrence, Inc., 449 F. Supp. 3d 354, 365 (S.D.N.Y. 2020) (“The insurer’s

duty to defend the entire action is triggered even if only one claim is potentially covered by the

insurance policy.”).

“To determine if a defense obligation exists, courts compare the allegations of the

complaint to the terms of the policy.” Houlihan, 449 F. Supp. 3d at 365. As such, the Court

must “liberally construe[]” the SAC’s allegations, see Century 21, Inc. v. Diamond State Ins.

Co., 442 F.3d 79, 83 (2d Cir. 2006), and interpret the insurance policies according to the

“ordinary rules of contractual interpretation,” see Houlihan, 449 F. Supp. 3d at 366. That being

said, the “allegations in the complaint are not necessarily the ‘sole criteria for measuring the

scope of the duty to defend.’” Id. (quoting Fitzpatrick v. Honda Am. Motor Co., 575 N.E.2d 90,

92 (N.Y. 1991) with alterations accepted). Indeed, “[t]he New York Court of Appeals has

eschewed wooden application of the four corners of the complaint rule,” in favor of a rule

requiring the insurer to also provide a defense where, notwithstanding the complaint allegations,

underlying facts made known to the insurer create a reasonable possibility of coverage.” See

QBE Ins. Corp. v. Adjo Contracting Corp., 997 N.Y.S.2d 425, 440–41 (N.Y. App. Div. 2014).

After determining whether there is coverage under the relevant policy, the Court may

consider if any exclusions raised by the insurer bar coverage. See Vill. of Piermont v. Am. Alt.

Ins. Co., 151 F. Supp. 3d 438, 451 (S.D.N.Y. 2015). Where an insurer invokes a policy

exclusion to try to avoid its duty to defend, it “bears the heavy burden of demonstrating that the

allegations of the complaint cast the pleadings wholly within that exclusion.” Stein v. N. Assur.

Co. of Am., 617 F. App’x 28, 30 (2d Cir. 2015). In other words, for an exclusion to apply, “the

insurer must demonstrate that the allegations of [the] underlying complaint place that pleading

solely and entirely within the exclusions of the policy and . . . the allegations are subject to no

other interpretation.” CGS, 720 F.3d at 77.

A. Philadelphia Has a Duty to Defend the City

Although Philadelphia’s insured, HeartShare, took custody of Ms. Roldan after the City

ended its relationship with Lexington’s insured, Concord, the Court begins its analysis with

Philadelphia’s claims. This is because Philadelphia’s attempt to disclaim coverage touches on

certain first principles of New York insurance law which are also instructive for the duty to

defend analysis as it relates to Lexington’s effort to do the same.

i. At-Issue Policies

At the threshold, the Court must determine the universe of relevant Philadelphia policies.

In the Third-Party Complaint, the City asserts that Philadelphia has a duty to defend under “a

series of commercial [GL] and [PL] policies that were effective for some or all of the period of

the [underlying] action.” ECF No. 22 ¶¶ 22, 60. Although Philadelphia issued various policies

to HeartShare during the period covered by the underlying complaint, Philadelphia asserted in its

Rule 56.1 Statement attached to its pre-motion conference letter that “[t]he Philadelphia policy at

issue in the City[’s] third-party complaint . . . is Policy No. PHPK765993,” or the 2011-2012

Primary Policy, ECF No. 112-1 ¶¶ 1–2 (Philadelphia’s Rule 56.1 Statement), which was the

specific policy under which Philadelphia disclaimed coverage, ECF No. 112-6 at 3 n.1.

Philadelphia observes that the City failed to contravene its Rule 56.1 Statement. See ECF No.

123 at 8. The City retorts that under Local Rule 56.1, it was not obligated to do so at the pre-

motion conference letter phase but only at the instant motion stage, when it did file a

counterstatement. See ECF No. 136 at 50; ECF No. 134.

Although both sides devote much briefing to this issue, they lose the forest for the trees.

Philadelphia argues that the statement regarding the at-issue policy in its Rule 56.1 Statement is

“deemed admitted,” and that, accordingly, the 2011-2012 Primary Policy is the “only

Philadelphia policy at issue in this litigation.” ECF No. 123 at 8. For that proposition, it relies

on cases in which courts have deemed admitted uncontroverted Rule 56.1 statements. See id.

(citing, inter alia, Cason v. Doe 1–2, No. 16-cv-3710, 2018 WL 10610345, at *1 (E.D.N.Y. Nov.

27, 2018)). To be sure, Local Rule 56.1(c) warns litigants that failure to oppose another party’s

statement in accordance with the rule will result in that uncontroverted fact being “deemed . . .

admitted.” But Philadelphia’s position does not fully capture the law of this Circuit, which

makes clear that the Court “has broad discretion to determine whether to overlook a party’s

failure to comply with local court rules,” see Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir.

2001),7 and that there is a “strong preference for resolving disputes on the merits, rather than on

the basis of procedural issues,” see Fiedler v. Incandela, 222 F. Supp. 3d 141, 156 (E.D.N.Y.

2016).

The City also misses the mark on this point. As it ultimately concedes, see ECF No. 144

at 25, a nonmovant needs to contravene its adversary’s Rule 56.1 Statement at the pre-motion

conference letter phase. See Individual Practices, § IV.A.4. (discussing opposing Rule 56.1

Statements in the context of pre-motion conference letters). However, in light of the foregoing

discussion and because the Court can appropriately adjudicate this issue on the merits, it is

inappropriate to apply the automatic rule urged by Philadelphia to this case. That being said, and

7 Indeed, Philadelphia’s own authority, see ECF No. 123 at 8, recognizes the Court’s

discretion in this area. See Taylor & Fulton Packing, LLC v. Marco Int’l Foods, LLC, No. 09-

cv-2614, 2011 WL 6329194, at *4 (E.D.N.Y. Dec. 16, 2011) (“A nonmoving party’s failure to

respond to a Rule 56.1 statement permits the court to conclude that the facts asserted . . . are

uncontested and admissible.” (emphasis added)).

as the City recognizes, see ECF No. 144 at 26, it still has a burden to demonstrate that it is

entitled to summary judgment. See Amaker v. Foley, 274 F.3d 677, 681 (2d Cir. 2001)

(regardless of opposition, court must still satisfy itself that moving party has carried its burden

under Rule 56). And with respect to the realm of applicable Philadelphia policies, the City’s

position is confused and confusing. In the Third-Party Complaint, the City seeks a declaration

with respect to all relevant Philadelphia policies. See ECF No. 22 ¶ 60. Then, in its Rule 56.1

Counterstatement, it vaguely states that “[a]ll of Philadelphia[’s] policies issued to Heartshare

are ‘at issue,’ depending on the year in which an occurrence is alleged to have taken place.”

ECF No. 134 at 14 (emphasis altered). The City also references a letter in which Ms. Roldan

clarified that she allegedly experienced abuse between July 1, 2008, and February 28, 2009, see

ECF No. 134-1, which the City claims “potentially places each of the . . . Policies ‘at issue.’”

ECF No. 134 at 14 (emphasis added). Then, in its instant motion, the City suggests that only

four policies (spanning August 31, 2008, to August 31, 2012) are “relevant,” ECF No. 136 at 19,

before later claiming in that same motion that “Philadelphia must defend the City under all

nine . . . Philadelphia primary policies as Ms. Roldan has alleged an injury during all of them,”

id. at 39.

A moving party may not be a moving target. This is particularly true in the context of an

action for a declaratory judgment, a mechanism designed to “offer relief from uncertainty.” See

Admiral, 57 F.4th at 100. Thus, where the parties “talk past one another,” as here, it is

appropriate for the Court to isolate “the facts that are not in dispute” and rule accordingly. See,

e.g., Britt v. Thermald Realty I, LP, No. 13-cv-8289, 2015 WL 4922977, at *10 (S.D.N.Y. Aug.

18, 2015). In this case, Philadelphia effectively concedes that, before analyzing any possible

exclusions, there is coverage for at least some of Ms. Roldan’s claims under the 2011-2012

Primary Policy.8 Accordingly, the Court will accordingly limit its analysis to that policy.

However, as discussed further below, this narrowed analysis has no effect on the Court’s bottom-

line conclusion that Philadelphia has a duty to defend.9

ii. Coverage Under the 2011-2012 Primary Policy

As it relates to the threshold question of coverage under the 2011-2012 Primary Policy,

there is little in dispute, and even less in serious dispute. Philadelphia has conceded that the City

is an additional insured under the policy. See ECF No. 85 at 34:13–14 (Dec. 10, 2021, Conf.

Tr.); ECF No. 112-4 at 13; see also ECF No. 112-1 ¶ 5; ECF No. 134 at 14. Philadelphia also

does not seriously contest that the SAC’s allegations come within the 2011-2012 Primary

Policy’s scope, proceeding directly to the analysis of an exclusion in its motion. See ECF No.

123 at 16. That makes sense because the 2011-2012 Primary Policy applies to “‘bodily injury’

or ‘property damage’ . . . caused by an occurrence,” which is, in turn, defined as “an accident,

including continuous or repeated exposure to substantially the same general harmful conditions.”

See ECF No. 112-4 at 26, 33. The allegations against the City related to Ms. Roldan’s time in

HeartShare’s custody are replete with such allegations. See, e.g., SAC ¶¶ 136–37 (alleging that

the City and HeartShare took “no action” even after Ms. Roldan “begged” them to remove her

from Ms. Lacy’s home because she was “terrified”); id. ¶ 140 (alleging that “[b]ecause of the

frequency of the moves and the abuse [Ms. Roldan] suffered, [she] was unable to continue her

education”); id. ¶ 170 (“As a result of defendants’ failures, [Ms. Roldan] was subjected to

8 As discussed further below, Philadelphia briefly suggests the possibility that certain

claims are not covered by the 2011-2012 Primary Policy, but that argument fails.

9 To be clear, the Court does not conclude that Philadelphia has no duty to defend under

any of the other policies, only that the City has not carried its burden on summary judgment to

obtain that additional relief due to the uncertainty around its position.

repeated sexual, physical, and emotional abuse, and was denied adequate food, clothing, and

shelter.”).

Although Philadelphia does not specifically raise the issue, the fact that Ms. Roldan’s

allegations are imprecise with respect to timing does not relieve it of its duty to defend.

Ms. Roldan’s allegations are sufficient to “arguably fall within a risk covered by the policies.”

See Scottsdale Ins. Co. v. United Indus. & Constr. Co., 137 F. Supp. 3d 167, 175 (E.D.N.Y.

2015). “[A] policy protects against poorly or incompletely pleaded cases,” Ruder & Finn Inc. v.

Seaboard Sur. Co., 422 N.E.2d 518, 521 (N.Y. 1981), and that principle extends to a “complaint

that is so vague and indefinite that one cannot conclusively rule out coverage,” see United, 137

F. Supp. 3d at 178 (quoting Cohen v. Jacoby, 199 N.Y.S.2d 537, 539–40 (N.Y. Sup. Ct. 1960));

see also New York v. Blank, 27 F.3d 783, 790 (2d Cir. 1994) (“[W]here the allegations of the

underlying complaint are general, ambiguous, or inaptly phrased, courts construe the allegations

in favor of coverage.”). In this case, United is instructive. There, the court held that an insurer

could not “disclaim its duty to defend . . . based on controlling dates of the policies” in view of

the “broad pleadings in the [u]nderlying [a]ctions which fix the dates of [the insured’s] actions

in, around, and on the ‘cusp’ of each of the[] policies.” 137 F. Supp. 3d at 178 n.6. So too here,

where the Court “cannot . . . ascertain[] with certainty” that no covered act in the broad SAC

falls within policy period for the 2011-2012 Primary Policy.10 Id.

Philadelphia also suggests that the definition of “occurrence” precludes coverage for

certain claims. Specifically, it argues that the 2011-2012 Primary Policy “does not provide

coverage for Roldan’s breach of contract cause of action and causes of action for violations of

10 That is to say nothing of the potential applicability of one of the earlier Philadelphia

policies, which, for reasons previously explained, the Court cannot address here due to

imprecision in the parties’ briefing.

the Fourteenth Amendment and the New York State Constitution because these causes of action

do not constitute an ‘occurrence.’” See ECF No. 191 at 10–11; see also ECF No. 123 at 23.

However, Philadelphia provides only weak support for that position by citing cases in which

courts held that breach of contract claims fell outside of the definition of “occurrence.” See ECF

No. 123 at 24. Further, to the extent Philadelphia is trying to disclaim coverage for certain

claims, it is black-letter law that “the duty to defend [is] a binary proposition: either the insurer

has a duty to defend, in which case it must defend the entire lawsuit, or the insurer has no duty to

defend the lawsuit at all.” See Spandex House, Inc. v. Hartford Fire Ins. Co., 407 F. Supp. 3d

242, 260 (S.D.N.Y. 2019). Philadelphia seems to try do here precisely what the law does not

allow and “provide a defense for some claims in [the] lawsuit but not others.” Id.; accord

Houlihan, 449 F. Supp. 3d at 365–66. After all, “[t]he duty to defend . . . . includes the defense

of those actions in which alternative grounds are asserted, even if some are without the

protection purchased.” Ruder & Finn, 422 N.E.2d at 521. Thus, even if Philadelphia is right and

it is not ultimately obligated to indemnify the City for certain specific claims, that argument does

nothing to change the conclusion that it has a duty to defend the City.

iii. Attacks on the Merits of the Underlying Action

Having effectively conceded that at least some allegations come within the 2011-2012

Primary Policy’s coverage, Philadelphia advances two categories of arguments to avoid its duty

to defend. First, it claims that coverage for the underlying action is “entirely precluded” under

the 2011-2012 Primary Policy’s Abuse Exclusion. See ECF No. 191 at 8. Second, it presents

several arguments attacking the merits of Ms. Roldan’s allegations in the underlying action. See,

e.g., ECF No. 123 at 6. Neither argument is convincing.

The Court starts with Philadelphia’s second argument that certain of Ms. Roldan’s

allegations fail, which misapprehends first principles of New York law. Philadelphia claims that

Ms. Roldan’s Section 1983 claims are time-barred and were not permitted by New York’s Child

Victims Act (“CVA”), see ECF No. 123 at 20–23, “which revive[d] the time to commence

[certain] civil actions based upon sexual offenses,” see Kane v. Mount Pleasant Cent. Sch. Dist.,

80 F.4th 101, 104 (2d Cir. 2023). Philadelphia also contends that Ms. Roldan “has no authority

under the CVA to assert a breach of contract cause of action.” See ECF No. 123 at 24–25. In its

most recent submission filed in response to the SAC, Philadelphia reaches further, arguing that

neither the CVA nor New York’s Adult Survivors Act provides a standalone cause of action.

ECF No. 191 at 4–5. Philadelphia also claims it “has no duty to defend the City in the

[underlying] [a]ction because the allegations in [Ms. Roldan’s] Complaint, if proven true, would

not impose a duty to indemnify on the part of Philadelphia for the reasons set forth in pages 15 to

18 of Philadelphia’s opening [brief],” see ECF No. 142 at 13, thereby referring back to its

arguments about why the underlying Section 1983 claims fail, see ECF No. 123 at 20–23.

Remarkably, Philadelphia—an insurance company—even claims, in this duty to defend posture,

that “the Court must dismiss” certain causes of action advanced by Ms. Roldan “because they are

not legally viable.” See ECF No. 191 at 9. Although Philadelphia does not explicitly say as

much, it suggests that where an underlying plaintiff’s claims fail, there will be no coverage, and

“where there is no coverage . . ., there is no duty to defend any insured.” ECF No. 123 at 22–23

(quoting Atl. Cas. Ins. Co. v. Stone & Tile, Inc., No. 17-cv-5534, 2021 WL 8316280, at *7

(E.D.N.Y. Aug. 26, 2021)).

The fatal flaw in Philadelphia’s argument is that it equates its insured’s potential liability

in the underlying action with its own duty to defend. The City is right to observe that

Philadelphia’s view contravenes elementary principles of New York insurance law, see ECF No.

136 at 39, a cornerstone of which is that the duty to defend is much broader than the duty to

indemnify. See Harleysville, 2023 WL 6214239, at *7.11 Further, “the New York Court of

Appeals . . . [has] squarely reject[ed] the argument that ‘liability must be determined before an

additional insured is entitled to a defense.’” See Certain Underwriters of Lloyd’s, London v.

Travelers Cas. Ins. Co. of Am., 664 F. Supp. 3d 288, 293 (E.D.N.Y. 2023) (quoting BP Air

Conditioning Corp. v. One Beacon Ins. Grp., 871 N.E.2d 1128, 1132 (N.Y. 2007)).

Philadelphia’s argument is misguided because “[t]he merits of the complaint are irrelevant; if the

allegations suggest coverage, ‘the insurer must come forward to defend its insured no matter how

groundless, false or baseless the suit may be.’” Id. (quoting Ruder & Finn, 422 N.E.2d at 521).

Indeed, as the Second Circuit has explained, “[t]he New York cases establish that so long as the

claims asserted against the insured may rationally be said to fall within policy coverage,

whatever may later prove to be the limits of the insurer’s responsibility to pay, there is no doubt

that it is obligated to defend.” See Century 21, 442 F.3d at 83.

Philadelphia resists this outcome by repeating the uncontroversial principle that “when

the uncontroverted facts prove that no duty to indemnify exists the insurer must be relieved of its

duty to defend.” See ECF No. 123 at 25 (quoting Md. Cas. Co. v. Continental Cas. Co., 332

F.3d 145, 160 (2d Cir. 2003)). In other words, “if it can be concluded as a matter of law that

there is no possible factual or legal basis on which the insurer will be obligated to indemnify the

insured,” then an insurer owes no duty to defend. Continental, 332 F.3d at 160. But

11 After Philadelphia filed its instant motion, Plaintiff Roldan filed a letter urging the Court

to “not reach the merits of [Ms. Roldan’s] claims against Defendants in ruling on a Third Party’s

Motion in a Third-Party Action.” ECF No. 132 (Plaintiff Roldan’s Opposition to Philadelphia’s

Motion for Summary Judgment). As explained herein, her argument is well taken.

Philadelphia misses the point by focusing on the merits of Ms. Roldan’s claims rather than on the

contours of the coverage provided by the policies it sold. For example, in Stone & Tile, see ECF

No. 123 at 22–23, the court indeed held that the insurer had no duty to defend. 2021 WL

8316280, at *7. However, it did so where an insured sought a defense under a premises liability

policy in a case involving injuries not even sustained at the insured building but at an altogether

different one. See id. Similarly, in MIC General Insurance Co. v. Allen, see ECF No. 142 at 13,

the Second Circuit ruled that there was no duty to defend where a homeowner’s policy covered

only a residence where the insured resided, and it was undisputed that the insured did not

actually reside at the at-issue property. 697 F. App’x 717, 719–20 (2d Cir. 2017).

In sum, the cases relied on by Philadelphia are inapposite because they involved instances

in which the underlying claims “were outside the coverage of the policies at issue.” See Burt

Rigid Box, Inc. v. Travelers Prop. Cas. Co., 302 F.3d 83, 97 (2d Cir. 2002) (cited by

Philadelphia, ECF No. 142 at 13–14). They do not, as Philadelphia would have it, stand for the

proposition that the broad duty to defend is extinguished when the claims in the underlying

lawsuit against the insured may ultimately be doomed. This conclusion is consistent with the

case law, under which there is a duty to defend even where the underlying claims are

“untenable.” See Century 21, 442 F.3d at 82; see also Ruder & Finn, 422 N.E.2d at 521 (“[T]he

question is not whether the complaint can withstand a motion to dismiss . . . .”). As such,

Philadelphia’s attack on Ms. Roldan’s claims cannot relieve it of its duty to defend because it

cannot at all “eliminate the possibility” of coverage in the underlying action. See Stein, 617 F.

App’x at 31.

iv. Applicability of the Abuse Exclusion

Moving to Philadelphia’s more serious argument, it claims that it has no duty to defend

because the SAC’s allegations all fall within the Abuse Exclusion. See ECF No. 123 at 16. As

previously explained, that exclusion provided that the 2011-2012 Primary Policy did not cover

“‘bodily injury,’ ‘property damage,’ or ‘personal and advertising injury’ arising out of . . . [t]he

actual or threatened abuse or molestation by anyone of any person while in the care, custody or

control of any insured.” ECF No. 112-4 at 38. Philadelphia posits that this Abuse Exclusion

applies because Ms. Roldan was in the City’s care, custody, and control as a foster child, and that

“each and every cause of action relates to and seeks relief for ‘sexual, physical and emotional

abuse.’” See ECF No. 123 at 18. Concerning the Abuse Exclusion’s scope, Philadelphia points

to Scottsdale Indemnity Co. v. Beckerman, in which the Appellate Division held that the “arising

out of” language, like that here, “is interpreted broadly.” 992 N.Y.S.2d 117, 121 (N.Y. App.

Div. 2014). In Beckerman, the Appellate Division explicated the “but-for” test that the Court

must apply to determine the provision’s applicability: “[I]f the plaintiff in an underlying

action . . . alleges the existence of facts clearly falling within such an exclusion, and none of the

causes of action that he or she asserts could exist but for the existence of the excluded activity or

state of affairs, the insurer is under no obligation to defend the action.” Id. (citing Mount Vernon

Fire Ins. Co. v. Creative Hous., 668 N.E.2d 404, 405–07 (N.Y. 1996)). Thus, Philadelphia

contends, Plaintiff “Roldan could not have filed her action and/or any of her causes of action ‘but

for’ the alleged sexual abuse and/or molestation she incurred,” and the Abuse Exclusion applies.

ECF No. 123 at 18.

In response, the City concedes that at least some of Ms. Roldan’s claims fall within the

Abuse Exclusion. See ECF No. 136 at 41. Nevertheless, it insists that Philadelphia has a duty to

defend because Ms. Roldan “alleges injuries from conduct other than abuse” as well as “abuse

outside of the time she was in the custody, care or control of” an insured. Id. at 38. The City

points to various allegations of injuries it claims do not arise out of the alleged sexual abuse. See

id. at 42. To take just two examples, Ms. Roldan alleges that “[w]hen Defendants HeartShare

and City moved [P]laintiff out of the Shore home, they left all of [P]laintiff’s possessions and all

of [P]laintiff’s documents, including [P]laintiff’s birth certificate, in the Shore home.” SAC

¶ 130. And Ms. Roldan contends that HeartShare and the City failed to provide her with

personal identification as they were legally required to do, and that HeartShare’s failure to assist

her with obtaining identification following the loss of her birth certificate “caused [her] extreme

distress and anguish.” Id. ¶¶ 142, 147. Significantly, “New York courts have repeatedly held

that emotional distress of th[is] nature . . . constitutes ‘bodily injury’ for insurance law

purposes.” Jewish Cmty. Ctr. of Staten Island v. Trumbull Ins. Co., 957 F. Supp. 2d 215, 236

(E.D.N.Y. 2013) (cited by Philadelphia, ECF No. 131 at 23).

Philadelphia does not directly engage with this argument and instead retreats to familiar

territory, asserting, for example, that the Abuse Exclusion applies because Ms. Roldan “could

not have filed her . . . CVA . . . action, which is limited to damages for sexual abuse, but for the

alleged sexual [abuse] and/or molestation she incurred -- precisely what the exclusion is intended

to exclude.” ECF No. 142 at 5. Philadelphia thus tries to invoke the Abuse Exclusion by

shifting upward the level of generality at which the Court performs the but-for inquiry by

claiming that “[t]he only legal authority Roldan had to file [her] Complaint was the CVA.” Id. at

10 n.1; see also ECF No. 191 at 9 (arguing that any claims brought under the CVA and Adult

Survivors Act must be predicated on “extreme sexual abuse”). Despite this parsing,

Philadelphia’s claim is all-encompassing: “[C]overage for the SAC is entirely precluded by the

Abuse [Exclusion].” ECF No. 191 at 8.

Intentional or not, Philadelphia’s reading of the SAC is far too simplistic. Consistent

with the long time period covered by the SAC and the seriousness of the allegations contained

therein, Ms. Roldan’s factual assertions and theories of liability are broad and diverse.

Methodologically, Philadelphia identifies not one case in which a court has applied the but-for

test in the way it suggests—i.e., as “statutorily limited” to certain damages permitted under a

claims-enabling statute like the CVA. See ECF No. 142 at 9–10. Nor could it, because it is well

settled that to determine if a policy exclusion applies, the Court “examin[es] whether the asserted

claim could succeed but for the excluded conduct.” See Beazley Ins. Co., Inc. v. ACE Am. Ins.

Co., 880 F.3d 64, 71 (2d Cir. 2018) (emphasis added); see also, e.g., Hugo Boss Fashions, Inc. v.

Fed. Ins. Co., 252 F.3d 608, 623 n.15 (2d Cir. 2001) (affirming non-applicability of breach-of-

contract exclusion because certain “claims . . . exist independent of the contract” alleged to have

been breached). Put differently, the Court looks at the “operative act giving rise to any

recovery.” Mount Vernon, 668 N.E.2d at 406. Thus, for example, where a plaintiff alleged in an

underlying action that he was sexually assaulted at a camp, and that the camp was liable for

“negligent misrepresentation” due to its failure to provide adequate supervision, a sexual abuse

exclusion was effective because “[w]ithout the underlying ‘[a]buse or [m]olestation’ there would

[have] be[en] no claim for negligent misrepresentation.” See TIG Ins. v. Martin, No. 00-cv-

5766, 2003 WL 25796732, at *1, *4 (E.D.N.Y. Feb. 28, 2003).

In this case, by contrast, and consistent with the Court’s “obligation to interpret the

underlying claims liberally and exclusions narrowly,” the Court “cannot find that all of the

causes of action would not exist but for the existence of [the abuse] allegations.” See Houlihan,

449 F. Supp. 3d at 369–71. Even if Ms. Roldan’s claims related to, as the City puts it, “mis-

administration or administrative negligence,” ECF No. 136 at 43, which do not arise out of the

alleged abuse, are somewhat peripheral in view of the entire SAC, they nevertheless “cannot be

cast solely and entirely within the policy exclusion[].” See Piermont, 151 F. Supp. 3d at 451

(insurer had duty to defend where sexual abuse exclusion did not apply). For example, the Court

finds that no abuse allegation was needed for Ms. Roldan to seek relief with respect to her lost

property or inability to obtain proper identification.12 Philadelphia has not carried its heavy

burden of demonstrating “with certainty that all possible damages for which [the City] might

ultimately be held liable would” be attributed to the excluded conduct. See United, 137 F. Supp.

3d at 176.

Notably, like the insurer in Piermont, Philadelphia does not even try to explain how these

additional injuries identified by the City arise out of the excluded “operative act” of abuse. See

ECF No. 142 at 6. Instead it asserts: “All of Roldan’s allegations of negligent property damage,

loss of funds, the inability to finish her education and/or negligent administration of Roldan’s

foster care are a legal nullity, time barred, outside the scope of the CVA and [are] precluded

from coverage under the Policy.” ECF No. 123 at 19 n.1. That shotgun argument tucked into a

footnote is unpersuasive. As already explained, neither the CVA nor any other statute enabling a

plaintiff to bring certain claims sheds light on the but-for inquiry, and Philadelphia’s attempt to

prematurely litigate Ms. Roldan’s merits arguments fares no better. See, e.g., Ruder & Finn, 422

N.E.2d at 670 (“[A] policy protects against poorly or incompletely pleaded cases as well as those

inartfully drafted.”). To the extent Philadelphia claims that these injuries are not covered by

12 As previously explained, because this but-for analysis is conduct-based, the Court, at this

juncture, takes no view on whether this claim or any other will withstand a motion to dismiss.

2011-2012 Primary Policy whatsoever, such argument is unsupported and seeks to erect legally

insignificant fences around the scope of the coverage it sold. After all, Philadelphia itself rightly

observed in opposition to Lexington’s supplemental brief that even “[i]f the allegations of the

complaint are ambiguous or incomplete, the insurer is nevertheless obligated to defend if the

case is potentially within the coverage of the policy.” See ECF No. 195 at 6 (quoting Ogden

Corp. v. Travelers Indem. Co., 681 F. Supp. 169, 172–73 (S.D.N.Y. 1988)). Indeed, the very

reason why insurers face an uphill battle in duty to defend litigation is because that duty is

“meant to provide ‘litigation insurance’” in cases like this one. See Zurich Am. Ins. Co. v. XL

Ins. Am., Inc., 547 F. Supp. 3d 381, 404 n.7 (S.D.N.Y. 2021), as corrected, 556 F. Supp. 3d 301

(S.D.N.Y. 2021). The Abuse Exclusion does not apply, and Philadelphia has a duty to defend

the City.13

v. Conclusion

For the reasons explained in this subsection, the City’s motion for summary judgment

with respect to Philadelphia’s duty to defend is granted in part. Philadelphia’s motion for

summary judgment with respect to its duty to defend the City is denied.

13 The City does not contest Philadelphia’s argument that Ms. Roldan was in the care,

custody, and control of an insured, which is one requirement under the Abuse Exclusion. See

ECF No. 136 at 44. However, the City goes on to argue that the Abuse Exclusion ultimately

does not apply because some of Ms. Roldan’s claims “extend into time periods after [she] had

been discharged from foster care.” See id. at 45. That alternative argument is potentially

persuasive, but the Court need not reach it here because it has already concluded that the Abuse

Exclusion cannot apply here, and that Philadelphia has a duty to defend. See, e.g., Agway, Inc. v.

Agway Petrol. Corp., No. 93-cv-557, 1993 WL 771008, at *11 (N.D.N.Y. Dec. 6, 1993) (after

finding that one occurrence did not preclude coverage on notice grounds, finding it

“unnecessary” to examine potential notice issue related to a separate occurrence “[b]ecause the

court need only find that there exists one claim which could potentially fall within

the . . . coverage in order to impose a duty to defend as a matter of law”); Zurich, 547 F. Supp.

3d at 404 n.6 (where the court concluded that one complaint triggered a duty to defend, declining

to consider a second possible trigger).

B. Lexington Has a Duty to Defend the City

As it relates to Lexington, the City claims coverage under various GL policies or policy

parts which Lexington issued to Concord between 2003 and 2009. ECF No. 136 at 10; ECF No.

143-1 ¶¶ 15–20 (Lexington’s Rule 56.1 Counterstatement).14 Lexington argues that it has no

duty to defend the City under any policy, going through Ms. Roldan’s pleadings with a fine-tooth

comb to identify time periods which potentially implicate the Concord GL coverage. As relevant

here, Lexington isolates “abuse incidents between July 2003 and November 2003, in the home of

Debra Shields, a period for which a Concord GL policy was in effect but did not provide

additional insured coverage to the City for liability arising out of Concord’s operations.” ECF

No. 126-15 at 17. Then, Lexington points to “the period from November 2003 to December

2008, during which [Plaintiff] Roldan alleges that Concord moved her to various foster homes,

but does not allege any incidents of abuse or bodily injury.” Id. Finally, Lexington identifies

“abuse incidents after December 2008, when Roldan was no longer under Concord’s care.” Id.

i. 2003 Policy

Lexington does not contest that Ms. Roldan’s allegations concerning abuse in the Shields

home (where Concord placed Plaintiff sometime in 2002 and which she left in November 2003,

SAC ¶¶ 83–96) implicate the 2003 Policy. Those allegations certainly involve physical abuse,

see, e.g., id. ¶ 94, within the policy’s scope. However, Lexington argues that it has no duty to

defend pursuant to the 2003 Policy because (1) the City was not an additional insured; (2) there

14 Philadelphia briefly raises the argument that Lexington is not entitled to summary

judgment because it “failed to submit certified copies of all its policies issued to Concord.” See

ECF No. 131 at 23. In this context, that argument borders on frivolous. “[S]o long as evidence

will be presented in admissible form at trial, it may be considered on summary judgment.” See

Harleysville Worchester Ins. Co. v. Wesco Ins. Co., 750 F. App’x 90, 93–94 (2d Cir. 2019). The

Court will consider the policies provided by Lexington.

was no “occurrence” within the meaning of the 2003 Policy; and (3) the 2003 Policy’s abuse

exclusion precludes coverage. ECF No. 126-15 at 19–20. Lexington’s first argument prevails.

The 2003 Policy has distinct language concerning who qualifies as an additional insured.

Specifically, it provides additional coverage for “[a]ll those [p]ersons or [o]rganizations as

required by written contracts.” ECF No. 126-3 at 29 (2003 Policy) (emphasis omitted). And

here, Concord’s written contract with the City indeed required it to obtain coverage “no narrower

than that provided by ISO form CG 20-26 (11/85 ed.).” ECF No. 126-15 at 20 (quoting ECF No.

126-11 at 41 (Aug. 30, 2000, City-Concord Contract)). That form, in turn, mandated that

Concord obtain additional insured coverage “only with respect to liability arising out of

[Concord’s] operations or premises owned by or rented to [Concord].” ECF No. 126-14 (ISO

Form). Apparently, though, Concord failed to get such coverage, and instead bought insurance

“only for liability rising out of the operations for the Named Insured [Concord] by the Additional

Insured [the City].” ECF No. 126-3 at 29 (emphasis added). That presents a serious problem for

the City, which hired Concord to perform work for it when it entered into an “Agreement for

Purchase of Child Welfare Services.” ECF No. 126-11 at 3.

This basic understanding of the relationship between the City, as purchaser, and Concord,

as service provider, is consistent with the SAC’s allegations. See, e.g., SAC ¶ 14h (“Defendant

City contracted with defendants Concord and HeartShare to provide foster care to children, and,

in doing so, outsourced some of its constitutional obligations to those agencies.”). But the City

fights this conclusion when it claims that “ACS [the City’s Administration for Children’s

Services] performed work for Concord” because the City’s work was “so intertwined . . . with

Concord’s foster care responsibilities that it can only be construed as work ‘for’ Concord by the

City.” ECF No. 136 at 30 (emphasis omitted). In support of that argument, the City refers to

allegations in the SAC highlighting that coordinated relationship with the City and Concord. See

id. at 30–32. For example, Ms. Roldan alleges that Concord “acted jointly with Defendant City,

performed a government function, and w[as] entwined with the City in the provision of foster

care services to children,” that “the City had final decision-making authority” over certain issues,

and that Concord would “use the City’s tools.” Id. at 30–31 (citing SAC ¶¶ 14, 14o, 14x). Thus,

the crux of the City’s argument is that because it enabled Concord’s work, it did work “for

Concord,” rendering it an additional insured. Id. at 32–33.

Undoubtedly, the City is dissatisfied with the language of the 2003 Policy because it

bargained with Concord for precisely the kind of protection that may have covered it here. That

dissatisfaction, though, cannot lead the Court to accept the City’s “[s]trained and unnatural

reading[]” of the 2003 Policy’s terms, which must be construed to comport with “common

speech . . . and the reasonable expectation and purpose of the ordinary businessman.” See W.

Waterproofing Co. v. Zurich Am. Ins. Co., 685 F. Supp. 3d 157, 167 (S.D.N.Y. 2023). The Court

agrees with Lexington that “the relevant allegations . . . demonstrate the common-sense reality

that the City hires foster care agencies like Concord to do work for the City, not the other way

around.” ECF No. 126-15 at 23.

The City’s position that the work between the City and Concord was “intertwined” does

not compel a different conclusion because it relies on a tortured understanding of “for” which is

plainly inconsistent with the word’s everyday use. ECF No. 136 at 30. For instance, an engaged

couple is very likely to be closely “intertwined” with their wedding planner by supervising the

preparatory work, providing a guest list and seating arrangements, and exercising ultimate

decision-making authority over even the smallest details. Nevertheless, no reasonable person

could claim that the couple works for the wedding planner they hired. Precisely the opposite,

regardless of how “intertwined” they may be. It follows that because the language of the 2003

Policy did not make the City an additional insured, Lexington has no duty to defend it under that

policy. See Colony Ins. Co. v. Sw. Marine & Gen. Ins. Co., No. 22-cv-1590, 2024 WL 1195401,

at *7 (S.D.N.Y. Mar. 19, 2024) (no duty to defend party who does not qualify as additional

insured under relevant policy). Having concluded that the City is not an additional insured under

the 2003 Policy, the Court does not reach Lexington’s other arguments as to why there is no duty

to defend under that policy.

ii. 2004 Policy and 2005 Policy

The parties do not dispute that the City is an additional insured under the 2004 Policy and

the 2005 Policy, as confirmed by the insurance agreements themselves. ECF No. 126-4 at 25

(2004 Policy); ECF No. 126-5 at 24 (2005 Policy). Like the other at-issue policies, these two

cover “damages because of bodily injury or property damage” “caused by an occurrence.” ECF

No. 126-4 at 4; ECF No. 126-5 at 3. And according to the policies, an “occurrence” is “an

accident, which results in bodily injury or property damage neither expected or intended from the

standpoint of the insured.” ECF No. 126-4 at 14; ECF No. 126-5 at 13 (emphases omitted).

Here, the parties hotly dispute whether the underlying action implicates this coverage at all.

Lexington does not seem to contest that certain of Ms. Roldan’s allegations come within the

scope of these policies but does claim that they are not implicated because “[t]here are no

allegations of any abuse or bodily injury in the period between November 2003 and December

2008.” ECF No. 126-15 at 26. Indeed, all Ms. Roldan explicitly alleges about this time period is

that “[i]n total, defendant Concord and its employees placed plaintiff in more than ten different

foster homes between May, 1997, and December, 2008.” SAC ¶ 97. The City responds

primarily by pointing to a letter Ms. Roldan’s counsel sent to Philadelphia’s counsel. See ECF

No. 136 at 26. Because the parties spend so much time discussing that letter, the Court quotes it

at length:

Plaintiff now confirms that she was sexually, physically, and emotionally abused

and neglected in foster care during the eight-month period in question (July 1,

2008, through February 28, 2009). The abuse took place during that period in the

foster homes of Kiesha Bell and Gary Hoyte. See, Complaint ¶¶79-98. Plaintiff

was also sexually, physically, and emotionally abused in 2009 while she was a

foster child in the home of Dolores Shore (Cmplt. ¶¶99-106), but does not

remember whether that abuse began before February 28, 2009.

Plaintiff was also sexually, physically, and emotionally abused and neglected

while in foster care prior to July 1, 2008, and subsequent to February 28, 2009. It

is plaintiff’s understanding that those time periods are not the subject of the

present inquiry. Plaintiff is suing for the abuse prior to July 1, 2008, from July 1,

2008, to February 28, 2009, and subsequent to February 28, 2009.

ECF No. 134-1 at 2. The City seizes upon this representation to argue that allegations of abuse

“before July 1, 2008, between July 1, 2008, to February 28, 2009, and after February 28,

2009 . . . implicat[e] the entire series of Lexington policies.” ECF No. 136 at 26. In response,

Lexington argues that the City overstates that significance of the letter, claiming that it “does not

contain any allegations of abuse not contained in Roldan’s Complaint” and that the letter “merely

summarizes” the allegations therein. See ECF No. 143 at 14. In particular, Lexington argues

that the starting point for the abuse in 2008 was after Ms. Roldan was placed into Ms. Bell’s

home in December, thereby attempting to shift any liability onto HeartShare, Philadelphia’s

insured. Id. at 14–15.

The parties spend an excessive amount of time going back and forth about the importance

of this letter. Although the Court may consider it in determining whether there is a duty to

defend, see QBE, 997 N.Y.S.2d at 440–41, it is ultimately not necessary for the duty to defend

analysis as it relates to the 2004 and 2005 Policies. To be sure, based on the SAC (as well as the

letter just discussed), there is vagueness around what took place between November 2003 and

December 2008. See SAC ¶¶ 96, 103. But the Court reaches the same conclusion here as it did

with Philadelphia. The City has the better argument because there is at least some “factual

ambiguity” as to whether covered occurrences took place within the 2004 and 2005 Policies’

coverage periods, see Hugo Boss, 252 F.3d at 621–22, and the law requires the Court to resolve

that ambiguity in the insured’s favor, see Int’l Bus. Machs. Corp. v. Liberty Mut. Ins. Co., 363

F.3d 137, 144–45 (2d Cir. 2004); see also Olin Corp. v. Ins. Co. of N. Am., 218 F. Supp. 3d 212,

217–18 (S.D.N.Y. 2016) (resolving “ambiguous” timing allegations in favor of the insured).

Lexington does not contest that, had Ms. Roldan pinpointed incidents of abuse in the policy

periods, the allegations would be covered by the 2004 and 2005 Policies. Construing the SAC

“liberally,” as it must, see Century 21, 442 F.3d at 83, the Court cannot conclude “that there is no

possible factual or legal basis on which [Lexington] might eventually be obligated to indemnify”

the City, triggering Lexington’s duty to defend, see CGS, 720 F.3d at 82.

Lexington tries to finely slice up the SAC to extricate itself from any coverage obligation,

but it cannot, at least for the time being,15 circumvent the pleading’s “broad and general”

allegations. See Cohen, 199 N.Y.S.2d at 540 (finding a duty to defend). As already explained,

the SAC is sweeping and, at least at times, contains indeterminate allegations and theories of

liability. For instance, Ms. Roldan alleges that she was injured because Concord “improperly

investigated at least four different sets of foster parents and improperly licensed or certified

them,” and together with the City, “placed [P]laintiff in dangerous situations when they placed

her in the foster homes where she was sexually and physically abused” and “neglected and

emotionally abused.” SAC ¶¶ 241, 243–44 (emphasis added). She further alleges that the City

15 Of course, it may eventually be able to, because “the duty to defend lasts only until the

factual ambiguity is resolved in favor of the insurer.” Hugo Boss, 252 F.3d at 622.

“knew or should have known defendant[] HeartShare . . . had policies and practices of failing to

investigate prospective foster parents adequately, failing to supervise foster children adequately,

and failing to protect foster children from harm, including sex crimes.” Id. ¶¶ 255–56.

Ms. Roldan ultimately seeks to hold the City and Concord liable for the resulting “extraordinary

physical and mental injuries, pain and suffering, anguish, terror, confusion, and helplessness,”

which she contends are “irreversible and permanent.” Id. ¶ 260.16 As was already discussed at

length above, an insurer’s observation that there is uncertainty with respect to whether otherwise

covered allegations fall outside of the policy period will not, as here, be sufficient to defeat the

duty to defend. See supra at 16, 30–31. On this point, the City is right to observe that

“Lexington errs in its attempted dissection of the Roldan Complaint in a search for discrete

incidents confined to specific policy periods,” see ECF No. 136 at 26–27, when Ms. Roldan’s

allegations are of a much more general nature so as to create a reasonable possibility of a

coverage, see QBE, 997 N.Y.S.2d at 440–41.

In relation to the 2004 and 2005 Policies, Lexington mistakenly puts all its eggs in one

basket by pressing only the timing issue. Indeed, Lexington barely engages with either of these

16 Again, even setting aside the physical injuries, the allegations of emotional distress of

this sort also constitute “bodily harm” within the meaning of the policy. See Jewish Cmty. Ctr.,

957 F. Supp. 2d at 236. There are, however, certain limits on the City’s theory to support

coverage under the 2004 and 2005 Policies. It cites Plaintiff Roldan’s allegation that “defendant

Concord and its employees placed plaintiff in more than ten different foster homes between May,

1997, and December, 2008” and that “[b]ecause of the frequency of the moves and the abuse that

she suffered, plaintiff was unable to continue her education . . . . [and] dropped out of school.”

SAC ¶¶ 97, 140. The City therefore concludes that Plaintiff Roldan “plausibly alleg[es] property

damage covered by the Lexington policies.” ECF No. 144 at 19. That argument is creative, but

unfortunately for the City, such a theory of property damage cannot bring this allegation within

the policies’ scope, which limits “property damage” to “tangible property,” see ECF No. 126-4 at

15; ECF No. 126-5 at 14, an argument not actually raised by Lexington but that is nevertheless

clear on the face of the policies. Of importance, the definitions of “bodily injury” are not so

narrow, reaching “bodily injury, sickness or disease sustained by a person.” See ECF No. 126-4

at 11; ECF No. 126-5 at 10.

policies in its opposition. See generally ECF No. 143. However, earlier, with respect to the

2003 Policy, Lexington separately raised an alternate argument for non-coverage, claiming that

an allegation of “knowing misconduct and deliberate indifference on the part of the City” did not

come within that 2003 Policy’s definition of “occurrence.” ECF No. 126-15 at 23. That policy,

like the 2004 and 2005 Policies, defined an “occurrence” as “an accident, which results in bodily

injury or property damage neither expected or intended from the standpoint of the insured.” ECF

No. 126-3 at 15. Without explanation, Lexington cabined that argument just to the 2003 Policy,

see ECF No. 126-15 at 23; ECF No. 143 at 11, and makes no argument for why at least some of

the other conduct alleged in the SAC does not come within that definition of “occurrence.”17

In the context of the 2003 Policy only, Lexington contends that Ms. Roldan alleges that

the City “acted with deliberate indifference toward [her] safety and welfare,” and that allegations

of deliberate indifference cannot constitute an “accident” within the meaning of the policy. ECF

No. 126-15 at 24–25. Even if that were the case with respect to the policy period for the 2003

Policy, it does not persuade the Court when it comes to the policy periods for the 2004 and 2005

Policies. Certainly, at least certain damages—i.e., allegations of mental anguish resulting from

failure to properly investigate at least four different foster homes, SAC ¶¶ 243–44, 260—were

“unexpected, unusual and unforeseen,” and are “accidental” within the meaning of the 2004 and

2005 Policies. See Com. Union Assur. Co. v. Oak Park Marina, Inc., 198 F.3d 55, 59 (2d Cir.

1999). Those types of damages, which concern alleged mismanagement of Plaintiff’s care, arise

out of alleged negligence and do not “flow directly and immediately from an insured’s

intentional act” so as to land conclusively outside of the policy coverage. See id.; see also

17 In the same vein, Lexington cites no potentially relevant exclusion which would preclude

coverage under these policies.

Greenberg v. Nat’l Chiropractic Mut. Ins. Co., No. 96-cv-0052, 1996 WL 374145, at *2

(S.D.N.Y. July 3, 1996) (“If the Court cannot determine the theory of liability on which the

complainant is proceeding, the insurer is required to defend the insured.”). That is in marked

contrast to, for instance, a case relied on by Lexington, ECF No. 126-15 at 24, in which the court

concluded there was no duty to defend where the underlying Plaintiff “alleged only intentional

acts.” See Brooklyn Ctr. for Psychotherapy, Inc. v. Phila. Indem. Ins. Co., No. 18-cv-5892, 2019

WL 8501338, at *5 (E.D.N.Y. July 2, 2019). Indeed, that court suggested that the outcome

would have been different had it found allegations sounding in negligence, specifically rejecting

the assertion that it needed to accept the underlying plaintiff’s legal characterization of her

claims. Id. at *4 & n.10. In the face of the SAC’s broad and general nature, the Court concludes

that Lexington has a duty to defend under the 2004 and 2005 Policies.

iii. 2006 Policy

The City does not contest that it is not an additional insured under the 2006 Policy. See

ECF No. 136 at 25 n.7. Because the 2006 Policy does not cover the City, Lexington cannot be

obligated to defend the City pursuant to it. See Colony, 2024 WL 1195401, at *7.

iv. 2007 Policy and 2008 Primary Policy

The 2007 Policy and 2008 Primary Policy contain coverage parts for additional

insureds18 “for ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ caused, in

18 Lexington passively asserts that “the Concord policies which extend additional insured

coverage do so only to those entities required to be named as additional insureds by written

contract, and the Concord Contract at issue here required the City to be named as an additional

insured only under Concord’s GL policies, not its PL policies.” ECF No. 126-15 at 28. The

reference to whatever was required in the contract between the City and Concord is a red herring

because the 2007 Policy, 2008 Primary Policy, and 2009 Policy all list the City as an additional

insured on the GL portion of those policies, see ECF No. 126-7 at 5 (2007 Policy); ECF No. 126-

whole or in part, by [Concord’s] acts or omissions or the acts or omissions of those acting on

[Concord’s] behalf . . . in performance of [Concord’s] ongoing operations; or . . . in connection

with [Concord’s] premises owned by or rented to [Concord].” ECF No. 126-7 at 52; ECF No.

126-8 at 51. As such, there is no material difference in their scopes of coverage from the 2004

and 2005 Policies’, and from the initial coverage perspective, the same rationale detailed above

as to why the SAC implicates the 2004 and 2005 Policies applies with equal force to the 2007

Policy and 2008 Primary Policy.

Lexington makes no argument to the contrary and instead points to the two policies’

Abuse and Molestation Endorsement (“Abuse Endorsement”), which covers, inter alia, “bodily

injury” and “mental injury” “arising out of . . . [a]ny abuse or molestation incident” under certain

conditions. See ECF No. 126-7 at 56–57; ECF No. 126-8 at 58–59 (emphases omitted).

Coverage under the Abuse Endorsement applies on a claims-made basis (as opposed to an

occurrence basis), meaning that “[t]he claim [under the Abuse Endorsement] must be made and

reported to [Lexington] or [its] authorized representative during the policy period or any

applicable extended reporting period.” ECF No. 126-7 at 57; ECF No. 126-8 at 59 (emphases

omitted). Thus, according to Lexington, the City cannot obtain coverage under these policies

because it never brought a timely claim. See ECF No. 126-15 at 26. As should now be clear,

8 at 5 (2008 Primary Policy); ECF No. 126-9 at 5 (2009 Policy), and the City claims that it is an

additional insured under those GL parts, see ECF No. 136 at 17–18.

Lexington also claims that these additional insured provisions “only amend the GL

coverage parts in those policies” and that “the City could not demonstrate that it would be an

insured under the PL coverage parts of the 2006-2009 Concord primary policies.” See ECF No.

126-15 at 29. Another red herring. As just stated, the City does not claim coverage under the PL

parts. And based on review of the insuring agreements, Lexington is entitled to summary

judgment on the narrow issue of the City’s lack of coverage under the PL parts of the 2006

Policy, 2007 Policy, 2008 Primary Policy, and 2009 Policy.

that argument fails because it relies on an impermissibly narrow and fragmented reading of the

SAC, and a liberal reading of the SAC and the theories of damages alleged therein entitle the

City to a defense under the GL parts of those policies without needing to rely on the Abuse

Endorsement.

For the same reason, Lexington’s contention that the City may not be covered due to a

lack of proximate cause “between the additional insured’s liability and the named insured’s”

fails. See ECF No. 143 at 18–19. Specifically, Lexington notes that the policies contain

language extending coverage to the City for certain injuries “caused, in whole or in part, by

[Concord’s] acts or omissions.” See ECF No. 126-8 at 51 (emphasis added). It goes on to claim

that the only allegation in the 2008 policy period relates to Ms. Roldan’s time that she spent in

the Hoyte home. See ECF No. 143 at 19. As cross-claimant, Philadelphia states that

Ms. Roldan’s allegation that Mr. Hoyte had previously “been investigated and licensed as a

foster parent, first by defendant Concord and then by defendant HeartShare,” SAC ¶ 110,

triggers Lexington’s duty to defend because of the link to Concord, ECF No. 131 at 9.

Lexington argues that that connection is so “distant” so as to fail the “in part” portion of the

additional insured term stated above. See ECF No. 143 at 18. This discussion, which the Court

explores in greater detail below, is ultimately a sideshow to the core of the duty to defend

analysis, as both sides focus on the allegations involving Mr. Hoyte at the expense of

Ms. Roldan’s much broader claims spanning her entire time in foster care.

Lexington raises no potentially relevant exclusions under the 2007 Policy or the 2008

Primary Policy. Instead, it is Philadelphia that (for reasons that will become clear shortly)

asserts the applicability of an exclusion under Lexington’s 2008 Primary Policy. See ECF No.

131 at 13–15. Both the 2007 Policy and the 2008 Primary Policy contained abuse or molestation

exclusions. See ECF No. 126-7 at 54; ECF No. 126-8 at 56. Philadelphia also adopts

Lexington’s argument that there is no coverage under the claims-made Abuse Endorsements due

to the absence of claims made by the City to Lexington. ECF No. 131 at 15. Philadelphia makes

no effort to explain how the claims-made Abuse Endorsements displaced the abuse exclusions in

the two Lexington policies.19 Indeed, it is telling that, in Lexington’s Opposition, it mentions

Philadelphia’s invocations of its own exclusions but does not adopt Philadelphia’s position,

joining Philadelphia only in the bottom-line contention “that the [2008 Primary Policy] does not

afford coverage.” See ECF No. 143 at 18. Lexington merely reasserts its original position that

the claims-made Abuse Endorsements do not entitle the City to a defense. Id. at 17. For the

reasons already explained, that argument fails.

v. 2008 Umbrella Policy

Lexington issued Concord an additional policy in 2008, which provided that Lexington

“shall have the right and duty to defend any claim or suit seeking damages covered by the terms

and conditions of this policy when,” inter alia, “[d]amages are sought for Bodily Injury, Property

Damage, Personal Injury or Advertising Injury covered by this policy but not covered by any

underlying insurance listed in the Schedule of Underlying Insurance or any other underlying

insurance providing coverage to the Insured.” ECF No. 126-10 at 20 (2008 Umbrella Policy)

(emphasis omitted). After attempting (and failing) to show that no duty to defend the City was

triggered by Lexington’s 2008 Primary Policy, Philadelphia claims that the 2008 Umbrella

Policy, which contains no abuse or molestation exclusion, “drops down” to provide excess

19 Philadelphia’s position is also completely internally inconsistent. In its Opposition, it

claims—in perfect opposition to its assertions in that same pleading—that “[t]he main Roldan

action . . . triggers . . . [the] Lexington 2008-2009 Primary Policy” and that “the Roldan Action

triggers the Lexington 2008[] primary and umbrella policies, as a matter of law.” ECF No. 131

at 5, 9.

coverage and triggers a defense obligation for Lexington. See ECF No. 131 at 17. As best the

Court can tell, Philadelphia’s theory is that because the allegations concerning Mr. Hoyte

apparently implicate the policy period for the 2008 Umbrella Policy but are not captured by an

exclusion, and because the City failed to make timely claims pursuant to the Abuse Endorsement

under the 2008 Primary Policy, Lexington has a duty to defend under the separate umbrella

policy. See id. at 15, 17. In response, Lexington contends that, even if the 2008 Primary Policy

is inapplicable, there is still no coverage because there was no occurrence as defined by the 2008

Umbrella Policy, advancing the same proximate cause argument it made to try to defeat coverage

under the primary policy. See ECF No. 143 at 18.

Both sides err by losing sight of the insuring agreement, which along with the SAC, is the

starting point of the Court’s analysis. As an umbrella policy, this one also has distinct features.

For a duty to defend to kick in pursuant to the 2008 Umbrella Policy, there must be certain

“damages . . . sought . . . [which are] not covered by any underlying insurance.” ECF No. 126-

10 at 20. The use of the term “not covered” in an umbrella policy like this one “delineates

uninsured risks” from insured ones. See Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 7

F.4th 50, 57–58 (2d Cir. 2021). What SAC allegations represent “uninsured risks” under the

2008 Primary Policy? According to Philadelphia, the ones within the 2008 Primary Policy’s

abuse and molestation exclusion, see ECF No. 131 at 17–18, as well as those potentially falling

under the Abuse Endorsement but for which the City failed to make a timely claim, see id. at 15.

Neither argument is convincing. An excess policy does not automatically take effect just

because there is no coverage under the primary policy. First, as previously mentioned, not even

Lexington takes the position that the risks identified by Philadelphia are precluded by an

exclusion in the primary policy; rather, it argues that it has no duty to defend because the City

failed to make a timely claim pursuant to the Abuse Endorsement. See supra at 37. Review of

the Abuse Endorsement confirms that it covers just the types of sex abuse claims identified by

Philadelphia. See ECF No. 126-8 at 58–60. Second, Philadelphia’s understanding of “coverage”

under the Abuse Endorsement is wrong. There is no lack of coverage, in the sense that the

claims were uninsured, just because the City may have failed to follow the Abuse Endorsement’s

claims-made procedure. See Bausch & Lomb Inc. v. Lexington Ins. Co., 414 F. App’x 366, 370

(2d Cir. 2011) (even where claims are covered, insured must follow insuring agreement’s

procedure to trigger duty to defend). When an umbrella policy contains “a condition precedent

to triggering the duty to defend,” it must be met “before the excess policy will provide a

defense.” See Preferred Constr., Inc. v. Ill. Nat’l Ins. Co., 494 F. App’x 162, 164–65 (2d Cir.

2012). Because Ms. Roldan does not seek damages not covered by the 2008 Primary Policy but

otherwise covered by the 2008 Umbrella Policy, there can be “no present obligation to provide a

defense” under the latter. See id. (no duty to defend under umbrella policy where coverage was

available only after exhaustion of primary policy, which had not yet been exhausted). At least

for now, Lexington has a duty to defend pursuant to multiple policies, but this is not one of them.

vi. 2009 Policy

The same is true when it comes to the 2009 Policy. That policy, which was in effect from

July 1, 2009, to July 1, 2010, provides additional insured coverage to the City to the same extent

as the 2007 Policy and 2008 Primary Policy. See ECF No. 126-9 at 5, 55. On this point,

Lexington points to Ms. Roldan’s allegations that the City ended its relationship with Concord in

“late 2008” and Philadelphia’s insured, HeartShare, placed Plaintiff into Ms. Bell’s home in

December 2008. SAC ¶¶ 97–98, 103. Ms. Roldan also alleges that she later left the Bell home

for the Hoyte home. Id. ¶ 108. And she then claims that at some point in 2009, HeartShare

moved her to the Shore home. Id. ¶ 123. Thus, says Lexington, the 2009 Policy cannot trigger a

duty to defend because there are no allegations concerning Concord during the 2009 Policy’s

coverage period. The City responds by pointing to the letter from Ms. Roldan’s counsel, see

ECF No. 136 at 26, in which she stated that she “is suing for the abuse . . . subsequent to

February 28, 2009,” ECF No. 134-1 at 2 (Letter from Ms. Roldan’s Counsel). Compare that to

the SAC, where the only allegation that specifically implicates Concord after Ms. Roldan left

Concord’s care is in late 2008 concerns her time in the Hoyte home, as Ms. Roldan alleges that

Mr. Hoyte “had been investigated and licensed as a foster parent, first by defendant Concord and

then by defendant HeartShare.” SAC ¶ 110.

To determine whether there is a duty to defend under the 2009 Policy, the Court must

resolve two issues. The first is a familiar timing problem. To escape the duty to defend on this

basis, Lexington would need to show that “liability coverage does not exist because injury

occurred outside the policy period.” See Am. Home Prods. Corp. v. Liberty Mut. Ins. Co., 565 F.

Supp. 1485, 1499 (S.D.N.Y. 1983). But in this duty to defend posture, it is not “unequivocally”

clear that that is the case. See Olin, 218 F. Supp. 3d at 217–18. In this instance, too, there is

much factual ambiguity around when Ms. Roldan stayed in the Hoyte home. Because she was

there in or sometime after December 2008 and for a “period of approximately six months,” SAC

¶¶ 103, 108, 113, and that ambiguity must be resolved in favor of the insured, Olin, 218 F. Supp.

3d at 217–18, Lexington cannot defeat the duty to defend based on timing alone.

The more difficult question is whether the allegations concerning Concord and Mr. Hoyte

are sufficient to trigger a duty to defend on Lexington’s part because Ms. Roldan stayed with

him when she was entrusted to HeartShare’s care. See SAC ¶¶ 103, 108. Although she was not

in Concord’s care at this point, Ms. Roldan’s SAC suggests that it may share in the potential

liability for the alleged abuse and neglect in the Hoyte home because, at some earlier point,

Concord had “investigated and licensed [Mr. Hoyte] as a foster parent.” Id. ¶ 110. As

previously mentioned in a different context, Lexington opposed Philadelphia’s argument that

such connection could trigger a duty to defend on Lexington’s part, stating that “Concord’s

alleged investigation and licensing of [Mr.] Hoyte years earlier” did not “provide[] a sufficient

nexus between the City’s liability and Concord’s actions to make the City an additional insured

under a Concord policy.” ECF No. 143 at 18. As a reminder, under the 2009 Policy, the City is

an additional insured “only with respect to liability for ‘bodily injury,’ ‘property damage’ or

‘personal and advertising injury’ caused, in whole or in part, by [Concord’s] acts or omissions or

the acts or omissions of those acting on [Concord’s] behalf” under certain conditions. ECF No.

126-9 at 55 (emphasis omitted).

Did Concord’s earlier licensing of Mr. Hoyte result in a covered injury “caused . . . in

part . . . by [Concord’s] acts or omissions”? The meaning of this “common language” is “now

well settled as a matter of New York law”: “[C]aused by requires a showing that the named

insured’s operations proximately caused the bodily injury for which indemnity was sought.” See

Ohio, 2021 WL 797670, at *3. The City must “raise a reasonable possibility that [Concord]

proximately caused [Ms. Roldan’s injuries].” See id. at *6. But it does not once address this

issue, nor does it address how the 2009 Policy requires a materially different duty to defend

analysis because of how it maps onto Ms. Roldan’s allegations. It has thus failed to carry its

burden to establish coverage in the first instance. See id. at *3.

vii. Timeliness of Disclaimers

The City argues that Lexington waived “all” policy exclusions because it failed to

comply with New York Insurance Law Section 3420(d)(2). See ECF No. 136 at 23–25. That

provision provides that “in cases involving death and bodily injury claims arising out of a New

York accident and brought under a New York liability policy,” the insurer is “require[d] . . . to

provide a timely disclaimer for denials of coverage.” See Penn-Star Ins. Co. v. Loring Place

Realty LLC, No. 22-cv-1154, 2024 WL 1255423, at *6 (S.D.N.Y. Mar. 25, 2024). When such a

disclaimer is based on a policy exclusion, “failure to provide a timely disclaimer under Section

3420(d) precludes denial of coverage.” Id.

Here, the parties again talk past each other, with neither explaining the significance of the

fact that the City initially sought coverage only under the 2006 and 2007 Policies, nor that these

two policies were the only ones under which Lexington initially disclaimed coverage. See ECF

No. 134-3 at 2. Nevertheless, in view of the preceding analysis, the City’s argument is no longer

relevant since the Court finds that Lexington has a duty to defend, and for those policies under

which it has no duty to defend (the 2008 Umbrella Policy or 2009 Policy), the lack of a duty is

not predicated on an exclusion but rather non-coverage. Cf. Penn-Star, 2024 WL 1255423, at *6

(“[A] provision that is a fundamental grant of Policy coverage, not an exclusion, is not subject to

the timeliness requirements of Section 3420(d).”). This lack of coverage in the first place also

defeats Philadelphia’s more sweeping argument that Lexington’s supposedly untimely disclaimer

altogether precludes it from denying coverage under, as now remains relevant, the 2008

Umbrella Policy. See ECF No. 131 at 22–23. As previously explained, there is no duty to

defend under that Policy because, at least for now, the claim “falls outside the scope of the

policy’s coverage portion” and failure to disclaim cannot “create coverage where it never

existed.” See Penn-Star, 2024 WL 1255423, at *6.

viii. Estoppel

In support of its crossclaim, Philadelphia asserts that “Lexington is estopped from

asserting that the Lexington policies do not provide a defense to the City in the Roldan Action

because Lexington’s position is inconsistent with the position it took” in cases involving

Ms. Roldan’s siblings, in which it defended the City. See ECF No. 131 at 18–22. In support of

this position, Philadelphia invokes the “doctrine of estoppel against inconsistent positions.” Id.

To determine if judicial estoppel applies, the court must consider “(1) whether the party’s later

position is clearly inconsistent with its earlier position; (2) whether the party’s position has been

adopted in some way by the court in the earlier proceeding; and (3) whether the party asserting

the two positions would derive an unfair advantage against the party seeking estoppel.” See

Kennedy v. Basil, 531 F. Supp. 3d 828, 838 (S.D.N.Y. 2021). Notably, Philadelphia points to no

case in which a court has estopped an insurer from denying a defense in one action based on its

decision to provide a defense in a similar action (and Philadelphia, an insurer, would surely be

uneasy with such a general rule). That aside, Philadelphia has not come close to showing that it

has met the requirements for the application of estoppel here. That is particularly true in the face

of Ms. Roldan’s pleadings, in which she sometimes explicitly distinguishes her situation from

that of her siblings. See, e.g., SAC ¶ 96 (Ms. Roldan alleges that she was separated from her

brother while in Concord’s care). Lexington does not have to supply the City with a defense in

this case merely because it provided a defense to the City in other cases.

ix. Conclusion

For the reasons explained in this subsection, the City’s motion for summary judgment

with respect to Lexington’s duty to defend is granted in part. Accordingly, Philadelphia’s

motion for summary judgment on its crossclaim regarding Lexington’s duty to defend is also

granted in part. Lexington’s motion for partial summary judgment as to lack of coverage under

the PL parts of the 2006 Policy, 2007 Policy, 2008 Primary Policy, and 2009 Policy, is also

granted.

CONCLUSION

For the reasons explained herein, the City’s motion for summary judgment is granted in

part. Philadelphia has a duty to defend under the 2011-2012 Primary Policy and Lexington has a

duty to defend under the 2004 Policy, 2005 Policy, 2007 Policy, and 2008 Primary Policy. The

City is entitled to reimbursement for the fees and costs of defending the underlying action.

Accordingly, Philadelphia’s motion for summary judgment on its counterclaim against the City

is denied but is granted in part as to its crossclaim with respect to Lexington’s duty to defend.

Lexington’s motion for partial summary judgment that it has no duty to defend the City under the

PL parts of the 2006 Policy, 2007 Policy, 2008 Primary Policy, and 2009 Policy is also granted.

No party having requested it do so, the Court has not and need not reach any question of

indemnification under any policy discussed herein.

Having considered the Admiral factors, the City is hereby awarded a declaration of its

right to a defense from Philadelphia and Lexington in the underlying action, including

reimbursement. Philadelphia is also awarded a declaration that Lexington has a duty to defend

the City in the same action. The Clerk of Court is respectfully directed to enter judgment

consistent with this Order.

On or before June 14, 2024, the City, Philadelphia, and Lexington shall meet and confer

and file a joint letter indicating if there is any reason the Court should not dismiss any remaining

claims and close this third-party case. If any Third-Party Litigant indicates that this case should

not be closed, it shall identify with specificity what issues remain, and each party shall provide

its position with respect to those issues.

/s/ Hector Gonzalez

HECTOR GONZALEZ

United States District Judge

Dated: Brooklyn, New York

May 31, 2024