Duty to Defend NYC and Board of Education as Additional Insureds  

The Southern District of New York, applying New York law, granted the City of New York (the “City”) and its Board of Education’s (the “Board”) motion for summary judgment against Philadelphia Indemnity Insurance Corporation (“Philadelphia Indemnity”), requiring the insurer to extend coverage to the City and the Board in two underlying tort actions asserting claims related to sexual and verbal abuse against two non-profit entities. The YMCA and Good Shepherd, the non-profit entities, contracted with the City and the Board, and each non-profit was required to obtain commercial general liability (“CGL”) insurance policies that included the City and the Board as additional insureds. 

The YMCA, the City and the Board faced a sexual abuse lawsuit in 2018. Good Shepherd and the City faced a verbal abuse lawsuit in 2020. Both the YMCA and Good Shepherd were insured by Philadelphia Indemnity under CGL policies. The City and the Board in the YMCA suit and the City in the Good Shepherd suit tendered its defense to Philadelphia Indemnity as additional insureds. Philadelphia Indemnity argued it had no duty to defend the City and the Board in either of the underlying cases because the insurance policies did not extend coverage beyond the non-profit entities that were the named insureds. In the YMCA suit, Philadelphia Indemnity argued it only had a duty to defend under the “Sexual or Physical Abuse” coverage, which it argued was separate from the CGL coverage where the City and the Board were included as an additional insured. Regarding the Good Shepherd lawsuit, Philadelphia Indemnity argued that the suit fell within the “Human Service Organization Professional Policy,” which Philadelphia Indemnity argued was a standalone coverage part that did not include the City as an additional insured. 

The district court held that the Sexual or Physical Abuse coverage fell within the CGL coverage, and therefore, the City and Board were both insureds. The district court explained that the Sexual or Physical Abuse coverage in the YMCA policy was not a standalone coverage part and that the parties intended this coverage to be within the CGL coverage. Therefore, Philadelphia Indemnity had a duty to defend the City and the Board in the YMCA case.  

As to the Good Shepherd case, the district court concluded that the Human Service Organization Professional Policy extended coverage to the City as an additional insured. Moreover, no exclusions applied because the district court concluded they were too ambiguous. Thus, Philadelphia Indemnity had a duty to defend the City in the Good Shepherd case. City of New York v. Philadelphia Indem. Ins. Co., 22-CV-2248 (S.D.N.Y. July 10, 2023).