Hout v. Coffman

Order unanimously modified, on the law, and, as modified, affirmed, without costs, in accordance with the following memorandum: The court properly denied plaintiffs’ motion to dismiss this declaratory judgment action insofar as it concerns the question of the insurer’s duty to defend in the underlying action, but erred in failing to dismiss the complaint insofar as it seeks a declaration that the insurer is not obligated to indemnify defendant. An action to declare the insurer’s duty to indemnify is premature and does not lie where the complaint in the underlying action alleges several grounds of liability, some of which invoke the coverage of the policy, and where the issues of indemnification and coverage hinge on facts which will necessarily be decided in that underlying action (see, Cordial Greens Country Club v Aetna Cas. & Sur. Co., 41 NY2d 996, 997; Prashker v United States Guar. Co., 1 NY2d 584, 591-592). For the same reason, the court correctly granted the insurer’s motion to stay the underlying action pending declaration of the insurer’s duty to defend, but abused its discretion in staying the underlying action pending determination of the insurer’s duty to indemnify. Following determination of the insurer’s duty to defend, the underlying action should go forward. A determination can be made in that action as to whether defendant’s act was negligent or intentional, thus deciding the question of indemnification (Utica Mut. Ins. Co. v Cherry, 45 AD2d 350, 352, 355, affd 38 NY2d 735). (Appeal from order of Supreme Court, Niagara County, Wolf, J.—stay proceedings.) Present—Callahan, J. P., Doerr, Denman, Pine and Balio, JJ.