General Accident Insurance v. Hyatt Legal Services

Judgment affirmed, with costs. Memorandum: The principal question presented in this declaratory judgment action is whether plaintiff insurance company had a duty to provide a defense to defendant in disciplinary proceedings in New York and Maryland. The litigation insurance policy provided that plaintiff shall "defend any proceeding or suit brought by any governmental regulatory agency seeking nonpecuniary relief.” We agree with Special Term that plaintiff had such a duty. In each disciplinary proceeding there was no prayer for pecuniary relief other than the cost of the proceeding. Each disciplinary grievance committee was a "governmental” and "regulatory” body because each group was associated with the judicial branch of government and was responsible for regulating the practice of law and disciplining attorneys (see, Judiciary Law § 90 [2]; 22 NYCRR 1022.19 et seq.; Attorney Grievance Commn. v Pattison, 292 Md 599, 441 A2d 328, 333). Construing the policy in favor of the defendant insured and in accordance with the understanding of the average person (see, Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, 49, rearg denied 290 NY 744; Little v Blue Cross, 72 AD2d 200, 203), the grievance bodies also are "agencies” because they act as the representative of the judiciary in carrying out their assigned duties in regulating the activities of the legal profession for the benefit of the public. Plaintiffs reference to isolated provisions of State statutes excluding courts from the 971 definition of an agency (see, e.g., State Administrative Procedure Act § 102 [1]; Executive Law § 166; Public Officers Law §73) is misplaced. Narrow and technical legal definitions are to be avoided in construction of insurance policies (see, Miller v Continental Ins. Co., 40 NY2d 675, 676). Moreover, had plaintiff wished to exclude grievance proceedings from its duty to defend, it easily could have done so as it did in excluding proceedings relating to employee benefit plans and claims of discrimination. We also agree with Special Term that defendant is entitled to reasonable attorney’s fees because plaintiffs lawsuit compelled defendant to defend against plaintiffs attempt to free itself from its policy obligations (see, Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22; Johnson v General Mut. Ins. Co., 24 NY2d 42, 48-50; Hurney v Mattson, 59 AD2d 934, 935; cf., Doyle v Allstate Ins. Co., 1 NY2d 439). We have considered plaintiffs remaining claims and find them lacking in merit. All concur except Callahan, J. P., and Doerr, J., who dissent and vote to reverse and grant judgment, in accordance with the following memorandum: