Assault-and-Battery Exclusions Do Not Extinguish the Duty to Defend When Underlying Pleadings Allege Independent Negligence: Insurer Must Prove Entitlement Even on Default

Introduction

In Union Mut. Fire Ins. Co. v. Rodeo Estates, LLC, the Appellate Division, Second Department, addressed two recurring issues in New York insurance coverage litigation: (1) what an insurer must show to obtain a declaratory judgment—particularly on default—disclaiming the duty to defend based on an assault-and-battery exclusion; and (2) the standards governing a policyholder’s request to serve a late answer in a declaratory judgment action. The case arises from injuries allegedly sustained by Heskell Khozouri‑Zadeh while on property owned by Rodeo Estates, LLC, where individual defendants Frank and Isadora Miale were also sued in the underlying tort action.

The insurer, Union Mutual Fire Insurance Company, filed a separate declaratory-judgment action seeking a ruling that it owed no duty to defend or indemnify its insured, Rodeo Estates, in the underlying tort action. When Rodeo Estates and the Miales did not timely answer, Union Mutual moved for a default judgment against them and, simultaneously, for summary judgment against the underlying plaintiffs (Heskell and Laurie Khozouri‑Zadeh). Rodeo Estates opposed and cross-moved for leave to serve a late answer.

The Supreme Court (Nassau County) denied Union Mutual’s motion and granted Rodeo Estates’ cross‑motion. On appeal, the Second Department affirmed. The opinion both reinforces New York’s stringent standards for insurers seeking to avoid the duty to defend on the basis of exclusions and clarifies the discretion courts exercise in allowing a late answer where there is no prejudice and a potentially meritorious defense exists.

Summary of the Opinion

The court affirmed the denial of Union Mutual’s request for a default declaratory judgment against Rodeo Estates and the Miales because the insurer failed to submit “proof of the facts constituting the claim,” as CPLR 3215(f) requires.
The insurer’s theory relied on a policy exclusion for claims “arising from an assault or battery.” But the underlying complaint alleged not only intentional conduct; it also alleged negligent and reckless acts by Frank Miale and independent negligence by Rodeo Estates (e.g., failure to provide a safe place to park and failure to warn of Miale’s “propensity for negligence and recklessness”).
Given these allegations, Union Mutual did not establish that the underlying pleadings were “wholly within” the assault-and-battery exclusion, as New York law demands to defeat the duty to defend at the declaratory stage.
For the same reason, the court affirmed denial of summary judgment against the answering defendants (Heskell and Laurie Khozouri‑Zadeh), “irrespective of [their] failure to oppose.” A movant must first make a prima facie showing; opposition cannot cure a movant’s own failure of proof.
The court upheld the grant of leave to serve a late answer to Rodeo Estates, noting the absence of prejudice to the insurer, the presentation of a potentially meritorious defense, and the strong policy favoring resolution on the merits.

Analysis

Precedents Cited and How They Shaped the Decision

Salt Constr. Corp. v Farm Family Cas. Ins. Co., 120 AD3d 568:
The duty to defend is broader than the duty to indemnify and is triggered whenever the allegations, liberally construed, “potentially” fall within policy coverage. This benchmark set the context: unless the insurer eliminates all potential for indemnity, it must defend.
Allstate Ins. Co. v Zuk, 78 NY2d 41, and Sammy v First Am. Tit. Ins. Co., 205 AD3d 949:
An insurer may be relieved of the duty to defend only if it shows “no possible factual or legal basis” for indemnification under any policy provision. The Second Department invoked this heavy standard to reject Union Mutual’s attempt to rely on a single exclusion where the pleading allowed for covered, nonassault theories of liability.
Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169:
To avoid the duty to defend by exclusion, the insurer must show the allegations fall “wholly” within the exclusion; the exclusion must admit of no other reasonable interpretation and leave no possible basis of coverage. This “wholly within” requirement was fatal to Union Mutual’s motion, given the negligence allegations.
Global Liberty Ins. Co. v Surgery Ctr. of Oradell, LLC, 153 AD3d 606; CPLR 3215(f):
For a default judgment, a plaintiff must submit proof of service, proof of default, and proof of the facts constituting the claim. In declaratory actions, simply pointing to a default is insufficient—an insurer must substantively establish the coverage determination it seeks.
Ameriprise Ins. Co. v Kim, 185 AD3d 995; JBBNY, LLC v Dedvukaj, 171 AD3d 898; Interboro Ins. Co. v Johnson, 123 AD3d 667:
These decisions confirm that declaratory relief can be granted on default only when the insurer demonstrates entitlement to the declaration as a matter of law. Because Union Mutual failed to meet its heavy burden on the exclusion, default relief was properly denied.
Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347:
A seminal Court of Appeals decision on assault-and-battery exclusions: if “no cause of action would exist but for the assault,” the claim “arises out of” the assault, even if framed as negligence (e.g., negligent hiring/supervision). The Second Department harmonized this rule by examining the complaint here and concluding it did not allege only assault-based injuries; it alleged independent negligence theories that, if proven, would not necessarily depend on an assault.
Great Am. E & S Ins. Co. v Commack Hotel, LLC, 211 AD3d 704:
Reiterates that assault-and-battery exclusions can bar negligence claims where the operative act giving rise to recovery is an assault. The court distinguished this line of cases because the pleadings here included potentially non-assaultive negligence claims.
O’Shei v Utica First Ins. Co., 195 AD3d 1499; Anastasis v Am. Safety Indem. Co., 12 AD3d 628:
These cases illustrate both sides of the coin: exclusions bar coverage when claims exist solely because of an assault, but not when the pleadings admit of injury-causing negligence independent of assaultive conduct. The court relied on this distinction in finding Union Mutual failed to negate potential coverage.
Peak Prop. & Cas. Ins. Corp. v Rodriguez, 230 AD3d 512; Caliber Home Loans, Inc. v Squaw, 190 AD3d 926; DLJ Mtge. Capital, Inc. v United Gen. Tit. Ins. Co., 128 AD3d 760:
A movant’s failure to make a prima facie showing requires denial of relief “irrespective of” lack of opposition. This principle underpinned the court’s denial of Union Mutual’s motion for default and summary judgment even where certain defendants did not oppose.
CPLR 3012(d); Patel v N.Y.C. Tr. Auth., 199 AD3d 925; Browne v Lyft, Inc., 219 AD3d 443; Nowakowski v Stages, 179 AD3d 822; Camille v Federation of Prot. Welfare Agencies, Inc., 233 AD3d 747; 209 Barbey St. Trust v Scotland, 231 AD3d 778; Schmidt v City of New York, 50 AD3d 664:
These authorities articulate the flexible, factor-driven standard for permitting late answers: reasonable excuse, potentially meritorious defense, absence of prejudice, lack of willfulness, and the strong public policy of deciding cases on the merits. The court applied this framework to affirm the grant of leave to Rodeo Estates.

Legal Reasoning

Duty to Defend Standard:
The duty to defend is triggered by the “potentiality” of coverage, assessed by liberally construing the underlying complaint. The insurer shoulders a particularly heavy burden when it seeks to avoid defending based on a policy exclusion: it must demonstrate that the allegations fall “wholly within” that exclusion and that no reasonable interpretation leaves room for indemnity.
Assault-and-Battery Exclusion Application:
Union Mutual relied on a policy exclusion for claims “arising from an assault or battery.” Under Mount Vernon Fire, that exclusion bars negligence claims when the assault is the sine qua non of injury (e.g., negligent failure to prevent an assault). But here the underlying complaint alleged a mix of theories: negligent and reckless acts by Frank Miale and Rodeo Estates’ independent negligence, including failures in property management (safe parking) and warnings regarding Miale’s “propensity for negligence and recklessness.” Because these allegations, taken as pled, could support liability not dependent on an assault or battery, the insurer could not show that the claims fell wholly within the exclusion.
Default Judgment Requirements in Declaratory Actions:
Under CPLR 3215(f), default relief requires proof of service, proof of default, and, critically, proof of the facts constituting the claim. In the declaratory-judgment context, that means the insurer must establish—on the merits—its right to a declaration of no coverage. The court found Union Mutual’s showing deficient because it did not demonstrate that all pleaded claims were excluded as a matter of law.
Summary Judgment Against Answering Defendants:
A movant must make a prima facie showing before the burden shifts. The lack of opposition from some defendants cannot supply that showing. Here, the same failure—to establish that all claims were barred by the assault-and-battery exclusion—required denial of summary judgment against the Khozouri‑Zadehs.
Leave to Serve a Late Answer:
Applying CPLR 3012(d), the court considered the totality of factors and emphasized no prejudice to the insurer, the existence of a potentially meritorious defense (i.e., that the assault-and-battery exclusion does not defeat the duty to defend given the pleadings), and the strong policy in favor of deciding cases on the merits. On that record, the grant of leave to serve a late answer was a proper exercise of discretion.

Impact and Practical Implications

Coverage Litigation Strategy for Insurers:
This decision is a cautionary tale: even on default, insurers must substantively prove that an exclusion eliminates all potential for indemnity. Where the underlying complaint includes any plausible non-assault negligence theory, an assault-and-battery exclusion will not suffice, at the duty-to-defend stage, to foreclose coverage. Insurers should:
- Attach the full policy and underlying pleadings and map each claim to the exclusion.
- Demonstrate that every pleaded theory depends on the assaultive act (consistent with Mount Vernon Fire), or present incontrovertible facts that negate any covered theory without reliance on disputed matters.
- Be prepared to defend under a reservation of rights when pleadings admit of covered possibilities.
Pleading Strategy in Underlying Torts:
Plaintiffs who allege independent negligence (e.g., unsafe premises, negligent operations, failure to warn of non-assaultive dangers) preserve the possibility of coverage and a defense for insureds. This decision reinforces that careful pleading can influence coverage outcomes, especially at early declaratory stages.
Insureds Facing Declaratory Actions:
Policyholders who default should promptly seek leave to answer, emphasizing lack of prejudice, a potentially meritorious defense (e.g., exclusions do not conclusively apply), and the public policy favoring merits-based determinations. Courts will weigh the “sui generis” circumstances and may forgive delays where these showings are made.
Assault-and-Battery Exclusion Jurisprudence:
The ruling underscores the narrow lane in which such exclusions resolve the duty to defend at the pleading stage. While the exclusion remains potent when the injury exists “but for” an assault, it will not bar a defense when the complaint articulates injury-causing negligence not necessarily dependent on assaultive conduct.
Default Judgment Practice in Declaratory Actions:
The court reiterates that a defaulting adversary does not entitle an insurer to a declaration; the insurer must still carry a prima facie burden. This fosters disciplined motion practice and ensures that declarations reflect legal entitlement, not merely procedural posture.

Complex Concepts Simplified

Duty to Defend vs. Duty to Indemnify:
The duty to defend is broader. If there is any potential that the allegations might be covered, the insurer must defend. The duty to indemnify arises only if the insured is actually liable on a covered ground.
“Arising out of” in Exclusions:
New York interprets “arising out of” broadly to mean originating from, incident to, or having a substantial nexus with an excluded event. Under Mount Vernon Fire, negligence claims can still “arise out of” an assault if the injury would not exist but for the assault. The flip side is that when the complaint alleges injury from non-assault negligence, the exclusion may not apply at the defense stage.
Default Judgment in Declaratory Actions (CPLR 3215[f]):
Even if a defendant defaults, the plaintiff must submit proof of the claim’s merits. In insurance declaratory actions, that means proving the legal basis for a no-coverage declaration—not merely pointing to a nonappearance.
“Wholly Within” an Exclusion:
To rely on an exclusion to avoid the duty to defend, an insurer must show that all pleaded theories fall within the exclusion, leaving no possible path to covered indemnity.
Leave to Serve a Late Answer (CPLR 3012[d]):
Courts consider whether the delay was excusable, whether the opponent suffered prejudice, whether the default was willful, and whether the defaulting party has a potentially meritorious defense. New York strongly favors resolving cases on the merits.

Conclusion

Union Mut. Fire Ins. Co. v. Rodeo Estates, LLC reaffirms two key doctrines in New York insurance practice. First, an insurer cannot avoid its broad duty to defend based on an assault-and-battery exclusion unless it demonstrates that the underlying complaint’s allegations fall wholly within the exclusion—i.e., that no pleaded theory could result in covered liability. Where the complaint includes independent negligence allegations, the exclusion will not, at the declaratory stage, defeat the defense obligation. Second, default judgments in declaratory actions are not automatic; the insurer must still prove the facts constituting its claim. Finally, the decision underscores courts’ willingness to permit late answers where there is no prejudice and a potentially meritorious defense exists, consistent with New York’s strong preference for decisions on the merits.

The practical message is direct: insurers must build robust records when moving for declaratory relief, especially on default, and insureds should promptly seek to appear and articulate their defenses. In cases invoking assault-and-battery exclusions, careful attention to the pleadings—and the distinction between assault-based and independent negligence theories—will often dictate whether the duty to defend persists.