Chmiel v. Continental Casualty Co.

177 A.D.2d 1022, 578 N.Y.S.2d 315, 1991 N.Y. App. Div. LEXIS 15805

Opinion

Judgment unanimously affirmed without costs. Memorandum: Supreme Court properly determined that defendant Continental Casualty Company was not obligated to defend or indemnify plaintiffs in the stockholders’ derivative action brought by minority stockholders on behalf of the corporation.

The insurance policy issued by defendant to plaintiff corporation insures plaintiff corporation and its officers and employees against loss when the insureds become liable to pay for damages because of liability imposed by law based on injury resulting from libel or slander which arises directly out of the insureds’ business as a radio or television station. In the underlying action, the plaintiffs do not seek damages for injury arising out of libel and slander. They seek damages on behalf of the corporation against the directors for monetary loss suffered by the corporation by reason of waste and mismanagement. Contrary to plaintiffs’ contention, the case of Fitzpatrick v American Honda Motor Co. (78 NY2d 61, 66) does not apply here, because the facts relied upon by plaintiffs, but not stated in the complaint, do not "potentially bring the claim [here a claim on behalf of the corporation for waste and mismanagement] within the policy’s indemnity coverage”. (Appeal from Judgment of Supreme Court, Erie County, Flaherty, J.—Declaratory Judgment.) Present—Callahan, A. P. J., Boomer, Pine, Balio and Lawton, JJ.