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Insurance Coverage Dispute Alone Not Bad Faith  

The tort of bad faith requires, for an insured to recover, that the  insurer act intentionally to deprive the insured of the benefits of the  policy of insurance.   Garo Alexanian (d/b/a) Vet Mobile and Companion Animal Network, Inc.  (\\u201cCAN,\\u201d and together with Alexanian, \\u201cPlaintiffs\\u201d) sued GEICO and  Travelers  seeking a declaration that Defendants have a duty to defend  and indemnify Alexanian against counterclaims filed against him New  York, plus tort damages for the insurers bad faith denial of his claim  for defense. 

 In Garo Alexanian d/b/a Vet Mobile and Companion Animal Network, Inc. v.  Government Employees Insurance Company and Travelers Casualty Insurance  Company Of America. No. 21-CV-05427 (LDH) (TAM), United States District  Court, E.D. New York (September 30, 2022) dealt with both the claims  for defense and the allegations allowing extracontractual damages.  

BACKGROUND  The Travelers Policy excluded from coverage, however, personal injury to  a person \\u201carising out of . . . employment-related practices, policies,  acts or omissions, such as coercion, demotion, evaluation, reassignment,  discipline, defamation, harassment, humiliation or discrimination  directed at that person.\\u201d Alexanian also purchased an umbrella policy  from GEICO (the \\u201cGEICO Policy\\u201d).  On January 15, 2021, Alexanian sued Rosa Morales claiming back rent, and  alleged that Morales was \\u201can employee of [Alexanian] and [Alexanian\'s]  business from September 2015 until October 2019.\\u201d It also referred to  Morales as a tenant.  Morales filed a counterclaim alleging that Alexanian defamed her.  Travelers refused to defend Alexanian since Morales was an employee. 

 DISCUSSION

The duty to defend is exceedingly broad and an insurer will be called  upon to provide a defense whenever the allegations of the complaint  suggest a reasonable possibility of coverage.   The Court must determine only whether, assuming Alexanian\'s allegations  are true, the defamation claim is solely \\u201cwithin the policy exclusion.\\u201d  The answer to that question is no. Thus, the breach of contract claim  cannot be dismissed.  

In short, Travelers failed to establish that the Underlying Action falls  within the employment practice related exclusion or is otherwise  outside the Travelers Policy, and therefore, the motion to dismiss  Alexanian\'s breach of contract claim must be denied.  Breach of the Covenant of Good Faith and Fair Dealing, Common Law Bad  Faith, and Common Law Fraud