This insurance coverage case arises out of an underlying Florida action brought by Terry Gene Bollea (Bollea), also known as the world-famous professional wrestler Hulk Hogan, against Don Buchwald & Associates (DBA), Tony Burton (Burton) and other entities and individuals (the underlying action). In the action before this court, plaintiffs Zurich American Insurance Company (ZAIC) and American Zurich Insurance Company (AZIC) and defendants DBA and Burton both seek declaratory judgments with respect to whether plaintiffs have a duty to defend DBA and Burton in the underlying action.Motion sequence nos. 002 and 003 are consolidated for disposition. In motion sequence no. 002, defendants move, pursuant to CPLR 3212, for an order awarding them partial summary judgment: (1) on their third counterclaim, and declaring that AZIC is obligated to defend them in the underlying action; (2) on their fourth counterclaim, and declaring that ZAIC is obligated to defend them in the underlying action; (3) on the first and second counterclaims, awarding monetary damages arising from defendants’ breach of the insurance policies at issue, and directing an inquest to determine the amount of damages to be paid to defendants; (4) dismissing the first and second counts of the amended complaint; (5) awarding a default judgment to defendants on their counterclaim; and (6) awarding defendants the legal fees and costs they have incurred in defending this action, and directing an inquest to determine the amount of their reasonable legal fees and costs.In motion sequence no. 003, plaintiffs move, pursuant to CPLR 3212, for an order awarding them summary judgment, and declaring that they have no duty to defend or indemnify defendants in the underlying action.For the reasons set forth below, defendants’ motion for partial summary judgment is granted, and plaintiffs’ motion is denied.FACTSI. Background and The Underlying ActionDBA is a talent and literary agency. Burton is a talent agent employed by DBA. One of DBA’s clients is radio personality Michael Calta (Calta), and Burton is his agent at DBA.On May 2, 2016, Bollea filed the original complaint in the underlying action, Bollea v. Don Buchwald & Assoc., Case No. 16-002861-CI, venued in the Circuit Court of the Sixth Judicial Circuit In and For Pinellas County, Florida. In that action, Bollea asserted various claims against DBA, Burton, the website Gawker.com (Gawker) and Calta, among other defendants (see aff of Ilene S. Farkas, exhibit A). The original Bollea complaint asserted seven causes of action against DBA and Burton sounding in, inter alia, invasion of privacy and intentional infliction of emotional distress (see id.).The claims in the Bollea action arise from the alleged dissemination and publication of two distinct portions of video and audio recordings recorded by Bubba the Love Sponge Clem (Clem), Bollea’s former best friend.First, in October 2012, Gawker published footage of Bollea engaged in consensual sexual intercourse with Heather Clem, Clem’s then-wife (the sex footage). Clem, a famous radio personality, actively encouraged and permitted Bollea to have sexual intercourse with his then-wife. Second, in July 2015, the National Enquirer (the Enquirer) published another portion of footage recorded by Clem, in which Bollea used offensive racial epithets to describe African-Americans (the racist footage). Bollea asserts that Calta and Burton acted in concert to deliver the sex footage to Gawker, and that they had some involvement in the leakage of racist footage to the Enquirer. Bollea alleges that, as a consequence of the racist footage being published, all of his contracts were terminated.On May 17, 2017, after settling with Gawker, Bollea filed an amended complaint in the underlying action (see Farkas aff, exhibit B). In the amended complaint, Bollea asserts two new claims against DBA sounding in negligence – one for “negligent retention” and the other for simple negligence. Specifically, Bollea alleges that DBA acted negligently by retaining Burton as an employee because DBA “knew or should have known” that Burton was “predisposed to committing wrongs.” Bollea further alleges that DBA’s “fail[ure] to take reasonable action to investigate, prevent and/or avoid [Burton's] misconduct” directly and proximately caused him to suffer damages, including “anxiety” and “severe emotional distress” (see amended Bollea complaint
208-214). In addition, unlike the original complaint, the amended Bollea complaint blamed DBA Burton, and the other remaining defendants (not Gawker, whom Bollea previously blamed), for the production and dissemination of the racist footage (id.
