Brooklyn Center for Psychotherapy, Inc. v. Philadelphia Indemnity Insurance Co. 1

19-2266-cv
Brooklyn Center for Psychotherapy, Inc. v. Philadelphia Indemnity Insurance Co.
1
United States Court of Appeals 2
for the Second Circuit 3
4
August Term, 2019 5
6
(Argued: February 6, 2020 Decided: April 9, 2020) 7
8
Docket No. 19-2266-cv 9
_____________________________________ 10
11
BROOKLYN CENTER FOR PSYCHOTHERAPY, INC., 12
13
Plaintiff-Appellant, 14
15
v. 16
17
PHILADELPHIA INDEMNITY INSURANCE COMPANY, 18
19
Defendant-Appellee. 20
_____________________________________ 21
22
ON APPEAL FROM THE UNITED STATES DISTRICT COURT 23
FOR THE EASTERN DISTRICT OF NEW YORK 24
_____________________________________ 25
26
Before: 27
28
POOLER, LYNCH, and PARK, Circuit Judges. 29
30
Plaintiff-Appellant Brooklyn Center for Psychotherapy, Inc. appeals a 31
decision and order of the United States District Court for the Eastern District of 32
New York (Donnelly, J.) dismissing its claim against Philadelphia Indemnity 33
Insurance Company for breach of contract for failing to provide a defense in a 34
lawsuit alleging discrimination under a failure-to-accommodate theory. Because 35

2
this case turns on an open question of New York insurance law, we reserve 1
decision and certify a question to the New York Court of Appeals. 2
3
MICHAEL Y. HAWRYLCHAK, O’Connell & 4
Aronowitz, P.C., Albany, New York (Jeffrey 5
J. Sherrin, on the brief), for Plaintiff-Appellant. 6
7
DAN D. KOHANE, Hurwitz & Fine, P.C., 8
Buffalo, New York, for Defendant-Appellee. 9
10
Park, Circuit Judge: 11
This case involves a dispute over the scope of a commercial general liability 12
insurance policy. A deaf woman sued the insured, Brooklyn Center for 13
Psychotherapy, Inc. (“Brooklyn Center”), for failing to accommodate her 14
disability. Brooklyn Center sought defense costs for that lawsuit from its insurer, 15
Philadelphia Indemnity Insurance Company (“PIIC”). PIIC refused, so Brooklyn 16
Center sued PIIC. The district court granted PIIC’s motion to dismiss because 17
New York law prohibits insurance coverage for intentional discrimination. The 18
New York Court of Appeals, however, has not yet addressed whether a general 19
liability insurance carrier must defend an insured in an action alleging 20
discrimination under a failure-to -accommodate theory. We thus reserve decision 21
and certify the question to the New York Court of Appeals. 22

3
I. BACKGROUND 1
A. The Underlying Action 2
Fanni Goldman, who is deaf, sued Brooklyn Center for allegedly 3
discriminating against her in violation of the Americans with Disabilities Act 4
(“ADA”), 42 U.S.C. § 12181 et seq.; the Rehabilitation Act, 29 U.S.C. § 794; the New 5
York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law § 290 et seq.; and the 6
New York City Human Rights Law (“NYCHRL”), N.Y.C. Admin Code § 8-101 et 7
seq. S ee Goldman v. Brooklyn Center for Psychotherapy, Inc., No. 15-cv-2572 (E.D.N.Y) 8
(the “Underlying Action”). 9
In her complaint, Goldman alleged the following: 10
• Brooklyn Center “refused to schedule an appointment” for her 11
seven-year-old son because of her disability. App’x at 23. 12
• A Brooklyn Center employee told her on two occasions that they 13
“would not provide interpreter services and that [she] should look 14
elsewhere” for her son’s psychiatric treatment. Id. at 24. 15
• Brooklyn Center “refuses to hire qualified onsite sign language 16
interpreters as a matter of policy and practice.” Id. 17
• Brooklyn Center’s refusal to provide interpreter services 18
constituted “intentional[] discriminat[ion]” and “deliberate 19
indifference to her communication needs.” Id. at 25. 20
• Brooklyn Center’s conduct “caus[ed] her to endure humiliation, 21
fear, anxiety, and emotional distress.” Id. 22

4
After trial, a jury found for Brooklyn Center, concluding that Goldman had 1
failed to prove unlawful discrimination. 2
B. The Coverage Dispute 3
During the relevant time period, Brooklyn Center held a commercial general 4
liability insurance policy with PIIC (the “Policy”). The Policy provided coverage 5
for “those sums that [Brooklyn Center] becomes legally obligated to pay as 6
damages because of ‘bodily injury’ or ‘property damage’ . . . caused by an 7
‘occurrence.’” App’x at 37. Under the Policy, PIIC also had a “duty to defend 8
[Brooklyn Center] against any ‘suit’ seeking those damages.” Id. The Policy 9
defines an “occurrence” to mean “an accident, including continuous or repeated 10
exposure to substantially the same general harmful conditions.” App’x at 39. 11
After Goldman filed the Underlying Action, Brooklyn Center notified PIIC 12
of the litigation and asked PIIC to pay for its defense costs under the Policy. PIIC 13
rejected Brooklyn Center’s request for coverage on the ground that Goldman’s 14
complaint did not allege any “occurrence” under the Policy.
1
15

1
PIIC originally argued that Goldman’s complaint did not allege any “bodily injury” or
“property damage” under the Policy. But PIIC abandoned that position because, under New
York law, emotional distress can qualify as a bodily injury under the terms of the Policy. See
Lavanant v. Gen. Acc. Ins. Co. of Am., 79 N.Y.2d 623, 631 (1992).

5
C. Procedural History 1
Brooklyn Center filed suit against PIIC in state court alleging, inter alia, that 2
PIIC had breached the Policy by refusing to cover Brooklyn Center’s defense costs 3
for the Underlying Action. PIIC removed the case to the U.S. District Court for the 4
Eastern District of New York on diversity jurisdiction grounds and then moved to 5
dismiss Brooklyn Center’s complaint for failure to state a claim. The district court 6
granted PIIC’s motion, holding that the Policy did not require PIIC to cover 7
Brooklyn Center’s defense costs because Goldman’s complaint “alleged only 8
intentional acts resulting in discrimination,” and “[i]ntentional discriminatory acts 9
are not accidental and thus not [occurrences] covered by the [P]olicy.” App’x at 10
481, 477. 11
II. APPLICABLE LAW 12
A. Standard of Review 13
“We review de novo the grant of a motion to dismiss for failure to state a 14
claim upon which relief can be granted under Federal Rule of Civil Procedure 15
12(b)(6).” Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). “We consider the legal 16
sufficiency of the complaint, taking its factual allegations to be true and drawing 17
all reasonable inferences in the plaintiff’s favor.” Id. 18

6
B. Duty to Defend 1
“In New York, an insurer’s duty to defend is exceedingly broad,” Euchner-2
USA, Inc. v. Hartford Cas. Ins. Co., 754 F.3d 136, 140 (2d Cir. 2014) (internal 3
quotation marks omitted), and “an insurer will be called upon to provide a defense 4
whenever the allegations of the complaint suggest a reasonable possibility of 5
coverage,” Auto. Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131, 137 (2006) (cleaned up). 6
“Thus, an insurer may be required to defend under the contract even though it 7
may not be required to pay once the litigation has run its course.” Id. “Whether a 8
complaint asserts additional claims falling outside the policy is immaterial,” and 9
“[a]ny doubt as to whether the allegations state a claim within the coverage of the 10
policy must be resolved in favor of the insured and against the carrier.” Euchner-11
USA, Inc., 754 F.3d at 141 (internal quotation marks omitted). “Put another way, 12
[a] defendant has no obligation to defend only if it can be concluded as a matter of 13
law that there is no possible factual or legal basis on which [the] defendant might 14
eventually be held to be obligated to indemnify plaintiff under any provision of 15
the insurance policies.” Mary & Alice Ford Nursing Home Co. v. Fireman’s Ins. Co. of 16
Newark, N.J., 446 N.Y.S.2d 599, 600 (N.Y. App. Div. 1982), aff’d 57 N.Y.2d 656 (1982). 17

7
C. An “Occurrence” 1
On appeal, the parties dispute whether any of Brooklyn Center’s actions 2
alleged in Goldman’s complaint is an “occurrence”—defined as “an accident”—3
under the Policy. App’x at 39. The provision at issue is a standard one that “has 4
commonly appeared in comprehensive general liability policies since 1966.” City 5
of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1149 (discussing 6
identical insurance policy language). We have thus had occasion to opine on the 7
meaning of “occurrence” and “accident” under New York law. 8
In City of Johnstown, we explained that, “[i]n attempting to define what 9
events are ‘accidental,’ the New York courts have focused on the nexus between 10
an intentional act and the resulting damage.” 877 F.2d at 1150. “Recovery will be 11
barred only if the insured intended the damages, or if it can be said that the 12
damages were, in a broader sense, ‘intended’ by the insured because the insured 13
knew that the damages would flow directly and immediately from its intentional 14
act.” Id. ( internal citations omitted) (citing McGroarty v. Great Am. Ins. Co., 36 15
N.Y.2d 358, 363–65 (1975), and Mary & Alice Ford Nursing Home Co., 446 N.Y.S.2d 16
at 601). “In those instances, coverage is precluded because the damages are not 17
‘accidental.’” City of Johnstown, 877 F.2d at 1151. 18

8
In other words, under New York law, damages that are not intended by an 1
insured are considered “accidental,” and an act causing such unintended damages 2
is considered an “occurrence.”
2
That does not mean, however, that coverage is 3
barred any time an insured performs an intentional act that ultimately causes 4
damage. Rather, a “distinction is drawn between damages which flow directly 5
and immediately from an intended act, thereby precluding coverage, and damages 6
which accidentally arise out of a chain of unintended though expected or 7
foreseeable events that occurred after an intentional act.” Id. at 1150 (internal 8
quotation marks omitted). “Thus, though an intentional act may ultimately cause 9
certain damages, those damages may, under New York law, be considered 10
‘accidental’ if the total situation could be found to constitute an accident.” Id. 11
(emphasis in original, internal quotation marks omitted); see also Graphic Arts Mut. 12
Ins. Co. v. Pine Bush Cent. Sch. Dist., 73 N.Y.S.3d 241, 245 (N.Y. App. Div. 2018) (“An 13
act that is intentionally committed or performed may still be considered an 14
accident within the meaning of an insurance policy, as long as the insured did not 15
expect or intend the harm caused.”). 16

2
The Policy language thus allows coverage to the extent allowed by New York public
policy. See, e.g., J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., 21 N.Y.3d 324, 335 (2013) (“[A]s a matter
of public policy, an insured may not seek coverage when it engages in conduct with the intent to
cause injury.”) (internal quotation marks omitted).

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D. Discrimination Claims 1
Brooklyn Center argues that PIIC was obligated to defend it under the 2
Policy because, in the Underlying Action, Goldman alleged—in addition to any 3
intentional discrimination claims—that Brooklyn Center discriminated against her 4
by failing to accommodate her hearing disability. PIIC, on the other hand, 5
contends that Brooklyn Center’s refusal to accommodate Goldman’s disability was 6
intentional, so Goldman’s failure-to-accommodate claims cannot constitute 7
occurrences under the Policy. 8
A plaintiff alleging disability discrimination “can base [her] claim on any of 9
three available theories: (1) intentional discrimination (disparate treatment); (2) 10
disparate impact; and (3) failure to make a reasonable accommodation.” Fulton v. 11
Goord, 591 F.3d 37, 43 (2d Cir. 2009) (internal quotation marks omitted). 12
“Disparate treatment is the most easily understood type of discrimination. 13
The [defendant] simply treats some people less favorably than others because of 14
their race, color, religion or other protected characteristics. Proof of discriminatory 15
motive is critical.” Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993) (cleaned up). 16
“Claims that stress disparate impact by contrast involve . . . practices that 17
are facially neutral in their treatment of different groups but that in fact fall more 18

10
harshly on one group than another and cannot be justified by business necessity. 1
Proof of discriminatory motive is not required under a disparate-impact theory.” 2
Id. (cleaned up). 3
Finally, failure-to-accommodate claims involve allegations that “a disability 4
makes it difficult for a plaintiff to access benefits” “to which [she is] legally 5
entitled.” Henrietta D. v. Bloomberg, 331 F.3d 261, 277, 273 (2d Cir. 2003). 6
Importantly, the ADA, the Rehabilitation Act, and the NYSHRL all require 7
defendants to afford only “reasonable accommodation” of a plaintiff’s “known 8
disability.” Noll v. Int’l Bus. Machines Corp., 787 F.3d 89, 94 (2d Cir. 2015) (emphasis 9
added); see also Powell v. Nat’l Bd. of Med. Examiners, 364 F.3d 79, 85 (2d Cir. 2004). 10
Thus, a defendant need not make an accommodation “that imposes an undue 11
hardship on its program’s operations,” and its refusal to make an unreasonable 12
accommodation does not constitute unlawful discrimination. Powell, 364 F.3d at 13
88. “The reasonableness of an . . . accommodation is a ‘fact-specific’ question that 14
often must be resolved by a factfinder.” Noll, 787 F.3d at 94. As with disparate-15
impact claims, failure-to-accommodate claims do not require proof of 16
discriminatory intent. See Austin v. Town of Farmington, 826 F.3d 622, 629 (2d Cir. 17
2016). 18

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III. DISCUSSION 1
This case presents the question whether Brooklyn Center’s alleged failure to 2
accommodate Goldman’s disability can constitute an occurrence under the Policy. 3
As an initial matter, New York courts have clearly held that the 4
“occurrence” language in the Policy does not require insurers to defend suits 5
alleging solely disparate-treatment discrimination. See, e.g., Mary & Alice Ford 6
Nursing Home Co., 446 N.Y.S.2d at 601 (“[T]he damages alleged in the . . . complaint 7
are the intended result which flows directly and immediately from plaintiff’s 8
intentional [discriminatory] act [of firing the plaintiff because of her disability], 9
rather than arising out of a chain of unintended though foreseeable events that 10
occurred after the intentional act.”); see also Rosenberg Diamond Dev. Corp. v. 11
Employers Ins. Co. of Wausau, 144 F. App’x 122, 124 (2d Cir. 2005) (“[T]he . . . 12
complaint alleged only intentional racial discrimination. And, under New York 13
law, it is clear that the type of language included in the [Policy] does not extend to 14
such intentional discriminatory acts.”). Similarly, the New York Superintendent 15

12
of Insurance (the “Superintendent”)
3
has explained that “discrimination based 1
upon disparate treatment is an intentional wrong whose resultant harm flows 2
directly from the acts committed, and liability coverage for it is impermissible” as 3
a matter of New York public policy. N.Y. Circular Letter No. 1994-6, 1994 WL 4
16306026 (May 31, 1994). 5
On the other hand, at least one New York court has held that the Policy 6
language does require—and New York public policy allows—an insurer to defend 7
an insured against a disparate-impact discrimination suit. See Am. Mgmt. Ass’n, 168 8
Misc. 2d at 979. And the Superintendent has explained that in disparate-impact 9
cases, “the discriminatory result does not directly proceed from specific 10
discriminatory acts against individuals; in fact, such acts are not an element of the 11
wrong and need play no part in the facts alleged.” N.Y. Circular Letter No. 1994-12
6; see also N.Y. Ins. Op. (Dec. 20, 2005), https://www.dfs.ny.gov/insurance/ 13
ogco2005/rg051216.htm (last visited Mar. 26, 2020) (“[T]he Department has 14
consistently disallowed intentional discrimination (disparate treatment) claims to 15

3
The opinions of the Superintendent “with respect to the Insurance Law are to be
accorded great weight by the courts unless contrary to the clear wording of a particular statute.”
Am. Mgmt. Ass’n v. Atl. Mut. Ins. Co., 168 Misc. 2d 971, 978 (Sup. Ct.), aff’d 651 N.Y.S.2d 301 (App.
Div. 1996). In 2011, the duties of the Superintendent were transferred to the Superintendent of
Financial Services. See N.Y. Fin. Servs. Law §§ 102, 202.

13
be covered under liability insurance policies. The Department does, however, 1
permit coverage to be provided for claims arising from unintentional 2
discrimination: disparate impact claims and employer’s vicarious liability.”). 3
Neither New York courts nor the Superintendent, however, have provided 4
guidance on failure-to-accommodate claims. Here, Brooklyn Center argues that 5
failure-to-accommodate claims are more like disparate-impact claims than 6
disparate-treatment claims because plaintiffs need not prove discriminatory intent 7
to succeed on failure-to-accommodate claims. Indeed, the decision to refuse a 8
particular accommodation may be justified, and will not provide a basis for 9
liability, if the requested accommodation is unreasonable or “would impose an 10
undue hardship on the operation of the business.” Felix v. New York City Transit 11
Auth., 324 F.3d 102, 104 (2d Cir. 2003) (quoting 42 U.S.C. § 12112(b)(5)(A)); see also 12
Goord, 591 F.3d at 44 (“‘Reasonable’ is a relational term: it evaluates the desirability 13
of a particular accommodation according to the consequences that the 14
accommodation will produce. This requires a fact-specific, case-by-case inquiry, 15
not only into the benefits of the accommodation but into its costs as well.”) 16
(cleaned up). Thus, as long as Brooklyn Center believed that hiring interpreters to 17
accommodate Goldman’s hearing disability would have been unreasonable or 18

14
would have imposed an undue hardship on its business, any cognizable harm 1
resulting from its refusal to do so would have been accidental. This position finds 2
support in New York case law. See, e.g., Graphic Arts Mut. Ins. Co., 73 N.Y.S.3d at 3
245 (“An act that is intentionally committed or performed may still be considered 4
an accident within the meaning of an insurance policy, as long as the insured did 5
not expect or intend the harm caused.”). 6
In response, PIIC focuses on Brooklyn Center’s refusal to accommodate 7
Goldman’s disability, irrespective of its reasons for doing so. Brooklyn Center’s 8
refusal to hire interpreters, PIIC argues, was an intentional act that “directly and 9
immediately” caused damage to Goldman. Mary & Alice Ford Nursing Home Co., 10
446 N.Y.S.2d at 601. This position also finds support in New York case law. See, 11
e.g., Cont’l Ins. Co. v. Colangione, 484 N.Y.S.2d 929, 930 (N.Y. App. Div. 1985) (“This 12
court . . . has distinguished between damages which flow directly and immediately 13
from an intended act, thereby precluding coverage, and damages which 14
accidentally arise out of a chain of unintended though expected or foreseeable 15
events that occurred after an intentional act.”). Thus, it is not clear under New 16
York law whether a failure to accommodate a disability can be an “occurrence” for 17
purposes of coverage under the Policy. 18

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IV. CERTIFICATION 1
“Although the parties did not request certification, we are empowered to 2
seek certification nostra sponte.” Kuhne v. Cohen & Slamowitz, LLP, 579 F.3d 189, 198 3
(2d Cir. 2009). “We have long recognized the appropriateness of according to state 4
courts the opportunity to decide significant issues of state law through the 5
certification process.” Corsair Special Situations Fund, L.P. v. Pesiri, 863 F.3d 176, 6
183 (2d Cir. 2017); see also 22 N.Y.C.R.R. § 500.27(a). 7
Our decision to certify questions to the Court of Appeals is 8
discretionary, and when exercising that discretion we consider 9
whether: (1) the New York Court of Appeals has not squarely 10
addressed an issue and other decisions by New York courts are 11
insufficient to predict how the Court of Appeals would resolve it; (2) 12
the statute’s [or, in this case, the standard “occurrence” provision’s] 13
plain language does not indicate the answer; (3) a decision on the 14
merits requires value judgments and important public policy choices 15
that the New York Court of Appeals is better situated than we to 16
make; and (4) the questions certified will control the outcome of the 17
case. 18
CIT Bank N.A. v. Schiffman, 948 F.3d 529, 537 (2d Cir. 2020) (internal quotation 19
marks omitted). All four factors weigh in favor of certification here. 20
First, as discussed above, the New York Court of Appeals has not decided 21
whether insurers must defend insureds in actions alleging failure-to-22
accommodate discrimination under the language of the Policy. And “issues 23

16
similar to those raised here [have not] been litigated in New York courts often 1
enough that sufficient precedents exist for us[] to make a determination 2
concerning their proper outcome.” Commodity Futures Trading Comm’n v. Walsh, 3
618 F.3d 218, 231 (2d Cir. 2010) (cleaned up). Second, as interpreted by the New 4
York courts, the language of the Policy is ambiguous with respect to coverage for 5
failure-to-accommodate claims. See Section III, supra. Third, a decision on the 6
merits would require us to determine whether New York public policy bars the 7
defense of a failure-to-accommodate claim. This would clearly implicate 8
“important public policy choices that the New York Court of Appeals is better 9
situated than we to make.” CIT Bank N.A., 948 F.3d at 537 (internal quotation 10
marks omitted). And finally, the answer to the question that we now certify is 11
wholly determinative of the outcome of this appeal. 12
V. CONCLUSION 13
For the foregoing reasons, we certify the following question to the New York 14
Court of Appeals: 15
Must a general liability insurance carrier defend an insured in an action 16
alleging discrimination under a failure-to -accommodate theory? 17
“As is our practice, we do not intend to limit the scope of the Court of 18
Appeals’ analysis through the formulation of our question, and we invite the 19

17
Court of Appeals to expand upon or alter this question as it should deem 1
appropriate.” 10 Ellicott Square Court Corp. v. Mountain Valley Indem. Co., 634 F.3d 2
112, 126 (2d Cir. 2011). 3
It is hereby ORDERED that the Clerk of this Court transmit to the Clerk of 4
the New York Court of Appeals this opinion as our certification, together with a 5
complete set of briefs, appendices, and the record filed in this case by the parties. 6
This panel retains jurisdiction for purposes of resolving this appeal after the 7
disposition of the certification by the New York Court of Appeals. 8