Morales v 10th St., LLC

[*1] Morales v 10th St., LLC 2009 NY Slip Op 51957(U) [25 Misc 3d 1202(A)] Decided on September 17, 2009 Supreme Court, Kings County Starkey, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 17, 2009
Supreme Court, Kings County

Elizabeth Morales, as Administratrix of the Estate and on behalf of the distributees of the Estate of Philip Morales, Deceased, Plaintiff,

against

10th Street, LLC, Defendant.



10th Street, LLC., Third Party Plaintiff,

against

Citipostal, Inc., Third Party Defendant.



5218/2004



For Plaintiff:

DAVID A. HOINES, ESQ.

32 Court Street, Suite 908

Brooklyn, New York 11201

For Defendant/Third Party Plaintiff:

O'CONNOR, O'CONNOR, KINTZ & DEVENEY, LLP.

One Huntington Quadrangle, Suite 3C01

Melville, New York 11747-4415

For Third Party Defendant:

LAW OFFICES OF MARGARET G. KLEIN & ASSOCIATES

200 Madison Avenue

New York, New York 10016

James G. Starkey, J.

On February 19, 2002, plaintiff's decedent suffered fatal injuries in the course of his employment as a mid-level warehouse manager when he fell from a catwalk at the premises known as 26 North 11th Street, Brooklyn, New York. At the time, the premises was owned by defendant/third party plaintiff 10th Street, LLC., and leased to decedent's employer, third party defendant CitiPostal, Inc. The lease agreement between defendant and third party defendant contained a broad indemnification provision for the benefit of defendant and required third party defendant to maintain liability insurance naming defendant as an additional insured in its general liability insurance policy.

Following the accident, plaintiff's Administratrix Elizabeth Morales initiated this action against 10th Street, LLC and CitiPostal, Inc., for the pain, suffering, and wrongful death of her deceased husband, alleging violations of Labor law § § 240(1) and 241(6) as well as common law negligence as codified in Labor Law § 200. Defendant 10th Street, LLC cross-claimed against then co-defendant CitiPostal, Inc. claiming contributory negligence and common law indemnification, but did not include a cross-claim for contractual indemnification. Thereafter, Citipostal, Inc. moved to dismiss plaintiff's claims, relying on § 11 of the Workers' Compensation Law and that motion was granted as against plaintiff. The cross-claims asserted by defendant 10th Street, LLC were then converted into a third party action against CitiPostal, Inc. as third party defendant.

Defendant moves to dismiss plaintiff's complaint upon several separate grounds: first, that plaintiff's decedent was the "sole proximate" cause of his accident; second, that plaintiff's sole remedy is the Workers' Compensation Law because defendant and third party defendant share an owner/officer; third, that plaintiff's decedent was not among the class of persons afforded protection under § 240(1) and § 241(6) the Labor Law and finally, that as to the claim of negligence pursuant to Labor Law § 200, neither an employer nor co-employee can be held liable as a landowner for injuries an employee incurs on its property. Third party defendant CitiPostal cross moves seeking dismissal of the third party complaint urging a violation of the "anti-subrogation" rule by defendant/third party plaintiff.

LAW AND APPLICATION

Defendant's motion for summary judgment

Summary judgment is a drastic remedy as it deprives a party of his or her day in court and should be granted when it is clear that no triable issues of fact exists. Alvarez v. Prospect Hospital, 68 NY2d 320, 508 NYS2d 923, 501 NE2d 572 (1986). The burden is upon the moving party to make a prima facie showing that the movant is entitled to summary judgment as a matter of law by presenting evidence in admissible form demonstrating the absence of any material facts. Giuffrida v. Citibank Corp., 100 NY2d 72, 760 NYS2d 397, 790 NE2d 772 (2003). A failure to make that showing requires the denial of the summary judgment motion, regardless of the adequacy of the opposing papers. Ayotte v. Gervasio, 81 NY2d 1062, 601 NYS2d 463, 619 [*2]NE2d 400 (1993). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact. Alvarez v. Prospect Hospital, supra at 324.

Defendant's motion is granted to the extent that plaintiff's Labor Law § 240(1) and Labor Law § 241(6) claims are dismissed. As plaintiff concedes, plaintiff's decedent was not engaged in construction activities at the time of the accident and therefore, these provisions of the Labor Law are inapplicable to this case.

As to plaintiff's claims for common law negligence and violations of Labor Law § 200, defendant urges that Workers' Compensation Law §§ 11 and 29(6), protects an employer from being held liable in its "dual capacity" as landowner for injuries an employee sustains on its property. See Billy v. Consolidated Mach. Tool Corp., 51 NY2d 152, 159, 432 NYS2d 879 (1980). In support of its contention that plaintiff's tort action is barred by the Workers' Compensation Law, defendant relies on Ozarowski v. Yaloz Realty Corp., 181 AD2d 763, 581 NYS2d 248 (2nd Dept. 1992), Coppolla v. Singer, 211 AD2d 744, 621 NYS2d 924 (2nd Dept. 1995) and DiRie v. Automotive Realty Corp., 199 AD2d 98, 605 NYS2d 60

(1st Dept. 1993).

Defendant further urges, based on the testimony of one Louis Weiner, that plaintiff is barred from maintaining the instant action by § 11 and § 29(6) of the Workers' Compensation Law since Mr. Weiner, one of three owners of defendant as well as president of third party defendant, was a co-employee of plaintiff's decedent. Therefore, it is argued, plaintiff's exclusive remedy is confined to the Workers' Compensation Law. However, where a plaintiff is injured when an employer and the owner of the premises are distinct legal entities, there is no basis to dismiss an action against the landowner based on the exclusivity provisions of the Workers' Compensation Law. See Canete v. Judlau Contr., 56 AD3d 407, 867 NYS2d 134 (2nd Dept. 2008); see also, Richardson v Benoit's Electric, Inc., 254 AD2d 798, 677 NYS2d (4th Dept. 1998). When, for their own business and legal advantage, individual principals in a business enterprise, elect to operate that enterprise through separate corporate entities, the structure they created will not lightly be ignored at their behest, nor shield one of the entities they created from common-law tort liability. See Buchner v. Pines Hotel, Inc., 87 AD2d 691, 448 NYS2d 870 (3rd Dept. 1982), aff'd, 58 NY2d 1019, 462 NYS2d 436 (1983).

Mr. Weiner's testimony as to the structure of the companies is insufficient to establish the existence of an alter-ego relationship between defendant and third party defendant. See Masley v Herlew, 45 AD3d 653, 654, 846 NYS2d 252 (2nd Dept. 2007). DiRie v. Automotive Realty Corp., supra , relied on by defendant, is distinguishable since both the third party defendant and defendant in that case were owned by one individual. Here, Mr. Weiner is but one of three members of defendant LLC, and one of four shareholders of third party defendant. In any event, it is also questionable whether the same result would have obtained had the DiRie case been considered in the Appellate Division, Second Department. See Masley v Herlew, supra ; Canete v. Judlau Contr., supra . Therefore, defendant's failure to make a prima facie showing requires a denial of this branch of the motion, regardless of the sufficiency of the opposing papers. See Smalls v. AJI Indus., 10 NY3d 733, 735, 853 NYS2d 536 (2008).

Labor Law § 200 is a codification of the common law duty to provide workers with a safe work environment. If the allegedly dangerous condition arises from the contractor's methods and [*3]the owner exercises no supervisory control over the operation, liability does not attach under the common law or Labor Law § 200. See Kwang Ho Kim v. D & W Shin Realty Corp., 47 AD3d 616, 852 NYS2d 138 (2nd Dept. 2008). Liability attaches if the owner or general contractor has the authority to control the activity which brings about the injury, which enables the owner or general contractor to avoid or correct the unsafe condition. See Mas v. Kohen, 283 AD2d 616, 617, 725 NYS2d 90 (2nd Dept. 2001). Since Mr. Weiner was the immediate supervisor of plaintiff's decedent and a member of defendant LLC, issues of fact exist for jury resolution as to whether defendant had constructive notice of an unsafe condition and as to the level of supervision and control over the manner in which decedent's work was performed. See Acosta v. Hadjigavriel, 18 AD3d 406, 794 NYS2d 445 (2nd Dept. 2005); Penta v. Related Companies, 286 AD3d 674, 675, 730 NYS2d 140 (2nd Dept. 2001); Thompson v. Pizza Hut of America, Inc., 262 AD2d 302, 691 NYS2d 99 (2nd Dept. 1999).

Concerning the claim that plaintiff's decedent was the sole proximate cause of the accident, defendant has failed to satisfy its prima facie burden of establishing that plaintiff's actions were the sole proximate cause of his demise. See Kwang Ho Kim v. D & W Shin Realty Corp., supra . at 618. The fact that plaintiff disregarded warnings to stay out of the construction area does not obviate defendant's statutory duty to provide a safe work environment. Id. at 618-619. This is particularly true, where as here, it is alleged that defendant failed to barricade or warn of the hole in the catwalk. Therefore, defendant's motion is denied to the extent that it seeks dismissal of plaintiff's Labor Law § 200 and common law negligence claims.

Third Party Defendant's motion to dismiss the third party action

pursuant to the "anti- subrogation" rule

New York has long recognized an insurer's equitable right to bring a subrogation action against a third party whose wrongdoing has caused a loss to its insured. See ELRAC, Inc. v. Ward, 96 NY2d 58, 76, 724 NYS2d 692, 699 (2001). Nevertheless, it is well settled that pursuant to the common-law anti-subrogation rule, an insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered. This rule applies even where a third party tortfeasor — also covered by the policy — has expressly agreed to indemnify the insured. See ELRAC, Inc., v. Ward, 96 NY2d 58, 76, 724 NYS2d at 699. See also McGurran v. DiCanio Planned Development Corp., 216 AD2d 538, 539, 628 NYS2d 773, 774 (2nd Dept. 1995); North Star Reinsurance Corp. v. Continental Insurance Co., 82 NY2d 281, 294, 604 NYS2d 510 516 (1993). Thus, an insurer may not step into the shoes of its insured to sue a third party tortfeasor — if that third party tortfeasor also qualifies as an insured under the same policy — for damages arising from the same risk covered by the policy. Ibid.

Where public policies concerning insurers' subrogation rights are implicated, overriding policies, rather than the parties' agreement, must guide the analysis. See Pennsylvania General Insurance Co. v. Austin Powder Co., 68 NY2d 465, 470-71, 510 NYS2d 67, 70 (1986). In this regard, the Court of Appeals has expressly enunciated two such concerns. First, an insurer should not be able to pass the loss on to its own insured and thus avoid the coverage for which it contracted with its insured to provide. See Pennsylvania General Insurance Co. v. Austin Powder Co., 68 NY2d at 470-71, 510 NYS2d at 70 (1986). Second, the insurer should not be allowed to create a conflict of interest by fashioning the litigation so as to minimize its own [*4]liability and affect its incentive to provide a vigorous defense for one of its insureds. See North Star Reinsurance Corp., v. Continental Insurance Co., 82 NY2d 281, 294, 604 NYS2d 510 (1993). For example, by failing to assert a contractual indemnification claim on an insured owner's behalf, an insurer — in certain circumstances — could trigger coverage under other insurance policies held by an insured contractor such as worker's compensation or excess coverage. Id. at 296.

Defendant/third party plaintiff does not dispute that the third party action commenced on its behalf against third party defendant is for common law indemnification and not contractual indemnification, nor that a single policy was issued by Providence Washington Insurance Company for both defendant and third party defendant.[FN1] Allowing defendant to continue the third party action would run counter to public policy and violate the anti-subrogation rule. It is noteworthy, however, that the anti-subrogation rule applies only to the policy limits of the comprehensive general liability policy at issue, and claims for contribution and/or indemnification beyond the limits of a common insurance policy are not barred. See Lodovichetti v. Baez, 31 AD3d 718, 719, 818 NYS2d 470, 470 (2nd Dept. 2006). Therefore, defendant is barred from seeking indemnification and/or contribution for damages that fall within the coverage amount agreed upon under the subject insurance policy issued by Providence Washington Insurance Company. Id. at 719.

CONCLUSION

Accordingly, defendant's summary judgment motion is granted to the extent that plaintiff's Labor Law § 240(1) and Labor Law § 241(6) claims are dismissed, and otherwise the motion is denied. Third party defendant's cross motion is granted to the extent that defendant is barred from seeking indemnification and/or contribution for damages that fall within the coverage amount agreed under the subject insurance policy issued by Providence Washington Insurance Company, and otherwise denied. This constitutes the decision and order of the court.

____________________________

J.S.C. Footnotes

Footnote 1: Defendant/third party plaintiff claims that insurance coverage was excluded by the Worker's Compensation Exclusion under the Providence Washington policy. But the argument is unpersuasive since the worker's compensation exclusion contained in the policy was nullified by the assumption of liability by third party defendant CitiPostal under an "insured contract" (the lease agreement).