Galvan v 9519 Third Ave. Rest. Corp.

[*1] Galvan v 9519 Third Ave. Rest. Corp. 2009 NY Slip Op 52848(U) Decided on March 31, 2009 Supreme Court, Kings County Saitta, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 31, 2009
Supreme Court, Kings County

Johnny Galvan, Plaintiff,

against

9519 Third Avenue Restaurant Corp., THERESA ROCANELLI, LOUIS ROCANELLI, VINCENT MALAFRONT and GERTRUDE MALAFRONT, Defendants, THERESA ROCANELLI, LOUIS ROCANELLI and DIANE NOVOGRODSKY as guardian of GERTRUDE MALAFRONT Third-Party Plaintiffs, GREATEST NEW YORK MUTUAL INSURANCE Third-Party Defendant, THERESA ROCANELLI, LOUIS ROCANELLI and DIANE NOVOGRODSKY as guardian of GERTRUDE MALAFRONT Second Third-Party Plaintiffs, 9519 THIRD AVENUE RESTAURANT CORPORATION, Third-Party Defendant.



44274/2007



Plaintiff Attorney (JOHNNY GALVAN):

Hankin, Handwerker & Mazal, P.C.

7 Penn Plaza, Suite 904

New York, New York 10007

(212) 349-1668

Defendant/3rd Party Plaintiff Attorney (THERESA & LOUIS ROCANELLI and VINCENT & GERTRUDE MALAFRONT):

Herfeld & Rubin, P.C.

40 Wall street

New York, New York 10005

(212) 471-8500

Andrew M. Roher, Esq.

Defendant Attorney (9519 RESTAURANT CORP. & GREATEST NEW YORK MUTUAL):

Margaret G. Klein & Associates

200 Madison Avenue

New York, New York 10016

(212) 683-9700

David D. Hess, Esq.

Wayne P. Saitta, J.

THIRD-PARTY Defendant, GREATER NEW YORK MUTUAL INSURANCE COMPANY, (hereinafter "GNY"), moves this Court for an Order pursuant to CPLR §3211(a)(1) and §3211(a)(7) dismissing the first third party complaint or, alternatively to sever this insurance coverage action, and for a declaratory judgment action or for such further relief as this Court deems just and proper.

Upon reading the Notice of Motion to Dismiss the third-party action or Alternatively to Sever by David D. Hess, Esq., attorney for GNY, third-party Defendant, dated June 27th, 2008, together with the Affirmation in Support dated June 27th, 2008, and all exhibits annexed thereto; the Affirmation in Opposition of Andrew M. Roher, Esq., attorney for Defendants/third-party Plaintiffs, THERESA ROCANELLI, LOUIS ROCANELLI and DIANE NOVOGRODSKY AS GUARDIAN OF GERTRUDE MALAFRONT, (hereinafter "the Owners"), dated October 22nd, 2008, and all exhibits annexed thereto; the Reply Affirmation in Further Support of GNY's Motion to Dismiss the first third-party Complaint or Alternatively to Sever of David D. Hess, dated November 12th, 2008; and after argument of counsel and due deliberation thereon, GNY's motion to dismiss the complaint is denied and the motion to sever is granted for the reasons set forth below.

FACTS[*2]This action arises from a personal injury action which was brought by Plaintiff, Johnny Galvan, against his employer, 9519 Third Avenue Restaurant Corp., (hereinafter "9519"), while Plaintiff was working at 9519. The Rocanellis and the Malafronts, (hereinafter "the Owners"), own the building located at 9519 Third Avenue in Brooklyn, NY, in which the restaurant is located. Defendant 9519 entered into a lease for the premises with the Owners. The President of 9519, Louis Rocanelli, is also an Owner of the building located at 9519 Third Avenue. The Owners cross claimed against 9519 for indemnification and then sought similar relief by instituting a second third-party action (the "second third-party action", index No.75426/2008) against 9519. The Owners also brought a third party action (the "first third-party action", index #75369/2008) against GNY for indemnification.

Pursuant to its lease, 9519 obtained a general liability policy with Greater New York Mutual Insurance Company, (GNY). The Owners were not named as additional insureds.

The Owners sought coverage from 9519 and GNY after they were sued by Galvan. GNY has denied coverage to the Owners claiming they are not covered persons under the policy.

The Owners thereafter filed a third party action seeking a declaratory judgment that pursuant to its policy with 9519, GNY must defend the Owners in the Galvan negligence action.

ARGUMENTS

GNY brings this motion arguing that the insurance policy is clear that it has no additional insureds besides 9519 and therefore the third party complaint should be dismissed. Alternatively it argues that the Galvan negligence action should be severed from the insurance coverage (third party) action.

The Owners argue that they are covered under 9519's policy because the policy covered any parties that 9519 was obligated to indemnify for liability incurred for bodily injury.

The Owners argue that because the lease between them and 9519 specifically required 9519 to indemnify them, and the lease is an "insured contract" as defined by the policy, the obligation to defend and indemnify the Owners does not fall within the policies exemption.

GNY responds arguing that the lease under which the Owners claim they are entitled to indemnification was expired and therefore it does not trigger the indemnification provision in the policy. Further, they assert that because the Owners have insurance coverage, even had the lease not expired, the indemnification would not be triggered.

Finally GNY asserts that the coverage is for 9519 alone and that the Owners have a potential claim against 9519, but not against GNY.

ANALYSIS

On a motion to dismiss pursuant to CPLR 3211(a)(7), the complaint must be [*3]accorded a liberal construction, the facts as alleged therein must be accepted as true, and the plaintiff must be accorded the benefit of every favorable inference. The court's function on such a motion is to determine only whether the facts as alleged fit within any cognizable legal theory. Elow v. Svenningsen 58 AD3d 674, - N.Y.S.2d , 2009 WL 146523, (2nd Dept 2009). (See Leon v. Martinez, 84 NY2d 83, 87-88, 614 N.Y.S.2d 972, 638 N.E.2d 511; Guggenheimer v. Ginzburg, 43 NY2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17; Uzzle v. Nunzie Court Homeowners Assn., 55 AD3d 723, 866 N.Y.S.2d 237; Cayuga Partners v. 150 Grand LLC, 305 AD2d 527, 759 N.Y.S.2d 347). A party seeking to dismiss pursuant to CPLR 3211(a)(1) on the ground that its defense is based on documentary evidence must submit documentary evidence that resolves all factual issues as a matter of law and conclusively disposes of the plaintiff's claim. Elow v. Svenningsen 58 AD3d 674, - N.Y.S.2d , 2009 WL 146523, (2nd Dept 2009). (See Leon v. Martinez, 84 NY2d at 88, 614 N.Y.S.2d 972, 638 N.E.2d 511; Uzzle v. Nunzie Court Homeowners Assn., 55 AD3d 723, 866 N.Y.S.2d 237; Martin v. New York Hosp. Med. Ctr. of Queens, 34 AD3d 650, 826 N.Y.S.2d 85; Nevin v. Laclede Professional Prods., 273 AD2d 453, 711 N.Y.S.2d 735).

In order to prevail on a motion to dismiss based upon documentary evidence, pursuant to CPLR 3211(a)(1), "the documentary evidence which forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim". (McCue v. County of Westchester, 18 AD3d 830, 831, 796 N.Y.S.2d 384, see also Reid v. Gateway Sherman, Inc., - N.Y.S.2d , 2009 WL 708907 (2nd Dept 2009).The burden, therefore, is for GNY to submit documentary evidence to conclusively establish that the policy issued by GNY to insure 9519 does not provide coverage to the Owners for the personal injury action in which the Owners have been named as Defendants.

GNY submits an insurance policy in support of its motion (1131T88275) naming the insured as 9519 Third Avenue Restaurant. The terms of the policy provide that GNY will insure or defend 9519 should it become obligated to pay damages as the result of "bodily injury".

GNY argues that the Owners are not "additional insureds" under the policy. They state that the policy does not identify the Owners either as named or additional insureds, and therefore their claim fails as a matter of law.

Defendant cites Moleon v. Kreisler Borg Florman General Constr. Co., Inc., 304 AD2d 337 (1st Dept 2003), in support of its position that it is entitled to dismissal of the complaint as the policy does not list or name the party seeking coverage as an insured. That Court held, "[a] party that is not named an insured or additional insured on the face of the policy is not entitled to [insurance] coverage."

The Moleon Court, however, was so holding where the party seeking coverage submitted a Certificate of Insurance in support of its claim. The certificate bore a disclaimer "which stated that this certificate is issued as a matter of information only and confers no rights upon the certificate holder [and that] this certificate does not amend, extend or alter the coverage afforded by the policies'." Accordingly the First [*4]Department found that the Certificate of Insurance did not modify the policy. Id.

The Owners agree that they are not "additional insureds" under the policy. Rather they argue that they are entitled to indemnification under the policy inasmuch as it is written to indemnify 9519 for liability to a Third party for bodily injury.

The policy does, however, list certain exclusions to which the insurance for bodily injury would not apply. Section 2(b) of the Commercial General Liability Coverage Form includes an exclusion for "Contractual Liability". It reads, in pertinent part, that [the insurance] does not apply to, "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.

However Section 2(b)(2) provides that;

This exclusion does not apply to liability for damages: (2)(b)(2) Assumed in a contract or agreement that is an "insured contract", provided the "bodily injury" or "property damage" occurs subsequent to the execution or agreement." (Emphasis added.)

By stating that the exclusion for Contractual Liability specifically does not apply to that liability assumed in an "insured contract", the effect is for the policy to cover such insured contracts.

Section 5 of the policy defines a lease of a premises as an insured contract.

The lease issued to 9519 is such an "insured contract", and it contains a provision for the landlord to be indemnified in the event of certain losses, including personal injury claims:

Tenant shall indemnify and save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs and expenses for which Owner shall not be reimbursed by insurance, including reasonable attorneys fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant's agent, contractors, employees, invitees, or licencees, of any covenant on condition of this lease, or the carelessness, negligence or improper conduct of the Tenant.In Wilson v. Commercial Envelope Manufacturing Company, Inc., 286 AD2d 731, the Second Department held that a lessee's insurer was obligated to defend and indemnify the building owner where the insurance contract between the lessee and the insurer required the insurer to defend and indemnify any * * * organization with whom [the lessee] agreed, because of a written contract or agreement or permit to provide insurance'". [*5]

The Second Department found that the lease agreement between the lessee and owner was such a contract and therefore upheld the lower court's grant of summary judgment declaring the insurer was obligated to defend and indemnify the owner.

Accordingly, the documentary evidence submitted by GNY in this case, specifically the policy and the lease, fail to resolve all factual issues in GNY's favor and does not conclusively dispose of the Owners' claim for indemnification under the policy.Defendant also argues that the lease between the Owners and 9519 was expired and "[t]herefore, no indemnification agreement applies to this accident..". However, it is well settled that upon the termination of a lease where the lessee remains in possession with the explicit or implied permission of the lessor, the terms of the expired lease remain enforceable.

When a tenant remains in possession after the expiration of a lease "pursuant to common law, there is implied a continuance of the tenancy on the same terms and subject to the same covenants as those contained in the original instrument". Lynch v Savarese, 217 AD2d 648, 649, quoting City of New York v. Pennsylvania R. Co., 37 NY2d 298, (1975); see also, Real Property Law § 232-c).

The expired, but enforceable terms of the lease, including the requirement that 9519 indemnify the Owners, would be implied in 9519's continued tenancy.

Finally, GNY argues that because paragraph 8 of the lease provides that 9519 will indemnify the owners for amounts that "shall not be reimbursed by insurance", their obligation to the Owners is only to reimburse for losses not covered by insurance. GNY contends that the insurance referred to in paragraph 8 means the Owner's insurance, and since the Owners have insurance, it is not yet clear that they will sustain a loss in excess of their insurance.

It is unclear from text of the lease whether 9519, and by extension GNY, must indemnify the Owners for liability exceeding the coverage that 9519 procured, or any coverage that the Owners purchased for themselves.

It is a question of fact whether the intent of the parties was to have the Owners' coverage or 9519's coverage be primary in this situation. In the absence of additional information to resolve this ambiguity, this issue cannot be decided on the papers before the Court at this time.

Since the first third party complaint is not being dismissed, it is proper to sever it from the main complaint so that the issue of the insurer's obligation to defend and indemnify can be decided separately.

WHEREFORE, GNY's motion to dismiss the first third party action is herein denied, and its motion to sever is granted. It is hereby Ordered that the first third party action is severed from the first party complaint and second third party action.

ENTER,

_____________________________

JSC

[*6]