Ttanscontinental Ins. Co. v Twin City Fire Ins. Co.

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Ttanscontinental Ins. Co. v Twin City Fire Ins. Co. 2012 NY Slip Op 30326(U) February 7, 2012 Supreme Court, New York County Docket Number: 600292/09 Judge: Judith J. Gische Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. ANNED ON 21912012 [* 1] I [* 2] Supreme Court of the State of Naw York County of New York: Part 10 X Transcontlnental Insurance Company, American Casualty Company of Reading, PA, International Storage Systems, Inc. and Heatley Installatlons, Inc., D~cl+lo~ord~c Index No.: 80029UOQ Seq. No.: 005 Plaintiffs, Pm8ent: -against- n. Judrth J. G I W ~ Q J.S.C. Twin Ctty Fire Insurance Company, Defendant Numbered Pap+n 1 - PWfa nlrn [3212] DKE affirm, exha,memo [sep back] D6ps ntx-rn [3212] aff back] . . . . . . . . . . . . . . . . . . . . . . . . .1 in supp & opp wl KB afid, PK affid, NPC affirm, exhs, memo [wp ..............................................................2 Hen. Judith J. Gische, J.S. C.: Upon the fomgoing pepem, the decision and order of the court is 8s follows: This ia an action by Transcontlnental Insurance Company ("Transcontlnental"), Anmican Casualty Company of Reading, PA rACC"), International Storage Systema, Inc. ('ISST and Heatley Installations, fnc. ("Heatley") (callectbely 'Plainttfi's*) seeklng a judgment declaring that Twjn City Fire Insurance Company (Twin City" or Defendant")is obligated, pursuant to the terms o a Twln Cky Policy ("policy" or Twin City Pollcf), to f lndamnlfy Heatley for the sntlra amount of a Settlement made In an undertying Labor Law - Page 1 of 14 - [* 3] (CPLR § 3212), against defendant, seeking such a declaration and also for a money judgment, In the amount of $3.725 mllllon, representing the contrlbutlon made by Transcontinental and ACC to settle the underlying action, Defendant cmss-mov~for summary Judgment (CPLR Q 3212) requeatlng that 113 the court d h h s plaintiffs complaint, [2] there be a declarationthat the Twin Ctty policy Ilmb are only $100,000, and [3] sanctions be awarded pursuant to NYCRR Q 130-1.1 et. seq. Sin- issue has been joined, but the note of issue has not yet been flied, this motion can be consldered on the merib. Brill v. Cltv of New Yn&, 2 N.Y.3d 648 (2004). Background Underhrinrl a m In the related undertying action, entitled Badeftv. Ameficen Reel Estate Uddhgs, I LP, et e/, Supreme Court, New York County, Index No. 1t6810/2003. Mark Bartlett (%adeW), a Massachusetts rasldant, sought damages for personal injuries, suffered on November 12,2001, in an on-the-job injury occurring In Farmlngdale, NY. Bartlettw an amployea of Heatley, a sole proprietorshiplocated in Mmsachuftetb. IS$, a defendant In I the Bartlett ection, impleaded Heatley as a thlrd-party defendant, seeking among other thlngs, cornmowlaw Indemnlficatlon. On February 5,2008, the Hon. Walter B. Tolub granted Bartlettsummaryjudgment OII liability, against ISS, pursuant to Labor Law 3 240(1). He also denied Heatley s motion to dismlss the thirdparty cornplaint T e underlyingactlon was, thereafter, settltd wlth Bartktt for $3.825 million. After h trlal on the thlrd party complaint,the court found that plaintiff auffered a grave injury. Aa [* 4] a consequence, ISS was entitled to indwnnfflcatlon from Heatley for the accident. Twin City paid $100,OOO towards the overall settlementwith Bartlett,whlle Transcontinentaland ACC paid the additional $3.725 million dollars. A dispute arose fn the underlying action between the insurance carders for ISS (Transcontinentaland ACC) and Hsatley (Twin Crty) warding the limits of coverage under the policy. Tdn City claimed that pursuant to the terms o the pollcy, the limb were f $100,000. However, Transcontinentaland ACC, took the positionthat the Twin City policy limits were unlirnked, pursuant to the requlrementa of the New York Workers Compensation L w a . This The dlspute between the carriers in the Bartlett action msuked in this declaratory Iudgmemt action being commenced. Plalntms now seek a decleratlon regardingthe policy limits of the Employers' Liabilrty Policy issued by Twln City to Heatley in the undertylng action. P a n i f maintaln that, pursuant to the Workers Compensation law them am no litf8 liabilrty Ifmks to the Twin City poIicy. Therefore, Transmntlncntal and ACC seek IndemnMcation and reimbursement ofthe $3.725 million they spent to settle the Bartlett action. Plaintm claims that - cross-motion for summary judgment must be granted h because ( i ) New York law requirea unlimited coverage for "Item 3.A. States" and the plaln language of the Twin City Policy, specfficaliythe, operation of paragraphs A.2. or A.4 of - "Part Three Other States Insurance," rsquires Twin City to treat New York as an Item 3A. State. It further argues that because Heatley satisfied ita obligation under l h palicy of notifying Twin City that it was worklng In New York, tt thereby triggered unlimited liability -P w 3 of 14 - [* 5] coverage under t e Worker s Compensatlon Laws. h Twin City claims that the expreas provisions of the policy limn liability to $100,000 and that such limb apply regardless of whether New York Is a 3.C. State andlor bated as a 3.A State under the policy. Twln Clty ab0 daim8 that it never received notice that Heatley w m working in New York, but even if It did, unlimited coverage would not be triggered in the absence of a renegotiated premium fora New York endorsement providing vastiy increased coverage over the original policy. Twin Clty issued a Workers Compensation and Employers Llablllty pollcy to Heatley under policy number 02WECG00502, effective October 26,2001 to October 26, 2002. The Informationpage, form WCOOOOOl Aofthe policy,sets forth the named insured, Heatley, and its mailing addresa, at 42 Thacher S r e ,Affleboro, Massachusetts 02703. tet Item 2 states the policy period, October 28,2001 to Odober 26, 2002. The Information Page, item 3, dates the following regarding the avallable coverages: 3. k Worken Compemtion Insumncs: Part One ofthe poltcy appliee to the Workers Compensation Law o the f states listed here: MA B. Employmm Llablllty Insurance: Part Two of the pollcy a p p l h to work In each state listed In Item 3A. The limits of our liability under Part Two are: E d l l y InJuryby Accldsnt $100,000 each accident Bodlly Injury by Direaso $500,000 policy limit Bodily InJuryby Dkeaso $100,000 each employee C. Other S a e Insuran-: Part Three of the policy applies tt to the states, if any, listed here: It is acknowledged that the likelihood af this dispute arising in Mure cases has been largely ameliorated by the passage of Workers Cornpensatlon Law 5 50(2) which now requires that out of state employers operating In New York State to maintain Workers Compensation Insurance through a pollcy issued under the law of this state. [* 6] ALL STATES EXCEPT ND, OH, WA, WV, W, AND STATES DESIGNATED IN ITEM 3 A OF THE INFORMATION PAGE. The Workers' Compensation and Employers' Llabllky lnsuranca Pollcy Fonn, WCOOOOOOA, states in the GENERAL SECTION, A. the Policy, as follows: Tho only agreements relating to thls insurance are stated in this pollcy. The terms of this pollcy may not be changed or wahmd except by endorsement issued by us to be part of this policy. PART ONE - WORKERS' COMPENSATION INSURANCE provldes coverage for cornpenaatlon clalms made by employees of the Insured. PART TWO - EMPLOYERS LIABILITY INSURANCE typically applies to third-party claims brought against the insured as a thirdparty defemdant in actions originally commenced by the insured's employees for common law contrlbution/lndmniflmtlonclalma. Sactian A.2. states that this coverage I provided for employment 'neC68s&ry or s incidental to your work in a state... listed in item 3.A. of the Informathn Page.* As previously mentioned, the limb for this coverage are listed on the information Page 3.B. as $100,000 each accident. Sectlon G. of PART TWO entttled "Limits of Liability" underscoresthis: G.Urnher of Liability Our liability to pay for damaged is limited. O t limits of u liablllty are shown In Item 3.B. of the information Page -They apply a8 explained bebw. I b d i l y InJuryby Accldsnt. The limit shown for'bodily injury . by accident - each accident" is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accldant. *** 3. We will not pay any dalms for damages afterwe have paid the applicable lirntt of our llrrbllky under this insurance. [* 7] PART THREE - OTHER STATES INSURANCE S h N S that A How Thb Insurance Applies 1. This other state lnauranca applies only If one of more states are shown In Item #.C. of the lnformatlon Page. 2. If you begin work in any one of those states after the effective date of thb pollcy and are not insured or selfInsuredfor such work, all provlslons of the policywlll apply as though that state warn listed in Item 3A. of the Informattion Page. 4. If you have worlQed] on the effective date of this policy in any state not lieted in Item 3.A. of the Information Page, coverage will not be afforded for that state unl- we am notifled wlthln thlrty days. B. Notice Tell us at onm If you begin work in any state llsted In Item 3.C.of the Information Page. The policy concludeswlth several Masaachusettsendorsements. No endorsements state listed on the Information Page are induded In the for New York or any other 3.C. pollcy. "The proponent of a summary Judgmentmotion muat make a prima fa& showing of antltlmnt to judgment as a matter of law, tendering sufficient evidenceto eliminate any material issue8 of fact from the case. m e r m a n v. Citv of New Yo& ,4Q N.Y.2d 567,582 (1st Dept. 1980); m d v. New York Unlv. M d . Ctr, , 64 N.Y.2d 851, 853 (1985). Only when the proponent of the motion rnakss a prlma fa& showing af entitlement to summaryjudgment does the burden then shift to the party opposlng the motlon who muet [* 8] then demonstrate, by admbible evHence, the existence of a factual Issue requiringa Mal of the action. m n v. City of New YON supra at 562. When an issue of law is , raised in connection with a motion for summary judgment, the court may and should mohre itwithoutthe need fora tsstimonialhearing. &: Jiinda8v. Weish, 303 A.D.2d 459 (2nd k p t . 2003). Interpretationof contracts usually presents an issue of law for the court to resolve. Iw,w.W. Assoc. v Glancontlarl n N.Y.2d 157, 162 (1990). The court first addresses the parties disagreement regarding what deposition hs transcripts can be conaklered on t l m o t h Defendant s argurnenta, that plaintiffa may not rdy on either defendant s witness, Patricia Kenny s unslgned deposition transcript, or that of Thomas Heathy, I connection with these motions for summary judgment, is n rejected. Thomas Heathy s depmklon transcript w s sent to him for dgnature on April 29, 2011. He did not respond and, therefore, hls deposition b deemed executed pursuant to CPLR Q 31 16. w a r 1 v. Cltv of New Yo* ,242 A.D.2d 15 (1st Dept. 1998). Patricia Kenny did sign her deposition, but she used her errata sheet to substantively change some of the prlor testimony she gave under oath. Beatuse theae substantive changes were unacwmpanied by any explanation, let alone a speclflc explanation, they am of no legal effect. J3iiav v. ISS In l -a SaWlce System, 284 AD.2d 320 (2nd Dept. 2001). Thus, plaintiffs are f to rely on the testimony as sctually m given at t e examlnatlan before trial In connection wkh these motlons. h . - in C@ s bponm- Pollcy -Page7of14- [* 9] The primary dispute between the parties In thh a d o n I whether Twin Cky i6 only s required to-pay $100,000 toward the Bartlett settlement, In accordance with the stated pollcy limits, or It Is required to pay the full sattlmlent amount, of $3.825 mllllon, canskitent with New York State mandates that them be no limit on liabilrty for employees subject to the New York State Worker's Compensation Law. See:Presatvar Ins, Ca.v. Rvba, 10 N.Y.3d 635 (2008), The New York Manual for Workers' Compensation and Employer's LiabilityInsurance (2008);=Oe &n- I Ina, CO ., 203A.D.2d 825 (3rd Dept. 1990); CO" 372 Fed.Appx. 107,111 (26 Cir. 2010). The crux of plalntffk' argument Is that if New York Is etther listed i Itern 3.A of the n polky, or should be listed in Item 3A. of the pollcy, either by operation of paragraphsA.2. orA4. of part Three of the pollcy, then the Stated policy limits of Item 3.8. do not appty (see: Plaintiffs' Memorandum of Law, p. 10). For the reasons set forth below, the court rejeds this argument. As a general mattsr, 'Workers' Campensatlon polides am no more than contracts, and a8 such am governed by the ordinary rules of contractual construction." 'mof the State Ins. Fund. v. PhotoclrcuttsGorp,, 20 A.D.3d 173 (1st Dept. 2005). The language of an insurance policy will be given Is plain meaning. t Co I 105 A.D.2d 723,724 (2nd Dept 1984);yV& A Ponds. Inc. v. Hartford I s n, $8Ih Strsst ASsoc. v, G r e J j , Y , M b Co., 250 A.D.2d 108,112 (1st Dept, 1998); CaDorlno v. T . U W Ina.Co., 62 N.Y.2d 234,239(1984). Under the express language of the pollcy, a 3A. State I subject to the 3.6. s Ilabiltty [* 10] limitations of $100,000. New York is clearly a 3.C. State. Under certain circumstances New York ia h a t e d as a 3.A. State. Evan if New York is treated as a 3A. State, as plalntlfh contend, the exprass policy language stlll Ilmb the liability t $100,000. o PlalntHTs' further argument, that I New York is a 3.A. State, then the express policy f limitationsmust be disregarded in favor of the NewYork Workers GompensatlonLaw, was expressly rejected by the Court of Appaals in , supra. The lnaurance policy considered In P m r v e r Ins, Cop . Rvba was virtually identical Y with the policy language at issue in this mse. Uke thla msa,Pmwrver Ins. Co,Y. involved a pollcy undelwritten and dellvered In a State other than New York In both -wet In$. Co, v, Rvba and this cas8 New Yak was a 3.C. State with the right, upon meeting certain conditions, to beccrme a 3.A. State. Like this case, preserver Ins. Co. v, involved an addent occurring while an employee was performingwork I New York n State, whlch resulted in a grave Injury to the employee. Tha Court of Appeals framed the dispute and resoluffon of Preserver Ins. Co, v. Rvba as follows: At the heart of this dlsputa between two lnsurers--in a case where a constructionworker allegedlysuffered a gmveJobslte injury-is the quastjon whether the employers' liablltty insurance coverage Is llrnlted to $100,000, as specified in the policy, or unlImlted. In this case we conclude that tt Is Ilmited. Preserver Ins. Co.v. Ryba, M. at 638. I deciding the Issue, the court made the following analysls: n Despite this clear limitation on coverage, Northern asks ua t o construe this contract to require Preserverto provideunllmlted mployars' llabllrty coverage as If the poky were underwritten In New York, where the New York Manual requjras that [* 11] insurance policies provide unllmitd employers' liability coverage. Northern's argument rests first on the fact that New York is included a8 an [tern 3.C.atate, and second on the prov'wion of 'Part T h m b h e r States Insurance' that if work w s in a 3.C. atate "all provisions of the policy will apply as i n though that state ware liStbd in Item 3A. of the lnformatlon Page." In short, amrdlng to Northern, baing listed as a 3.C. state Is the same as being llsted as a 3.A. state, and East Coast Is entltled to coverage as If the policy ware underwritten in NewYork.This argument misapprehendsthe plain language o the pollcy as well as the Manual. f inchding New York a3 "a 3.C. state" means what the policy says It means: that If an acddant occurs In such a state, all provisions of the policy will apply. This includes the stated limitation of coverage for employers' liablllty insurance to $100,000 per accident. Nothing in the policy suggest8 that thls cap evaporates when an accident occurs in a 3.C. state. Nor, significantly, does Part Two provid-s Part One does4hat employers' liabilrty insurance will conform to the workers' componsatlon laws of the state where the injuryomrs. This wndusion is fortified by Part Two's "Exclusions,"stating that this portion of the policy does not mver "any obligation imposed by a workers compensatlon . . . or any slmllar law." Plainly, nothing in the insurance contract supports Northern'sargument fbr unlimited ilabiiity. Pretwrver Ins. CQ.v. Rvb4, id. at 642443. The same analysis applies hem; even if New York is a 3.C. State that should be treated as though It were a 3.A. State, the express financial liability limits of the policy PlaintHTs attempt to distinguishPI.ls8rrtvar Ins. Cn v. Rvba by arguing becauseTwin City was "on notice" of work h l n g performed in New York, a different m u i t should enwe. In making this argument, plaintma rety on certain oblterdlcta In Preswer ImCco,v. m . a that there was no New York endoraement in the policy at issue there because the insurer [* 12] was never informed that work was being performed in New Yo&. The precise language is as follows: The Preserver policy lacks any New York endorsements, preckly becausa New York is an Item 3.C. state. Here, even If Preserver Is bound by the New York Manual, its emplayem' liabllity Insurance for Ryba'a injury should be capped at $100,000 because Prosawor was not infotrnedthat East Coast was opeiratlng in New Yo&. That being 80, Pmewer was not required to move New York from a 3.C. state to a 3A. state, and not required to add an endorsement provMing unlimited employers' llabllity insurance for Injuria in New Yo& Preserver Ins. Co. v. Rvba, id. at 844-846. This language in the decision does not support plaintiffs arguments. Pmarttver !na, Co, v, Rvbg doe8 not hold that notlce alone would automatidy trigger unllmltd iiabliky coverage under the pollcy. As Twln City points out, once they are notified that different covemgs is rsquired, wkh increased potentlai ilablilty, they would have the right to negotiate premiums for any New York endorsement that wouM be required. This is a matter of bask contmct law and common sense. Even if notice alone would trigger increased obligations on the part of the insurer under the pollcy, the "notice" claimed in this case did not rim to that level. There is no avldence presented that Heatley notwed Twin City that it would be working in New York State. That condusion is reached even considering Thomaa Haatlsy'a depositionas part of the m r d on this summary judgment motion. That conclusion Is reached even mnsMering that Carey, Richmond & Viking Insurance (WW) Is Twln C ¬ty'sagent and that notice to CRV is notlce to Twin Crty. Thomas Heatley telling Twin Ctty's agent, CRV, that It would be doing jobs all over -Pagelld14- [* 13] New England in 1994 (7 years before the accident) is insufficient notice, because New York is not part o New England. Heatley asklng CRV whether hb coverage was national f In 1998 (3 years before the addent) does not Identify any actual work that will take place in New York State. Thomas Heatley's statement that he believed that CRV "knew" about the 'possibllky" of work In Nsw York I not even admissible evidence, because Mr. Heatley s cannot testrfy about what was in someone else's mind. In any event, when asked polnt blank at this depositionwhether he informed Twin City that he was warklng in New York, Mr. Heatley sald no. Thue, the only claim that Twin CRy "knew*about the work performed In NOW York occurred only In the context o telling it about BartleWs accident, after It had already f occurred. That could not have been what the perbies masanably Intended by the requirement of notice in Part three, B of the policy which provldes "Notice: Tell us at once iF you begfn work in any state listed in Item 3.C. of the lnformatlon Page." Notice of the accklent did not inform Twin City that Haatley was doing work in New York or seeking a New York endorawnent for all of Heatley's New York wrk. It was simply notice of a particular acddent that occurred in New York. part 130 S a n d o w Defendant also moves for sanctions agalnst plaintk for even having brought this action. It claims that Prmawer Ins. C0. v. R v b b diapositiveof the Issues and, therefore, ~ thls action is frivolous. Pursuant to 22 NYCRR 5130-1, sanctlons can be imposed when conduct complalned of is "frlvolou8." The R u b deff ne canduct as ~ o l o u if, s Conduct is frivolous within the meanlng of Part 130 If: - Pagb 12 Of 14 - [* 14] ( it is completely without merit in law and cannot be I ) supported by a reasonable argument for an extension, modification or ravtrsal of exlstlng law; (2) it is undertaken primarily to delay or prolong the rwsolution of the litigation, or to harass or maliciously InJureanother; or (3) it asserts material factual atatemerita that am false. The declslonto impose or not impose sanctions lieswlthlnthe court's sole diswetlon & Robhson v, Shoe-, 278 A.D.2d 335 (1st Dept. 2000). In deciding whether they are to be Imposed, "thecourt ehall consider, among other Issues the circumstances under which thb conduct took place, indudingthe tlme avallable for lnvestlgatlngthe legal or factual basis o the, conduct, and whether or not the conduct was continuedwhen it8 lack f of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party" (Uniform Rules of Trial Court Part 130.1-1 et seq). The court denies the motion for sanctions because the conduct oomplalnbd of was not frkroloua within the meaning of the court rule. The fact that a party dos not uttjmately prevail in an action does not necassarily mean that the adon was frivolous. G n l o b u b, A.D.3d 829 (2nd Dept. 2011). 80 At bar, the plaintiffs seek to claim that they fall within an exceptlon to Praeic4Tyw Ins. C o , m . While the court does notagmewlth lhair positlon, it is not a sanctionable event. CONCCuslOy In accordance with the foregoing, It Is hereby: ORDERED that the plainttfh', Transcontinental Insurance Company, American Casualty Company of Reading, PA, International Storage Syetems, Inc. and Haatlay Installations, Inc., motion for summary Judgment, agalnst defendant, Twin City -P m 13 d 14 - FIre [* 15] Insurance Company, I denied; and it is further s ORDERED that defendant, Twin Crty Fire Insurance Company s, cross-motionfar summaryjudgment dismissing plaintiffs ,Transeantlnental I nsumnceCompany,American Casualty Company of Reading, PA, tntemational Storage Systems, Inc. and Heatley Installations, Inc., complaint, Is grantd; and It is further ORDERED, DECLARED AND ADJUDGED that the plaintiffs , Transcontinental Insurance Company, American Casualty Company of Reading, PA, International Storage Systems, Inc. and Heatley Installations, Inc., complaint is hereby dismi88ed; and It is further ORDERED, DECLAREDAND ADJUDOED that defendant, Twin City Fire Insurance Company, is only obligated pumuant to the berms of policy number 02WECG00502 to pay One Hundred Thousand Dollars ($lOO,OOO), for the accldent InvoMng Mark Bartbtt occurring on Novemhr 12,2001; and i t further ORDERED the defendant, Twln Clty Firs Insurance Company s, crossmotion for mnctlons Is denled; and It further ORDERED that any requested relief not otheMllse expressly granted herein is d m e d daniad; and it is further ORDERED that thla constitutes the declslon and order of the court. Dated: New York, NY February 7,2012 So Ordered:

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