200 Fifth Ave. Owner, LLC v New Hampshire Ins. Co.
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200 Fifth Ave. Owner, LLC v New Hampshire Ins. Co. 2012 NY Slip Op 31526(U) June 5, 2012 Supreme Court, New York County Docket Number: 104141/2011 Judge: Louis B. York 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. [* 1] SCANNED ON 611112012 SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PART 0 INDEX NO. Index Number: 104141/2011 200 FIFTH AVENUE OWNER, LLC MOTION DATE VS . NEW HAMPSHIRE INSURANCE SEQUENCE NUMBER : 001 MOTION SEQ. NO. SUMMARY JUDGMENT MOTION CAL. NO. The followlng papars, numbered 1 to were read on this motion to/for PAPER5 NUMBERED Notice of Motion/ Order to Show Cause Answering Affldavits - Affidavits - Exhibits ... - Exhibits Rnplylng Affidavits C ross-Motion: Yes [73 No Upon the foregoing papera, it is ordered that this motion I UNFILED JUDGMENT This judgment has not been entered by t County Clerk h and notice of entry cannot be 4erved basd hereon. To obtain entry, counsel or authorized representative must appear in person at the Judgment Clerk s Desk (Rmm 141B). )$ r] NON%!R Check one: FINAL DISPOSITION Check if appropriate: DO NOT POST a [I SUBMIT ORDER/J UDG. I hb6SyflDN REFE~ENCE n SETTLE ORDER /JUDG. [* 2] Plaintiffs, Index N o . : 104L41/11 -aqains t DECI,$ION NEW JUMPSHIRE INSURANCE COMPANY, Defendant i n s u r e r moves, pursuant to CPLR 3 2 1 2 , f o r an order: (1) declaring that plaintiff 200 F i f t h Avenue Owner, LLC (200 Fifth) does not qualify as an additional insured under defendant s policy; (2) declaring t h a t defendant s policy is a t r u e excess policy that will only be triggered upon the exhaustion of plaintiff Structure Tone, Inc. s (Structure Tone) primary policy issued by nonparty AIG; ( 3 ) and declaring that defendant has no duty to defend os indemnify plaintiffs in the u n d e r l y i n g personal injury action which was settled f o r $1.7 million, which is within the limits of the policy issued by A I G . Plaintiffs cross-move, pursuant to CPLR 3212, f o r an order: (1) declaring that 200 Fifth and Structure Tone a r e additional insureds under defendant s policy; (2) declaring that defendant [* 3] is to provide coverage after t h e Interstate Insurance Company (Interstate) policy and before the AIG policy; and ( 3 ) declaring that.defendant is to defend and indemnify plaintiffs in t h e underlying personal injury action. BACKGROUND The underlying personal injury action was commenced by Matthew Webber (Webber) on August 25, 2008, for an accident that occurred on July 28, 2008 at a construction site owned by 200 Fifth. Webber was employed at the time by Empire City Iron Works (Empire City), and w a s moving and erecting steel at the site when the incident took p l a c e . Webber fell off a scaffold, thereby sustaining serious spinal injuries. His action named 200 Fifth and Structure Tone as co-defendants. On the date of the accident, Structure Tone was insured by A I G under a general commercial liability insurance policy, with a $ 2 million limit per occurrence. Empire City was insured under a primary general commercial liability insurance policy issued by Interstate, with limits of $1 million per occurrence, and under an umbrella insurance policy issued by defendant, with limits of $5 million per occurrence. In response to AIG s tender letter dated September 19, 2008, Interstate disclaimed coverage in l e t t e r s dated October 16 and -2- [* 4] October Ex, 2008 to Empire City and AIG respectively. Motion, C. On January 13, 2009, 200 Fifth and Structure Tone commenced a third-party action in the underlying lawsuit against Empire City, asserting contractual indemnity claims. Motion, E x . D. Thereafter, 2 0 0 Fifth and Structure Tone commenced the instant declaratory judgment action agaimt defendant, seeking a declaration that they are additional insureds under defendant's policy, entitling them to defense and indemnification in the underlying personal injury action. The underlying personal injury action was settled by 2 0 0 policy, 200 Fifth does not qualify as an additional insured, because Empire City, defendant's named insured, did not enter into any written.agreement with 200 Fifth requiring Empire City over when the primary insurer disclaims coverage based on a late notice, and, in addition, that ita policy would not come into play until the $ 2 million AIG limitation has been exhausted, -3- [* 5] Empire City's general commercial liability insurance policy with Interstate defines "additional i n s u r e d s " as: Any person or organization for w h o m you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Defendant's umbrella policy issued to Empire City defines Ilinsuredl' to include any person or organization included in the Interstate policy as an additional insured. Motion, Ex. H. Pursuant to the "Other Insurancell provision of defendant's policy, defendant agreed to the following: If other valid and collectible insurance applies to a loss that is a l s o covered by this policy, this policy will apply excess of the other insurance. However, this provision will not apply if the other insurance is specifically written to be excess of this policy. In its "Limits of Insurancell section, defendant's policy states, in pertinent p a r t : D. If the applicable Limite of insurance of the policies listed on t h e Schedule of Underlying Insurance or of other insurance providing coverage to the Insured are reduced or exhausted by payment of one or more claims that would be insured by your policy, we will: 1. In the event of reduction, pay in excess of t h e reduced underlying Limits of insurance; or 2 . In t h e event of exhaustion of the underlying -4- [* 6] Limits of insurance, continue in force as underlying insurance. E. Retained Limit We w i l l be liable only for t h a t portion of damages in excess of the Insured's Retained Limit which is defined as the greater of either: 1. The total of the applicable limits of t h e underlying policies listed in the Schedule of Underlying Insurance and the applicable Limits of any other underlying insurance providing coverage to the insured; or 2 . The amount stated in the Declarations as S e l f Insured Retention as a result of any one Occurrence not covered by the underlying policies listed in the Schedule of Underlying Insurance nor by any other underlying insurance providing coverage to t h e Insured; and t h e n up to an amount not: exceeding the Each Occurrence Limit as stated in the Declaration6. According to the provisions of the AIG policy issued to Structure Tone, the "Other Insurance" provision states: The insurance is excess over any of the other insurance whether primary, excess, contingent or on any other basis: (1) Unless such insurance is specifically purchased as excess of this policy, or (2) You are obligated by contract to provide primary insurance. On October 29, 1993, Empire City entered into a written agreement w i t h Structure Tone wherein Empire C i t y was obligated to purchase $4 million in general commercial liability insurance and to name Structure Tone as an additional insured on such policy. This agreement did not r e q u i r e Empire City to name 200 Fifth as an additional insured. The purchase orders between -5- [* 7] Structure Tone and Ernpire City for the j o b site that was the subject of the underlying personal i n j u r y action require Empire City to name Structure Tone as an additional insured under its insurance policies. It is defendant's contention that Empire City entered i n t o two written agreements relating to the instant matter: the first agreement, entered into with Structure Tone in 1993, obligated Empire City to procure $4 million in insurance and name Structure Tone as an additional insured; and the second, the purchase orders for the work relating to the underlying personal injury action, also only required Structure Tone to be named as an additional insured. According to defendant, there is no written agreement between Empire C i t y and 200 Fifth requiring that 200 Fifth be named as an additional insured under E m p i r e City's policies. Hence, since Empire City was never obligated to, nor did, name 200 Fifth as an additional insured, defendant is not obligated to defend or indemnify 200 Fifth. With respect to Structure Tone, defendant asserts that, as a p u r e excess insurance policy, it does not "drop down" to become the primary policy where t h e primary insurer disclaims coverage. Defendant claims that it is a true excess policy, which does not come into play until and unless the primary policy is exhausted. -6- [* 8] In opposition to the instant motion, and in support of their cross motionI1200F i f t h and Structure Tone argue that, pursuant to its contract with Structure Tone, Empire City is: bound to Structure Tone for the performance of t h e Work in the same manner as Structure Tone is bound to the Owner [ 2 0 0 Fifth] under Structure Tone's contract with the Owner. As a consequence, 200 Fifth maintains t h a t it is an In addition, 200 F i f t h and Structure Tone claim that the AIG policy is excess over the Interstate and defendant's policies, based on the language of the AIG policy quoted above. Therefore, even though A I G disclaimed coverage, its coverage was excess coverage and defendant's policy takes over. Plaintiffs argue, with respect to the p r i o r i t y of coverage, that the AIG p o l i c y s t a t e s that i t is excess coverage over any o t h e r policy issued for t h e same event, unless such other policy is specifically stated to be excess over AIG's policy. It is plaintiffs' position that the clause in defendant's policy is, pursuant to Endorsement 4 of defendant's p o l i c y , a follow-form insurance, providing coverage after Interstate but before AIG. '200 Fifth and Structure Tone have submitted two documents, one in opposition to defendant's motion and one in support of their cross motion; however, the arguments appearing in these documents are virtually the same, and the court will discuss them collectively. -7- [* 9] Endorsement 4 of defendant s policy states: PERSONAL INJURY FOLLOW-FORM ENDORSEMENT This insurance does not apply to Personal Injury. However, if insurance for such personal injury is provided by a policy listed in the Schedule of Underlying Insurance: 3 . This exclusion shall not apply; and 4. The insurance provided by our policy will not be broader than the insurance coverage provided by t h e policy listed in the Schedule of Underlying Insurance. All other terms and conditions of this policy remain unchanged. Interstate is listed as an underlying insurance policy. The court notes that the AIG policy was written on March 26, 2008, the AIG policy on July 1, 2008, and defendant s policy, entitled an excess umbrella policy, on July 22, 2008. Plaintiffs further maintain that defendant s policy states that, if the underlying insurance policy limits are exhausted, it will remain in force as underlying insurance. To plaintiffs, this indicates that defendant s policy must pay before AIG s policy pays. In opposition and reply, defendant claims that 200 Fifth and Structure Tone s argument that 200 Fifth is an additional insured, based on the above-quoted section of the contract between Empire City and Structure Tone, disregards the provisions of defendant s policy, quoted above, that requires that an -8- [* 10] additional insured be a person or entity with whom Empire city has agreed, in writing in a contract, to be included as an additional insured. It is defendant s contention that a general clause mandating that Empire City perform work in a similar manner to that required by Structure Tone under i t s agreement with 200 Fifth is not: a written agreement that specifies that 2 0 0 F i f t h be named an additional insured. Further, defendant policy requires that Empire City make such written commitment: to the putative additional insured; in the instant case, no such agreement exists between Empire City and 200 Fifth. Defendant a l s o claims chat, contrary to the opposition argument, the clear language of the A I G policy, quoted above, states that it is not excess insurance coverage if another policy was specifically acquired as excess coverage. As previously noted, defendant s policy was issued after AIG s policy. According to defendant, the clear terms of its policy state that 1 L 1s excess umbrella coverage, thereby making the A I G policy the primary policy. Furthermore, the fact that the premium for i t s policy is relatively small ($28,300.00 for $5 million i n coverage), provides further evidence that it is an excess insurance policy. DISCUSSION -9- [* 11] "The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case [internal quotation marks and citation omitted] . ' I ( I s t Dept 2006). S a n t i a g o v F i l s t e i n , 35 AD3d 184, 185-186 The burden then shifts to the motion's opponent to "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v Metropolitan Museum of A r t , 27 AD3d 227, 228 (1" Dept 2 0 0 6 ) ; C i t y of N e w York, 49 NY2d 5 5 7 , see Zuckerman v 562 (1980). If there is any doubt as to the existence of a triable fact, t h e motion for summary judgment must be denied. See Rotuba Extruders, Inc. v Ceppos, 4 6 NY2d 223, 231 (1978). Defendant's motion'is granted and plaintiffs' c r o s s motion is denied. 200 Fifth is not an ladditional insured" under defendant's policy. By the plain terms of the policies issued, [ 2 0 0 Fifth] is not an additional insured because [Empire City] had no written contracts with [ Z O O Fifth]. Moreover, even if [ 2 0 0 Fifth] w e r e found to be a third-party beneficiary of [Structure Tone's contract with Empire City], t h a t would simply mean that [ Z O O Fifth] has standing to sue [Structure Tone and Empire City] for breach of the -10- [* 12] citation omitted]. Linarello v C i t y University of N e w York, 6 AD3d 192, 195 (Imt Tone and 200 Fifth. Plaintiffs' argument is that the contract between Empire City and Structure Tone incorporates by reference the contract between 200 Fifth and Structure Tone, thereby rendering Empire City liable under that contract. However, the contract between Empire City and Structure Tone only obligates Empire City to the provisions of the 200 Fifth/Structure Tone contract dealing with the standards of Work, not the insurance coverage provisions, Moreover, defendant's policy requires a written contract between Empire City, its named insured, and t h e entity claiming additional insured status, which does not exist in the case at -1 1- [* 13] 272 [ l EDept 2 0 0 8 1 ) , t is distinguishable from the instant matter. incorporated by reference into the insurance policy, which is not person or entity that is required to be so named in a covered As a consequence of t h e foregoing, the court concludes that 200 Fifth is not an additional insured under defendant's policy with Empire' City and, therefore, is not entitled to t h e relief t h a t it seeks. indemnify Structure Tone, because its policy is excess over the exhausted. defendant's policy " d r o p s down" to become primary coverage -12- [* 14] Courts have consistently held that an excess insurance policy's coverage will not drop down just because t h e primary insurer becomes insolvent. Ambassador A s s o c i a t e s v Corcoran, 168 AD2d 281 ( l a t Dept 1990), affd 79 NY2d 871 (1992); Zurich-American Insurance Company v Mead R e i n s u r a n c e Corp. , 161 AD2d 403 ( l EDept 1990), In other words, simply because t h e t primary insurer is unable to pay does not automatically trigger the excess insurerls obligations. I n t h e case at b a r , the limits of coverage under the terms of the primary insurance policy were not reached; the limits were $ 2 million and t h e underlying personal injury action settled for $1.75 million. Since defendant's policy is excess to the primary policy, and those limits must be exhausted before defendant is required t o contribute under the terms of its policy, plaintiffs' "drop down" argument is unavailing. Virginia S u r e t y Company, Village of Brewster v 7 0 AD3d 1239 (3d Dept 2010); see a l s o Federal I n s u r a n c e Company v Estate of G o u l d , 2011 WL 4552381, 2011 US Diat L E X I S 114000 (SD NY 2011). The court is also unpersuaded by plaintiffs' arguments regarding defendant's follow-form endorsement. An excess policy may be written in two forms: as a stand-alone policy or as a policy that 'follows form' -13- [* 15] 23 . . . [A] follows form excess policy incorporatee by reference t h e terms of the underlying policy and is designed to match the coverage provided by the underlying policy. In the event of a conflict in terms between a following form excess policy and primary policy, the terms of a following form excess policy control to the extent that the coverage is invoked. Following form excess policiea also commonly contain unique provisions that the underlying primary policy does not contain, such as additional exclusions or additional coverage. 145 Holmes Appleman on Insurance 2d ed ยง 145.1 ( 2 0 0 8 ) . A n insurance policy is a contract between the insurer and the i n s u r e d . Thus, t h e extent of coverage (including a given policy s priority vis-a- vis other policies) is controlled by the relevant policy terms, not by the terms of the underlying trade contract that required the named insured to purchase coverage. As the Court of Appeals has stated, New York law recognize[sl the right of each insurer to rely upon the terms of its own contract with its insured . Bovis Lend L e a s e LMB, Inc. v G r e a t American Insurance Company, 53 AD3d 140, 145 ( l BDept 2008). t In the present case, defendant s follow form provision states that it will only apply to claims based on personal injuries if the underlying policy, in this case, the Interstate policy, provides for such coverage, b u t that defendant s coverage will be no broader than that of the underlying policy. In no way a primary insurer or that its coverage comes into play prior to -14- [* 16] has a follow form provision prevails over the terms of the policy whose form it follows. Furthermore, [aln umbrella insurance policy provides t h e insured with 'final tier . . . coverage at a premium reduced to reflect the lesser risk to the insurer.' '[U]&rella coverages . . . are regarded as t r u e excess over and above any type of primary coverage, excess provisions arising in regular policies in any manner, or escape clauses' [internal citations omitted] . Bovis Lend L e a s e LMB, Inc. v Great American Insurance Company, 53 AD3d at 148. policy, based on i t a provisions and minimal premiums, is a true final tier policy whose obligations will not come into play until t h e other policies' coverage has been exhausted. r * CONCLUSION + .. * -* ' C " Based on the foregoing, it is hereby ORDERED that defendant's motion is granted; and it is further ADJUDGED and DECLARED that plaintiff 200 Fifth Avenue Owner, LLC does not qualify as an additional insured under defendant's policy; and it is further ADJUDGED and DECLARED that defendant's policy is a true -15- [* 17] excess policy that will o n l y be triggered upon the exhaustion of plaintiff Structure Tone, Inc.'s primary policy issued by AIG; and i t i s f u r t h e r ADJUDGED and DECLARED t h a t d e f e n d a n t has no d u t y t o defend or indemnify plaintiffs in t h e underlying personal i n j u r y action; and it is further ORDERED that plaintiffs' Dated: G CTOSB motion is denied. slw ENTER : Louis B. York, J.S.C. UNFILED JUDGMENT Thls iudamnt has not basn entered by t h County Clerk and A o t b of entry cannot be s a w d booad hereon. To obtain entry, counssl or authorizsd representative must appear in person at the Judgment Clerk's Desk (Room 1418). -16-
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