U.S. Underwriters Ins. v New Realty Realty

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U.S. Underwriters Ins. v New Realty Realty 2012 NY Slip Op 32614(U) October 11, 2012 Sup Ct, New York County Docket Number: 116410/2009 Judge: Doris Ling-Cohan 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] SCANNEDON 1011612012 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: Jus= cIoR3$ UNG-COtfkN PART 3 Justice Index Number : 116410/2009 U.S. UNDERWRITERS INSURANCE vs. NEW REALTY REALTY SEQUENCE NUMBER : 004 INDEX NO. MOTION DATE MOTION SEQ. NO. SUMMARY JUDGMENT The following papers, numbered Ito ,were read on this motion to/for Notice of MotionlOrder to Show Cause -Affidavits Answering Affidavits - Exhibits - Exhibits . d u r v r , n - u ? ~ ,v Au d q P &4& FpL,&d %o(s). ;" 1 2 . < 3 )No(s). I No@). 4 Replying Affidavits ILED oc'b 1 6 2012 Dated: 4 NEW YORK COUNTY CLERK'S OFFICE -I/".' _> - US^^^^ T qWS EJ*.;. P .............................................................. ".,,.. 0DENIED 2. CHECK AS APPROPRIATE: .......................... ...MOTION ClGRANTED IS: 3, CHECK IF APPROPRIATE: ................................................ 0SETTLE ORDER 1. CHECK ONE: DO NOT POST ........... ...... .+*-- ,J.S.C. ~ ~ NON-FINAL DISPOSITION 0GRANTED IN PART 0OTHER SUBMIT ORDER 0FIDUCIARY APPOINTMENT nREFERENCE [* 2] Motion Seq. N : 004 & 005 Plaintiff Index No. 1 16410/09 -against- NEW REAI.'I'Y REALTY COIIP., GLOBE FIRE SPRINKLER CORPORATION, THE PETZVEL CORPORATION and BUCKMILLER AUTOMATIC SPRINKLER CORP., NEW YORK COUNTY CLERK'S OFFICE Third-Party Plaintiff, Index No. 5901 19/10 -againstTl E I)E7'ZVGI, CORPORATION and BUCKMII,I,EII AUTOMATIC SPRINKLER COW., DORIS LING-COHAN, J.: Motion scquence numbers 004 and 005 are consolidated for disposition. The defendants The Petzvel Corporation (Petzvcl) and Buckmillcr Automatic Sprinkler Corp. (Ruckrnillcr) move, pursuant to CPLR 3212, for an order granting summary judgment dismissing both thc plaintiffs, and the third-party plaintiffs complaints (motion sequencc number 004). The defendant, and the third-party plaintiff New Realty Realty Corp. (New Realty) moves, pursuant to CPLR 3212, for an order dismissing the complaint and cross claims (motion sequence 005). Thc p1aintiffU.S. IJnderwriters Insurance Company (1J.S. Underwriters) cross- 1 [* 3] moves, pursuant to CPLR 3 126, for an order striking the answers of the defendants New Realty, Petzvel, and Buckmiller. This is a subrogation action by U S . Underwriters, thc insurer of a tenant, Tibet Carpet Inc. ( l ibct), which suffered water damagc to its rugs stored in the basement of 34 Howard Street, Manhattan. The source of the watcr leak allegedly was a feeder pipe, or coupling between the water main, and the fire suppression system. Pursuant to a written lease, Tibet was a commercial tenant, and the defendant New Realty was the landlord of the premises. Pctzvel contracted with New Realty to perform statutorily rcquired visual monthly inspections of the fire suppression system. Huckmiller, a fire sprinklcr business, merely sent numerous letters to New Realty warning of the defective piping, and offering to repair same. Petzvel argues that the broken pipe or coupling between the water main and the fire suppression system was not a part of the fire suppression system that Petzvel was contracted to inspect. Buckrriiller argues that it was undcr no duty to maintain or repair the faulty pipe. New Realty argues that the p1aintiffU.S. Underwriter s action is barred by a valid waiver of subrogation provision in the lease agreement. U.S. Underwriters argues that the defendants spoliated evidence in that the pipe that failed is missing, and the papcr maintenance records, soaked in the flood, should have been dried out, rather than discarded. U.S. Underwriters also argues that thc submitted insurance policy is uncertified, and does not contain a waiver of subrogation. The proponent of a summary judgment motion must niakc a prima facie showing of entitlement to judgment as a rnattcr of law, tendering sufficient cvidcncc to eliminate any material issue of fact from the case (Smalls vA./IIndus., Inc., 10 NY3d 733, 735 [2008]; Sillman v Twentieth Century-Fox Film Coi-p., 3 NY2d 395 [1957]). The failurc to make such showing 2 [* 4] requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v New York Univ. Med. Ctr., 64 NY2d 85 1 [1985]). Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issucs of fact which require a trial of the action. Mcrc conclusions, expressions of hope, or unsubstantiated iy allegations are insufficient for this purpose (Zuckerrnan v Ct qf NewYork,49 NY2d 557 [ 19801). It is not the function of a court deciding a summary judgment motion to make credibility determinations or findings of fact, but rather to identify material triablc issucs of-fact (or point to the lack thereof) (Vega v Restani Constr. Corp., 18 NY3d 499, 505 [2012]). Buckmiller and Petzvel s Motion for Summary Judgment (Motion Seq. No.: 004) Buckmiller, by demonstrating that it was not hired to install, inspect, maintain, service, or repair the sprinkler system, and Petzvel, by demonstrating that it warned of the leaky pipe even though it was not a part of the sprinkler system, have met their burden of-demonstrating the absence of any material issues of fact (Alvarez v Prospect Hasp. , 68 NY2d 320, 324 [ 19861). To cstablish a prima facie case of negligence, a plaintiff must prove( 1) that defendant owed a duty to the plaintiff, (2) a breach thereof, and (3) injury proximately resulting therefrom. (Friedmm v Anderson, 23 AD3d 163, 164 [ 1 Depl20051). TJnlike foreseeability and causation, both generally factual issues to be resolved on a case by-case basis by the fact finder, the duty owed by one member of society to another is a legal issue for the courts (Eiseman v Stute ofNew York,70 NY2d 175, 187 [ 19851 citing De Angelis v Lutheran Med. Ctr., 58 NY2d 1053, 1055 [ 19831). The risk reasonably to be perceived defines the duty to be obeyed (Pdygrafv Long Is. R.R. Co. 248 NY 339, 344 [ 19281). In the instant case, Buckmiller owed no legal duty, as a matter of law. 3 [* 5] The claim against Petzvel also fails as a matter of law. A party, such as Petzvel, that enters into a contract assumes a duty of care to third persons only: (1) whcre the contracting party, in failing to cxercisc reasonable care in the performance of its duties launche[s] a force or instrument of harm (Moch Co. v Rensselaer Wuter Co., 247 NY 160, 168 [ 19281); (2) where the plaintiff detrimentally relies on the continued performance of the contracting parties duties (Eaves Brooks Costume Co. v Y.B.H. Realty Corp., 76 NY2d 220,226 [1990]; and (3) whcre the contracting party has entirely displaced the othcr party s duty to safely maintain the premises (Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579,589 [ 19941). Herc, there was no force or instrument of harm launched, no detrimental reliance, and no entire displacement of New Realty s and Tibet s duty to safely maintain the premises. Therefore, Petzvel owcd no duty of care to the plaintiffs, and thereforc cannot be held liable in tort (Lehmun v North Greenwich Landscuping, LLC, 16 NY3d 747 [2011]; Brothers v New Yurk State Elec. B C;us Corp., 11 NY3d 25 1 [2008]; Fung v ./spun Airlines Co., Lid., 9 NY3d 35 1 [2007]). New Realty s Motion for Summary Judgmcnt (Motion Seq. No.: 005) An insurer, who has fully satisfied its policy obligations, may pursue its subrogation claim against the third-party tortfeasor (Fasso v Doerr, 12 NY3d 80, 86 [2009]). In a claim made pursuant to an insurer s right to subrogation, the insurer stands in the shoes of the insured (Blue Cross and Blue Shield oJ N..J., Inc. v Philip Morris USA Inc., 3 NY3d 200,206 [2004]). While parties to an agreement may waive their insurer s right of subrogation, a waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears (KefLKqL Inc. v Rodless Decorutions, 90 NY2d 654, 660 [ 19971). Waiver is an intentional relinquishment of a known right and is not lightly presumed (S&E Motor IIire Chrp. v New York Indem. Co., 255 NY 69, 72 [1930]). 4 [* 6] Paragraph (9) (e) of the lease between Tibet and New Realty provides, in relevant part: Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damages from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage rcsulting from fire or other casualty, and to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of rccovcry against the other or anyone claiming through or under each of them by way of subrogation or otherwise. The forcgoing rclease and waiver shall be in force only if both rclcasors insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance [emphasis supplied]. Thc commercial property conditions section of thc policy issued by U.S Underwriters to Tibet, at paragraph I provides in relevant part: If any person or organization to or for whom we rnakc payment under this Coverage Part has rights to recover damages from another, those rights are transferred to us to the extent of our payment. That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them. But you may waive your rights against another party in writing: 1. prior to a loss of your Covered Property ... This will not restrict your insurance reniphasis supplied]. The lease agreement betwccn thc defendant New Realty and Tibet contains the foregoing waiver of subrogation clause, conditioned solely upon there being in each of New Realty s and Tibet s insurance policies a clause permitting a waiver of subrogation, and it is undisputed that each policy contains such a clause. Thus, the waiver of subrogation clause in the subject lease bars this action. Contrary to its argument, the case cited in support by the plaintiff U.S Underwriters (Continental Ins. Co. v 115-123 W. 29th St. Owners Corp., 275 AD2d 604 [lstDept ZOOO]), actually supports the dismissal of its claim. In C onlinentul, the First Department held that the plaintiff insurer could seek sprinkler system damages from defendant landlord, where the lease contained a waiver of subrogation language that was applicable only i l the policy contained waivcr of subrogation language, and the insurance policy did not contain waiver of subrogation 5 [* 7] language. By contrast, in the instant case, the policy does contain waiver of subrogation language. Thc facts in Continental Insurance Company arc distinguishable from the facts of the matter at bar. In Continental Insurance Company, the rclcvant language of the waiver of subrogation clause contained in a cooperative shareholder's proprictary lease provided that: In thc cvcnt that Lessee suffers loss or damagc for which Lessor would be liable, and Lessee carries insurancc which covers such loss or damage and such insurancc policy or policies contain a waiver of subrogation against the Landlord, then in such event Lessee releases Lessor from any liability with respect to such loss or damage (idat 605). The court interprctcd the lease provision strictly according to its tcrms and determincd that sincc thc rclcvant insurance policy did not "contain a waiver of subrogation against the Landlord," but, rather, simply authorized thc insured to waive its rights against another in writing, the release set f-orth in the lease is ineffective by its own terms. 'I'hc lcase relevant to the matter at bar, on thc other hand, contains no such limitation, but provides that the "foregoing release and waiver shall be in force only if both releasors insurancc policies contain a clausc providing that such a release or waiver shall not invalidate thc insurance." Both insurance policies at issue contain a clause that waiver of subrogation "will not restrict" each party's insurance, which has been interpreted to mean that the insurance will not be invalidated by waiver of subrogation (American Motorists Ins. Co. v Louis 1 Ciminelli Cunstr. ' . Co., Inc., 50 AD3d 1563, rearg denied 53 AD3d 1 124 [4th Dept], lv denied 1 1 NY3d 708 [2008]). Therefore, the motion by New Realty for summary judgment, must also be granted. Finally, there is no merit to U.S. Underwriter's argument regarding an alleged failure to ccrtify the copies of the contracts subrnittcd as exhibits on the motions. CPLR 321 2 (b) governs the type of proof admissible in support of a motion for summary judgment, allowing consideration of affidavits, the pleadings, and other available proof such as depositions and G [* 8] written admissions (Andre v Pomeroy, 35 NY2d 361 [19741). A proper and unrebutted foundation has been laid for the admission of the lease, and the insurance contracts at issue, sufficient to make out a prima facie showing of entitlement to judgment as a matter of law (Commissioners of the State Ins. Fund v Beyer Furms, Inc., 15 AD3d 273 [ 1st I k p t 20051 lv denied 5 NY3d 707 [20051; Briar Hl Apts. Co. v Teperman, 165 AD2d 519 [lslDcpt 19911 ; il Berrios v Lumhermens Mut. Cas. Co., 162 AD2d 365 [ 1 Dept 19901). The burden then shifted to U.S. Underwriters to raise an issue offact as to the content of the writtcn contracts. However, U.S. Underwriters, despite the volume of its papers, is silent on this issue. Moreover, in its reply, New Realty has supplied a certified copy of its insurancc policy, which is the same as the policy submitted as part of the original motion, and includes the same waiver of subrogation language; thus, U S . Underwriter s is not prejudiced by its submission in the reply. U.S. Underwriter s Cross-Motion to Strike The property manager, Hing Fong, testified that the sprinkler system records were destroyed in the six-foot deep flood that inundated the basement. U.S. Underwriter s speculative assertion that the records could have been dried out, rather than discarded, is rejected. The dcfectivc pipe was replaced when a repair was made, and nobody knows wherc it is. However, the plaintiff s adjustor was able to photograph it before it went missing. Again, despite the volume of its papers, U.S. Underwriter fails to share with the court cithcr how it is prejudiced or what it hopcd to learn by having the pipe. The testimony, and the documents, all agree that years before it burst, the pipe was in extremely poor condition as the result of a dog continually urinating on it. Under the circumstances, the defendants should not be sanctioned for spoliation of evidence. Absent proof that the disposal of the records and the pipc was done in bad faith, the 7 [* 9] .. court declines to impose the drastic sanction of striking the defendant's answer (Ellis v Purk, 93 AD3d 502 [ 1st Dept 20 121; Hall v Elruc, Inc.,79 AD3d 427 [ 1'' Dept 20 lo]). Further, plaintiff has failed to show that it is unable to prove its prima facie case in the absence of the records or the pipe. C;f. Hewrera v. Mutlin, 303 AD2d 198 (1" Dept 2003)(where plaintiff was deprived of her ability to establish her primajbcie case for medical inalpractice against her doctor who lost thc plaintiffs medical records). Accordingly, it ORDERED that defendants' motions for summary judgment (motion scqucnce numbers 004 and 005) arc granted and the complaint, cross claims, and third-party complaint are all dismissed with costs and disbursements to defendants as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further OJXDEKED that the Clerk is directed to enter judgment accordingly; and it is further ORDERED that within 30 days of entry of this order, dcfcndants shall serve a copy upon plaintiff, with notice of entry. Dated: I L Doris Ling-Cohan, J S.C. J:\Summary Judgnicnt\US undcrwritcr v. new realty. suter.wpd 8

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