QBE Ins. Corp. v QBE Ins. Corp.

Annotate this Case

Download PDF

QBE Ins. Corp. v QBE Ins. Corp. 2012 NY Slip Op 32747(U) October 25, 2012 Supreme Court, New York County Docket Number: 116947/2009 Judge: Eileen A. Rakower 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. ANNEDON 111912012 [* 1] t T OF THE STATE OF NEW YORK NEW YORK COUNTY " PART - - T-' !--> . Justice Index Number : 116947/2009 QBE INSURANCE vs INTERSTATE FIRE & CASUALTY SEQUENCE NUMBER : 002 I INDEX NO. MOTION DATE MOTION SEQ. NO. SUMMARY JUDGMENT The following papers, numbered 1 to I were read on this motion tolfor - Affidavits - Exhibits Answering Affidavits - Exhibits 1NO($). 1 5 3 B N W . L-r/ 3-i *( 7) $-- Replying Affidavik IMo(5). Notice of MotionlOrder to Show Cause , 4 lo Upon the foregoing papers, it is ordered that this motion is Dated: ..................................................................... i? CASE DfSPQSED CHECK AS APPROPRIATE: .................................. I : 0GiiAr".iTEf) S [13 DENIED CHECK DF APPROPRIATE: ................................................ ( j SETTLE ORDER 1. CHECK ONE: 2. 3. Ll.1 NBN-FINAL DISPOSITION G8ANTEB IN PART GTHER 7 0SUBMlT ORDER [* 2] Index No. 1 I6847/09 P1ai n t i ffs, DECISTON/ORDER - against - Mot. Seq. 02 INTERSTATE FIRE AND CASUALTY COMPANY, METRO DEMOLITION CONTRACTING, CORP., HARTFORD INSURANCE COMPANY OF TEE MTDWES? , SDCF FLOORING, INC., ONE BEACON INSURANCE GROUP, SRG CONSTRUCTION CONSULTING CORP., UTICA NATIONAL INSURANCE GROUP, PRO-SPEC INTERIORS, INC., ILLINOIS UNION INSURANCE COMPANY and ON PAR CONTRACTING CORP., HON. EILEEN A. RAKOWER On or prior to January 20, 2005, Inocencia Wejbe was injured when she was allegedly exposed to ccrtnin toxins as a result of certain construction activities at 1 190 Fifth Avenue, New York, known as Mount Sinai Medical Center, One Gustave L. Levy Place (the Project ). Morgan Construction Enterprises, Inc. ( MCE ) was Ihe general contractor on the Project. By the filing of the Summons and Coinplaint datcd August 29, 2007, lnocenica Wejbe and Gcorge Wejbe commenced an action against MCE and the Morgan Contracting Corp. entitled George WejDe v. Morgan Construction Enterprises, Inc. and The Morgan Contracting Corp., Index No.: 1 1 I 846/07, pending in the Supreme Court of the State of New York (the Underlying Action ). Thcreafter, Inocencia Wejbe and George Wej be filed a Supplemental Summons and Amended Verified Complaint dated December 20, 2007. The I [* 3] following partics are defendants in the Underlying Action: MCE, Thc Morgan Contract i 11 g Corpf, Comp 1etc Construction Cons orti urn 1nc ., Metro Derno 1it i on Contracting Corp. ("Metro"), Pro Spec Interiors, Inc. ("Pro Spcc"), KST Contracting, Inc., SDCF, Inc. ('ISDCF"), SRG Construction Consulting Corp., and Waldorf Carting Corp. By the Court's Ordcr dated June 6, 201 1 , SDCF and Pro-Spec interiors, Tnc., were granted summary judgment and dismissed from the Underlying Actio t i . ' I QBE Insurance Corporation ("QBE") and its gencral contractor insured MCE (collectively, ""Plaintiffs") commenced the instant action against defendants (various insurance companies and their insureds) seeking a declaration that MCE is entitled to primary coverage as an additional insured under various pol ices of insurance issued to its subcontractors in connection with the Project that is the subject of the Undcrlying Action, The action was commenced with the filing of the Summons and Complaint dated December 2, 2009. Interstate Fire and Casualty Company ("Interstate") is named as one of the named defendants along with its insured, Metro Demolition, a subcontractor of MCE that performed demolition work at the Project. Illinois Union Insurance Company ("Illinois Union") is also named as a defendant, along with its insured On Par Contracting Corp ("On Par"), a subcontractor of MCE that installed dry wall and acoustical ceilings at the Project. By the Court's Order dated June 6, 201 1, defendants Hartford Insurance Company of the Midwest ("Hartford") and Utica National Insurance Group's (llUticall) insureds' SDCF and ProSpec were dismissed from the Underlying Action, but they remain in this action as claimed insurers of named additional insured MCE. QBE represents that it has been, and currently is, providing a defensc to MCE in the LJnderlying Action and that to date, no other insurers have agreed to assumc MCE's defense in the Underlying Action. Prcsently before the Court is interstate's motion for an Order, pursuant to CPLR 3212, granting summary judgment, dismissing those claims asserted against it in the Verified Complaint, and declaring, pursuant to CPLR 300 1 , that Interstatc does not have an obligation to cither defend or indemnify plaintiffs in the Underlying Action. As with respect to Interstate, thc Complaint alleges that on, or before January 20, 2005, MCE entered into a contract with Metro for the performance oi'certain serviccs at the Project. The First Cause of Action set forth in the Complaint alleges 2 [* 4] that MC E was or should h a w been named as an additional insured on the iiisurance policy issued by Interstate to Metro and that Interstate is obligated to defend and indcinnify MCE in thc Underlying Action. The Second Cause ofAction alleges that Interstatc failed to promptly disclaim coverage to the plaintiffs for the claims asserted against thctn as required by Section 3420 of the New York State Insurance Law. Def endnnt Illinois Union is also named as a defendant, along with its insured On Par Contracting Corp., a subcontractor of MCE at the Project. Interstate argues, Assuming for the purposes of this motion only that MCE is an additional insured under thc Interstate Policy, the Interstate Policy docs not provide primary insurance for MCE in the Underlying Action since the Additional Insured (Blanket Contractual) Endorsement provides that such coverage is excess of any other insurance. Interstate further contends that because its policy is an excess policy, it has no duty to defend MCE in the Underlying Action and is also not obligated to reimburse to QBE any dcfense costs incurred in the Underlying Action. Interstate also contends that, assuming that the alleged injuries in the Underlying Action arise out oftlie work performed by or on behalf of Metro for MCE, Interstate has no obligation to indemnify MCE, until all other primary and excess policics are exhausted, Interstate also asserts that its denial of coverage is timely. Plaintiffs cross move for an Order pursuant to CPLR 3212 for summary judgment against Interstate. Plaintiffs assert that Interstate s motion for summary judgincnt should be denied as a matter of law because: (1) Interstate failed to timely disclaim coverage to plaintiffs; (2) the Interstate Policy is not excess to the QBE Policy; and (3) it is premature to render any determination as to the priority of coverage among any of the policies at issue in this action as discovery is not complete. Illinois Union cross moves for an Order: (1) pursuant to CPLR 3212 granting summary judgment dismissing the claims asserted against Illinois Union in the Complaint by plaintiffs, with prejudice, and (2) denying that portion of Interstate s motion for summary judgincnt that seclcs a declaration that is policy is excess of the Illinois Union Policy, Defendant One Beacon Insurance Group ( Onc Beacon ) did not submit motion papers; however, counscl for the party appeared at oral argument and stated at oral argument that to the extent that the Court finds that there is late notice, One 3 [* 5] Beacon is similarly situated where they first received tender on February 15,2008and disclaimed coverage 01-7 March 3, 2008." No other de kndant submitted opposition or appeared at oral argument. Interstate's Motion and Plaintiffs' Cross Motion The proponent of a tnotion for summary judgment must make a prima facic showing of entitlement to judgment as a matter of law. That party must produce sufficient evidence in admissible form to eliminate any inaterial issue of fact from the case. Where the proponent makes such a showing, the burden shifts to the party opposing the motion to demonstrate by admissible cvidence that a fxtual issue remains requiring the trier of fact to determine the issue. The affirmation of counsel alone is not sufficient to satisfy this requirement. ( Zuckerman v. Cily oj'New Ynrk, 49 N.Y.2d 557 [ 19801). In addition, bald, conclusory allegations, even ifbelievable, are not enough. (Ehrlich v. American Moninger Greenhouse Mji. Cory., 26 N.Y.2d 255 [ 19701). (EdisonStone Corp. v. 42ndStreel Development Corp.,145 A.D.2d 249, 25 1-252 [ 1st Dept. 19891). In its motion, Interstate seeks a declaration that the policy it issued to Morgan (its insured) is not a primary policy for MCE as an additional insured in the Underlying Action based on the terms of the other policies. At oral argument, Interstate addressed what it claimed to be the other relevant policies to support its claim: the CGL policy Interstate issued to Metro, the CGL policy issued by QBE to MCE, the policy issued by HartFord to its insured SDCF, and the policy issued by Illinois Union to its insured On Par. While Interstate originally argued in its niotion papcrs that policy issued by Utica Mutual Insurance Company to its insured Pro-Spec was also relevant, Interstate acknowledged at oral argument that it does not come into play bascd on the t e r m of its additional insured endorsement and the Court's granting of sunimary judgment in its insured's favor in the [Jnderlying Action. With respect to the policy issued by Illinois Union, as explained below, as plaintiffs failed to providc timely notice ofthe occurrcnce in accordance with Illinois Union's policy and Illjnois Union timely disclaimed coveragc, this Court is granting TI linois LJnion's summary 4 [* 6] judgment motion. Therefore, the policy issued by Illinois Union does not come into play as to the extent of Interstate s coverage vis-a-vis other policies. An insurance policy is a contract between the insurer and the insured. Thus, the extent ofthe coverage (including a given policy s priority vis-a-vis other policies) is controlled by the relevant policy terms..,, (Bovis Lend Lease LMB, Inc. v. G r m Am. Ins. Co., 2008 NY Slip Op 3 150, * 5 [ 1st Dcpt. 20081). [Aln umbrella or excess liability insurance policy should be treated as just that, and not as a second layer of primary coveragc, unless the policy s own terms plainly provide for a different result (id. 3). Where the same risk is covered by two or more policies, each of which at was sold to provide the same level of coverage *.. priority of coverage ... among the policies is determined by comparison of their respective other insurance clauses (Sports RockIntl., Inc. v. Arnuicnn Cas. Co. vfReading, Pa., 65 A D . 3d 12, 18 [lst Dept 20091; J ~ ~ ~ ~ Ins.sCo. o f N . Y, v. Truvelers Indent CD., N.Y. 2d 363, 372 I oM 92 [ 19981). When deciding which policies are primary and which are excess, courts will examine the langiiage of the various other insurance provisions (id.). Here, as stated above, the relevant policies at issue in terms of evaluating Interstate s motion are as follows: the policies issued by Interstate, Hartford, and QBE. Interstate issued a CGI, Policy to Metro, bearing policy number GLT 1 1 11836, for the policy period of July 15, 2004 to July 15,2005 ( the Interstate Policy ), The Interstate Policy provided coverage of $1,000,000 per occurrence, $2,000,000 in general aggregate. In its Other Insurance provision, the policy provided; If other valid and collectible insurancc is available to the insured for a loss we cover under Coverages A or B of the Coverage Part, our obligations arc limited as follows: As l or the policy issued by One Beacon, the Court finds that any determination with respect to this policy to be premature based on plaintiff s papers. Plaintiffs statc that while the One Beacon Policy on its face does not contain an additional insured endorsement, the subcontract between MCE and SRC contained a relevant insurance procurement provision. Plaintiffs contend that relevant discovery with respect to this policy is outstanding I 5 [* 7] a. Primary Insurance i hisinsurance is primary except when b. applies . . . b. Excess Insurance This insurancc is excess over: Any ofthe other insurance, whether primary, cxcess, contingent or any other basis: (a) That is Fire, Extended Coverage, Builder s Risk, Installation Risk or similar coverage for your work ; (2) That is Fire Insurance for premises rented to you , . .; or (3) If the loss arises out of the maintenance or use of aircraft . . . When the insurance is excess, we will have no duty under Coverage A or B to defend the insured against any suit if any other insurer has a duty to defend the insured against that suit. When this insurance is excess over othcr insurance, we will pay only our share ofthe amount of loss, if any . . e The Interstate Policy also contains the following endorsement: ADDITTONAL INSURED (I3 lanket Contractual) This endorsement changes the policy. Please read it carefully, In consideration of the premium charged: The following provision is added to Section 11, Persons Insured, of the Comprehensive General Liabj lity Coverage Part: (f) any entity the Named Insured is rcquired in a writtcn contract to name as an insured (hereinafter cal lcd Additional Insured) is an insured but only with respect to liability arising out of work performed by or on behalf or the Named Insured for the Additional Insured. 6 [* 8] QBE issued a CGI, policy of insurance to MCE. The other insurance clause provides the QBE Policy is primary, but cxcess to [alny other insurance, whether primary, excess, contingent or any other basis that is valid and collectible insurance available to you as an additional insured under a policy issued to: (a) a contractor perf orming work for you. Hartford issued a Comprehensive Business Liability Pol icy to SDCF ( the Hartford Policy ). Mount Sinai Hospital and MCE arc named additional insureds on the Hartford Policy. In its other insurance provision, the Hartford Policy provides that the insurance provided is primary except that it is excess over: (a) That is Fire, Extended Covcrage, Builder s Risk, installation Risk or similar coverage for your work ; (b) That is Fire Insurance for premises rented to you (c) If the loss arises out ofthe maintenance or use of aircraft . . . . . .; or As Interstate points out, this excess insurance provision in the Hartford policy is inapplicable in this case since none of the insurance policies are issued are Fire, Extended Risk Coverage, Builder s Risk Installation Risk, Fire Insurance, nor does the loss in the Underlying Action arise out of the maintenance or use of aircraft, autos or watercraft. Furthermore, as Interstate also points out, the primary coverage affordcd to the named insured SDCF is not contingent upon any finding ofliability of the mined insured SDCF, and it is wcll settled law that an additional insured is an entity enjoying the same protection as the named insured , BPAir Conditioning Corp. v. One Beucon Ins. Group, 33 A D . 3d 116, 122 (1 Dept 2006). Therefore, MCE has primary coverage under the Hartford Policy, and Hartford must pay up to its limits before QBE and Interstate s coverage, as excess insurers are triggered. After the Hartford Policy is exhausted, based upon the contracts, QBE and Interstate are either co-primary insurers or excess insurers as the coverage clauscs contained in the Interstate and QBE s respective policies cancel each other out. Lzimhermens Mut. CnsLinlfy C o. V. Allstate Ins. Co., 5 1 N.Y.2d 65 1 (1 980). Thus, the Court finds 7 [* 9] that the Interstate Policy is not, in fact, in excess to the QRE Policy as Interstate asserts. As such, MCE has primary coverage under the Hartford policy and Hartford imust pay up to its limits before QBE and Interstate s coverage, as excess insurers, is triggered. As for thc duty to defend, When a policy provides only excess coverage, the duty to defend or indemnify is not triggcred until coverage under the primary policy has been exhausted or otherwise terminated. ( L & B Estates, LLC v Allstate Ins., 7 1 hD3d 834,836,897 N.Y.S.2d 188 [2d Dept 20 lo]). Therefore, the Interstate Policy has no duty to dcfend until the Hartford Policy is exhausted. In their opposition and cross motion, plaintiffs claim that Interstate failed to tirncly disclaim coverage. However, while the Court finds that Interstate failed to timely disclaim and would be precluded from asserting late notice or an exclusion, Interstate is not moving on those grounds. Interstate s failure to disclaim does not preclude its motion to the extent that lnterstate contends that the Interstate Policy does not provide primary insurance for NICE in the Underlying Action since the Additional Insured (Blanket Contractual) Endorsement provides that such coverage is cxcess of any other insurance. lnsurance Law 3420(d) states, in relevant part: Ifunder a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death of bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant. The reasonableness of any delay in providing such written disclaimer is iiicasured froin the time when thc insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage. (First Fin. Ins. Co. v. Jdco Contr. Corp., 1 N.Y. 3d 64, 66 [2003]). Whilc Insurance Law 5 3420(d) speaks only of giving notice as soon as is reasonably possible, investigation into issues affecting 8 [* 10] an insurer s dccision whether to disclaim coverage obviously may cxcuse delay in noti k i n g the policyholder o f a disclaimer. (Id.) It is the responsibility ofthe insurer to explain its delay. (Id, at 70). When the explanation offered for the delay is an assertion that there was a need to investigate issues that will affect the decision on whether to disclaim, the burden is on the insurance company to establish that the delay was reasonably related to the completion of a necessary, thorough, and diligent investigation. (Quincy Mut. Fire Ins. Co. v. Uribe, 45 AD3d 661, 662 [ZOO71 ). Moreover, an insurer s explanation is insuff lcientas a matter of law where the basis for denying coverage was or should have been readily apparent before the onset ofthe delay. (First Fin. Ins. Co. at 69). I ~ I-Iere,plaintiffs tendered their notice to Interstate by letter, dated February 15, and Interstate did not disclaitn coverage until May 20,2008. lnterstate claims that the delay was based on its need to investigate. lnterstatc states that it did not reccive a copy of the Summons and Complaint from MCE s counsel until March 31, 2008; received a copy of the subcontract between MCE and Mctro on April 24,2008 by way of letter dated April 14, 2008; attempted to contact the insured Metro on April 30, 2008; contacted National Insurance Brokers, and the broker on the Interstate Policy on May 10,2008 who advised that their Metro account was in active and the insured was out of business. Interstate states that by letter dated May 20, 2008, it denied coverage to MCE. By way of letter dated October 8,2009, Rockville Risk rc-tendered MCE s def ensc to the Underlying Action to Interstate. By letter dated October 20, 2009, Interstate reasserted its previous declination of coverage. Even if Summons and Complaint and subcontract between MCE and Metro (which were allegcdly received by Interstate on March 3 1, 2008 and April 24, 2008 although sent days before) were necessary as to Interstate s investigation, Interstate still has failed to of kr any explanation as to why a declination letter was not issued until May 20, 2008. Interstate has offered no explanation as to why it waited until April 30, 2008 to contact its own insured [Metro] and until May 19,2008 to contact Metro s insurance or why such a conversation with its insured was necessary in render its determination, As such, the Court finds that Interstate has failed to timely disclaim coverage pursuant to 1nsurai-m Law 3420(d). Nonetheless, while its failure to disclaim precludes it from asserting late notice or a certain exclusion, Interstate is not moving on those grounds. Interstate sfailure to disclaitn does not preclude the Court s analysis as to priority of the respective in order to determine whether the Interstate Policy [* 11] lllinois Union's Cross-Motion Illinois Union cross moves for summary .judgment against the c l a i m of plaintill's based on late notice of the occurrence, claim, and suit. The relevant policy provides the following notification provisions: Section IV - Commercial General Liability Conditions -. 3 Duties in the event of Occurrence, Offense, Claim or Suit You must see to it that we are notified as soon as practicable a. of an "occurrencet' or an offense which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occurrence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and (3) The nature and location of any injury or damage arising out of the "occurrencettor offense. b. I f a claim is made or "suit" is brought against any insured, you must: Immediately record the specifics of the claim or "suit" (1) and the date received; and (2) Notify L I S as soon as practicable. . . . provide primary insurance or excess insurance for MCE in the IJnderlying Action based on its Additional Insured (Blanket Contractual) Endorsement. 10 [* 12] You must see to it that we receive notice of the claim or suit as soon as practicable. c. You and any other involved insured must: ( 1 ) Iinniediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or suittt; *** The purposc of notice provisions in insurance policies is to give the insurer an f opportunity to protect itself. (Security Mzit. Ins. Co. o New York v. Acker-Fitsiimons Corp., 31 NY2d 436119721) (where insured waited nineteen months to notifj insurance company of claim). Where there is an unambiguous notification policy, claims are to be reported as soon as practicable if they are to become the basis of a claim. (Republic New York Corp. v. American Home Assur. Co., 125 AD 2d 247[ 1 st Dept. 19861) (where, even when record was viewed most favorably for the plaintiff, a forty-five day delay in notification was inexcusable). Under certain circumstances, an insured may reasonably explain or excuse his delay in notifying the insurer. For example, a reasonable excuse may be if the insured i s not aware that an accident occurred or has a good-faith basis for believing in their non-liability.(ld. at 441), Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy. (Id. at 440). When no excuse is offered or there are no mitigating circumstances, the court, rather than a jury, deems whether the condition was fulfilled. (Deso v. London le Lmcashire Indem. Co., 3 NY2d I27 [ 19571)(where there was a Gfty-one day delay in notifying the insurance company). Finally, the insured need not show prejudice before it can assert the defense ofnoncompliance. (SecurityMutual Ins. Co. at 440). Delays in providing notice to an insurer vitiate coverage as a matter of law. (Id). I-Iere, Illinois Union asserts that the occurrence at issue in the Underlying Action allegedly occurred during the exposure period from October 14, 2004 to January 20, 2005 and the Underlying Action against MCE was commenced on August 30,2007. Illinois Union references the plaintiffs interrogatories response in which they state that they were served with the pleadings in the LJnderlying Action on November 15,2007. However, Rockville Management Associates, the third-party administrator for QBE, did not tender the defcnse and indemnity of MCE to Illinois 11 [* 13] Union until February 15, 2008, three years after the alleged occurrence and three months after MCE learncd of the claim. Illinois Union, in turn, disclaimed coverage as to MCE on February 26, 200S, eleven days after the tender. Plaintiffs have set forth no reasonable excuse for MCE s delay in reporting the occurrence and/or claim. As such, Illinois Union is entitled to summary judgment dismissing the coverage claims ofMCE and QBE as against it because MCE violated the notice conditions of the Illinois Union Policy. Wherefore, it is hereby ORDERED, ADJUDGED and DECLARED that defendant Interstate Fire and Casualty Company s motion for summary judgment is granted to the extent that the Interstate Policy is not a primary insurance policy for plaintiff Morgan Construction Enterprises, Inc.; and it is further ORDERED that plaintiffs QBE Insurance Corporation and Morgan Construction Enterprises, Iiic. s cross motion is denied; and it is further ORDEmD, ADJUDGED, DECLARED that defendant Illinois Union Insurance Company s motion for summary judgment is granted and the Complaint as against defendant illiiiois Union Insurance Company is dismissed; and it is fiirther ORDERED that the Clerk is directed to enter judgment accordingly This constitutes the decision and order of the court. EILEEN A. RAKOWER, J,S.C. 12

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.