Century Sur. Ins. Co. v All in One Roofing, LLC
Annotate this CaseDecided on July 8, 2013
Supreme Court, Westchester County
Century Surety Insurance Company, Plaintiff,
against
All in One Roofing, LLC, ZDENO JADRON, MCALPINE CONSTRUCTION COMPANY, INC., 10 LEONARD STREET, LLC and 10 BOULEVARD, LCC, Defendants.
57683/2011
Law Office of Lori Fishman
Attorney for Defendants 10 Leonard Street, LLC, 10 Boulevard, LLC and McAlpine
Construction, Co., Inc.,
120 White Plains Road, Suite 220
Tarrytown, New York 10591
Hurwitz & Fine, PC
Attorney for Plaintiff
1300 Liberty Building
Buffalo, NY 14202
Law Offices of Scott R. Housenhold
Attorney for Defendant Zdeno Jadron
233 Broadway, Suite 1800
New York, NY 10279
William J. Giacomo, J.
Defendant Zdeno Jadron commenced a personal injury action in Supreme Court, Suffolk County, against 10 Leonard Street, LLC, 10 Boulevard, LLC, MCC, and AIO. Jadron is seeking damages for severe personal injuries sustained on October 21, 2010 when he fell from an elevated height at a construction site located at 10 East Main Street a/k/a 10 Leonard Street, Beacon, NY. In his complaint, Jadron asserts claims under the Labor Law. At the time of the accident Jadron was an employee of Vasyl Berezhansky. Berezhansky was a roofing contractor hired by AIO.
Defendants 10 Leonard Street, LLC and 10 Boulevard, LLC are the owners of the premises under construction. Defendant MCC was the general contractor for the construction project. MCC hired AIO as its roofing subcontractor. AIO has only one employee, Operations Manager Edmond Warwick and, therefore, further subcontracted out the job to Vasyl Berezhansky to do the roofing work.
On August 12, 2010, plaintiff issued a Commercial Liability Insurance Policy to AIO.
The policy contains the following "BODILY INJURY TO INDEPENDENT CONTRACTORS EXCLUSION" which provides in relevant part:
It is agreed that this insurance does not apply to "bodily injury" to: (1) Any independent contractor or the "employee" of any independent contractor while such independent contractor or their "employee" is working on behalf of the insured; or * * *
The policy also contains an "INDEPENDENT CONTRACTORS EXCLUSION" which provides in relevant part: In consideration of the premium charged the following changes are made to this policy:It is agreed that this insurance does not apply to "bodily injury" or "property damage" arising out of:1. The acts or omission of independent contractors while working on behalf of any insured, or
2. The negligent:
a. hiring or contracting; [*2]
b. investigation;
c. supervision;
d. training;
e. retention; of any independent contractor for whom any insured is or ever was legally responsible and whose acts or omissions would be excluded by 1. above.This exclusion does not apply if the work was performed on your behalf by a subcontractor, pursuant to a written contract, and that subcontractor:1. Had a valid and enforceable certificate of insurance on file with you at the time the work was completed for occurrence coverage at least as board as this policy, and you can produce that certificate for us when we ask for it; and 2. That certificate of insurance was with an insurance company with an AM Best rating of A- or better at the time the certificate issuance; and
3. The limits on the certificate are equal to or greater than this policy; and 4. You are named as an additional insured on the subcontractor's policy for both ongoing operations and products-completed operations hazard".
On April 22, 2011, plaintiff issued a written disclaimer to AIO as well as to all the defendants in this action based upon these exclusions since it claimed that Jadron was an employee of the independent contractor/subcontractor Vasyl Berezhansky. Further, according to plaintiff, AIO did not provide any evidence to allow an exception to the policy's exclusions. Nevertheless, plaintiff advised that it would afford AIO a courtesy defense unless AIO provided it with a written objection. AIO did not issue a written objection. Plaintiff also notified AIO that it reserved its right to recover any defense costs if it was determined that there was no insurance coverage for AIO under the policy.
Plaintiff commenced this action seeking a declaration that it is not obliged to provide AIO, or any of the named defendants, with a defense and indemnification in the underlying action. It also seeks $44,063.30 for defense costs incurred in defending AIO in the personal injury action.
Jadron opposes the motion arguing that while the policy appears to exclude coverage for independent contractors, he was employed by a "subcontractor," not an "independent contractor." Jadron argues that an independent contractor is left free to do the assigned work and to choose the method of accomplishing that work. A subcontractor, however, assumes performance of some part of a contract, such as labor or other services, and performs work pursuant to the contract with oversight from the general contractor. Moreover, AIO's agreement with Berezhansky was to perform roofing work as depicted in certain drawing and specification provided to it and in accordance with the scope of the work described in the subcontract. Further, [*3]AIO operations manager Edmond Warwick went to the site to inspect the roofing work performed by Berezhansky. Therefore, as a result of these facts and especially Warwick's control over the roofing work, Jadron worked for a subcontractor, not an independent contractor.
Jadron also notes that the policy does not define subcontractor, independent contractor or contractor. Thus, any ambiguity regarding those terms must be construed against plaintiff.
Defendant MCC also opposes plaintiff's motion arguing that plaintiff's interpretation of the policy renders coverage for additional insureds under the policy 100% illusory which is against public policy. MCC also argues that plaintiff's disclaimer was untimely.
Defendant MCC cross moves seeking a declaration that it is an additional insured with coverage under the policy plaintiff issued to AIO. MCC notes that pursuant to the terms of the construction contract between it and AIO, AIO was to name MCC (as well as 10 Leonard Street, LLC and 10 Boulevard, LLC) as additional insureds on its liability policy and provide it with a certificate of insurance documenting same. According to MCC, AIO endorsed its policy which named MCC as an additional insured and provided it with a copy of the policy certificate of insurance. MCC argues that the policy provides the following in relevant part: Additional Insured-Owners, Lessees, or Contractors - Automatic Status When Required in Construction Agreement with You Section II - Who is An Insured is amended to include as an additional insured any person or organization for whom 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. Such person or organization is an additional insured only with respect to liability for "bodily injury" . . . caused, in whole or in part by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf;
in the performance of your on going operations for the additional insured.
MCC argues that pursuant to the Additional Insured Endorsement, MCC qualifies as an additional insured under the terms of the policy issued to AIO because MCC is required to be named as an additional insured and Jadron's injuries arose out of the work and was caused by the act or omissions during the work Berezhansky was performing for AIO.
Thus, plaintiff's disclaiming of coverage to MCC is invalid.
MCC also argues that plaintiff's interpretation of the "Independent Contractor" and "Bodily Injury to Independent Contractor" exclusions to the policy "completely eclipses any potential coverage for additional insureds." MCC claims that plaintiff was aware the AIO had no employees and did not perform any of its own work. Thus, to argue that any work performed by contractors hired by AIO, the only type of work AIO performs, is excluded from coverage omits 100% of any coverage issued by plaintiff to AIO.
Discussion
[*4]
"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 demonstrate the absence of any material issues of fact." (Alvarez v. Prospect Hosp., 68 NY2d 320, 501 N.E.2d 572, 508 N.Y.S.2d 923 [1986]). "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 issues of fact which require a trial of the action." (Id. at 324, citing Zuckerman v. City of New York, 49 NY2d 557, 404 N.E.2d 718, 427 N.Y.S.2d 595 [1980]).
Plaintiff's Motion for a Declaratory Judgment
Plaintiff has established prima facie entitlement to summary judgment on its declaratory judgment claim. Pursuant to the clear and unambiguous terms of the policy it issued to AIO, the policy, in two separate paragraphs, excludes coverage for bodily injuries sustained by independent contractors; the "BODILY INJURY TO INDEPENDENT CONTRACTORS EXCLUSION" and the "INDEPENDENT CONTRACTOR EXCLUSION."
In opposition, Jadron raises an issue of fact by arguing that he was employed not by an "independent contractor" but rather by a "subcontractor."
"Where the language of an insurance contract is clear and unambiguous, interpretation of that contract and construction of its provisions are questions of law that should be resolved by summary adjudication." (Sheehan v. State Farm Fire and Cas. Co., 239 AD2d 486 [2nd Dept 1997] citing Loblaw. Inc. v. Employers' Liability Assurance Cas. Corp., 57 NY2d 872 [1982]). "An exclusion from coverage must be specific and clear in order to be enforced,' and an ambiguity in an exclusionary clause must be construed most strongly against the insurer." (Essex Ins. Co. v. Pingley, 41 AD3d 774, 776, 839 N.Y.S.2d 208, 209-10 [2nd Dept 2007][internal citations omitted]). The insurance company bears the burden of establishing that the exclusion applies in a particular case and it is subject to no other reasonable interpretation. Id. The test for ambiguity is whether the language of the insurance contract is "susceptible of two reasonable interpretations." (State of New York v. Home Indem. Co., 66 NY2d 669, 671, 495 N.Y.S.2d 969, 486 N.E.2d 827 [1984]; See also Essex Ins. Co. v. Vickers, 103 AD3d 684, 687, 959 N.Y.S.2d 525, 529 [2nd Dept 2013][finding the word "employee" to be ambiguous when it was not defined in the policy, and denying summary judgment (obligating plaintiff to defend) when the exclusion could "even potentially" be inapplicable) (emphasis added)]).
Here, the policy coverage excludes persons or entities who are "independent contractors." The exclusion, however, states: "This exclusion (for independent contractors) does not apply if the work was performed on your (insured's) behalf by a subcontractor, pursuant to a written contract, and that subcontractor: [meets certain conditions listed therein]." This exclusion creates an ambiguity in the policy by using the words "subcontractors" and "independent contractors" interchangeably.
Century contends that the word "subcontractor" as used in the clause implies that the policy excludes coverage to both independent and subcontractors unless such contractor (either independent or subcontractor) has met the conditions provided. Century argues that a different interpretation would render the exception to the exclusion meaningless unless "independent contractor" is interpreted to encompass any type of contractor; sub, independent or otherwise. However, Century did not define either independent contractor or subcontractor in its policy. [*5]Thus, this Court reads the exclusion to bar coverage for those workers of the insured who are "independent contractors" and the exception clause acts to provide coverage to the same when such independent contractor has satisfied the listed conditions the policy (i.e. has its own insurance).
In order to obviate its duty to provide coverage and to provide a defense in this action, Century must show that Jadron was an employee of an independent contractor and, therefore, falls within the exclusion. "Generally, it is [the burden] for the insurer to prove that an exclusion in the policy applies to defeat coverage." (Outlook Realty, LLC v. U.S. Underwriters Ins. Co., 66 AD3d 852, 853, 886 N.Y.S.2d 630 [2nd Dept 2009][affirming grant of summary judgments when evidence that exclusion applied was not contradicted]; see also Consolidated Edison Co. of NY v. Allstate Ins. Co., 98 NY2d 208, 218, 746 N.Y.S.2d 622, 774 N.E.2d 687 [2002]).
Century did not establish that Jadron was an employee of an independent contractor. An independent contractor is "one who agrees to do a specific piece of work for another for a lump sum or its equivalent who has control of himself and his helpers, as to when, within a reasonable time, he shall begin and finish the work; as to the method, means or procedure of accomplishing it; and who is not subject to discharge because he does the work as to method and detail in one way rather than another." (Matter of Beach v. Velzy, 238 NY 100, 103, 143 N.E. 805 [1924]). "Whether a person is an 'employee' or an 'independent contractor' is an ultimate fact to be determined from the evidence itself. It may be called a conclusion to be drawn from the contract itself, the attitude of the parties toward each other, the nature of the work and all relevant circumstances." (Favale v. M.C.P. Inc., 125 AD2d 536, 509 N.Y.S.2d 425, 426-27 [2nd Dept 1986]). "The courts will look to the method of the contractor's work and the extent of the control exerted over that work to determine whether the claim falls within the independent contractors exclusion." (Outlook Realty, LLC v. U.S. Underwriters Ins. Co., 66 AD3d 852, 853, 886 N.Y.S.2d 630 [2nd Dept 2009], citing Metropolitan Heat & Power Co., Inc. v, AIG Claim Services. Inc., 47 AD3d 621 [2nd Dept 2008]).
Century contends that Berezhansky is an independent contractor within the meaning of the policy. In support of their position Century relies on AIO's Operations Manager, Mr. Warchick who states that he "subcontracted the work to Mr. Berezhansky." Century's own disclaimer of coverage identifies Mr. Berezhansky as a "sub-contractor" rather than an independent contractor, and further acknowledges such work was being performed pursuant to a subcontract agreement. As a result, Century cannot establish, as a matter of law, that Mr. Berezhansky was hired as an independent contractor since, viewing the evidence in light most favorable to the non-movants, Century has not established that Berezhansky performed work "according to its own methods without being subject to the contractor or subcontractors control, except as to the product or result of its work." (Metro. Heat & Power Co., Inc. v. AIG Claims Servs., Inc., 47 AD3d 621, 622, 850 N.Y.S.2d 142, 144 [2nd Dept 2008]).
Accordingly, since there is a question of fact regarding Jadron's status as an employee of an independent contractor or a subcontractor Century's motion for summary judgment on its declaratory judgment action is DENIED.
However, in view of the fact that AIO has neither appeared nor answered in this case, plaintiff's motion for a default judgment against AIO for $44,063.30 the amount of attorney's fees [*6]expended in defending AIO in the underlying personal injury action is GRANTED.
MCC's Motion for Summary Judgment
In view of the above determination, MCC's motion for summary judgment seeking a declaration that plaintiff is obligated to provide MCC with "Additional Insured" coverage, to wit, a defense and indemnity, is DENIED with prejudice to renew upon the determination of Jadron's status as an employee of an independent contractor or subcontractor.
The parties are directed to appear in the Preliminary Conference Part on July 29, 2013 at 9:30 a.m. room 800 for further proceedings.
Dated: White Plains, New York
July 8, 2013
__________________________
WILLIAM J. GIACOMO, J.S.C.
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