Rodriguez v Beulah Commons Assoc., L.P.
Annotate this CaseDecided on December 9, 2014
Supreme Court, Bronx County
Maria Rodriguez, AN INFANT BY HER MOTHER AND LEGAL GUARDIAN, EVANGELINA ESPINOZA, AND EVANGELINA ESPINOZA, INDIVIDUALLY, Plaintiff(s),
against
Beulah Commons Associates, L.P., STEBBINS PROSPECT, L.P., CITY OF NEW YORK, AND BELMONT ARTHUR AVENUE LOCAL DEVELOPMENT CORPORATION, Defendant(s).
350674/08
Plaintiff's counsel: Pena & Kahn, PLLC
Counsel for defendant Belmont: Law Offices of Emond J. Pryor
Counsel for defendant Beulah Commons Associates, LP: Werner, Zaroff, Sltonick, Stern and Ashkenazy, LLP
Counsel for defendant City: New York City Law Department
Mitchell J. Danziger, J.
In this action for personal injuries defendant BELMONT ARTHUR AVENUE LOCAL DEVELOPMENT CORPORATION (Belmont) moves for an order granting it summary judgment against defendant CITY OF NEW YORK (the City) on its cross-claim for contractual indemnification. Belmont avers that pursuant to the lease between itself and the City, it is entitled to defense, indemnification and reimbursement of legal fees incurred in defending this action. The City opposes the instant motion averring that questions of fact preclude summary judgment. Saliently the City argues that the claims asserted [*2]against Belmont do not trigger the indemnification provision in the lease insofar as the facts underlying the claim fall outside the ambit of the those acts giving rise to indemnification.
For the reasons that follow hereinafter, Belmont's motion is granted, in part.
The instant action is for alleged personal injuries stemming from the negligence maintenance of a premises. The complaint alleges that on August 7, 2007, plaintiff MARIA RODRIGUEZ (Rodriguez) was bitten by a dog while traversing the sidewalk located in front of premises located at 764 East 168th Street, Bronx, NY. Plaintiffs allege that the dog was vicious, was kept, and emerged from the instant premises. Plaintiffs allege that defendants owned, leased, and maintained the aforementioned premises and were negligent in the maintenance of the premises because as they knew the dog was vicious and dangerous. Plaintiffs allege that defendants' negligence caused Rodriguez' injuries. Plaintiff EVANGELINA ESPINOZA (Espinoza), as Rodriguez' mother asserts a derivative loss of service claim.
Within its answer, Belmont alleges that it leased the premises located at 764 East 168th Street, Bronx, NY from the City and that pursuant to the lease dated April 15, 2006, the City agreed to indemnify Belmont for injuries sustained by any person in connection with the aforementioned premises. Accordingly, Belmont asserts a cross-claim against the City for contractual indemnification.
Motion for Summary Judgment
Belmont's motion seeking summary judgment on its cross-claim against the City for contractual indemnification is granted insofar as Belmont establishes entitlement to indemnification based on the clear terms within the lease between itself and the City. Specifically, the contract coupled with the letter indicating the City's agreement to indemnify Belmont establish Belmont's right to indemnification, the assumption by the City of its defense and Belmont's entitlement to reimbursement for all legal fees and costs incurred thus far in the defense of this action.
The proponent of a motion for summary judgment carries the initial burden of tendering sufficient admissible evidence to demonstrate the absence of a material issue of fact as a matter of law (Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Thus, a [*3]defendant seeking summary judgment must establish prima facie entitlement to such relief as a matter of law by affirmatively demonstrating, with evidence, the merits of the claim or defense, and not merely by pointing to gaps in plaintiff's proof (Mondello v DiStefano, 16 AD3d 637, 638 [2d Dept 2005]; Peskin v New York City Transit Authority, 304 AD2d 634, 634 [2d Dept 2003]). There is no requirement that the proof be submitted by affidavit, but rather that all evidence proffered be in admissible form (Muniz v Bacchus, 282 AD2d 387, 388 [1st Dept 2001], revd on other grounds Ortiz v City of New York, 67 AD3d 21, 25 [1st Dept 2009]).
Once movant meets his initial burden on summary judgment, the burden shifts to the opponent who must then produce sufficient evidence, generally also in admissible form, to establish the existence of a triable issue of fact (Zuckerman at 562). It is worth noting, however, that while the movant's burden to proffer evidence in admissible form is absolute, the opponent's burden is not. As noted by the Court of Appeals,
[t]o obtain summary judgment it is necessary that the movant establish his cause of action or defense sufficiently to warrant the court as a matter of law in directing summary judgment in his favor, and he must do so by the tender of evidentiary proof in admissible form. On the other hand, to defeat a motion for summary judgment the opposing party must show facts sufficient to require a trial of any issue of fact. Normally if the opponent is to succeed in defeating a summary judgment motion, he too, must make his showing by producing evidentiary proof in admissible form. The rule with respect to defeating a motion for summary judgment, however, is more flexible, for the opposing party, as contrasted with the movant, may be permitted to demonstrate acceptable excuse for his failure to meet strict requirement of tender in admissible form. Whether the excuse offered will be acceptable must depend on the circumstances in the particular case
(Friends of Animals v Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067-1068 [1979] [internal citations omitted]). Accordingly, generally, if the opponent of a motion for summary judgment seeks to have the court consider inadmissible evidence, he must proffer an excuse for failing to submit evidence in inadmissible form (Johnson v Phillips, 261 AD2d 269, 270 [1st Dept 1999]).
Moreover, when deciding a summary judgment motion the role of the Court is to make determinations as to the existence of bonafide issues of fact and not to delve into or resolve issues of credibility. As the Court stated in Knepka v Talman (278 AD2d 811, 811 [4th Dept 2000]),
Supreme Court erred in resolving issues of credibility in granting defendants' motion for summary judgment dismissing the complaint. Any inconsistencies between the deposition testimony of plaintiffs and their affidavits submitted in opposition to the motion present issues for trial
(see also Yaziciyan v Blancato, 267 AD2d 152, 152 [1st Dept 1999]; Perez v Bronx Park Associates, 285 AD2d 402, 404 [1st Dept 2001]). Accordingly, the Court's function when determining a motion for summary judgment is issue finding not issue determination (Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 404 [1957]).
It has long been held that absent a violation of law or some transgression of public policy, people are free to enter into contracts, making whatever agreement they wish, no matter how unwise they may seem to others (Rowe v Great Atlantic & Pacific Tea Company, Inc., 46 NY2d 62, 67-68 [1978]). Consequently, when a contract dispute arises, it is the court's role to enforce the agreement rather than reform it (Grace v Nappa, 46 NY2d 560, 565 [1979]). In order to enforce the agreement, the court must construe it in accordance with the intent of the parties, the best evidence of which being the very contract itself and the terms contained therein (Greenfield v Philles Records, Inc., 98 NY2d 562, 569 [2002]). It is well settled that "when the parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms" (Vermont Teddy Bear Co., Inc. v 583 Madison Realty Company, 1 NY3d 470, 475 [2004] [internal quotation marks omitted]) Moreover, "a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield at 569). Accordingly, courts should refrain from interpreting agreements in a manner which implies something not specifically included by the parties, and courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing (Vermont Teddy Bear Co., Inc. at 475). This approach serves to preserve "stability to commercial transactions by safeguarding against fraudulent claims, perjury, death of witnesses [and] infirmity of memory" (Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995] [internal quotation marks omitted]).
The proscription against judicial rewriting of contracts is particularly important in real property transactions, where commercial certainty is paramount, and where he agreement was negotiated at arm's length between sophisticated, counseled business people (Vermont Teddy Bear Co., Inc. At 475). Specifically, in real estate transactions, parties to the sale of real property, like signatories of any agreement are free to tailor [*4]their contract to meet their particular needs and to include or exclude those provisions which they choose. Absent some indicia of fraud or other circumstances warranting equitable intervention, it is the duty of a court to enforce rather than reform the bargain struck(Grace v Nappa, 46 NY2d 560, 565 [1979]).
Leases are nothing more than contracts and are thus subject to the rules of contract interpretation, namely, that the intent of the parties is to be given paramount consideration, which intent is to be gleaned from the four corners of the agreement, and that of course, the court may not rewrite the contract for the parties under the guise of construction, nor may it construe the language in such a way as would distort the contract's apparent meaning (Tantleff v Truscelli, 110 AD2d 240, 244 [2d Dept 1985]).
While a party can, by contract, indemnify another for damages incurred, it is well settled that the words in a contract calling for indemnification must be strictly construed to achieve the apparent purpose of the parties (Hooper Associates, Ltd. v AGS Computers, Inc., 74 NY2d 487, 492 1989] (Court denied summary judgment on claim for contractual indemnification when plaintiff sought to collect legal fees incurred in suing defendant. Court held that contract did not expressly provide for indemnification and reimbursement of attorney fees stemming from the kind of action alleged.]; Lipshultz v K & G Industries, Inc., 294 AD2d 338, 338 [2d Dept 2002] (Court granted dismissal of claim for contractual indemnification when the contract mandating the same failed require indemnification; Szalkowski v Asbestospray Corporation, 259 AD2d 867, 868-869 [3d Dept 1999]. Thus
[a] party is entitled to full contractual indemnification provided that the intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances
(Drzewinski at 777 [internal quotation marks omitted]); see also Masciotta v More Diesel International, Inc., 303 AD2d 309, 310 [1st Dept 2003]). As in all contractual disputes, in determining whether the indemnification is warranted, "[w]ords in a contract are to be construed to achieve the apparent purpose of the parties . . [and] [t]he promise should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances (Hooper Associates, Ltd. at 491-492).
Generally, when a party seeks contractual indemnification, the party seeking indemnification need only prove that he or she was free from negligence, was held liable only by virtue of a statute [*5]imposing liability, and that there was a valid contract governing the indemnification (Uluturk v City of New York, 298 AD2d 233, 234 [1st Dept 2002]; Correia v Professional Data Management, Inc., 259 AD2d 60, 65 [1st Dept 1999]). Whether or not the indemnitor, the party who will be indemnifying the other, was negligent is irrelevant (Uluturk at 234; Correia at 65).
While a claim for indemnification does not accrue until the indemnitee renders payment, thereby making any determination prior thereto premature, a court can nevertheless make such a determination prior to the time an indemnitee renders payment (Masciotta at 310; State of New York v Travelers Property Casualty Insurance Company, 280 AD2d 756, 757 [3d Dept 2001]; State of New York v Syracuse Rigging Company, 249 AD2d 758, 760 [3d Dept 1998]). While courts do in fact deny motions seeking summary judgment on a claim for contractual indemnification as premature, such denial is almost always on grounds that the indemnitee's negligence, if any is as yet undetermined, that being an essential prerequisite to contractual indemnification (Mckenna v Lehrer McGovern Bovis, Inc., 302 AD2d 329, 331 [1st Dept 2003]; Williams v G.H. Development & Construction Company, 250 AD2d 959, 962 [3d Dept 1998]; Gillmore v Daniel, 221 AD2d 938, 939 [4th Dept 1995]). When no issues exist as to the indemnitee's negligence, the court should and can issue a conditional judgment on the issue of indemnification pending determination of the primary action, thereby affording the indemnitee the opportunity to forecast to what extent he or she can expect to be reimbursed (Maciotta at 310; Travelers Property Casualty Insurance Company at 757; Isnardi v Genovese Drug Stores, Inc., 242 AD2d 672, 674 [2d Dept 1997]).
Notwithstanding the foregoing, generally, General Obligations Law § 5-322.1, precludes contractual indemnification where the indemnification clause in the contract seeks to impose complete and total indemnification notwithstanding the indemnitee's negligence (Itri Brick & Concrete Corp. v Aetna Casualty & Surety Company, 89 NY2d 786, 794 [1997]. This is because GOL § 5-322.1 states that
[a] covenant, promise, agreement or understanding in, or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances including moving, demolition and excavating connected therewith, purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property contributed to, caused by or resulting from the negligence of the promisee, his agents or employees, or indemnitee, whether such negligence be in whole or in part, is against public policy and is void and unenforceable; provided that this section shall not [*6]affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer. This subdivision shall not preclude a promisee requiring indemnification for damages arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of a party other than the promisee, whether or not the promisor is partially negligent.
In Itri Brick & Concrete Corp., the court, analyzing two separate and distinct indemnification clauses, found them both void, unenforceable, against public policy, and in violation of GOL §5-322.1 because the clauses mandated indemnification for injuries arising "from any cause while on or near the project" or "in connection with or resulting from the work," such that the clauses sought to impose "an indemnification obligation on the subcontractors without limitation in terms of negligence of the general contractor/owner" (id. at 793-794). Thus, the court held that these clauses mandated complete indemnification even if the indemnitee caused the injury in whole or in part, which is the very scenario - indemnification for one's own negligence - that GOL § 5-322.1 was meant to proscribe (id. at 796).
Similarly, GOL §5-321, bars any indemnification agreement between a lessor and lessee of real property where the lessor seeks to be held harmless for his own negligence. Specifically, GOL § 5-321 states
Every covenant, agreement or understanding in or in connection with or collateral to any lease of real property exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor, his agents, servants or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises shall be deemed to be void as against public policy and wholly unenforceable.
Despite the foregoing, our courts have carved exceptions to the strict prohibition against indemnification agreements which confer indemnification for an indemnitee's own negligence. First, an exception to the prohibition prescribed in GOL § 5-321 exists, and an indemnification agreement in a lease shall be enforceable even if the lessor seeks to have the lessee indemnify him for his own negligence, if the lease is negotiated by sophisticated business entities and such parties allocate the risk of liability to third parties between themselves, essentially through the employment of insurance (Great Northen Insurance Company v Interior Construction Corp., 7 NY3d 412, 420 [2006]; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153, 161 [1977]). In explaining why GOL § 5-321 does [*7]not apply in these circumstances the court in Hogeland, stated
[t]he legislative history and the statute's express invalidation of any agreement exempting the lessor from liability for damages for injuries resulting from the negligence of the lessor' strongly suggests that is was directed primarily to exculpatory clauses in leases whereby lessors are excused from direct liability for otherwise valid claims which might be brought against them by others. It and several parallel provisions prohibit agreements which free landlords (or others in comparable relationships) from all responsibility to a tenant (or others) for negligence; the former are thus compelled at their own peril to retain the incentive to act prudently. It is against this background of declared purpose that the indemnification clauses before us must be considered. So analyzed, Berenson is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance. Courts do not, as a general matter, look unfavorably on agreements which, by requiring parties to carry insurance, afford protection to the public
(Hogeland at 160-161[internal citations omitted]). Thus, in both Hogeland and Great Northen Insurance Company, the lessees were obligated to indemnify the lessor, even though they had been found negligent (Hogeland 158; Great Northen Insurance Company at 419).
Second, because "courts should be wary of construing [indemnification] provisions in such a manner that they become absolutely meaningless" (Levine v Shell Oil Co., 28 NY2d 205, 212 [1971] [internal quotation marks omitted]), provided that the indemnitee can point to a specific provision of a contract requiring indemnification for his active negligence, such provision shall be enforced" (id. at 211; Kurek v Port Chester Housing Authority, 18 NY2d 450, 456 [1966]).
Here, a review of the lease between the City and Belmont, which lease is submitted by Belmont, establishes that it was entered into on April 15, 2006. Pursuant to the lease, the City leased several premises to Belmont, including 764 East 168th Street, Bronx, NY (764). Section 3.8 of the lease required Belmont to "provide, pay for and maintain in full force . . . the insurance set forth in Article IV." Section 4.1 of the lease required that Belmont procure and maintain liability insurance, insuring the City "against any claims, suits, or judgments for bodily injury, personal injury, or damage arising out of any acts or omissions occurring in the Premises or arising out of the operation of the Premises." Section 7.1 of the lease, addressing indemnification, [*8]states that
[i]f the person or property of others sustains any loss, damage, or injury resulting from the negligence, carelessness or willful tort of [Belmont], its agents, employees, contractors, or subcontractors in the performance of this Net lease or from their failure to comply with any provisions of this Net lease or of applicable laws, [Belmont] shall indemnify and hold [the City] harmless from any and all claims and judgments and from any costs and expenses which [the City] may suffer or incur by reason thereof.
Section 7.2 of the lease, however, states that the City
at its option, by written notice to [Belmont]. . . direct [Belmont] not to purchase the insurance required by Article IV and . . . thereafter indemnify and hold [Belmont] harmless from any loss, cost, liability, claim, damage, expense, judgment, penalty, or fine required to be covered under such insurance incurred in connection with or arising from any injury to [Belmont], its employees, agents, or any other person during the performance of this Net Lease, or for property, or the property of any other person, if such injury, damage or loss arose as a result of a negligent act of any employee or agent of [Belmont], provided the [Belmont] shall cooperate fully with [the City] in the defense of any such claim . . . Such defense shall be conducted by [the City] at [its] expense and [it] shall reimburse [Belmont] for any reasonable costs incurred in connection therewith (including reasonable disbursements and expenses for attorneys, if any).
By letter dated April 15, 2006, the City "elected to indemnify [Belmont], according to the . . . language specified in Article VII Section 7.2 of the NRP Net Lease."
Based on the foregoing, Belmont establishes prima facie entitlement to summary judgment on its contractual indemnification cross-claim insofar as by the clear and unambiguous language in the lease between it and the City - with the letter dated April 15, 2006 - the City triggered the applicability of section 7.2 of the contract obviating the requirement that Belmont purchase the insurance required by Section 4.2 of the lease, thereby nullifying Belmont's obligation to indemnify the City under section 7.1 of the lease. More importantly, based on the foregoing the City agreed to and is now obligated to indemnify Belmont pursuant to section 7.2 of the lease "for any loss, cost, liability, claim, damage, expense, judgment, penalty, or fine required to be covered under such insurance incurred in connection with or arising from any injury to [Belmont], its employees, agents, or any other person during the performance of this Net Lease, or for property, or the [*9]property of any other person, if such injury, damage or loss arose as a result of a negligent act of any employee or agent of [Belmont]."
Because leases are nothing more than contracts and when clear must to be construed as intended by the terms therein (Tantleff at 244), here, contrary to the City's contention, where the allegations against Belmont are negligence arising from the maintenance of the premises covered by the lease, it is clear that by waiving the requirement that Belmont procure liability insurance, the City intended and the contract requires, that Section 7.2 of the lease apply. While section 7.2 of the lease requires that the City indemnify Belmont for its own negligence, contrary to the City's assertion, the clause is enforceable despite GOL § 5-321, since it is clear that the instant lease was negotiated by sophisticated business entities (Great Northen Insurance Company at 420; Hogeland at 161) and that it was the express intent of the parties that the City indemnify Belmont even if Belmont was found negligent (Levine at 211-212; Kurek at 456). As to the former, the City cannot credibly argue that it - a municipality - is not a sophisticated entity nor that Belmont - a commercial management company - was not one either. More importantly, here, that City meant to indemnify Belmont even for its own negligence could not be clearer, since it not only put in the lease, but reiterated the same by letter sent to the Belmont thereafter.
While it is true that generally, the proponent of contractual indemnification is required to establish that he or she was free from negligence, was held liable only by virtue of a statute imposing liability, and that there was a valid contract governing the indemnification (Uluturk at 234; Correia at 65), here, where indemnification is triggered irrespective of Belmont's negligence, all that is required is that the acts alleged against Belmont fall within the ambit of the coverage prescribed by the relevant indemnification clause. Accordingly, Belmnont establishes prima facie entitlement to summary judgment.
Nothing submitted by the City precludes summary judgment in Belomont's favor. Indeed, Rodriguez' 50-h testimony, a transcript of which the City submits simply bolsters her allegations that the instant accident allegedly occurred when Belmont's employee failed to secure dogs that exited the premises and purportedly bit her. Such allegation of negligence falls squarely within the ambit of section 7.2 of the lease since it represents a claim of "liability . . . damage, expense, judgment, penalty, or fine required to be covered under" the insurance Belmont would have purchased to protect itself and the City under section 4.2 of the lease.
To be sure, the acts alleged, namely, personal injury due to negligence in the maintenance of the premises covered by the lease certainly falls within the ambit of the insurance coverage which Belmont was required to purchase under Section 4.1 - "bodily injury, personal injury . . . arising out of any acts or omissions occurring in the Premises or arising out of the operation of the Premises (emphasis added)." Moreover, and in any event, the City's argument that the claim against Belmont for the negligent maintenance of the premises falls outside the ambit of section 4.2 is simply specious and nothing but a red herring since by virtue section 7.2 - the City's election to waive the insurance requirement required by section 4.1 - what controls is the language of within 7.2. Again, as noted above, that section requires indemnification by the City when, as here, there is a claim against Belmont - even for its own negligence - for any injury to Belmont "or any other person during the performance of this Net Lease."
Similarly, while the City argues that because the lease conditions indemnification for injuries sustained "during the performance of this Net Lease," this language limits indemnification to claims arising from the active maintenance of the premises, such that injury alleged - one caused by an employee of Belmont's dog - cannot trigger indemnification, this argument is meritless. It is clear that the foregoing language is a refefrence to time and not activity. Stated differently the language serves to limit any claims giving rise to indemnification to those occurring during the term of the lease.
Accordingly, Belmont's motion is granted.
Legal Fees
Belmont's application for reimbursement of legal fees incurred in the defense of this action is hereby granted, in part - to the extent of setting this matter down for a conference and then, if necessary, a hearing - insofar as the section 7.2 of the contract clearly requires that the City not only defend and indemnify Belmont under these circumstances, but also requires that the City reimburse Belmont for "any reasonable costs incurred in connection therewith (including reasonable disbursements and expenses for attorneys, if any)."
Generally, in the absence of an agreement, contract, or statute, a party involved in litigation is responsible for all legal frees and costs incurred in the defense or prosecution of such action and cannot recover the same from an opposing party (Hooper Associates, Ltd. v AGS Computers, Inc., 74 NY2d 487, 491 [1989]; Chapel v Mitchell, 84 NY2d 345, 348-349 [1994]). When a [*10]party is entitled to such fees - generally because he's the prevailing party (Nestor v McDowell, 81 NY2d 410, 414-415 [1993]; Hooper Associates, Ltd. at 491) - he is only entitled to those fees which are reasonable; such determination one for the court (Coniglio v Regan, 186 AD2d 708, 709 [2d Dept 1992]; National Bank of N. Am. v Smith Mechanical Corp., 74 AD2d 600, 600 [2d Dept 1980]). Thus, when the moving party is entitled to recover legal expenses and tenders proof of the reasonableness of the expenses incurred, the court is nevertheless required to have a hearing to determine the reasonableness of such fees (id.; Federal Deposit Ins. Corp. v Kassel, 72 AD2d 787, 788 [2d Dept 1979]).
Here, while Belmont itemizes the legal fees and costs incurred in defending the instant action, the reasonableness of those fees must nevertheless be resolved at a hearing. It is hereby
ORDERED that the City provide Belmont with counsel in defense of the instant action and that the City indemnify Belmont for any judgments rendered against it in this action. It is further
ORDERED that all parties appear for a conference on the issue of legal fees on February 9, 2015 at 2pm in Part 3, Room 707. It is further
ORDERED that Belmont serve a copy of this Order with Notice of Entry upon all parties within thirty days (30) hereof.
This constitutes this Court's decision and Order.
Dated : December 9, 2014
Bronx, New York
___________________________________ Mitchell J. Danziger, ASCJ
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