Leading Ins. Group Ins. Co., LTD v Argonaut Great Cent. Ins. Co.
Annotate this CaseDecided on April 22, 2015
Supreme Court, Westchester County
Leading Insurance Group Insurance Company, LTD, and Hartsdale Village Square, LLC, Plaintiff,
against
Argonaut Great Central Insurance Company, Defendant.
50550/2013
Havkins Rosenfeld Ritzert & Varriale, LLP
Attorney for Plaintiff
1065 Avenue of the Americas, Suite 800
New York, New York 10018
Hurwitz & Fine, PC
Attorney for Defendant
1300 Liberty Building
Buffalo, New York 14202
William J. Giacomo, J.
The following documents numbered 1 to 12 were read on defendant's motion for summary judgment dismissing the complaint and plaintiff motion for summary judgment on its declaratory judgment action.PAPERS NUMBERED
Defendant's Notice of Motion/Affirmation/Exhibits/Memo of Law1-4
Plaintiff's Notice of Motion/Affirmation/Exhibit/Memo of Law5-8
Defendant's Affirmation in Opposition/Memo of Law9-10
Plaintiff's Affirmation in Opposition/Memo of Law11-12
[*2]Factual and Procedural Background
Sara King-Benincasa and Philip J. Benincasa, Jr. ("the Benincasas"), as tenants, entered into a lease agreement with Monte S. Mance and Sandra Hutchins c/o Blum & Bellow, Inc agent, for the lease of premises known as 212 East Hartsdale Avenue, Hartsdale, New York. Plaintiff Hartsdale Village Square, LLC is the owner of the premises. The Benincasas used the premises to operate a dry cleaning business King-Aristocrat Dry Cleaners. The lease was for a term of 10 years from January 1, 2004 to December 21, 2013.
Pursuant to the terms of paragraph 2 of the lease, "the Tenant shall take good care of the premises and shall, at the Tenant's own costs and expense make all repairs to the interior including entrance doors." The lease also provided in a rider thereto that "the Tenant shall sweep or shovel daily to keep the sidewalk and curb area in front of said premises and the areaway directly in rear thereof in clean condition at all times and free from ice, snow, rubbish and debris."
On August 17, 2010, Carol Kellner filed a personal injury action against the Benincasas alleging that she slipped and fell on the sidewalk in front of King-Aristocrat Dry Cleaners. At the time of the accident, Kellner was not attempting to enter the dry cleaner but was merely passing in front of it to go to the Bagel Shop down the street. Kellner passed in front of the dry cleaner about 3-4 times per week to get to the bagel store.
Plaintiff Leading Insurance Group Insurance Company Ltd. ("Leading") is the insurer for Hartsdale Village Square, LLC and defendant Argonaut Great Central Insurance Company ("Argonaut") is the Benincasas's insurer.
Upon notice of the suit, Argonaut assigned counsel to the Benincasas.
On June 16, 2011, Kellner's counsel set a letter to Hartsdale informing it of the accident.
On August 19, 2011, Leading tendered the defense and indemnification of Hartsdale to Argonaut.
On September 7, 2011, Argonaut denied Leading's tender advising that the only responsibility the Benincasas' had under the lease regarding the sidewalk was snow and ice removal.
On September 9, 2011, Kellner commenced a separate action against Hartsdale in Kellner v. Hartsdale Index No. 55601/2011. According to Argonaut, this action was resolved in April 2014 when Leading agreed to settle the matter with Kellner for $8,500.
On June 21, 2012, the Court (Adler, J.) granted the Benincasas' motion for summary judgment dismissing the complaint on the ground that the alleged defect in the sidewalk did not constitute a trap or nuisance and was merely a trivial defect which was not actionable as a matter of law. Although an appeal was filed, it was voluntarily withdrawn by plaintiff's counsel on February 1, 2013.
On February 26, 2013, Hartsdale's attorney sent a letter to the Benincasas demanding that they assume Hartsdale's defense in the Kellner lawsuit and all defense and indemnity costs and to indemnify Hartsdale. On March 15, 2013, Argonaut sent a letter to Leading's counsel noting that Leading learned of the Kellner v Hartsdale action on or about November 8, 2011, but waited until February 26, 2013 to provide it with [*3]notice of the suit. Nevertheless, it would investigate and evaluate the tender after Hartsdale provided it with a copy of the lease agreement.
On March 27, 2013, Argonaut notified Leading's counsel that it never received a copy of the lease, as requested, however, they rejected the tender. Argonaut noted that Kellner sued the Benincasas' directly and that action was dismissed on a finding that the Benincasas were not negligent. Argonaut also stated that it was prejudiced by the late notice of suit sent by Hartsdale and refused to defend or indemnify Hartsdale for any claims asserted in the Kellner action.
On January 14, 2013, Leading and Hartsdale commenced this declaratory judgment action seeking a judgment that Argonaut is obligated to provide a defense and indemnification to Hartsdale under the additional insured language of the policy Argonaut issued to the Benincasas.
Argonaut now moves for summary judgment dismissing the complaint on the ground that Hartsdale is not entitled to additional insured coverage because the accident did not occur on the leased premises. Argonaut argues that the additional insured provision of its policy provides coverage for "liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the schedule . . . " However, Argonaut agues that Kellner's accident occurred on the sidewalk in front of the leased premises; therefore, no additional insured coverage is available. Notably, Kellner was injured while walking on the sidewalk crossing in front of the leased premises to go to a bagel shop. She was not entering or exiting the leased premises. Argonaut also notes that Kellner's fall had nothing to do with the repair, maintenance, or use of the leased premises. Moreover, the lease only required the Benincasas to maintain the interior of the premises and, other than snow and ice removal, the Benincasas had no duty to repair the sidewalk which Argonaut contends is a structural repair. Accordingly, under the facts of this case, Hartsdale is not entitled to additional insured coverage under Argonaut's policy.
Argonaut also claims that under the terms of it's policy, Hartsdale was required to provide it with notice of the accident as well as notice of suit as soon as practicable. Argonaut notes that the accident occurred on June 17, 2009, yet Hartsdale did not notify Benincasas until June 28, 2011. Further, Hartsdale did not provide it with notice of suit until February 26, 2013, 16 months after the suit against Hartsdale was commenced and 8 months after the case against the Benincasas was dismissed. Thus, the notices were not timely.
Argonaut further argues that Hartsdale and Leading's failure to use the decision rendered in Benincasas' case to dismiss the case against Hartsdale based upon the doctrine of res judicata resulted in a waste of time and resources for which Argonaut should not be liable.
Finally, Argonaut argues that "other insurance" clauses of both the Leading policy and the Argonaut policy make Leading and Argonaut co-insurers.
In opposition, Leading argues that the abutting sidewalk of the premises is covered under the terms of the policy. Further, the repair of a sidewalk is not a structural alteration and, therefore, is covered under the terms of the lease and additional insured insurance coverage. Leading argues that Argonaut's late notice of claim arguments are without merit since Argonaut disclaimed coverage on September [*4]7, 2011 which thereafter relieved Leading from any further notice obligations under the policy. Moreover, even if notice was untimely Argonaut has not established how it was prejudiced. Leading also argues that it and Argonaut are not co-insurers, but rather that Argonaut is the primary insurer.
Leading cross moves for summary judgment on it's declaratory judgment claim. In support of its motion, Leading makes the same arguments it made in opposition to Argonaut's motion for summary judgment.
Discussion
A party seeking summary judgment bears the initial burden of affirmatively demonstrating its entitlement to summary judgment as a matter of law. (See Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Alvarez v Prospect Hospital, 68 NY2d 320 [1986]). "Once this showing has been made ... 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" (see Zuckerman v. City of New York, 49 NY2d 557 [1980]).
Argonaut has established prima facie entitlement to summary judgment dismissing the complaint. The additional insured coverage under Argonaut's policy is only for " liability arising out of the ownership, maintenance or use of that part of the premises leased to you . . . " Notably, pursuant to the terms of the lease, the Benincasas leased the premises known as 212 East Hartsdale Avenue, Hartsdale, New York. The lease expressly provides that the tenant is responsible to "take good care of the premises and shall, at the Tenant's own costs and expense make all repairs to the interior including the entrance doors." With respect to the sidewalk, the lease states that the tenants will "sweep or shovel daily to keep the sidewalk and curb areas in front of the said premises and areaway directly in the rear thereof in clean condition at all times and free from ice, snow, rubbish and debris." There is nothing in the lease to indicate that the Benincasas were responsible for the maintenance and repair of the sidewalk. Notably, Kellner's accident was not the result of ice, snow, rubbish or debris on the sidewalk. Kellner alleged that her accident was caused by uneven and misleveled concrete, a non-trivial defect in the sidewalk. Here, there is no evidence that the Benincasas were responsible for the maintenance or repair of the sidewalk crossing in front of the premises.
In a similar case, Christ the King Regional High School v Zurich Ins. Co. of N. Am.,
91 AD3d 806, 937 N.Y.S.2d 290 [2nd Dept 2012]), the Appellate Division Second Department held that the premises' lessee's insurer was not obligated to defend and indemnify the owner under the additional insured coverage provided in the lessee policy's in an underlying personal injury action. In Christ the King, the personal injury plaintiff was injured on the sidewalk in front of a school that was leased by Christ the King Regional High School ("Christ the King") to All American Talent ("All American"), whereby All American was to rent the auditorium and three classrooms in Christ the King for two days for a dance competition. Personal injury plaintiff was injured when [*5]she fell on a sidewalk while walking from the parking lot behind the school to the school's front entrance in order to attend the dance competition. The personal injury plaintiff commenced an action against Christ the King, alleging that her fall was caused by a sidewalk defect. Christ the King sought a defense and indemnification in the personal injury action from All American's insurer Zurich Insurance Company of North American ("Zurich") under an additional insured endorsement of a general liability policy issued by Zurich to All American. When Zurich denied that request, Christ the King commenced an action for a judgment declaring that Zurich was obligated to defend and indemnify it in the underlying personal injury action. Zurich moved for summary judgment declaring that it was not so obligated, claiming that Christ the King was not entitled to additional insured coverage under the subject policy.
In holding that Zurich did not have an obligation to defend and indemnify Christ the King, the Appellate Division Second Department stated:
[T]the above-quoted provision of the subject policy only provides additional insured coverage for "liability arising out of the . . . use of that part of any premises leased" to All American. [Zurich] met its prima facie burden of demonstrating that [Christ the King] failed to satisfy this portion of the policy by showing that the contract defined the leased premises as the school auditorium and three classrooms, and that the accident that is the subject of the underlying action occurred outside the school building.
In opposition, the plaintiffs attempted to raise a triable issue of fact by showing that coverage was nonetheless available under Section II, 2.e of the Commercial General Liability Coverage Form, under which, as relevant here, an "insured" is defined to include any organization to whom All American was obligated, by virtue of a written contract, to provide liability insurance, "but only with respect to liability arising out of [its] operations." This provision requires that there be " some causal relationship between the injury and the risk for which coverage is provided' " (Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38 [2010], quoting Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005]; see Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d 411, 415 [2008]).
The plaintiffs failed to raise a triable issue of fact as to the existence of such a causal relationship. All American's "operations" consisted of conducting a dance competition in the school auditorium and three classrooms. Bodily injury occurring outside the leased premises, in an area which All American had no responsibility to maintain or repair, "was not a bargained-for risk" (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d at 473).
Here, as in Christ the King the lease did not provide that the sidewalk crossing in front of the premises was included in the leased premises nor did the Benincasas have a duty to repair or maintain the sidewalk or keep it free from defects. Accordingly, [*6]Kellner's accident does fall within the terms of the language of the additional insured coverage. (See General Acc. Fire & Life Assur. Corp. v Travelers Ins. Co., 162 AD2d 130, 556 N.Y.S.2d 76 [1st Dept 1990]["Since the accident did not occur within that part of the premises leased to Cramco, plaintiff General, Cramco's insurer, was not obligated to defend or indemnify Howland."]; Rensselaer Polytechnic Inst. v Zurich Am. Ins. Co., 176 AD2d 1156, 575 N.Y.S.2d 598 [3rd Dept 1991]["[W]e first reject the contention that the leased premises included the walkways immediately adjacent to the fieldhouse. Under the clear terms of the contract with plaintiff, Ice Capades leased only space located within the fieldhouse and not areas external to the structure"]).
Notably, in this case Kellner was not using the sidewalk to enter the premises in contrast to the facts in Christ the King where plaintiff was using the sidewalk to enter the school. Here, Kellner was merely using the sidewalk to walk to a bagel store down the block further weakening the nexus between Kellner's accident and the leased premises.Finally, it must be noted that by decision and order dated January 21, 2012 the Court (Adler, J.) granted the Benincasas' motion for summary judgment dismissing the complaint on the ground that the alleged sidewalk defect did not constitute a trap or nuisance and was merely a trivial defect which was not actionable as a matter of law. This decision was rendered almost two years before the Hartsdale action was settled and could have resolved the Hartsdale action also.
In opposition, Leading raises no issue of fact which would preclude summary judgment in favor of Argonaut. Leading argues that abutting sidewalks are considered part of the leased premises, however, there is nothing in the lease to indicate that a sidewalk was part of the leased premises. Moreover, even if it were included there is no evidence that the Benincasas failed to properly maintain and repair the sidewalk. As noted above, the Kellner action against the Benincasas was dismissed on the ground that the sidewalk was not defective.
Leading's reliance on ZKZ Assoc. LP v. CNA Ins. Co., (89 NY2d 990 [1997]), is misplaced. In ZKZ, the language of the additional insured policy was identical to the one here. However, in ZKZ, the management agreement between the named insured and the additional insured stated that the named insured was "responsible for operating and managing a parking facility" In ZKZ, the personal injury plaintiff was injured while traversing the sidewalk abutting the garage. Plaintiff sought to hold both owner and lessee responsible due to the defect in that part of the sidewalk used by vehicles to enter the garage. The Court of Appeals affirmed the Appellate Division First Department's finding that the additional insured was entitled to a defense and indemnification where "the special use of the sidewalk for that purpose is inextricable, indivisible part of the use of the garage and any liability arising from such use clearly comes within the additional insured's coverage." (ZKZ Associates LP v. CNA Ins. Co., 224 AD2d 174, 176 [1st Dept 1996] affirmed 89 NY2d 990 [1997]). That is not the case here.[FN1]
Accordingly, Argonaut's motion for summary judgment dismissing the complaint is GRANTED and Leading's cross motion for summary judgment is DENIED.
Dated: White Plains, New York
April 22, 2015
HON. WILLIAM J. GIACOMO, J.S.C.
FootnotesFootnote 1:The Court notes that this decision is contrary to the decision of our esteem colleague Justice Jack M. Battaglia of the Supreme Court Kings County in Leading Insurance Group Insurance Company, LTD v. Greenwich Insurance Company, 44 Misc 3d 435 [2014]). In Leading, the Court held that the additional insured was entitled to a defense and indemnification by the additional insurer. The Leading Court cited Antoine v City of New York, 56 AD3d 583, 868 N.Y.S.2d 688 [2nd Dept 2008]) for the proposition that "under New York law, the coverage afforded by a premises liability policy extends by implication to that portion of an outside sidewalk necessary for access to the covered premises . . . " However, this Court notes that Antoine did not involve additional insurance coverage. Rather, the issue in Antoine was whether a primary insurer could disclaim coverage in an underlying slip and fall on a sidewalk action where, at the time the policy was issued, there were code violations issued to owner relating to the sidewalk where plaintiff would later be injured. The Antoine Court held that: [B]ecause the language of the warranty does not unambiguously apply to the sidewalk outside the premises, because the ambiguous warranty provision must be interpreted in favor of the insured and against the insurer unless a contrary construction is the only fair interpretation, and because the inclusion of the City's sidewalk within the warranty provision is not the only fair interpretation of that provision, we conclude, as a matter of law, that [owner] did not breach the warranty, that [insurer] is therefore obligated to defend and indemnify . . . This Court finds this case factual distinguishable from Antoine and, therefore, finds itself in disagreement with the holding in Leading Insurance Group Insurance Company, LTD v. Greenwich Insurance Company, 44 Misc 3d 435 [2014]).
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