Zurich Am. Ins. Co. v Tower Natl. Ins. Co.
Annotate this CaseDecided on May 24, 2016
Supreme Court, New York County
Zurich American Insurance Company, GENERAL AMERICAN INVESTORS COMPANY, INC., and ARAGON, LLC, Plaintiffs,
against
Tower National Insurance Company and PORT RICHMOND GLASS & STOREFRONTS, INC., [Pertaining to the underlying action Brown . SLG 100 Park, LLC et al., Index No. 103941/08, N.Y. Sup. Ct., N.Y. Co.], Defendants.
110805/2009
White Fleischner & Fino, LLP, New York (Janet P. Ford of counsel), for plaintiffs.
Carroll, Mcnulty & Kull, LLC, New York (Max W. Gershweir of counsel), for defendant Tower National Insurance Company.
Gerald Lebovits, J.
Recitation, as required by CPLR 2219 (a), of the papers considered in reviewing plaintiffs' motion for summary judgment and defendant Tower National Insurance Company's cross-motion for summary judgment.
PapersNumbered
Plaintiffs' Notice of Motion1
Plaintiffs' Memorandum of Law in Support2
Plaintiffs' Affirmation in Support3
Defendant's Notice of Cross-Motion4
Defendant's Affirmation in Opposition to Motion and in Support of Cross-Motion5
Defendant's Memorandum of Law in Support of Cross-Motion6
Plaintiffs' Affirmation in Reply and Opposition to Cross-Motion7
Plaintiffs' Memorandum of Law in Reply and Opposition to Cross-Motion8
Defendant's Memorandum of Law in Reply9
Plaintiffs' Memorandum of Law in Sur-Reply10
______________________________________________________________________________
Gerald Lebovits, J.
Plaintiff General American Investors Company, Inc. (General) is a tenant at a building located at 100 Park Avenue, New York, New York. Plaintiff Aragon, LLC (Aragon) is a general contractor for a renovation project of a large office suite that plaintiff, General, had leased. Aragon procured Commercial General Liability insurance from plaintiff Zurich American Insurance Company (Zurich) for the period December 6, 2008, to December 6, 2009. Aragon subcontracted with defendant Port Richmond Glass & Storefronts, Inc. (Port Richmond) to install glass doors and partitions. Port Richmond procured a policy of insurance from defendant Tower National Insurance Company (Tower) for the period November 30, 2007, to November 30, 2008. Plaintiffs move under CPLR 3212 for summary judgment, seeking reimbursement from Tower and Port Richmond for defense and indemnity of a personal-injury action, captioned Brown v. SLG 100 Park, LLC et al., Index No. 103941/08 (Brown Action). Plaintiffs seek to recover $465,000 in settlement of the Brown Action, $71,233.08 for defending General, and at least $158,000 for defending Aragon. With nine percent statutory interest from 2008, plaintiffs seek in exceed of $1 million. Plaintiffs also seek the court to declare that "[d]efendants Tower and Port Richmond were obligated to defend and indemnify General American and Aragon in the Brown Action." (Plaintiffs' Notice of Motion.) Defendant Tower cross-moves under CPLR 3212 for summary judgment to dismiss claims against Tower on the ground that Tower was not obligated to reimburse plaintiffs.
Plaintiffs' motion for summary judgment against defendant Port Richmond is denied as academic. In the decision on Port Richmond's motion for summary judgment, sequence 3, Hon. Paul Wooten, New York State Supreme Court, New York County, on January 17, 2016, dismissed plaintiffs' complaint against Port Richmond in its entirety. Justice Wooten determined that plaintiffs are not entitled to indemnification from Port Richmond, and that plaintiff Aragon cannot establish a claim for breach of contract.
Plaintiffs' motion for summary judgment against defendant Tower is denied. Defendant Tower's cross-motion is granted in part and denied in part.
$158,000 for defending Aragon
Plaintiffs' CPLR 3212 motion for summary judgment seeking reimbursement from defendant Tower for $158,000 in defending Aragon is denied. Tower's cross-motion to dismiss claims for reimbursement on Aragon's defense is denied. Neither party has satisfied its burden to prove a prima facie case. For a court to grant a summary-judgment motion, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issue of fact about the claim or claims at issue. (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].) Neither party has made a prima facie showing to entitle it to judgment as a matter of law. A dispute exists about the parties' intent when they entered into the settlement stipulation on June 7, 2011.
The following facts are not in dispute. On September 18, 2007, Aragon entered into a contract with Port Richmond to install glass doors and partitions (Aragon/Port Richmond Contract). The contract included an indemnification provision requiring Port Richmond to defend and indemnify Aragon and General. (Plaintiffs' Affirmation in Support, Exhibit 5.) The Insurance requirements of the Aragon/Port Richmond Contract provide: "1d. All insurance shall name Aragon and all other parties designated in the Construction Documents as additional insureds for all claims that result from Contractor's performance of the work under the Contract Documents . . . ." (Id. Exhibit 6.) Port Richmond procured a policy of insurance from Tower for the period November 30, 2007, to November 30, 2008, with a limit of $1 million per occurrence (Tower Policy). (Id. Exhibit 8.) On December 14, 2007, Donald Brown, a Port Richmond employee, suffered an on-the-job injury. (Defendant's Affirmation in Opposition, Exhibit 7.) By letter dated August 19, 2010, Tower agreed to defend and indemnify Aragon in the Brown Action under a reservation of rights. (Plaintiff's Affirmation in Support, Exhibit 17; Defendant's Affirmation in Opposition, Exhibit 12.) On February 28, 2011, Zurich refused Tower's offer of defense, stating that Aragon retains the right of counsel of choice to continue to defend it in the matter, and requested Tower to either reimburse Aragon in full or defend Aragon without the reservation of rights. (Defendant's Affirmation in Opposition, Exhibit 14.) On June 7, 2011, a settlement stipulation was signed. The stipulation provides that "Attorneys fees for Aragon to be paid by Port Richmond for a total of $31K for all attny fees related to the above action (+ all ã [plaintiff] actions)." (Id. Exhibit 18.)
Tower interprets the settlement to mean that Tower will pay $31,000 in settlement of Aragon's claim for attorney fees. Tower, in its attorney's affirmation, asserts that "the stipulation states that Tower will pay $31,000 in settlement of Aragon's claims for attorneys fees." (Defendant's Affirmation in Opposition to Motion and in Support of Cross-Motion, ¶ 39.) Plaintiffs do not dispute this. This court notes that the stipulation is signed by Port Richmond and Aragon, not Tower. This court assumes that Tower, as Port Richmond's insurance carrier, defended Port Richmond in the Brown Action and assumed the obligation to pay under the stipulation.
Plaintiffs argue that Tower breached the stipulation dated June 7, 2011, by not paying the $31,000. Accordingly, plaintiffs elect to have Tower reimburse them for the full amount of Aragon's defense. This court notes that the stipulation, however, includes no payment deadline and no default provision. Neither party has satisfied its burden to prove the parties' intent about payment deadline and the default provision when they entered into the settlement stipulation. The court cannot tell what the parties intended and what the stipulation meant to cover. Thus, plaintiffs' CPLR 3212 motion for summary judgment for reimbursement from defendant Tower for $158,000 in defending Aragon is denied. Tower's cross-motion to dismiss claims for reimbursement on Aragon's defense is denied.
$71,233.08 for defending General
Plaintiffs' CPLR 3212 motion for summary judgment for reimbursement from defendant Tower for $71,233.08 in defending General is denied. Tower's cross-motion to dismiss claims [*2]for reimbursement on General's defense is granted on the ground that General is not covered under Tower Policy's Additional Insured endorsement.
Plaintiffs argue that General is an additional insured covered under the Additional Insured endorsement of the Tower Policy. The Additional Insured endorsement, however, excludes coverage for Labor Law claims and negligence claims against insured. An additional Insured endorsement that provides that "[t]his insurance does not apply to acts or omissions of the Additional Insured nor liability imposed on the additional insured by statute, ordinance or law" bars coverage for Labor Law claims and negligence claims against insured. (Total Concept Carpentry, Inc. v Tower Ins. Co. of New York, 95 AD3d 411, 412 [1st Dept 2012].)
The following facts are not in dispute. Tower's Additional Insured endorsement in Total Concept Carpentry v Tower is identical to its endorsement here: "This insurance does not apply to acts or omissions of the Additional Insured nor liability imposed on the additional insured by statute, ordinance or law." (Plaintiff's Affirmation in Support, Exhibit 8.) Both the Complaint and the Second Third-Party Complaint in the Brown Action allege that the incident occurred as a result of negligence and violation of the Labor Law and the Industrial Code. (Id. Exhibit 1, at ¶¶ 18, 28; Id. Exhibit 3, Second Third-Party Compliant, at ¶¶ 29, 35.) Thus, claims against General are for negligence and violation of the Labor Law and the Industrial Code, and are excluded under the Additional Insured endorsement.
Plaintiffs further argue that Tower is barred from denying coverage to General by failing to provide a timely disclaimer to General under Insurance Law § 3420 (d) (2). Under Insurance Law § 3420 (d) (2), failing to give "written notice as soon as is reasonably possible" precludes an effective disclaimer or denial. (Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837 [1996].) This provision applies where an insurer is acting on behalf of its insured to recover from another insurer. (JT Magen v Hartford Fire Ins. Co., 64 AD3d 266, 268 [1st Dept 2009].) Plaintiffs assert that defendant Tower never sent a disclaimer letter to General. Disclaimer is necessary under section § 3420 (d) (2), but doing so "is unnecessary when a claim falls outside the scope of the policy's coverage portion. Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. By contrast, disclaimer pursuant to section 3420 (d) is necessary when denial of coverage is based on a policy exclusion without which the claim would be covered." (Black Bull Contr., LLC v Indian Harbor Ins. Co., 135 AD3d 401, 403 [1st Dept 2016].)
No disputes exists that the Additional Insured endorsement specifically provides that "This endorsement insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART." (Plaintiff's Affirmation in Support, Exhibit 8.) Thus, the claim "falls outside the scope of the policy's coverage portion," and § 3420 (d) (2) does not apply. Therefore, plaintiffs' CPLR 3212 motion for summary judgment to seek reimbursement from defendant Tower for $71,233.08 in defending General is denied. Tower's cross-motion to dismiss claims for reimbursement on General's defense is granted.
$465,000 in settlement of the Brown Action
Plaintiffs' CPLR 3212 motion for summary judgment to seek reimbursement from defendant Tower for $465,000 in settlement of the Brown Action is denied. Tower's cross-motion to dismiss claims for reimbursement on settlement of the Brown Action is denied. Neither party has satisfied its burden to prove a prima facie case. Disputes exist about whether Tower unjustifiably refused to defend, whether the settlement is reasonable, and whether the settlement stipulation dated June 7, 2011, is complete.
The general rule is that "[i]f an insurer unjustifiably refuses to defend a suit, the insured may make a reasonable settlement or compromise of the injured person's claim, and is then entitled to reimbursement from the insurer." (Cardinal v State, 304 NY 400, 410 [1952].) When parties are disputing the reasonableness of the settlement, "including the likelihood that plaintiff would have been found liable had it proceeded to trial in the underlying action, they may be raised at the trial in the instant action." (Horn Const. Co., Inc. v MT Sec. Serv. Corp., 97 AD2d 786, 786 [2d Dept 1983].)
The following facts are not in dispute. On February 28, 2011, Zurich refused Tower's offer of defense, stating that Aragon retains the right of counsel of choice to continue to defend them in the matter, and requested Tower to either reimburse Aragon in full or defend Aragon without the reservation of rights. (Defendant's Affirmation in Opposition, Exhibit 14.) On April 20, 2011, Tower communicated with Zurich to explain that Tower would not agree to Zurich's conditions. (Id. Exhibit 16.) In the Brown Action, in a decision dated November 29, 2012, Hon. Geoffrey D. S. Wright, New York State Supreme Court, New York County, granted Aragon's motion to set aside the verdict, and dismissed the complaint against Aragon. (Defendant's Affirmation in Opposition, Exhibit 27.) Zurich settled with Brown for $465,000; as part of its settlement, Brown agreed to withdraw his notice of appeal. (Plaintiff's Affirmation in Support, Exhibit 42.) The First Department approved this settlement on September 3, 2013. (Id. Exhibit 43.)
Plaintiffs have not satisfied their burden to prove that Tower unjustifiably refused to defend. Nor have they satisfied their burden to prove the reasonableness of the settlement. Defendant Tower argues that the stipulation is complete on its face and it must be enforced as written. Tower, however, has not satisfied its burden to prove. Thus, plaintiffs' CPLR 3212 motion for summary judgment for reimbursement from defendant Tower for $465,000 in settlement of the Brown Action is denied. Tower's cross-motion to dismiss claims for reimbursement on settlement of the Brown Action is denied.
ORDERED that plaintiffs' motion for summary judgment is denied; and it is further
ORDERED that defendant Tower's cross-motion for summary judgment is granted in part and denied in part, in that its cross-motion on Aragon's defense and settlement of the Brown Action are denied, and its cross-motion on General's defense is granted.
This constitutes the court's decision and order.
Dated: May 24, 2016
J.S.C.
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