Devoe Properties, LLC v. Atlantic Casualty Insurance Company, No. 1:2009cv00672 - Document 25 (E.D.N.Y. 2011)
Court Description: ORDER granting 17 Motion for Summary Judgment. Ordered by Senior Judge I. Leo Glasser on 10/4/2011. (Green, Dana)
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Devoe Properties, LLC v. Atlantic Casualty Insurance Company Doc. 25 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------x DEVOE PROPERTIES LLC, Plaintiff, Mem orandum and Order 0 9-cv-672 - against ATLANTIC CASUALTY INSURANCE CO. Defendant. ------------------------------------------------------x GLASSER, United States District J udge: Plaintiff Devoe Properties, LLC (“plaintiff” or “Devoe”) filed this action against Atlantic Casualty Insurance Com pany (“defendant” or “Atlantic”) pursuant to New York State Insurance Law § 3420 (b), which provides, in substance, that any person who has obtained a judgm ent against an insured m ay m aintain an action against the insurer, if the judgm ent against the insured rem ains unsatisfied for m ore than thirty days. Devoe, as explained hereafter, obtained a default judgm ent against Lexus Construction, Inc. (“Lexus”),1 Atlantic’s insured. Pending before the Court is Atlantic’s m otion for sum m ary judgm ent, dism issing the case. Despite four extensions of tim e to respond to the m otion, Devoe has not subm itted one. For the following reasons, the defendant’s m otion is GRANTED. 1 In its Verified Com plaint, Devoe states that Lexus has altered its nam e with the Secretary of State and now does business as Four-Cap Construction Corp. See Verified Com plaint, dated J anuary 1, 20 0 9, (“Ver. Com pl.”) ¶ 4. 1 Dockets.Justia.com BACKGROU N D I. Co n s tru ctio n at th e D e vo e Pro p e rty The following facts are undisputed, unless otherwise noted. On or about March 27, 20 0 6, plaintiff hired Fung Shung Dee Construction, Inc. (“Fung Shung Dee”) as a general contractor and supervisor for the dem olition of a pre-existing structure and the construction of a new condom inium on land Devoe owned at 291 Devoe Avenue, Brooklyn, New York (“the Devoe Property”). Statem ent Pursuant to Rule 56.1 (“R. 56.1”) ¶¶ 6-7 & Ex. L, ¶ 7. Im m ediately adjacent to the Devoe Property was a building at 293 Devoe Street, Brooklyn, New York, (the “Neighboring Property”) owned by Vincent Ragone (“Ragone”). R. 56.1 ¶ 13. Lexus was hired to perform part of the construction work at the Devoe Property. R. 56.1 ¶ 9 & Ex. P, at 11-12, 31. This work consisted of excavating an old foundation and rem oving soil to create a hole approxim ately 20 feet wide, 60 feet long, and ten feet deep to prepare the site for the new condom inium ’s concrete foundation. R. 56.1 Ex. L, ¶ 8; Ex. N, at 20 , 23-29; Ex. C, at 39. To accom plish this work, Lexus used an excavator 2 and trucks to rem ove the soil. R. 56.1, Ex. N, at 28-29, 72. Another com pany, Europa Construction Corp. (“Europa”), was hired to pour the new foundation. R. 56.1, Ex. N, at 20 . Together, Lexus and Europa also perform ed underpinning work, rem oving supporting soil from under the Neighboring Property and replacing it with concrete. R. 56.1, Ex. Q, at 14-16. Lexus also com pleted the “backfilling,” regrading soil against the concrete underpinnings. Id. 2 Although there is som e confusion in the record regarding what m achine Lexus used, the witnesses’ descriptions at deposition m atch that of an excavator. See R. 56.1, Exs. B, N, P & Q. An excavator, also com m only called a “digger,” is a heavy construction m achine consisting of a bucket and hydraulic boom attached to a rotating platform on tracks or wheels. 2 II. U n d e rlyin g Litigatio n On J uly 12, 20 0 6, the New York Departm ent of Buildings (“NYDB”) issued a stop-work order, finding there was a “failure to protect adjoining structure during excavation operations” and that “due to unsafe excavation and underpinning work,” the Neighboring Property was dam aged. R. 56.1 ¶ 24 & Ex. R. Ragone subsequently filed suit against Devoe for property dam age and other relief (the “Underlying Action”). Ragone v. Devoe Properties, LLC, 0 3520 9/ 20 0 6 (N.Y. Sup. 20 0 6). The com plaint in the Underlying Action (the “Underlying Com plaint”) alleged that during the course of the excavation, Devoe caused extensive dam age to Ragone’s foundation wall and interior walls. R. 56.1 ¶¶ 15-16 & Ex. K. This dam age included cracks in the foundation and basem ent floor, m ud and water seeping through those cracks, and m ovem ent of the foundation wall towards the excavation. Id. On December 27, 20 0 6, Devoe filed a Third-Party Sum m ons and Verified Com plaint against Fung Shung Dee, Lexus, and Europa (the “Third-Party Action”). R. 56.1 ¶ 17 & Ex. L. The Third-Party Action alleged that the dam age to the Neighboring Building was “solely as a result of the negligence of third party defendants . . . in perform ing their obligations at the [Devoe Property] during the course of the excavation and the construction of the foundation. . . .” R. 56.1, Ex. L ¶ 14. Devoe sought contribution for any dam age for which it was held liable in the Underlying Action. Id. at ¶ 19. Subsequently, Devoe settled the Underlying Action, purchasing the Neighboring Property for approxim ately $ 850 ,0 0 0 . R. 56.1, Ex. N, at 60 . 3 III. Re p o rtin g o f th e Occu rre n ce to Atlan tic Prior to construction at the Devoe Property, Atlantic issued to Lexus com m ercial general liability insurance, Policy L0 440 0 0 966, for the period of February 6, 20 0 6 to February 7, 20 0 7 (the “Policy”). R. 56.1 ¶ 1 & Ex. A. Am ong other things, the Policy obligated the insured to notify Atlantic “as soon as practicable” of any “occurrence” that m ight result in a claim . R. 56.1, Ex. A, at § IV(2)(a). The parties dispute when Lexus first becam e aware that the Neighboring Property had been dam aged or that the dam age m ight result in a claim against Lexus. In any event, Atlantic did not becom e aware of the Third Party Action until March 15, 20 0 7. R. 56.1 ¶ 18 & Ex. B; Ex. C,at 183. Following an investigation, Atlantic disclaim ed the Policy’s coverage of Lexus’s work at the Devoe Property on the ground that Lexus failed to m ake a tim ely report of the occurrence and for the additional reason that the Policy did not insure excavation work. R. 56.1 ¶ 26 & Ex. D. IV. En try o f D e fau lt Ju d gm e n t Neither Atlantic nor Lexus responded to the Third-Party Com plaint. See R.56.1 Ex. M. On August 11, 20 0 8, a default judgm ent was entered in favor of Devoe against Lexus in the am ount of $ 547,962.0 0 (the “Underlying J udgm ent”). R. 56.1 ¶ 31 & Ex. M. Devoe filed this action J anuary 5, 20 0 9, in the New York Suprem e Court, Kings County, seeking to enforce that judgm ent against Atlantic, pursuant to New York State Insurance Law § 3420 (b). R. 56.1 ¶ 32 & Ex. I. On February 13, 20 0 9, Atlantic rem oved the action to federal court, pursuant to 28 U.S.C. § 1442(b). 4 JU RISD ICTION This court has jurisdiction over this action pursuant to diversity of citizenship. 28 U.S.C. § 1332(a)(1). Plaintiff is a Lim ited Liability Com pany organized in the State of New York with its principal place of business in New York. Ver. Com pl. ¶ 1. Atlantic is a North Carolina corporation with its principal place of business in North Carolina. Notice of Rem oval, dated February 13, 20 0 9 ¶ 4. The am ount in controversy exceeds $ 75,0 0 0 . D ISCU SSION Reviewing the evidence with the proper deference granted to the non-m ovant on a m otion for sum m ary judgm ent, it is clear that the judgm ent against Lexus derives from work that is excluded from the Policy’s coverage. Because the Court finds that Lexus’s work was not insured by the Policy, it is unnecessary to address the issue of tim eliness. I. Stan d ard o f Re vie w Sum m ary judgm ent is appropriate “if the pleadings, depositions, answers to interrogatories, and adm issions on file, together with the affidavits . . . show that there is no genuine issue as to any m aterial fact and that the m ovant is entitled to judgm ent as a m atter of law.” Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 10 6 S. Ct. 1348, 1355-56, 89 L. Ed. 2d 538 (1986). As an initial m atter, the m oving party has the burden of dem onstrating that no genuine issue of m aterial fact exists. Matsushita, 475 U.S. at 586. Once the m ovant points to the absence of an issue, the non-m oving party “m ay not rest upon the m ere allegations or 5 denials” in its pleadings but m ust produce evidence of a genuine issue of m aterial fact. See Fed R. Civ. P. 56(e). See also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 10 6 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). A genuine issue of m aterial fact exists when there is sufficient evidence favoring the nonm oving party such that a jury could return a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 10 6 S. Ct. 250 5, 91 L. Ed. 2d (1986). Credibility assessm ents and choices between conflicting versions of events, when m aterial to the inquiry, are determ inations that the Court m ust leave for a jury. See Fischl v. Arm itage, 128 F.3d 50 , 55 (2d Cir. 1997). “The courts m ust view the evidence in the light m ost favorable to the party against whom sum m ary judgm ent is sought and m ust draw all reasonable inferences in his favor.” L.B. Foster Co. v. Am . Piles, Inc., 138 F.3d 81, 87 (2d Cir. 1998) (citing Matushita, 475 U.S. at 587). If there rem ains no genuine issue of m aterial fact then the m oving party is entitled to judgm ent as a m atter of law. II. Sco p e o f th e Po licy The parties do not contest that New York law applies to the Policy. “The New York approach to the interpretation of contracts of insurance is ‘to give effect to the intent of the parties as expressed in the clear language of the contract.’” Mount Vernon Fire Ins. Co. v. Belize N.Y., 277 F.3d 232, 236 (2d Cir. 20 0 2) (quoting Vill. of Sylvan Beach, N.Y. v. Travelers Indem . Co., 55 F.3d 114, 115 (2d Cir. 1995)). “Unam biguous term s are to be given their plain and ordinary m eaning, and am biguous language should be construed in accordance with the reasonable expectations of the insured when he 6 entered into the contract.” McCarthy v. Am . Int’l. Grp., Inc., 283 F.3d 121 (2d Cir. 20 0 2). The Policy contains endorsem ents and exclusions, both relevant to the determ ination of whether the Policy applies to Lexus’s work at the Devoe Property. It is well-settled that “exclusions from insurance policy coverage are given strict construction.” Kim m ins Indus. Serv. Corp. v. Reliance Ins. Co., 19 F.3d 78, 81 (2d Cir. 1994). See also Critchlow v. First UNUM Life Ins. Co. of Am ., 378 F.3d 246 (2d Cir. 20 0 4); State of New York v. Blank, 27 F.3d 783 (2d Cir. 1994). Policy exclusions are interpreted in a m anner m ost beneficial to the insured. MH Lipiner & Son, Inc. v. Hanover Ins. Co., 869 F.2d 685, 687 (2d Cir. 1989); see also Miller v. Cont’l Ins. Co., 40 N.Y.2d 675, 678, 389 N.Y.S.2d 565 (1976) (“New York follows the “hornbook rule that policies of insurance . . . are to be liberally construed in favor of the insured.”). “The insurer bears the burden of proving that the exclusion applies, that it is stated in clear and unm istakable language, and is subject to no other reasonable interpretation.” U. S. Underwriters Ins. Co. v. Kum Gang, Inc., 443 F. Supp. 2d 348, 356 (E.D.N.Y. 20 0 6) (citing Cont’l Cas. Co. v. Rapid-Am erican Corp., 80 N.Y.2d 640 , 652, 593 N.Y.S.2d 966, 60 9 N.E.2d 50 6 (1993)). Where a policy contains an endorsem ent, “[u]nder New York law, an endorsem ent m ust be read in conjunction with the entire policy, and the words of the policy rem ain in full force and effect except as m odified by the endorsem ent.” Id. (citing Cnty. of Colum bia v. Cont’l Ins. Co., 83 N.Y.2d 618, 628, 612 N.Y.S.2d 345, 634 N.E.2d 946 (1994)). Under New York law, “[d]eterm ining whether an insurer has a duty to defend requires an exam ination of the policy language and the allegations of the com plaint to 7 see if the underlying com plaint alleges any facts or grounds which bring the action within the protection purchased.” Int’l Bus. Machs. Corp. v. Liberty Mutual Fire Ins. Co., 30 3 F. 3d 419, 424 (2d Cir. 20 0 2) (citation om itted). An insurer will be relieved of this duty “only if it could be concluded as a m atter of law that there is no possible factual or legal basis on which [the insurer] m ight eventually be held to be obligated to indem nify [the insured] under any provision of the insurance policy.” Servidone Constr. Corp. v. Sec. Ins. Co. of Hartford, 64 N.Y. 2d 419, 424, 477 N.E.2d 441, 444 (N.Y. 1985). In contrast, “the narrower duty to indem nify arises only if the claim for which the insured has been judged liable lies within the policy's coverage. Thus . . . the duty to pay is determ ined by the actual basis for the insured's liability to a third person.” Allianz Ins. Co. v. Lerner, 416 F.3d 10 9, 115 (2d Cir. N.Y. 20 0 5). Because a judgm ent has already been entered against Lexus, the dispositive issue in this case is whether the tortious acts that form ed the basis for that judgm ent are within the Policy’s coverage. It is clear and unam biguous that the Policy did not apply to the work Lexus perform ed at the Devoe Property. Under the term s of the Policy, Atlantic agreed to defend and indem nify Lexus against bodily injury and property dam age “to which this insurance applies.” R. 56.1 Ex. A, § I(1)(a). By an endorsem ent, the Policy stated the insurance would only apply to dam age “classified or shown on the Com m ercial General Liability Coverage Declarations, its endorsem ents or supplem ents.” R. 56.1 Ex. A. Those declarations stated that Lexus’s business was “INTERIOR & EXTERIOR DEMOLITION (HAND TOOLS ONLY)” with an additional prem ium for “Carpentry.” Id. Excluded from the Policy was property dam age caused by “structural dam age to any building or structure due to grading of land, excavation, borrowing, filling, backfilling . . 8 . m oving, shoring or underpinning, raising or rebuilding of any building or part thereto.” Id. Even drawing all reasonable inferences in favor of the non-m oving party, the evidence indisputably shows that Lexus’s work at the Devoe Property consisted of using an excavator – a heavy construction m achine – to excavate the prior foundation, excavate additional subsoil to expose the Neighboring Property’s foundation, and then underpin and backfill that foundation. This work and the structural dam age that it caused to the Neighboring Property is the sole basis for the Underlying J udgm ent against Lexus and this work fell squarely within the policy exclusions. Consequently, it is clear that Atlantic is not liable to indem nify Lexus for the Underlying J udgm ent. CON CLU SION For the foregoing reasons, sum m ary judgm ent is granted and the Verified Com plaint dism issed with prejudice. SO ORD ERED . Dated: Brooklyn, New York October 4, 20 11 _ _ / s/ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I. Leo Glasser, U.S.D.J . 9
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