426-428 W. 46th St. Owners, Inc. v Greater NY Mut. Ins. Co.

[*1] 426-428 W. 46th St. Owners, Inc. v Greater NY Mut. Ins. Co. 2007 NY Slip Op 51420(U) [16 Misc 3d 1114(A)] Decided on July 25, 2007 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 25, 2007
Supreme Court, New York County

426-428 West 46th St. Owners, Inc., 46th Street Associates, LP, and Robert M. Gottesman, Plaintiffs,

against

Greater New York Mutual Insurance Company, Defendant.



603354/03



Appearances:

For Plaintiffs:

Fried & Epstein LLP

1350 Broadway, Suite 1400

New York, NY 10018

Of Counsel: John W. Fried

For Defendant:

Greater New York Mutual

Insurance Company

220 Madison Avenue, 3rd Floor

New York, NY 10016

Of Counsel: Richard C. Rubinstein

Bernard J. Fried, J.

This case involves an insurance coverage dispute.[FN1] Plaintiffs seek a declaration that defendant Greater New York Mutual Insurance Company (GNY) is obligated to defend and [*2]indemnify them in a personal injury action commenced by Michelle Marshall (the Tenant), who was allegedly injured from a fall from a staircase in a studio apartment with a loft (the Apartment), in which she then resided, on West 46th Street in Manhattan. Plaintiffs also seek damages for GNY's alleged breach of the insurance policy in refusing to defend and indemnify them in the Tenant's underlying personal injury case.

GNY moves for summary judgment, pursuant to CPLR 3212, dismissing the complaint as against the defendant, and for a declaration that GNY need not defend or indemnify plaintiffs in the Tenant's underlying action, on the ground that plaintiffs failed to comply with the notice provisions of the GNY commercial general liability primary and umbrella insurance policies (together, the Policy),[FN2] issued to 426-428 West 46th St. Owners, Inc. GNY also moves for summary judgment in its favor against 46th Street Associates, LP (Associates) and Robert M. Gottesman (Gottesman), on the ground that in the capacity in which these plaintiffs were sued by the Tenant in the underlying case, they are not covered under the Policy.

During the time periods relevant in this case, plaintiff Gottesman was a board member and the president of 426-428 West 46th St. Owners, Inc., a domestic cooperative corporation that owns the building on West 46th Street in which the Tenant lived at the time of the incident (the Cooperative Corporation). Plaintiff Associates, a domestic limited partnership, is owner of the shares of the Cooperative Corporation allocable to the proprietary leases of several apartments in the building at 428 West 46th Street, including the Apartment.

Associates leased the Apartment to the Tenant through an executed residential lease. On that lease, Associates is listed as the "Owner" of the Apartment (Rubenstein Aff., Exh. C).

Gottesman swears that in 2002, when the incident occurred, he was a general partner of Associates (Fried Aff., Exh. 3, at 2, ¶ 7).[FN3] Gottesman testified that his wife, non-party Irene Fish Gottesman (Fish Gottesman), is vice president of Associates.

In the underlying action, the Tenant sued plaintiffs for injuries that she alleges she sustained as a result of a fall on August 27, 2002 from a defective staircase inside the Apartment.[FN4] Plaintiffs notified GNY of this incident on June 18, 2003, approximately 10 months after the incident occurred, but shortly after their receipt of the Tenant's summons and complaint. After receiving notice of the claim, GNY disclaimed, asserting that the notice was not timely under the Policy and that Associates and Gottesman were not insured thereunder.

The parties do not dispute that, at the time of the incident, the Apartment was a one-room studio, with a staircase leading to an elevated loft area. The Tenant testified that she used the loft or platform area of her apartment, which is elevated about eight or nine feet above the main floor of [*3]the Apartment, for sleeping purposes.[FN5]

Also undisputed is that the building superintendent (the Building Superintendent) called 911 after he heard the Tenant's cries for help, unlocked her front door with a passkey, and found her on the floor, inside the apartment on August 27, 2002. The Building Superintendent testified that the Tenant told him that she was unable to move, and asked that he cover her unclothed body. The Tenant was taken to the hospital by ambulance, where Fish Gottesman visited her within weeks after the incident.

The primary GNY policy contains the following notice provision: "You must see to it that we are notified as soon as practicable of an occurrence' or an offense, which may result in a claim. To the extent possible, notice should include:(l) How, when and where the occurrence' or offense took place;(2) The names and addresses of any injured persons and witnesses; and(3) The nature and location of any injury or damage arising out of the occurrence' or offense"

(Fried Aff, Exh. A, at P-006).

"Occurrence" is defined in the primary policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions" (Fried Aff., Exh. A, at P-011). In the umbrella policy, an "Occurrence" is also defined as an accident (Fried Aff., Exh. B, at P-020).

The movant on a summary judgment motion has the initial burden of proving entitlement to summary judgment, by tender of evidentiary proof in admissible form sufficient to eliminate any material issues of fact from the case (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Finkelstein v Cornell University Med. Coll., 269 AD2d 114, 117 [1st Dept 2000]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate, by admissible evidence, the existence of a factual issue requiring a trial of the action, or to tender an acceptable excuse for his or her failure to do so (CPLR 3212 [b]; Zuckerman, 49 NY2d at 562).

Regarding its first ground for dismissal, that plaintiffs failed to provide timely notice under the Policy, GNY argues that it is entitled to summary judgment against plaintiffs because of where plaintiffs found the Tenant unable to move, on the main floor of the Apartment at the bottom of banister-less staircase leading to a sleeping loft in the Apartment, there was no valid excuse for the 10-month delay in providing notice of the occurrence. GNY contends that, under the circumstances, the insureds failed to reasonably inquire into the facts to determine whether there existed a possible [*4]reportable claim.

Recently, the First Department stated:

"Where a liability insurance policy requires notice of an occurrence to the carrier as soon as practicable, such notice must be given within a reasonable period of time, and the insured's noncompliance in this respect constitutes failure of a condition precedent (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742 [2005]), thus vitiating the contract as a matter of law, without a showing of prejudice (Argo Corp. v Greater NY Mut. Ins. Co., 4 NY3d 332, 339 [2005])"

(Sorbara Const. Corp. v AIU Ins. Co.,- AD3d , 2007 WL 1746907 [1st Dept 2007]); see also Paramount Ins. Co. v Rosedale Gardens, Inc., 293 AD2d 235, 239 [1st Dept 2002]).

"The duty to give notice arises when, from the information available relative to the accident, an insured could glean a reasonable possibility of the policy's involvement" (Paramount, 293 AD2d at 239-240 [citation omitted]). Furthermore, "[t]he burden is upon the insured to demonstrate that timely notice was given to the carrier" (Shaya B. Pacific, LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 46 [2d Dept 2006], citing Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742 [2005]).

"There may be circumstances, such as a lack of knowledge that an accident has occurred or a reasonable belief in nonliability, that will excuse or explain delay in giving notice" (White v City of New York, 81 NY2d 955 [1993]; Public Service Mut. Ins. Co. v Hollander, 228 AD2d 283 [1st Dept], lv denied 88 NY2d 816 [1996]). The good-faith belief in nonliability must be reasonable in light of all of the circumstances (Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 744 [2005]; Empire City Subway Co. v Greater New York Mut. Ins. Co., 35 NY2d 8, 13 [1974]) and it may be relevant to the issue of reasonableness whether and to what extent the insured has "inquired into the circumstances of the accident or occurrence" (Security Mut. Ins. Co. of NY v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]; Great Canal, 5 NY3d at 744; see also White, 81 NY2d at 958; RMD Produce Corp. v Hartford Cas. Ins. Co., 37 AD3d 328, 331 [1st Dept 2007]).

Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances (Paul Developers, LLC v Maryland Cas. Inc. Co., 28 AD3d 443 [2d Dept 2006]; see Security Mut., 31 NY2d at 440). Moreover, "[i]t is . . . well settled that the reasonableness of a delay, where mitigating circumstances such as . . . lack of knowledge of the occurrence or its seriousness are offered as an excuse, is usually for the jury" (Deso v London & Lancashire Indemnity Co. of Am., 3 NY2d 127 [1957]; see also Argentina v Ostego Mut. Fire Ins. Co., 86 NY2d 748, 749 [1995]; Galaxy Insurance Co. v 1454 Nicolas Avenue Assocs., 276 AD2d 424 [1st Dept 2000]; Levine v Drake Manor, Inc., 256 AD2d 448 [2d Dept 1998]).

Defendant argues that the record, now fully developed, demonstrates that the Tenant was found in the Apartment in close proximity to the bannister-less staircase that led to the loft, and submits deposition testimony to support this proposition. In further support of its motion, defendant submits the Tenant's deposition testimony, in which she states that she fell because there was nothing to hold on to as she went down the stairs.

Defendant also submits witness testimony that Fish Gottesman visited the Tenant in the hospital during which time the Tenant had a conspicuous medical device on her head, and had to be fed the cookies that Fish Gottesman brought on the visit. Defendant asserts that Fish Gottesman [*5]inquired about the Tenant while speaking on the telephone with the Tenant's friends, and was advised of the Tenant's inability to return to the Apartment because it was not wheelchair accessible.

Defendant argues that the Tenant's fall down the banister-less stairway in her apartment is unequivocally an occurrence that triggered the Cooperative Corporation's obligation to report the accident to GNY as soon as the Building Superintendent found the Tenant "lying paralyzed at the bottom of the staircase, or for that matter lying paralyzed anywhere in her small apartment" (Rubenstein Moving Aff., at 13, ¶ 38). Defendant contends that the record demonstrates that plaintiffs knew of the severity of the Tenant's injury, increasing their obligation to investigate the incident. Defendant also points out, and it is not disputed, that plaintiffs installed a railing on the loft stairway sometime after the Tenant moved out, although it is not clear exactly when. Defendant argues that plaintiffs' contentions, made in the earlier motion to dismiss, that they did not know the injuries were serious or that a reportable accident occurred because they did not witness the accident, do not support a good-faith belief in nonliability, or excuse the plaintiffs from failing to investigate the facts or circumstances surrounding the Tenant's accident.

Plaintiffs oppose the motion, stating that they

"had no knowledge that:

(a) [the Tenant] had sustained an "accident;" (b) the purported accident allegedly was caused by a defect in [the Tenant's] apartment; (c) [the Tenant's] injuries were serious; or (d) [the Tenant] intended to hold plaintiffs liable for her injuries"

(Pl. Memo. of Law in Op., at 7). Plaintiffs contend that they were not aware that the Tenant had fallen in the Apartment or suffered an accident, or that an accident, rather than an illness or continuing medical condition, was the cause of the Tenant's hospitalization. They further contend that despite the opportunity to do so, the Tenant did not provide information to them concerning the incident, or her medical condition, and did not indicate that she intended to sue.

In opposition to the motion, plaintiffs provide the affidavits of Gottesman and Fish Gottesman who swear that the Tenant never advised them that she felt that the staircase was in a state of disrepair or defective, and did not tell plaintiffs of the nature of her condition (Fried Aff., Exh.6, ¶ 10 [Gottesman]; Fried Aff., Exh. 8, ¶ 4 [Fish Gottesman]). Fish Gottesman swears that she knew the Tenant since 1998, and visited her in the hospital within a few weeks after the incident, where the Tenant was sitting up in bed and did not discuss her condition or say anything about having fallen. Contrary to the testimony offered by defendant, Fish Gottesman testified at her deposition that when she visited plaintiff in the hospital, the Tenant was not wearing any braces or appliances on her body, and that she did not bring anything to the Tenant (Rubenstein Reply Aff., Exh. A, at 102-103). Fish Gottesman further testified that she thought that her relationship with the Tenant was such that the Tenant would have informed her if the incident was related to the Apartment, and the Tenant testified that her relationship with Fish Gottesman was friendly.

Plaintiffs also submit admissible evidence from the Building Superintendent and Fish Gottesman that neither the Tenant, nor her family members or friends, ever mentioned a fall to them. In addition, plaintiffs submit the Tenant's affidavit in which she swears that she did not tell plaintiffs about the nature of the incident.

Plaintiffs point out, and it is not disputed that, albeit late, the Tenant paid rent after the [*6]incident until the time that she vacated the Apartment. Fish Gottesman testified that some time, possibly months, prior to the incident, the Tenant had been unable to pay rent due to a medical condition, and that plaintiffs put no pressure on her to pay her rent (Rubenstein Reply Aff., Exh. A, at 74, 91). It is undisputed that Tenant did not request of plaintiffs the payment of her medical bills. Except for Fish Gottesman's visit to the hospital, described above, until served with a summons and complaint, plaintiffs offer sworn testimony that they never saw or heard from the Tenant again after the incident.

The primary issue here is whether the plaintiffs had a reasonable basis to believe that no claim would be asserted by the Tenant under the circumstances (see SSBSS Realty Corp. v Public Service Mutual Insurance Co., 253 AD2d 583 [1st Dept 1998]). The heart of defendant's argument is that because of the Tenant's proximity to the staircase, that she was hospitalized and that she told the Building Superintendent that she could not move and asked to be covered, there is no believable excuse for plaintiffs having failed to investigate and report the occurrence, thereby rendering their notice to defendant late, as a matter of law.[FN6] One of the premises underlying defendant's argument is that plaintiffs knew that the Tenant was paralyzed, because she told the Building Superintendent that she could not move, and asked him to cover her. The Building Superintendent testified, however, that he did not know what was wrong with the Tenant when he found her lying, naked and groggy, on the floor, and that he did not stay with her, but waited outside the Apartment, after calling for an ambulance.

To bolster their argument that plaintiffs knew of the accident and the seriousness of the Tenant's condition, defendant points to Fish Gottesman's deposition testimony in which she states that she may have asked about Marshall's condition. Defendant also provides the testimony of a witness, Stacie Cowan Gray, a friend of the Tenant, who swore that she advised Fish Gottesman of the Tenant's condition. Based on this evidence, defendant argues that the plaintiffs were advised of the Tenant's condition, which is unequivocal notice of the occurrence, and that Fish Gottesman's affidavit otherwise must be disregarded because it contradicts the "admission" she made during her deposition.

It is indeed well settled that a party's affidavit in opposition to a summary judgment motion which contradicts his prior sworn testimony creates only a feigned issue of fact insufficient to defeat a properly supported motion for summary judgment (Harty v Lenci, 294 AD2d 296, 298 [1st Dept 2002]). Fish Gottesman's testimony that she may have inquired into the Tenant's condition (see Rubenstein Reply Aff., at 7) cannot be definitively characterized as an admission that she was told of the Tenant's condition, which Fish Gottesman explicitly denies in her affidavit. Moreover, Gray's testimony does not constitute an admission by Fish Gottesman.[FN7] [*7]

Presumably to discredit the Building Superintendent, defendant submits the testimony of Terence Bogan, a close friend of the Tenant, who swears that the Tenant told him that the Building Superintendent knew that she had fallen. Bogan's testimony, however, is contradicted by that of the Building Superintendent and the Tenant, raising credibility issues that are not resolvable here (Forrest v Jewish Guild for the Blind, 3 NY3d 295, 315 [2004] ["(c)redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he (or she) is ruling on a motion for summary judgment or for a directed verdict" (citation and internal quotation marks omitted)]; S.J. Capelin Assocs. v Globe Mfg. Corp., 34 NY2d 338 [1974]).

Defendant contends that plaintiffs' installation of a railing after the Tenant moved out proves their knowledge of a defect or liability. Fish Gottesman swears, however, that the installation of the railing was merely part of an overall renovation of the Apartment made to beautify it so that plaintiffs could get higher rent (Rubenstein Reply Aff., Exh. A, at 62). On summary judgment, inferences must be taken in favor of the nonmoving party and statements made in opposition to the motion are generally accepted as true (Patrolmen's Benevolent Assn. of City of NY v City of New York, 27 NY2d 410, 415 [1971]; Wendling v 136 E. 64th St. Assocs., 128 AD2d 419 [1st Dept 1987]). Implicit in defendant's contention is that the sworn statements and testimony that plaintiffs have submitted to support their defense that they did not know that the Tenant fell, or that the staircase was defective, are not credible under these circumstances. Credibility determinations, however, are impermissible on summary judgment (Forrest, 3 NY3d 295, supra).

Furthermore, the cases upon which GNY relies concerning the issue of reasonableness of delay in notice are distinguishable inasmuch as in those cases it appears that the respective policyholders knew that an accident had occurred (see e.g. White v City of New York, 81 NY2d 955 [l993]; Empire City, 35 NY2d 9, supra [policyholder learned that man was injured in accident occurring in vicinity of its road excavation work site]; Steinberg v Hermitage Ins. Co., 26 AD3d 426 [2d Dept 2006] [involving a fall on the front steps of the policyholder's building and policyholder was notified of incident by injured party's attorney]; Aetna Casualty & Sur. Co. v Lanza, 70 AD2d 508 [1st Dept 1979] [policy holder struck pedestrian with automobile causing hospitalization]; Security Mutual Ins. Co., 31 NY2d 436, supra [policyholders knew of newspaper article mentioning their liability but did not notify insurer or investigate]). For example, in White (81 NY2d 955), the insured was aware that a child was injured from a fall on a playground because the incident was reported to the agent. Other cases where courts have found summary judgment in favor of the insurer, as a matter of law, similarly involve knowledge of an accident on the part of the policyholder (see e.g. Felix v Pinewood Builders, Inc., 30 AD3d 459 [2d 2006] [insured aware of accident on work site, and received letter from attorney]; Great Canal Realty Corp. v Seneca Ins. Co., 13 AD3d 227 [1st Dept 2004], revd 5 NY3d 742 [2005] [premises owner informed a few weeks after the accident of worker's fall from ladder during course of work]; Zadrima v PSM Insurance Cos., 208 AD2d 529 [2d Dept 1994] [policy holder received actual notice of worker's fall from a ladder shortly after the occurrence]).

In this case, the Tenant was found lying unclothed on the floor in her own residence in the early morning hours, and not at the bottom of a staircase in a building hallway, on a sidewalk, or at a work site. Plaintiffs have also submitted evidence demonstrating that prior to the incident, the Tenant had paid her rent late due to a medical condition. In addition, plaintiffs provide evidence that [*8]supports their assertion that the Tenant chose not to affirmatively volunteer information about her medical condition, or its cause. Such facts, assumed to be true for purposes of this motion, implicate certain nuances concerning privacy not found in cases cited to by defendant.[FN8] Plaintiffs' apparent failure to inquire into the Tenant's condition and hospitalization by, as defendant suggests, asking the Tenant's healthcare providers, friends and family about the cause of the Tenant's hospitalization and medical condition, does not, as a matter of law, render plaintiffs' excuse unreasonable, but is merely a factor for consideration by the trier of fact. Also an issue for the trier of fact is whether, as defendant appears to imply, plaintiffs' have not been truthful about their knowledge concerning the Tenant's condition or whether the incident involved the staircase.

"Summary judgment is a drastic remedy and should not be granted where there is any doubt as to the existence of a triable issue of fact or where the factual issue is arguable or debatable" (International Customs Assoc., Inc. v Bristol-Meyers Squibb Co., 233 AD2d 161, 162 [1st Dept 1996]; see Andre v Pomeroy, 35 NY2d 361, 364 [1974]; Fradera v 124 Realty Co., 220 AD2d 258 [1st Dept 1995]). It is where there is no excuse or mitigating factor that the issue of reasonableness poses a legal question for the court, rather than an issue for the trier of fact (see Paul Developers, LLC v Maryland Casualty Ins. Co., 28 AD3d 443 [2d Dept 2006]). Under the circumstances found here, the record reveals mitigating factors that bear on the issue of reasonableness, and summary judgment on the issue of notice is denied.[FN9]

GNY also seeks summary judgment as against Associates and Gottesman, arguing that neither is not an insured under the GNY policies. The relevant provision at issue in the primary policy states: "SECTION II - WHO IS AN INSURED 1. If you are designated in the Declarations as:

a. An individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner.

. . .

d. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your "executive officers" and directors are insured, but only with respect to their duties as your officers or directors. Your stockholders are also insured, but only with respect to their liability as stockholders. [*9] 2. Each of the following is also an insured:

. . . b. Any person (other than your "employee"), or any organization while acting as your real estate manager"



(Fried Aff., Exh. 1, at P-006).[FN10] There is no dispute that the Cooperative Corporation is an insured.

GNY argues that the Policy provides coverage for Associates only in its capacity as a shareholder of the Cooperative Corporation, and that Associates is not being sued therefore, but instead as the owner of the Apartment, or the Tenant's landlord, for renting her an apartment containing a defective staircase. Regarding Gottesman, GNY argues that he is being sued because of his status as a principal of Associates, or as the manager of the Apartment on behalf of Associates, and not arising out of his relationship with the Cooperative Corporation as its president.

In the amended complaint in the underlying action, the Tenant alleges that she sustained serious bodily injury as a result of a fall in the Apartment, that the fall was caused by a defective and dangerous staircase in the Apartment, and that the Cooperative Corporation, Associates and Gottesman, respectively, owned, operated, managed, controlled, maintained, and were responsible for the Apartment, its appurtenances and fixtures, and are liable for her alleged injuries.

In the first of the three causes of action of the Tenant's complaint, the Tenant alleged that she was caused to slip and fall off of a dangerous and defective staircase because of an unsafe and dangerous condition, and that it was the duty of the "said defendants to maintain the said apartment in a safe condition. . . ." (Fried Aff., Exh 32, ¶ 22). The Tenant alleged that the described incident was caused by the negligence of the defendants and/or their "servants, agents, employees and/or licensees in the ownership, operation, management, maintenance and control of the aforesaid premises" (Fried Aff., Exh. 32, ¶ 23).

In the second cause of action, the Tenant alleged that the defendants permitted the alteration of the Apartment to include a loft with a staircase, permitted the construction of the loft with a staircase in the Apartment, should have known that the loft and staircase were negligently and dangerously constructed, and failed to repair the dangerous condition. In the third cause of action, the Tenant alleged that the defendants were aware of certain violations on the premises regarding the subject loft and staircase and failed to take reasonable steps to repair and clear those violations, allowing the Tenant to occupy the premises although the violations were never repaired or cleared. Regarding all of the causes of action, the Tenant alleged that it was the duty of the defendants to maintain the Apartment in a safe condition.

As previously stated, in addition to damages for breach of the Policy, plaintiffs seek a [*10]declaration that GNY is obligated to defend and indemnify them in the Tenant's underlying personal injury action. "[A]n insurer's duty to defend [its insured] is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage" (BP Air Conditioning Corp. v One Beacon Ins. Group, - NY3d , 2007 WL 1826923 [2007] [citation and internal quotation marks omitted]). Furthermore, "The duty to defend [an] insured[ ] . . . is derived from the allegations of the complaint and the terms of the policy. If [a] complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend. A duty to defend is triggered by the allegations contained in the underlying complaint. The inquiry is whether the allegations fall within the risk of loss undertaken by the insured [and, it is immaterial] that the complaint against the insured asserts additional claims which fall outside the policy's general coverage or within its exclusory provisions"

(ibid. [citation and internal quotation marks omitted]).

.

"If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be" (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006] [citation and internal quotation marks omitted]). "Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course" (ibid.); BP Air Conditioning Corp. v One Beacon Ins., - NY3d , 2007 WL 1826923, supra).

The narrower duty to indemnify arises only if the claim for which the insured has been judged liable lies within the policy's coverage (see Servidone Constr. Corp. v Security Ins. Co. of Hartford, 64 NY2d 419, 424 [1985]). Therefore, while the duty to defend is measured against the possibility of recovery, "the duty to pay is determined by the actual basis for the insured's liability to a third person" (id.).

The party seeking a declaration of insurance coverage bears the burden of proving its entitlement to such coverage, and it is not entitled to coverage if not named as an insured or an additional insured on the face of the policy (National Abatement Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 33 AD3d 570 [1st Dept 2006]). An additional insured endorsement is an addition, rather than a limitation, of coverage (National Abatement Corp., 33 AD3d 570, supra). "It is also true that plaintiff's burden on a motion for summary judgment is merely to raise a question of fact as to the coverage under the policy" (Kidalso Gas Corp. v Lancer Insurance Co., 21 AD3d 779, 781 [1st Dept 2005]).

The parties dispute both the meaning, and the application of the provisions of the Policy concerning officers, directors and shareholders. Plaintiffs argue that the motion should be denied because GNY has not has not provided evidence that Gottesman and Associates are not insureds. They also argue that the Cooperative Corporation, Associates and Gottesman have each been sued by the Tenant on identical, extremely broad grounds, rendering unpersuasive GNY's assertion that Associates and Gottesman are not being sued in particular roles.

Plaintiffs further contend that Associates and Gottesman are insured under several theories. For instance, they argue that Associates may have been sued as the Cooperative Corporation's real [*11]estate manager, as Associates was the managing agent of the Cooperative Corporation from 1988 through April 2006. In support, plaintiffs submit Gottesman's affidavit in which he swears that during the period when Associates was the Cooperative Corporation's managing agent, its responsibilities included, among other things, locating and hiring tradesmen such as plumbers, electricians and carpenters, supervising the work of these tradesmen and purchasing building and/or maintenance supplies.

Although the phrase "real estate manager" is not defined in the Policy, plaintiffs contend that a reasonable construction would include a person or business that manages, or conducts the business affairs of a residential rental or cooperative apartment building. It follows, plaintiffs argue, that to the extent that Associates is sued by the Tenant as an entity that managed and maintained the premises, such allegations are consistent with certain of Associates' responsibilities as the Cooperative Corporation's real estate manager.

In her complaint, the Tenant alleged that her injuries were caused by the negligence of the defendants and their agents (Fried Aff., Exh. 21 [Amended Verified Complaint],[FN11] ¶¶ 23, 39). All of the defendants and their agents were sued concerning the operation, management, supervision and control of the premises. In addition, the Tenant alleged that the defendants, among other things, had a duty to maintain the Apartment in a safe condition, permitted the alteration of the Apartment to include the loft with a staircase, and the loft's construction, and were aware of and failed to take reasonable steps to repair and clear violations concerning the loft and staircase (Fried Aff., Exh. 32 [Amended Verified Complaint], ¶¶ 22, 32, 38, 44, 45).

In Morales v Allstate Insurance Company (170 AD2d 419, 419 [1st Dept 1991]), the First Department interpreted an insurance policy which provided for coverage for the named insured's "real estate manager," a phase undefined in the policy. Stating that "any ambiguity in the insurance contract is to be resolved in favor of the insured," the Court found that the record demonstrated that the plaintiff, who managed a building on behalf of the title owner, was covered under the policy (id.).

Although GNY disputes plaintiffs' assertion that Associates was the real estate manager for the Cooperative Corporation, arguing, based on her deposition testimony, that Fish Gottesman performed those management duties as vice president of the Cooperative Corporation, in light of Gottesman's sworn statement that Associates was the managing agent for the Cooperative Corporation, that issue is one of fact. Fish Gottesman's testimony is merely conflicting evidence, and GNY's motion is denied as to Associates.

Plaintiffs urge that Associates is also entitled to coverage as a shareholder of the Cooperative Corporation. Plaintiffs interpret the Policy as insuring the Cooperative Corporation's shareholders, officers, and directors whenever their acts or omissions are such that the corporation is exposed to liability. Consistent with this interpretation, plaintiffs argue that, to the extent that Associates did something negligent in connection with a defect in the Apartment, it has exposed the Cooperative Corporation, the owner of the apartment, to liability as much as itself, and is therefore a covered entity under the Policy. [*12]

To support this interpretation of the Policy, plaintiffs cite to several cases in which courts have interpreted liability insurance policies containing provisions similar to those here as providing coverage for the officers, directors and shareholders of corporations. In those cases, courts have generally interpreted such provisions providing coverage to officers or directors who were sued for acts or omissions related to their role with their respective corporations (see Zavota v Ocean Accident & Guarantee Corp., 408 F2d 940 [1st Cir 1969]), or where shareholders or officers of corporations were sued because the corporations were no longer viable targets due to, for example, dissolution (see Turner & Newall, PLC v American Mutual Liab. Ins. Co., 1985 WL 8056 [D DC 1985]); Employers Insurance of Wausau v Duplan Corp., 1999 WL 777976 [SD NY 1999]).[FN12]

Generally a corporation's director or officer who takes part in the commission of a tort by the corporation may be held personally and individually liable for his or her participation in tortious acts even if he or she derived no personal benefit, or acted on behalf of and or in the name of the corporation (Haig, 4B Commercial Litigation in New York State Courts § 87:45.50 [West's NY Prac Series 2005 (2d ed), 2007 Pocket Part, at 50]). Officers and directors of residential cooperative corporations are, many times, building residents who serve as volunteers.[FN13] Thus, cooperative corporations, like other corporations that purchase commercial general liability policies providing coverage to officers, directors and shareholders, seek to protect these parties against certain risks that may arise by virtue of their position with, or conduct and duties on behalf of, the corporation. The Policy may be interpreted as providing coverage to an officer, director, or shareholder who is sued in relation to his or her conduct that is on behalf of the corporation, or inextricably linked to his or her duty, role or position on behalf of the corporation, or where a shareholder is targeted as an alter ego, or similarly targeted.

While Associates, as the Tenant's lessor, may also be liable to the Tenant, for its negligence, if any, based on that role, the allegations of the complaint are extremely broad, and may also [*13]implicate liability that the Tenant was alleging that Associates had as a shareholder for, as an example, not maintaining the premises in a safe and habitable condition. In addition, the complaint may also implicate duties that the Tenant was alleging Gottesman had as the president of the Cooperative Corporation to investigate and perhaps ensure the abatement of a potentially hazardous condition or violations about which he had knowledge. Thus, liberally construed, the Tenant's claim is within the embrace of the policy, despite that the allegations may ultimately be baseless.

Plaintiffs' argument that Gottesman was the managing agent or real estate manager as the person that managed and maintained the Apartment on behalf of Associates, however, falls short as Gottesman swears in his affidavit that Associates was the managing agent. Although the primary policy provides coverage for the Cooperative Corporation's "real estate manager," there is nothing therein to indicate that also covered are the real estate managers' agents, employees or representatives.

In light of the issues of fact, discussed above, concerning notice of the occurrence, which is a threshold issue concerning GNY's duty, if any, to defend or indemnify plaintiffs, GNY's motion for summary judgment may not be granted, and a declaration must await resolution of the issues of fact raised here.

Accordingly, it is

ORDERED that defendant's motion for summary judgment is denied.

Dated: _________________

Enter:

____________________________

J.S.C. Footnotes

Footnote 1:The facts of this case are also discussed in my prior decision on the motion to dismiss (426-428 West 46th St. Owners, Inc. v Greater New York Mut. Ins. Co., [Sup Ct, NY County, July 6, 2004], affirmed 23 AD3d 207 [1st Dept 2005]).

Footnote 2:Except where it is necessary to differentiate based on the separate policies, "the Policy" will be used to signify both the primary and umbrella policies.

Footnote 3:Gottesman swears that, as of today, his partnership interest has been assigned to a limited liability company (Fried Aff., Exh. 3, at 2, ¶ 7).

Footnote 4:Originally the Tenant sued Associates and Gottesman, but later amended her complaint to add the Cooperative Corporation.

Footnote 5:Defendant includes a picture of a part of the Apartment, and "post-alteration" pictures of the stairwell "to give the Court an idea of the height of the fall and of [the Tenant's] apartment in general" (Rubenstein Moving Aff., at 10).

Footnote 6:Defendant asserts that because the Tenant was found "paralyzed near the banister-less stairway . . . no one can possibly believe that the circumstances here would not compel a reasonable person to investigate the matter to see if a reportable accident occurred" (Rubenstein Reply Aff., ¶ 10).

Footnote 7:Fish Gottesman also disputes as untrue Gray's testimony that Fish Gottesman was aware that the Tenant had an accident and had not regained used of her legs, and planned to move out of the Apartment because it was not wheelchair accessible (Fried Aff., Exh. 30, ¶ 11).

Footnote 8:Crediting as true the testimony of the Tenant, the Building Superintendent and the Gottesmans, as is required on summary judgment, plaintiffs have provided evidence that the Tenant choose not to divulge to the Cooperative Corporation's board, her lessor, or the building staff the reasons she was hospitalized. Under these circumstances, GNY's suggestion that a commercial general liability policyholder should investigate the possibility of potential reportable claims by seeking information from a patient's healthcare provider(s) about her medical condition does not warrant serious consideration.

Footnote 9:As an issue of fact has been raised regarding the primary policy, plaintiffs' argument concerning the umbrella policy, which GNY describes as a "follow the form" policy, need not be addressed.

Footnote 10:In the umbrella policy, contains the following provision:

F. "Insured" and "Named Insured"

. . .

2. "Insured" means the "Named Insured" and also

. . .

(c) your executive officers, directors and stockholders but only within the scope of their duties as such

Fried Aff., Exh. 2, at P-019.

Footnote 11:Exhibit 21 to the Fried affidavit contains both the Tenant's original complaint, wherein only Associates and Gottesman were named, and her Amended Verified Complaint wherein the Cooperative Corporation was added as a defendant.

Footnote 12:Plaintiffs seek an overly expansive interpretation of Zavota (408 F2d 940), in which an executive was sued for his conduct in operating a crane and the Court found that he was covered under the liability policy as an officer or director, despite that his conduct as a crane operator was not executive in nature. In discussing why a corporation might seek insurance for its executives, the Court discussed how a corporate officer is a likely target of litigation, and the purpose of the insurance is their protection. In Zavota, however, there was no dispute that the officer was acting on behalf of the corporation. Similarly, in Turner & Newall, PLC (1985 WL 8056, supra), the defendant-shareholder was sued in its capacity as shareholder because the better target for the tort claims had previously been dissolved. Although the court did not rely on an alter ego analysis, it mentioned that the shareholder provided evidence that the provision was developed to provide insurance for an officer sued as an alter ego of the corporation.

Footnote 13:"The cooperative apartment regime . . . combines three forms of property interest:

(1) a fee interest (obtained by the corporation),

(2) an ownership interest in personal property via stock ownership in such

corporation, plus

(3) a leasehold estate (obtained by shareholders).

The realty relationship between a shareholder-proprietary tenant and the corporation is a landlord-tenant relationship. However, it differs from a traditional landlord-tenant relationship in that (a) the tenant is also partial owner of the corporation, and, to that extent, has a voice in management of the property . . ."

(Di Lorenzo, New York Condominium and Coop. Law § 1:2)