Vovchik v Metropolitan Dev. Partners, II, LLC

[*1] Vovchik v Metropolitan Dev. Partners, II, LLC 2010 NY Slip Op 52126(U) [29 Misc 3d 1232(A)] Decided on October 19, 2010 Supreme Court, New York County Gische, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 14, 2010; it will not be published in the printed Official Reports.

Decided on October 19, 2010
Supreme Court, New York County

Steven Vovchik and Marie Vovchik, Plaintiff (s),

against

Metropolitan Development Partners, II, LLC and Gotham Constructions Company, LLC, Defendant (s).



109050/06



Attorney for the Plaintiff :

Arye Lustig & Sassower P.C.

20 Vesey Street

New York, New York 10007

Phone : 212-732-4992

Fax: 212-385-0875

Attorney for the Defendant:

Edward Garfinkel

12 Metrotech Center, 28th Fl.

Brooklyn, NY 11201

Phone : 718-250-1100

Judith J. Gische, J.

This is a personal injury action in which plaintiff Steven Vovchik ("Vovchik") alleges defendants violated sections 240 [1], 241 [6] and 200 of the New York State Labor Laws and that such violations were a proximate cause of his injuries. Defendants Metropolitan Development Partners, II, LLC ("Metropolitan") and Gotham Construction Company, LLC ("Gotham") have answered the complaint and brought a third party action against High-Rise Electric, Inc. ("High-Rise"), Vovchik's employer, for common law and contractual indemnification, contribution and breach of contract. High-Rise has answered the third party complaint.

Metropolitan and Gotham now move for conditional partial summary judgment on their third party claims against High-Rise for contractual indemnification (2nd cause of action) and breach of contract (4th cause of action). High-Rise opposes the motion.

Since issue has been joined, summary judgment relief is available (CPLR § 3212 [a]; Myung Chun v. North American Mortgage Co., 285 AD2d 42 [1st Dept 2001]). The court's decision and order is as follows:

Arguments

Vovchik, a laborer, claims he was injured when he fell into a 10-12 foot ditch while wheeling along an 80-pound concrete core drilling machine. Metropolitan and Gotham are, respectively, the owner and general contractor of the construction project that Vovchik was working on the day of the accident. High-Rise had a Trade Contract with Gotham as of November 18, 2002 ("subcontract").

According to Vovchik, he was wheeling along the machine across two long planks which were not lashed together in any way but just "sitting there" over the ditch. The planks were warped and unstable and, according to Vovchik, the condition of these planks had been the subject of "discussion" by "one or two of the other guys" with Jack Geffner ("Geffner"), High-Rise's foreman.

At his deposition, Vovchik testified that Geffner was the only person who gave him instructions on where to work and what to do. When asked at his EBT whether he took instructions from anyone else, Vovchik answered that "Jack was the foreman" and that he took instructions from no one else. Although Vovchik knew that Gotham was the "GC" on the job, he did not know much else about the company or indicate he received any instructions from any who worked with Gotham. He also testified that he had never heard of Metropolitan nor did he know what the company did or its role in this project.

The subcontract between High-Rise and Gotham makes reference to the contract between Gotham and Metropolitan (i.e. the "prime contract"). According to the subcontract, it had been approved by the owner to "achieve the intended results."

Pursuant to the subcontract, High Rise agreed to provide:

"all necessary design, labor, materials, accessories, equipment, hardware, fasteners, tools, layout, engineering, supervision, hoisting, scaffolding, shop drawings, packaging, trucking, [*2]freight, delivery, permits, insurance, taxes, and all other services required for the full and complete performance of the Electrical Work and all related Work for this project..."

Gotham and Metropolitan contend they are entitled to an award of conditional indemnification against High-Rise because neither the owner nor general contractor were negligent, had notice of a dangerous condition, or created the dangerous condition alleged. Both movants deny they had any authority to control the activity that brought about Vovchik's accident.

In opposition to Gotham and Metropolitan's motion, High-Rise first argues that there are sharply disputed facts about how Vovchik's accident happened, pointing out that Vovchik's EBT testimony is markedly different than his foreman. According Geffner, Vovchik told him the accident happened as he was bringing the coring machine into the job site along the ramp. There was a dumpster blocking his path and as he tried to go avoid the dumpster, the machine went off the side of the ramp. He struggled to regain control of the machine and wrenched his back while doing so.

Whereas Vovchik described the ramp as being "wobbly," unfastened and hastily thrown together, Geffner described the ramp entirely differently. He described it as being more of a walk as being more of a walkway. He testified that it was well built, with no warped, twisted or bowed planks. According to Geffner, Gotham's laborers placed and maintained ramps at the job site. Geffner also stated that there was no ditch, per se, but a triangular patch filled with dirt.

Anthony Cella, Gotham's construction superintendent was also deposed. Cella testified at his EBT that Gotham had personnel on site who took care of general housekeeping, including cleaning up debris. The CEO of Metropolitan ("Martorella") was deposed and he testified that he only visited the project once a week or once every two weeks just "to check on progress." His visits typically lasted 15 minutes. Some visits were with Metropolitan's vice president. Martorella took no notes during these visits, but walked around in the all the areas. Martorella did not have a direct contract with any one at Gotham.

Gotham and Metropolitan also seek summary judgment on their breach of contract cause of action against High-Rise. They contend that High-Rise failed to obtain insurance which met the requirements set forth in the sub-contract. Exhibit C sets forth the Insurance Requirements. It requires that High-Rise obtain:

"2. Comprehensive General Liability Insurance 1986 or 1988 Occurrence Form: $2,000,000 each occurrence and $4,000 aggregate including Contractual Liability Insurance in the same amount specifically insuring the covenants of trade contractor in the Indemnity Agreement signed by the trade contractor. A per project aggregate limit shall apply for this project and $1,000,000 aggregate for property damage."

High-Rise obtained an insurance policy with limits of $1,000,000 per occurrence and $2,000,000 in the aggregate. High Rise also obtained an umbrella policy with limits of $5,000,000. However, the policies have a self insured retention of $150,000 per occurrence with an annual aggregate of $500,000. According to Gotham and Metropolitan, this is a breach of the subcontract because now Gotham and Metropolitan will have to first satisfy the self insured retention, a risk exposure they did not agree to. [*3]

In opposition, High-Rise relies on the subcontract itself, pointing out that it is silent on whether the required insurance may contain a deductible or self-insured retention. High-Rise also points out the subcontract does not expressly forbid a policy with either a self insured retention or deductible. Thus, High-Rise argues that even if the court decides it should not have obtained insurance with a self-insured retention, this is not a breach of contract.

High-Rise also claims that because the indemnification provision is for full, not partial, indemnification, therefore the provision is void and unenforceable, as a matter of law if Gotham and/or Metropolitan are even found to be 1% negligent (GOL § 5-322.2 [1]). In response, Gotham and Metropolitan argue that the language "to the fullest extent permitted by applicable law..." shows the provision is for partial, not full, indemnification and therefore, enforceable.

Law Applicable to Motions for Summary Judgment

A movant seeking summary judgment in its favor must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case " (Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). The evidentiary proof tendered, however, must be in admissible form (Friends of Animals v. Assoc. Fur Manufacturers, 46 NY2d 1065 [1979]). Once met, this burden shifts to the opposing party who must then demonstrate the existence of a triable issue of fact (Alvarez v. Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v. City of New York, 49 NY2d 557 [1980]).

When an issue of law is raised in connection with a motion for summary judgment, the court may and should resolve it without the need for a testimonial hearing (See: Hindes v. Weisz, 303 AD2d 459 [2nd Dept 2003]).

DiscussionGOL § 5-322.1 prohibits indemnification contracts purporting to indemnify an indemnitee for its own negligence (Itri Brick & Concrete Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 786 [1997]). The indemnification provision in High-Rise's contract with Gotham does not violate the statute. The language "to the fullest extent permitted by applicable law..." (and variations thereof) has been held by the Court of Appeals to be a limitation on a promisor's indemnification obligation (Brooks v. Judlau Contracting, Inc., 11 NY3d 204 [2008]). Thus, under this provision, even a promisee that is partially at fault can seek indemnification against the promisor for that portion of damages attributable to the negligence of the promissor (Brooks v. Judlau Contracting, Inc., supra). Therefore, the indemnification provision is enforceable.

Labor Law § 200 codifies the common law duty imposed upon an owner or general contractor to maintain a safe construction site and unlike Labor Law §§ 240 [1] and 241 [6], liability can only be imposed if the defendant has actually been negligent. Both Gotham and Metropolitan argue that even if they are found statutorily liable, they were not actively negligent and, therefore, they are entitled to indemnification by High-Rise, the party which was actually (and actively) negligent. The elements of a prima facie Labor Law § 200 claim are that the defendants: 1) exercised supervision and control over the work performed or 2) had actual or constructive notice of the dangerous condition alleged, or 3) created the condition (Sheridan v. Beaver Tower Inc., 229 AD2d 302 [1st Dept. 1996] lv den 89 NY2d 860 [1996]; O'Sullivan v. IDI Construction Co., Inc., 7 NY3d 805 [2006]; Gonzalez v. United Parcel Serv., 249 AD2d 210 [1st Dept. [*4]1998]).

Gotham has not proved its freedom from negligence, beyond statutory liability and, therefore, its motion for summary judgment must be denied (Correia v. Professional Data Management, Inc., 259 AD2d 60 [1st Dept. 1999]). Although there is no factual dispute that Vovchik only took orders and directions from his foreman and assuming Gotham did not have notice of a dangerous condition, Gotham has not proved it did not create the dangerous condition alleged.

There is conflicting testimony about how plaintiff's accident happened. Vovchik and Geffner's description of the planks or ramp where the accident occurred are strikingly different. Furthermore, Vovchik apparently told Geffner his accident happened differently. These discrepancies bear on whether Gotham was negligent because there is testimony that Gotham may have been responsible for placing the planks/ ramp there in the first place. There is also testimony that Gotham employees were responsible for maintaining those planks (i.e. ramped area). Gotham has not proved that the planks/ramped area where Vovchik allegedly fell was under the exclusive control of High-Rise. Thus, Gotham's has not proved it is entitled to contractual indemnification by High-Rise.

Metropolitan (the owner) has, however, shown that it did not exercise supervision or control over the work performed by Vovchik, it did not have actual or constructive notice of the dangerous condition alleged not did it create the condition. Although Martorella may have periodically inspected the site with other Metropolitan personnel, he did so to keep abreast of the progress of the project. Simply having a general right to supervise the work, or retaining contractual inspection privileges is insufficient to constitute supervisory control so as to impose liability on an owner under Labor Law § 200 or a common law negligence claim (Hughes v. Tishman Construction Corp., 40 AD3d 305 [1st Dept 2007]; Brown v. New York City Economic Dev. Corp., 234 AD2d 33 [1st Dept. 1996]; Gonzalez v. United Parcel Serv., supra). Therefore, High-Rise must indemnify Metropolitan for any liability arising out of the accident that was not the result of Metropolitan's own negligence (Lennard v. Mendik Realty Corp., 43 AD3d 279 [1st Dept 2007]).

Gotham and Metropolitan have proved that High-Rise was required to obtain insurance for their benefit with limits of $2,000,000 each occurrence, $4,000,000 in the aggregate amount. High-Rise obtained insurance with $2,000,000 in the aggregate and an umbrella policy with limits of $5,000,000. There is, however, a self insurance retention of $150,000. Like a deductible, this is a dollar amount that must be paid by the insured before the insurer will respond to a loss.

Although there is nothing in the contract expressly prohibiting Gotham and Metropolitan from obtaining an insurance policy with a deductible or self insurance retention, this increase the expenses that Gotham and Metropolitan has to bear (Structure Tone, Inc. v. Burgess Steel Products Corp., 249 AD2d 144 [1st Dept 1998]; Hoverson v. Herbert Const. Co., Inc., 283 AD2d 237 [1st Dept. 2001]). In essence, the insured will perform all the functions normally undertaken by an insurance company for losses within the self insured retention.

Pursuant to the subcontract, High-Rise agreed to obtain insurance in the specified amounts for the benefit of Gotham and Metropolitan. High-Rise does not acknowledge or agree that it is obligated to indemnify third party plaintiffs for any covered liability falling within the [*5]self insurance retention, or that it has to bear those increased costs. Where a subcontractor agrees that it is obligated to indemnify additional insureds for any covered liability within the deductible/self-insurance retention and to bear additional insureds' costs of defending such claims while the insurance is in effect, then there is no valid claim for breach of contract (Structure Tone, Inc. v. Burgess Steel Products Corp., supra; Hoverson v. Herbert Const. Co., Inc., supra).

Here, however, High-Rise makes no such concession and there is an un-insured loss (i.e. the self insured retention) that was not agreed to by Gotham and Metropolitan. Therefore, High-Rise breached its contract with Gotham and Metropolitan by failing to obtain insurance that would cover the entire risk, as contemplated under the parties' agreement. Gotham and Metropolitan's motion for summary judgment on their breach of contract claim against High-Rise is granted because an agreement to procure insurance specifically "anticipates the promisee's continued responsibility for its own negligence for which the promisor is obligated to furnish insurance" (Kinney v. Lisk Co., 76 NY2d 215, 218 [1995]).

Conclusion

Gotham and Metropolitan's motion for summary judgment on their 2nd cause of action (contractual indemnification) is granted only as to Metropolitan but denied as to Gotham as there are triable issues of fact about. Gotham and Metropolitan's motion for summary judgment on their 4th cause of action (breach of contract to procure insurance coverage) is granted as to both third party plaintiffs.

Any relief requested but not specifically addressed is hereby denied.

This constitutes the decision and order of the court.

Dated:New York, New York

October 19, 2010

So Ordered:

_______________________

Hon. Judith J. Gische, JSC