Murnane Bldg. Contrs., Inc. v Zurich Am. Ins. Co.

[*1] Murnane Bldg. Contrs., Inc. v Zurich Am. Ins. Co. 2011 NY Slip Op 51943(U) Decided on October 5, 2011 Supreme Court, Suffolk County Asher, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 5, 2011
Supreme Court, Suffolk County

Murnane Building Contractors, Inc. and WAL-MART STORES EAST, LP d/b/a WAL-MART REAL ESTATE BUSINESS TRUST, Plaintiffs,

against

Zurich American Insurance Company, Defendant.



zurich American Insurance Company, Third-Party Plaintiff,

against

Lexington Insurance Company, Third-Party Defendant.



09-16699



CASCONE & KLUEPFEL, LLP

Attorney for Plaintiffs

1399 Franklin Avenue, Suite 302

Garden City, New York 11530

MELITO & ADOLFSEN, P.C.

Attorney for Defendant & Third-Party Plaintiff

233 Broadway, 28th FloorNew York, New York 10279

BETH ZARO GREEN, ESQ.

Attorney for Third-Party Defendant

12 Metrotech Center, 28th Floor

Brooklyn, New York 11201

W. Gerard Asher, J.

ORDERED that these motions are hereby consolidated for purposes of this determination; and it is further

ORDERED that the motion by the plaintiffs for an order pursuant to CPLR 3212 granting summary judgment and a declaration that 1) the defendant/third-party plaintiff Zurich American Insurance Company (Zurich) is obligated to defend them in the underlying action for personal injuries, 2) said defense be on a primary and noncontributory basis, (3) Zurich is obligated to reimburse the plaintiffs for all attorney's fees incurred to date in defending the underlying action, and (4) Zurich is obligated to indemnify the plaintiffs for any judgment entered against them in the underlying action should it be found that the injuries to the plaintiff in the underlying action arose, at least in part, out of the work of Zurich's named insured, is granted to the extent that the plaintiffs are entitled to summary judgment and a declaration that Zurich is obligated to defend plaintiff Murnane Building Contractors, Inc., scheduling a hearing, as set forth below, to determine the amount of any reimbursement owed to Murnane, and a declaration that Zurich is obligated to indemnify Murnane Building Contractors, Inc. for any judgment entered against it in the underlying action should it be found that the injuries to the plaintiff in the underlying action arose, at least in part, out of the work of Zurich's named insured, and is otherwise denied, and it is further



ORDERED that the motion by the third-party defendant Lexington Insurance Company (Lexington) for an order pursuant to CPLR 3212 granting summary judgment and a declaration that 1) Zurich is obligated to defend the plaintiffs in the underlying action for personal injuries on a primary basis, 2) the obligations, if any, under its policy of insurance is excess to that of Zurich, and (3) Zurich and its named insured owe restitution to the plaintiffs and Lexington in an amount equal to that paid by Lexington in defending the plaintiffs in the underlying action, is granted to the extent that Lexington is entitled to summary judgment and a declaration that Zurich has a duty to defend Murnane on a primary co-insurance basis, and that Lexington is entitled to restitution/reimbursement from Zurich, and scheduling a hearing, as set forth below, to determine the amount of any restitution/reimbursement owed to it, and is otherwise denied; and it is further

ORDERED that the cross motion by Zurich for an order pursuant to CPLR 3212 granting summary judgment and a declaration that 1) Zurich is not obligated to defend or indemnify [*2]plaintiff Wal-Mart Stores East, LP d/b/a Wal-Mart Real Estate Business Trust (Wal-Mart) in the underlying action as Wal-Mart does not qualify as an additional insured under the Zurich insurance policy with its named insured, (2) the Lexington insurance policy provides primary defense and indemnification to the plaintiffs in the underlying action as a matter of law, (3) Zurich is not currently obligated to defend or indemnify plaintiff Murnane Building Contractors, Inc. (Murnane) in the underlying action, and (4) in the alternative, the Lexington and Zurich insurance policies provide primary co-insurance to Murnane, requiring an equal split of defense costs attributed to Murnane's defense, and a pro-rata calculation of any reimbursement due to Lexington, is granted to the extent that Zurich is entitled to a declaration that Wal-Mart does not qualify as an additional insured under its policy, that it is not currently obligated to indemnify Murnane, that the Lexington and Zurich policies provide primary co-insurance regarding the defense of Murnane, requiring a pro-rata calculation of any reimbursement due to Lexington, and is otherwise denied.

This declaratory judgment action seeks to determine the duties of the respective insurers with regard to a personal injury action, Oakes v Wal-Mart Real Estate Business Trust,, Index No. 07-1062, filed in the Supreme Court, Franklin County. In the underlying action, Darby Oakes (Oakes) seeks damages for personal injuries he allegedly sustained on June 25, 2007, when a free standing steel girder beam fell on him at the construction site where he was working. Oakes was employed by J.T. Erectors, Inc. (JTE), a subcontractor on a project to construct a Wal-Mart store. Oakes commenced his action against Wal-Mart Real Estate Business Trust (Wal-Mart), the owner of the property, Murnane Building Contractors, Inc. (Murnane), the general contractor for the project, and Luck Brothers, Inc. (Luck), another subcontractor on the project. After Murnane commenced a third-party action against JTE, its insurer, Lexington Insurance Company (Lexington), assumed the defense and indemnification of Murnane and Wal-Mart in the underlying action.

The instant action was commenced by Murnane and Wal-Mart Stores East, LP d/b/a Wal-Mart Real Estate Business Trust (Wal-Mart) against Zurich American Insurance Company (Zurich), Luck's insurer, alleging that they are entitled to additional insured coverage for the Oakes action based upon their contract with Luck and Luck's insurance policy with Zurich. Zurich has denied the allegations and it has asserted, inter alia, that the underlying loss is not covered by the Zurich policy, that the loss was covered in whole or in part by other insurance policies, and that, in the event that the loss is found to be covered by the Zurich policy, the other policies would operate on a primary basis, or as co-insurance. In addition, Zurich commenced a third-party action against Lexington alleging, inter alia, that the Lexington policy operates to provide primary and noncontributory coverage to Murnane and Wal-Mart in the Oakes action.

In or about March 2007, Murnane entered into contracts with JTE and Luck, among others, for subcontract work on the construction of a new Wal-mart store in Massena, New York. Pursuant to its contract, JTE was to erect steel at the project and it was obligated to maintain general liability insurance naming both Murnane and Wal-Mart as additional insureds with respect to liability arising out of or in any way connected to JTE's work. Similarly, Luck was [*3]responsible for site preparation, including site clearing, earthwork, rock excavation, and backfill, and it was obligated to maintain general liability insurance naming both Murnane and Wal-Mart as additional insureds with respect to liability arising out of or in any way connected to its work. At the time of Oakes' accident, JTE was insured under a commercial general liability policy issued to it by Lexington, bearing policy number 0557394, effective April 15, 2007 to April 15, 2008 (Lexington policy). Also at the time of said accident, Luck was insured under a commercial general liability policy issued to it by Zurich, bearing policy number GLO 4894134-02, effective January 1, 2007 to January 1, 2008 (Zurich policy).

The plaintiffs now move for an order grating summary judgment declaring their rights and obligations herein. The proponent of a summary judgment motion 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 (see Alvarez v Prospect Hospital, 68 NY2d 320 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]). The burden then shifts to the party opposing the motion which must produce evidentiary proof in admissible form sufficient to require a trial of the material issues of fact (Rebecchi v Whitmore, 172 AD2d 600, 568 NYS2d 423 [2d Dept 1991]; Roth v Barreto, 289 AD2d 557, 735 NYS2d 197 [2d Dept 2001]; O'Neill v Fishkill, 134 AD2d 487, 521 NYS2d 272 [2d Dept 1987]). Furthermore, the parties' competing interest must be viewed "in a light most favorable to the party opposing the motion" (Marine Midland Bank, N.A. v Dino & Artie's Automatic Transmission Co., 168 AD2d 610, 563 NYS2d 449 [2d Dept 1990]).

The plaintiffs, in support of that branch of their motion seeking a declaration that Zurich is obligated to defend them as additional insureds in the Oakes action, submit the Zurich policy which provides, in an added endorsement Form U-GL-113-BCW:

ADDITIONAL INSURED - PRIMARY COVERAGE

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

SCHEDULE

Name of person or organization:

Any person or organization with whom you have agreed, through written contract, agreement or permit, executed prior to the loss, to provide primary additional insured coverage.

WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your work for that insured by or for you.

Furthermore, the following is added to SECTION IV COMMERCIAL GENERAL [*4]LIABILITY CONDITIONS paragraph

4. Other Insurance:

4. Other Insurance

d) This insurance is primary for the person or organization shown in the schedule, but only with respect to liability arising out of your work for that insured by or for you. Other insurance afforded to that insured will apply as excess and not contribute as primary to the insurance afforded by this endorsement.

All other terms and conditions of this policy remain unchanged.

The plaintiffs assert that the policy language clearly amends the Zurich policy to include as an additional insured "any person or organization with whom [Luck] ha[s] agreed, through written contract, agreement or permit, executed prior to the loss to provide primary additional insured coverage," provided that the additional insured's liability "arose out of" Luck's work. The plaintiffs submit the complaint in the Oakes action, as well as the bill of particulars, which include allegations that Oakes' injuries were caused, at least in part, by Luck "allowing the ground on which the girder [which fell upon Oakes] was situated to be soft, unstable and otherwise inadequate to support the steel girder."

It is well settled that an insurer's duty to defend is broader than its duty to indemnify, such that an insurer may be obligated to defend its insured even if, at the conclusion of an underlying action, it is found to have no obligation to indemnify its insured (see Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 818 NYS2d 176 [2006]; Global Constr. Co. v Essex Ins. Co., 52 AD3d 655, 860 NYS2d 614 [2d Dept 2008]; City of New York v Evanston Ins. Co., 39 AD3d 153, 157, 830 NYS2d 299 [2d Dept 2007]). An insurer's duty to defend arises whenever, as is the case here, "the allegations within the four corners of the underlying complaint potentially give rise to a covered claim" (Worth Constr. Co. v Admiral Ins. Co., 10 NY3d 411, 415, 859 NYS2d 101 [2008], quoting Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 667 NYS2d 982 [1997]). "This standard applies equally to additional insureds and named insureds" (Worth Constr. Co. v Admiral Ins. Co., supra at 415; BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714, 840 NYS2d 302 [2007]). Further, "an insured should not be denied an initial recourse to a carrier merely because another carrier may also be responsible" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 655, 593 NYS2d 966 [1993]).

Zurich asserts that the plain language of the policy endorsement upon which the plaintiffs rely indicates that Wal-Mart is not an additional insured under its policy with Luck. Specifically, Zurich argues that Luck did not enter into a written contract with Wal-Mart, that Luck's contract with Murnane, despite requiring Luck to obtain coverage for Wal-Mart, is not controlling, and that the Zurich policy only provides additional insured coverage to those "with whom" Luck entered into a contract. Thus, Zurich acknowledges that Murnane is an additional [*5]insured under its policy with Luck, while denying that Wal-Mart has the same status.

In partial opposition to this branch of the plaintiffs' motion for summary judgment, and in support of its cross motion for summary judgment, Zurich cites Linarello v City Univ. of NY, 6 AD3d 192, 774 NYS2d 517 [1st Dept 2004]). In Linarello, the appellate court considered language in a policy endorsement which is identical to that set forth above in Zurich's Form CG 20 33 07 04 herein. "As the lower court noted in Linarello, an insurer is not bound by the terms of its insured's contracts with third parties. To find otherwise would in effect rewrite the terms of the insurance policy. The language in the subject policy does not provide insurance coverage for anyone for whom the insured is required to obtain additional insured coverage. Rather, the policy clearly restricts coverage to those with whom the insured has a written contract" (The Macklowe Org. v K.G. Mech. Inc., 2008 NY Slip Op 32897[U], 2008 WL 4752823 [Sup Ct, New York County 2008]). Thus, by the plain terms of the Zurich policy, Wal-Mart is not an additional insured because it had no written contracts with Luck. The language in Form U-GL-113-BCW is likewise clear and unambiguous in excluding additional insured coverage to those not in privity with Luck (Linarello v City Univ. of NY, supra; but see American Home Assur. Co. v. Zurich Ins. Co., 26 Misc 3d 1223[A], 907 NYS2d 435 [Sup Ct, Kings County 2010]; Plaza Const. Corp. v. Zurich Am. Ins. Co., 2011 NY Slip Op 30709[U], 2011 WL 1212719 [Sup Ct, New York County 2011]).

Accordingly, the plaintiffs' motion for summary judgment declaring that Zurich is obligated to defend Murnane and Wal-Mart in the Oakes action is granted to the extent that the plaintiffs are entitled to summary judgment declaring that Zurich is obligated to defend Murnane. In light of the decision herein, and for the reasons cited, Zurich's cross motion for an order declaring that it has no obligation to defend or indemnify Wal-Mart is granted.

The second branch of the plaintiffs' motion seeks a declaration that Zurich is obligated to defend them on a primary and noncontributory basis. In support of their motion, the plaintiffs submit the commercial general liability policies issued directly to them by their separate insurers. It is undisputed that those policies are excess to those issued by Zurich and Lexington. In addition, the plaintiffs submit the Zurich and Lexington policies.

As a general rule, "unless it would distort the plain meaning of the policies, where there are multiple policies covering the same risk, and each generally purports to be excess to the other, the excess coverage clauses are held to cancel each other out and each insurer contributes in proportion to its limit amount of insurance" (State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 374, 492 NYS2d 534 [1985]; Lumbermens Mut. Cas. Co. v Allstate Ins. Co., 51 NY2d 651, 655, 435 NYS2d 953 [1980]; American Tr. Ins. Co. v Continental Cas. Ins. Co., 215 AD2d 342, 625 NYS2d 653 [2d Dept 1995]). In contrast, however, if one party's policy is primary with respect to the other policy, then the party issuing the primary policy must pay up to the limits of its policy before the excess coverage becomes effective (Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682, 687, 685 NYS2d 411 [1999]). A determination of the priority of coverage between policies "turns on consideration of the purpose each policy was [*6]intended to serve as evidenced by both its stated coverage and the premium paid for it, as well as upon the wording of its provision concerning excess insurance" (Bovis Lend Lease LMB, Inc. v. Great Am. Ins. Co., 53 AD3d 140, 148 [1st Dept 2008] citing State Farm Fire & Cas. Co. v LiMauro, supra at 374).

Here, the Zurich policy Form CG 00 01 12 04 provides, at Section IV - Commercial General Liability Conditions:

4. Other Insurance

If other valid and collectible insurance is available to theinsured for a loss we cover under Coverages A or B of thisCoverage Part, our obligations are limited as follows:

a. Primary Insurance

This insurance is primary except when b. below applies. If thisinsurance is primary, our obligations are not affected unless anyof the other insurance is also primary. Then, we will share withall that other insurance by the method described in c. below.

b. Excess Insurance

This insurance is excess over:

(1) Any of the other insurance, whether primary, excess, contingentor on any other basis:

(a) That is Fire, Extended Coverage, Builder's Risk, InstallationRisk or similar coverage for "your work";

(b) That is Fire insurance for premises rented to you or temporarilyoccupied by you with permission of the owner;

(c) That is insurance purchased by you to cover your liability as atenant for"property damage" to premises rented to you or temporarilyoccupied by you with permission of the owner; or

(d) If the loss arises out of the maintenance or use of aircraft, "autos"or watercraft to the extent not subject to Exclusion g. of Section 1-Coverage A- Bodily Injury and Property Damage Liability.

* * *+

When this insurance is excess, we will have no duty under Coverages A or B to defend [*7]the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers.

When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:

(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and

(2) The total of all deductible and self-insured amounts under all that other insurance.

We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in Declarations of the Coverage Part.

(c) Method of Sharing

If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.

If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of insurance of all insurers.

In addition, Form CG 00 01 12 04, Section IV - Commercial General Liability Conditions, as set forth immediately above, is amended by endorsement Form U-GL-113-BCW to add a paragraph (d), see above. In all material aspects, the "other insurance" clause in the Lexington policy uses identical language to that in the Zurich policy.

Here, the plaintiffs have failed to establish their entitlement to summary judgment regarding this branch of their motion. In effect, the plaintiffs' seek to determine the respective obligations of Lexington and Zurich. While there is no question that Zurich's obligation to defend is primary to the policy issued directly to Murnane, there is a question of fact whether Oakes' injuries "arose out" Luck's work for Murnane, and whether Zurich can be found solely responsible for Murnane's defense costs. Thus, regarding the plaintiffs' request for relief only and under these circumstances, it cannot be determined whether Murnane is entitled to primary defense coverage under the Zurich policy until a determination as to Luck's liability is made in the Oakes action because the subject additional insured endorsement in the policy specifically provides that said coverage is primary only if the underlying claim is determined to "[arise] out of your work for that insured by or for you." (83 Kajima Const. Servs., Inc. v CATI, Inc., 302 [*8]AD2d 228, 755 NYS2d 375 [1st Dept 2003]). Accordingly, the second branch of the plaintiffs' motion for summary judgment is denied.

The third branch of the plaintiffs' motion seeks a declaration that Zurich is obligated to reimburse them for all attorney's fees incurred to date in defending the underlying action. Initially, the Court notes that Wal-Mart is not entitled to the requested relief. However, for the reasons set forth herein, Murnane is and was entitled to a defense from Zurich. Although, the record reveals that Lexington has undertaken and borne the cost of defending the plaintiffs in the Oakes action pursuant to its policy naming them as additional insureds, Zurich does not dispute Murnane's allegations that it has expended sums in its defense of the Oakes action. Accordingly, the third branch of the plaintiffs' motion is granted.

The fourth and final branch of the plaintiffs' motion seeks a conditional declaration that Zurich is obligated to indemnify the plaintiffs for any judgment entered against them in the underlying action should it be found that the injuries to the plaintiff in the underlying action arose, at least in part, out of the work of Zurich's named insured, Luck.Initially, the Court notes that Wal-Mart is not entitled to the requested relief. However, Murnane has established that it would be entitled to indemnification under the Zurich policy should the injuries to Oakes be found to arise out of Luck's work at the Wal-Mart construction site.

Zurich has failed to raise a triable issue of fact regarding this branch of the plaintiffs' motion for summary judgment. Accordingly, Murnane is entitled to a declaration that Zurich is obligated to indemnify Murnane Building Contractors, Inc. for any judgment entered against it in the underlying action should it be found that the injuries to the plaintiff in the underlying action arose, at least in part, out of the work of Zurich's named insured.

Lexington moves for an order granting summary judgment and a declaration that 1) Zurich is obligated to defend the plaintiffs in the underlying action for personal injuries on a primary basis, 2) the obligations, if any, under its policy of insurance is excess to that of Zurich, and (3) Zurich and its named insured owe restitution to the plaintiffs and Lexington in an amount equal to that paid by Lexington in defending the plaintiffs in the underlying action. The first branch of Lexington's motion seeks the same relief as that sought in the second branch of the plaintiffs' motion. That is, that Zurich must defend the plaintiffs on a primary and noncontributory basis. Because the Court has previously decided the issue, and for the reasons set forth below, Lexington is not entitled to summary judgment regarding this issue. Accordingly, the first branch of Lexington's motion is denied.

The second branch of Lexington's motion seeks an order declaring that the obligations under its policy are excess to that of the Zurich policy. Lexington asserts that endorsement Form U-GL-113-BCW, set forth above, amends Zurich's "other insurance" provision making its coverage primary and Lexington's coverage excess. Said endorsement provides, in pertinent part, that: "Other insurance afforded to [Murnane] will apply as excess and not contribute as primary to the insurance afforded by this endorsement." The gravamen of Lexington's argument is that its [*9]policy should be considered insurance "afforded to" the plaintiffs, making its coverage excess to that of Zurich. Generally, in determining priority of coverage issues, the courts first attempt to discern the purpose of the policies covering on the risk, to see if they are either primary or excess (see Bovis Lend Lease LMB, Inc. v Great Am. Ins. Co., supra; Tishman Constr. Corp. of NY v Great Am. Ins. Co., 53 AD3d 416,[1st Dept 2008]; Travelers Indem. Co. v American & Foreign Ins. Co., 286 AD2d 626, 730 NYS2d 231 [1st Dept 2001]). It is undisputed that both the Lexington policy and the Zurich policy were intended to provide primary coverage to Murnane for the loss arising out of the work of their respective named insureds. The Court finds that the subject policies cover the same risk, and each "generally purports to be excess to the other," requiring each insurer to contribute in proportion to its limit amount of insurance" (State Farm Fire & Cas. Co. v LiMauro, supra). The Court notes that JTE paid $78,594 for $1,000,000 in CGL coverage under the Lexington policy, and Luck paid $337,050 for $2,000,000 in CGL coverage under the Zurich policy. Considering the work to be performed by the respective named insureds, the amount paid for coverage, and the intent of both named insureds to provide primary coverage to Murnane, a finding that Lexington and Zurich contracted to cover the same risk on the same level, and that they are co-insurers of Murnane, is warranted (Cheektowaga Cent. School Dist. v. Burlington Ins. Co., 32 AD3d 1265, 822 NYS2d 213 [4th Dept 2006]). Said finding is consistent with the requirement that insurance contracts be interpreted "according to the reasonable expectation and purpose of the ordinary businessman when making an ordinary business contract" (Atlantic Cement Co., Inc. v Fidelity & Cas. Co. of NY, 91 AD2d 412, 418, 459 NYS2d 425 [1st Dept. 1983], affd 63 NY2d 798, 481 NYS2d 329 [1984]). Accordingly, the second branch of Lexington's motion for summary judgment is denied.

The third and final branch of Lexington's cross motion seeks an order declaring that Zurich and [Luck] owe restitution to the plaintiffs and Lexington in an amount equal to that paid by Lexington in defending the plaintiffs in the underlying action. Initially, the Court notes that Luck is not a party to this action, and the request for a declaration as to Luck's duties or obligations is denied. In addition, the Court has determined that Wal-Mart is not an additional insured under the Zurich policy. However, Lexington has established its entitlement to summary judgment declaring that Zurich owes it restitution or reimbursement in an amount equal to that paid by Lexington in defending Murnane in the underlying action. Zurich has failed to produce evidence in admissible form sufficient to require a trial of material issues of fact (Rebecchi v Whitmore, supra; Roth v Barreto, supra; O'Neill v Fishkill, supra). In light of the Court's finding that Lexington and Zurich are co-insurer's as to Murnane, a pro-rata sharing of defense costs for Murnane is warranted (Health-Chem Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 148 Misc 2d 187, 559 NYS2d 435 [Sup Ct, New York County 1990]). In the event Lexington is able to produce evidence of segregated payments made for the defense of Murnane, it is entitled to 50% of that amount, plus interest. In the event Lexington is not able to produce evidence of segregated payments made for the defense of Murnane, it is entitled to 25% of the total amount paid for the defense of the plaintiffs, plus interest. Accordingly, the third branch of Lexington's motion for summary judgment and a declaration that Lexington is entitled to restitution/reimbursement is granted, and a hearing is scheduled, as set forth below, to determine the amount of any restitution/reimbursement owed to it by Zurich. [*10]

Zurich cross-moves for an order granting summary judgment and a declaration that it is not obligated to defend or indemnify Wal-Mart, that the Lexington insurance policy provides primary defense and indemnification to the plaintiffs in the underlying action, that it is not currently obligated to defend or indemnify Murnane in the underlying action, and that, in the alternative, the Lexington and Zurich policies provide primary co-insurance to Murnane, requiring an equal split of defense costs attributed to Murnane's defense, and a pro-rata calculation of any reimbursement due to Lexington. The first branch of Zurich's cross motion seeks relief which is obverse to that sought by the plaintiffs and Lexington in the instant motions. For the reasons set forth in this decision, and in light of the Court's finding that Wal-Mart is not an additional insured under the Zurich policy, Zurich is entitled to a declaration that it has no duty to defend or indemnify Wal-Mart. The second, third and fourth branches of Zurich's cross motion are likewise determined by the Court's findings regarding the instant motions. To the extent that the second branch of Zurich's cross motion impliedly seeks a declaration that its policy is excess to that of the Lexington policy, it is denied. However, while the Court has found that Zurich owes Murnane a current duty to defend, because it has been found that only a conditional declaration regarding Zurich's obligation to indemnify Murnane is warranted, it is clear that Zurich has no current duty to indemnify Murnane. Accordingly, the third branch of Zurich's cross motion is granted to the extent that it is entitled to a declaration that it is not currently obligated to indemnify Murane. Furthermore, in light of the Court's decision regarding Murnane and Lexington's rights to reimbursement of defense costs, Zurich is entitled to a declaration that its policy and Lexington's policy provide primary co-insurance to Murnane, requiring an equal split of defense costs attributed to

Murnane's defense, and, in the absence of appropriate evidence, a pro-rata calculation of any reimbursement due to Lexington.

The parties are directed to appear for a hearing at 1 Court Street, Part 32, Riverhead, New York at 9:30 a.m. on November 29, 2011, and to produce appropriate documentation to support the amount of costs and attorney's fees sought as reimbursement from Zurich.

The parties are directed to settle judgment in accordance with this order. However, the Court directs that settlement of said judgment be held in abeyance pending the outcome of the hearing to determine the amount of reimbursement due from Zurich.

Dated:__________________________________________________________

J.S.C.