S. Constr., Inc. v Everest Natl. Ins. Co.
Annotate this CaseDecided on October 8, 2013
Supreme Court, Richmond County
S. Construction, Inc. and ARI STEINMAN, Plaintiffs,
against
Everest National Insurance Company, IRA S. ILOWITE, IRA S. ILOWITE AGENCY, GLN WORLDWIDE, LTD, INTER-RECO, INC., JOHN DOE, (Name being fictitious and unknown), and XYZ CORP. (Name being fictitious and unknown), Defendants.
150294/10
Philip G. Minardo, J.
The following papers numbered 1 to 6 were fully submitted on the 22nd day of August, 2013:
Pages
Numbered
Notice of Motion for Summary Judgment
by Defendant Everest National Insurance Company,
with Supporting Affirmation, Exhibits and Memorandum of Law
(dated July 18, 2013)......................................................................................................1
Notice of Motion for Summary Judgment and/or Preclusion
by Defendants Ira S. Ilowite and Ira S. Ilowite Agency,
with Supporting Affirmation, Exhibits and Memorandum of Law
(dated July 22, 2013)......................................................................................................2
Affirmation in Opposition
by Plaintiffs, with Supporting Affirmation and Exhibits
(dated August 15, 2013).................................................................................................3
Affirmation in Opposition
by Plaintiffs, with Supporting Affirmation and Exhibits
(dated August 19, 2013).................................................................................................4
Reply Affirmation by Defendant Everest National Insurance Company
(dated August 21, 2013).................................................................................................5
Reply Affirmation by Defendants Ira S. Ilowite and Ira S. Ilowite Agency
(dated August 21, 2013)..................................................................................................6
Upon the foregoing papers, the motion and cross motion for summary judgment are granted.
Plaintiffs S. Construction, Inc. (hereinafter "S. Construction") and Ari Steinman (hereinafter "Steinman") commenced this action to recover damages against defendant-insurer Everest National Insurance Company (hereinafter "Everest")for breach of an insurance contract, as well as causes of [*2]action against defendant-broker Ira S. Ilowite and Ira S. Ilowite Agency (hereinafter "Ilowite") for, e.g., its negligent failure to procure proper insurance coverage. Plaintiffs have also asserted causes of action against each defendant for breach of their fiduciary duty. In addition to damages, plaintiffs seek a declaration compelling defendant Everest to defend and indemnify them and/or any "additional insureds" for any judgment or monetary settlement to which they may be subjected in the two lawsuits identified in their Second Amended Verified Complaint (hereinafter the "Abrams" and "Zelaya" actions).[FN1]
To the extent relevant, plaintiffs contend that defendant Ilowite failed to "list the general contractors as additional insureds as set forth in the certificates of insurance" (see Plaintiff's Interrogatory Response, para 27), and that the insurance which it procured at their request from defendant Everest "failed to cover excavation, incidental or otherwise" (id.). Plaintiffs further contend that defendant Everest breached its insurance contract by denying coverage in both of the above cases.
In moving for summary judgment dismissing the second amended verified complaint,[FN2] defendant Ilowite submits an affidavit by its employee, Brian Ilowite, wherein he attests that "[i]n or about July 2006, [plaintiff Steinman] contacted [the Agency] and requested [a] commercial general liability insurance [policy] for his company", plaintiff S. Construction, Inc (see Affidavit of Brian Ilowite, para 3). The affiant further attests that during the application process, when he asked Steinman "[d]o any [of your] operations include excavation, tunneling, underground work or earth moving?", the latter "only advised that his company performed general contracting and interior carpentry work". As a result, "the box [marked] No' was checked" on the application form, thereby excluding any request for such coverage (id. at 4; see Ilowite's Exhibit "K", p 4). After the above "Acord" application was completed, it was forwarded to Steinman for his review and verification (id. at 6). Steinman signed the application under date of August 28, 2006, without requesting that any information contained in the application be changed (id. at 6; see Ilowite's Exhibit "L"). In a supplemental application, Steinman checked off "N/A" when asked to indicate if S. Construction performed any work or operations involving "tunneling", "pile driving", "blasting", "demolition" and "excavation". In the same application, only "interior carpentry" and "general contracting" work were entered (by hand) under the request for a "schedule of hazards" (id. at 7; see Ilowite's Exhibit "M"). The supplemental application was also signed by Steinman, who again did not request that any changes be made (id. at 8; see Ilowite's Exhibit "M").[FN3]
It is undisputed that on or about August 30, 2006, Everest, acting upon a request from Ilowite, issued a certain insurance policy bearing #6900001056-01 to S. Corporation, providing commercial general liability coverage for the classes described as "Contractor - work with construction, reconstruction, repair or erection of buildings - industrial use" and "Carpentry - interior" (id. at 10; see Ilowite's Exhibit "P"). Annexed to a letter sent to Steinman in November, 2006, Ilowite enclosed the insured's copy of the Everest policy for plaintiffs' review for "accuracy, [*3]conditions & exclusions" (id. at 11; see Ilowite's Exhibit "R"), and, again, Ilowite did not receive any request for changes from Steinman (id. at 12).
On August 14, 2007, Steinman completed an application for a renewal policy, informing Brian Ilowite that S. Construction was a "General Contractor building apt buildings & masonry & carpentry contractor" (id. at 13). A supplemental application was also completed and signed by Steinman at or about the same time (id. at 15), and on both applications, the box marked "N/A" was checked indicating that S. Construction did not perform any blasting, demolition, excavation or tunneling (id. at 14-16). These applications were subsequently submitted to Everest and nonparty Ace Insurance for a price quote comparison (id. at 18-20), and while the latter offered broader coverage, its premium was significantly higher (id. at 19-20). Steinman ultimately chose the less expensive Everest policy and authorized Ilowite to renew (id. at 20). As a result, Everest renewed the general liability policy to S. Construction for the policy period August 30, 2007 through August 30, 2008 with the same classifications as the original policy plus an additional class code for "masonry" (id. at 20-22; see defendant Ilowite's Exhibit "X"). The Everest renewal policy was mailed to plaintiffs on or about December 5, 2007 for their review (id. at 23 see Ilowite's Exhibit "Z") but, as before, no request for changes was ever received (id. at 24). Finally, Ilowite maintains that the only compensation which it received for these transactions was the commission paid by co-defendant GLN Worldwide, Ltd (hereinafter "GLN")[FN4], an insurance wholesaler (see also EBT of Ira S. Ilowite, p45-46).
In support of its motion for summary judgment, Everest maintains that upon investigation of the claims underlying the "Abrams" and "Zelaya" actions, it appeared that both arose out of excavation and underpinning work performed by S. Construction. Moreover, Everest asserts that the defendants in those actions, namely Fulton Housing, LLC and Mazeh Construction did not qualify as "additional insureds" under the policy issued to S. Construction, as no such coverage had been purchased by plaintiffs. As proof, Everest has annexed copies of the policies it issued to plaintiffs, along with the appropriate endorsement forms to demonstrate that excavation and underpinning work was not covered (see Everest's exhibits "G1", "G2", "G6", "G10"). Everest also submits (1) a copy of the "Abrams" third-party summons against Steinman and S. Construction, (2) a handwritten statement (dated September 15, 2008) by Steinman admitting that S. Construction was subcontracted to perform excavation work, and (3) the contract between Mazeh Construction and S. Construction pursuant to which the latter agreed to perform excavation work for the former at the subject work site (see Everest's exhibits "H1", "H2", "H3"). In addition, Everest submits copies of Zelaya's bill of particulars and Juan Zelaya's deposition transcript to show that the personal injuries he claims to have sustained in the underlying case occurred while performing underpinning work as an employee of one of Steinman's companies (see Everest's exhibits "J", "K"). For his part, Steinman has denied that Zelaya was ever his employee (see Everest's exhibits "H8").
In further support of its denial of coverage in both cases, Everest submits an Affidavit by Patrick Conklin, executive vice president for defendant Inter-Reco, Inc, an independent insurance producer authorized by Everest to bind and issue policies.[FN5] Mr. Conklin attests that "[e]xcavation and underpinning are separate risk classifications that are covered by different classification codes", and that "[n]either excavation nor underpinning were risks contemplated for coverage under the Everest liability policies, since the applicant denied it performed any operations with respect to [*4]excavation" (see Affidavit of Patrick Conklin, paras 7-8). Moreover, he further stated that "[h]ad those risks been contemplated, an additional premium would have been assessed to the Everest insured" (id. at 8). With regard to "additional insured" status, Conklin averred that under the "relevant insurance policies [such status] was granted only to the City of New York Department of Transportation" (id. at 15). Pertinently, it was noted that the policies at issue did "not contain a Blanket Additional Insured Endorsement", and instead contained an endorsement that required prior notification of any entity seeking "additional insured" coverage (id. at 4-5), which never occurred.
It is well settled that an insurance agent or broker may be held liable under the theories of breach of contract or negligence for failing to procure a particular policy of insurance (see Bedessee Imports, Inc v. Cook, Hall & Hyde, Inc, 45 AD3d 792, 793-794 [2nd Dept 2007]). However, in order to be successful, an insured must show that the agent or broker failed to discharge the duties imposed upon it either by proof that it breached an agreement to obtain insurance or because it failed to exercise due care in effectuating the transaction (id.; see Gagliardi v. Preferred Mut Ins Co, 102 AD3d 741 [2nd Dept 2013]). In this regard, an insurance agent or broker has been held to have a common-law duty to obtain the coverage requested by a client within a reasonable amount of time, or to inform the client of its inability to do so (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d 1092, 1093 [2nd Dept 2011]; Core-Mark Intl v. Swett & Crawford Inc., 71 AD3d 1072, 1073 [2nd Dept 2010]). Conversely, absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional or different insurance coverage (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d at 1093). However, such a relationship may arise where, inter alia, there has been a mutual course of dealing over an extended period of time which objectively would put a reasonable insurance agent on notice that his or her advice was being sought and specially relied upon (id. [internal quotation marks omitted]).
Here, defendants have demonstrated their prima facie entitlement to judgment as a matter of law by, e.g., presenting evidence, including the affidavits of Brian Ilowite and Patrick Conklin, demonstrating that they procured the specific insurance coverage requested by the insured (see Femia v. Graphic Arts Mut ins Co, 100 AD3d 954, 955 [2nd Dept 2012]), and that plaintiffs (1) denied any need for additional coverage pertaining to excavation or underpinning work, and (2) failed to request coverage for either Fulton Housing, LLC and/or Mazeh Construction as additional insureds (see Axis Constr Corp v. O'Brien Agency, Inc, 87 AD3d at 1093; Verbert v. Garcia, 63 AD3d 1149 [2nd Dept 2009]; Loevner v. Sullivan & Strauss Agency, Inc., 35 AD3d 392, 393-394 [2nd Dept 2006]). Hence, there was no reason for either Ilowite or Everest to anticipate a desire or the need for such inclusive coverage. In opposition, plaintiffs have failed to raise a triable issue of fact or to demonstrate the existence of any question of whether or not they may have had a special relationship with either defendant (compare South Bay Cardiovascular Assoc v. SCS Agency, Inc, __AD3d__, 2013 NY Slip Op 2564 [2nd Dept]), or whether there was anything more than the standard "consumer-agent insurance placement relationship" between plaintiffs and either of them (Murphy v. Kuhn, 90 NY2d 266, 271 [1997]). Additionally, since the policy was renewed as originally written (with the exception of adding "masonry" as a new insurance classification), plaintiffs are "conclusively presumed to have read and assented to [its] terms" (Portnoy v. Allstate Indem Co, 82 AD3d 1196, 1198 [2nd Dept 2011] [citations and internal quotation marks omitted]).
Finally, although plaintiffs initially argued that defendants were bound to provide coverage to Fulton Housing LLC and Mazeh Construction Corp as additional insureds since they had issued a certificate of insurance naming them as such (see Plaintiff's Exhibit "A"), defendant Ira S. Ilowite testified at his deposition that the certificates in question were erroneously issued by his secretary (see EBT of Ira S. Ilowite, p 104). Thus, plaintiffs have again failed to raise a triable issue of fact. In any event, the Court finds that a certificate of insurance is insufficient to alter the language of a policy especially where, as here, it recited that it was for informational purposes only; conferred no [*5]rights upon the holder; and it did not amend, alter, or extend the coverage afforded by the policy (see Hargob Realty Assoc, Inc v. Fireman's Fund Ins Co, 73 AD3d 856, 858 [2nd Dept 2010]).
The Court finds plaintiffs' remaining contentions to be without merit.
Accordingly, it is
ORDERED that the motion and cross motion for summary judgment by defendants Everest National Insurance Company and Ira S. Ilowite and Ira S. Ilowite Agency are granted; and it is further
ORDERED that the second amended verified complaint and any cross claims against them are severed and dismissed; and it is further
ORDERED that the Clerk enter judgment in accordance herewith.
ENTER,
Philip G. Minardo
J. S. C.
DATED: October 8, 2013
Footnotes
Footnote 1:The underlying actions, Gwen and John Abrams v. Fulton Housing, LLC, Mazeh Construction, et al and Juan and Maria Zelaya v. Fulton Housing, LLC, Mazeh Construction et al are presently pending in the Supreme Court, Kings County under Index Nos. 30122/09 and 3495/08, respectively (see Second Amended Verified Complaint, para 64).
Footnote 2:In an Order dated July 2, 2012, Everest's previous motion for summary judgment was denied without prejudice with renewal after the completion of discovery.
Footnote 3:While the supplemental application is not dated, it appears to have a facsimile date of August 28, 2006 (see Ilowite's Exhibit "M").
Footnote 4:In an Order dated October 26, 2012, GLN's motion to dismiss the Second Amended Verified Complaint as against it was granted.
Footnote 5:In an Order dated March 29, 2012, plaintiffs' action against defendant Inter-Reco, Inc. was discontinued with prejudice, on consent.
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