Smith v Waste Mgt. of N.Y., LLC

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Smith v Waste Mgt. of N.Y., LLC 2016 NY Slip Op 32285(U) November 14, 2016 Supreme Court, Kings County Docket Number: 508276/14 Judge: Larry D. Martin Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. ---------------------------------------[*FILED: KINGS COUNTY CLERK 11/14/2016 1] ~~i ...------1 " ..... INDEX NO. 508276/2014 02:58 PM NYSCEF DOC. NO. 65 RECEIVED NYSCEF: 11/14/2016 At an LA.S. Trial Term, Part 41 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, located at Civic Center, BOrOUgh,~OkIYn, CZ ~tate on the day of 0 of New York, ,2016. e.r PRE SENT: ~ .. Hon. LARRY D. MARTIN, l.S.C. SHAWN SMITH, Plaintiff, ~VS- INDEX No. 508276/14 WASTE MANAGEMENT OF NEW YORK, LLC, Defendant. --------------------------------------------------------------------.~ WASTE MANAGEMENT OF NEW YORK, LLC, .Third-Party Plaintiff, -VSLU TRANSPORT, INC., MESA UNDERWRITERS SPECIALTY INSURANCE COMPANY, GEMINI TRANSPORTATION UNDERWRITERS, INSURANCE COMPANY OF THE STATE OF PA, CONTINENTAL INDEMNITY COMPANY, RBN & ASSOCIATES, INC., COTTINGHAM & BUTLER, INC., and APPLIED RISK SERVICES, Third-Party Defendants. The following papers numbered 1 to 18 read on this motion Notice of Motion ~Cross Motion and Affidavits (Affirmations) Annexed Answering Affidavit (Affirmation) Reply Affidavit (Affirmation) Memorandum of Law Papers Numbered _ _ _ _ 1-2 10-11 4,5,6,7,8_13,14 __ 3,9 12 15-16 17,18 _ _ Upon the foregoing papers, third-party defendant Cottingham & Butler Insurance Services, Inc., ("Cottingham") moves for an order: (1) pursuant to CPLR "603, severing the eighth through eighteenth 1 1 of 14 [* 2] __ i 'causes of action in the third-party complaint from the main action herein; and (2) pursuant to CPLR 3211(a)(7), dismissing the fifteenth, seventeenth and eighteenth causes of action of the third-party complaint as against Cottingham. Moreover, third-party defendant RBN & Associates, Inc. ("RBN"), moves for an order, pursuantto CPLR 3211(a)(7), granting dismissal of the fourteenth, seventeenth and eighteenth causes of action in the third-party complaint insofar as asserted against RBN. By separate motion papers, plaintiff Shawn Smith ("plaintiff') cross-moves for an order, pursuant to CPLR 603, granting severance of the entire third-party action from the main action herein. BACKGROUND FACTS & PROCEDURAL HISTORY Plaintiff commenced the main action to recover~compensatory damages for personal injuries he allegedly sustained as a result of a slip and fall accident which occurred on February 17, 2014, at a transfer station owned and operated by defendant and third-party plaintiff, Waste Management of New York, LLC ("Waste Management"). The transfer station is located at 215 Varick Street, Brooklyn, New York ("subject premises"). Plaintiff alleges that his injuries were sustained while working as a truck driver for third-party defendant Lu Transport Inc. ("Lu Transport"). Thereafter, Waste Management commenced the third-party action asserting that it entered into a contract with Lu Transport, wherein Lu Transport agreed to: (1) obtain certain insurance coverage aridto add Waste Management as an additional insured on each ofthe policies; and (2) indemnifYWaste Management for damages arising from personal injuries sustained by anyone near the subject premises. Waste Management alleges that Lu Transport retained third-party defendants RBN, Cottingham, and Applied Risk Services ("Applied Risk") as • r insurance agents and/or brokers, to procure the appropriate insurance coverages on its behalf. Waste 2 2 of 14 [* 3] Management further alleges that RBN then obtained insurance policies with third-party defendants Mesa Underwriters Speciality Insurance Company ("Mesa Underwriters"), Gemini Transportation Underwriters Insurance Company ofthe State ofP.A., ("Gemini") and Insurance Company ofthe State I of P.A., ("IC of PA"), while Applied Risk obtained a policy from third-party defendant Continental I ! . Indemnity Company ("Continental"). Waste Management avers that RBN, Cottingham and Applied ~isk failed to place sufficient primary insurance coverage and failed to ensure that Waste Management was named as an additional insured under the policies they obtained from Mesa, Gemini, Contipental and IC ofPA., as required under the contract between Waste Management and Lu Transport. DISCUSSION L Severance of the Eighth through Eighteenth Causes of Action of the Third-party Complaint Based upon a review of the record submitted by the parties, t4e Court grants that branch of Cottingham's motion to sever the eighth through eighteenth causes of action in the third-party action from the main action I. Cottingham avers that the eighth through eighteenth causes of action involve questions of insurance coverage and, as such, should be severed from the main action as no common questions oflaw or fact exists between these claims (Cottingham Mem of Law in Supp, 1-2). Section 603 of the CPLR allows a court to "order a severance of claims" or a "separate trial of any claim" where doing so would further "convenience" or would "avoid prejudice" (CPLR ~ 603). Moreover, according J to CPLR 1010, "[t]he court may dismiss a third-party complaint without prejudice, order a separate trial ofthe third-party claim 'or of any separate issue thereof .... In exercising its discretion, the court shall 1 Third-party defendants Lu Transport, Gemini, Mesa Underwriters, Continental and Applied Riskjoin in on that branch of Cottingham's motion seeking severance. 3 3 of 14 i[* 4] ~._---- l .• consider whether the controversy between the third-party plaintiff and the third-party defendant will unduly delay the determination ofthe main action or prejudice the substantial rights of any party" (CPLR 1010). It is well-settled that a primary action based on negligence and a third~party action based on insurance coverage do not involve common questions oflaw and fact,2 and, as such, ajoint trial of such actions would prejudice the third-party insurers (see Kelly v Yannotti, 4 NY2d 603,607 v Loevner, 7 AD3d 568,568 [1958]; Golfo [2d Dept 2004]). Here, in the eighth through thirteenth causes ~f action of the third-party action, Waste Management is seeking judgments declaring that it is an additional insured under Lu Transport's policies with Mesa, Gemini, Continental and IC ofPA, and also that said third- party defendants are obligated to defend and indemnify it with respect to any recovery against it in the main action (Cottingham Affirmation in Supp, Exhibit C). Moreover, seventeenth causes of action, Waste Management is seeking contribution in the fourteenth through and/or indemnification from Cottingham, RBN and Applied Risk, as an intended third-party beneficiary under the contracts and/or relationships between Lu Transport and the other third-party defendants (id.).The eighteenth cause of action similarly deals with claims of contribution against the third-party insurers and insurance agents (id.). By reason of the fact that these claims relate to insurance coverage and have no relevance to the underlying liability action3, the Court finds that severan~e of these claims from the main action is 2 According to CPLR 602(a), "[w]hen actions involving a common question oflaw or fact are pending before a court, the court, upon motion, may order ajoint trial of any or all matters in issue ... "(CPLR 602 [a]). 3The Court notes that even if the two actions involved common questions of law and fact" it is nonetheless "prejudicial to insurers to have the issue of insurance coverage tried before the jury that considers the underlying liability claims" (see Christensen v Weeks, 15 AD3d 330, 331 [2d Dept 2005]). As the Court of Appeals noted in Kelly v Yannotti, such prejudice lies in the factthat "the jury might be more disposed than otherwise, if it saw fit to render a verdict in favor of the plaintiffs (and especially if it chose to award a generous 4 4 of 14 [* 5] 1 •• -. appropriate in order to avoid prejudice to the insurers (see Christensen v Weeks, 15 AD3d 330,331 [2d Dept 2005]). Accordingly, the. Court grants that branch of Cottingham's motion to sever the eighth through eighteenth causes ,of action of the third-party complaint from the main action. IL Dismissal of the Fifteenth, Seventeenth & Eighteenth Causes of Action of the Third-Farty Complaint Against Cottingham Cottingham additionally seeks dismissal of the fifteenth, seventeenth and eighteenth causes of action in the third-party complaint, insofar as asserted against it, for failure to state ~ cause of action under CPLR 321 1(a)(7). As an initial matter, when considering a motion dismiss a cause of action pursuant to CPLR32 11(a)(7), the Court is required to "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts, as alleged fit within any cognizable legal theory" (F & M General Contracting v Oncel, 132 AD3d 946, 947 [2d Dept 2015], quoting Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Cog-Net Bldg Corp. v ( Travelers Indem Co., 86 AD3d 585,586 [2d Dept 2011]; see Guggenheimer v Ginzburg, 43 NY2d 268, 275 (1977]; Rietschel v Maimonides Medical Ctr., 83 AD3d 810,810 [2d.Dept 2011]; Sokol v Leader, 74 AD3d 1180, 1181 [2d Dept 2010]). verdict), to resolve the question of insurance coverage against the insurance company, or, if the jury saw fit to resolve the question of insurance coverage against the insurance company, knowing then that the insurance company (and not the defendant-respondent) would be ultimately liable, it might be more disposedthan otherwise to render a verdict in favor of the plaintiffs" (Kelly, 4 NY2d at 607). 5 5 of 14 ... -...----. [* 6] .. A. The Fifteenth Cause of Action In the third-party complaint, the fifteenth cause of action alleges that Cottingham acted ,as an insurance agent and/or broker for Lu Transport in placing the Automobile Liability Insurance coverage that Lu Transport was responsible for under its contract with Waste Management (Third-party Complaint, ~ 70). The complaint further alleges that Cottingham "failed to place sufficient primary coverage under the contract" and "failed to have [Waste Management] named as an additional insured as required under Automobile Liability policy" (id.). As a result, Waste Management alleges that it is entitled to indemnification or contribution from Cottingham in the underlying action (id.). , , - According to the general rule, "the duty of an insurance broker runs to its customer and not to any additional insureds since there is no privity of contract" between the broker and the insured party (Binyan Shell Chessed, Inc. v. Goldberger Ins. Brokerage, Inc., 18 AD3d 590, 593, [2d Dept 2005]; citing St. George v Barney Corp., 270 AD2d 171, 172 [1st Dept 2000]). Since no privity lies between an insured and an insurance broker, an insured party can only bring a claim against an insurance broker in two instances: (1) where there are special circumstance,s at play, such as fraud or collusion (see Binyan, 18 AD3d at 592), or (2) where there is evidence that the insured party is an,intended third-party beneficiary of a contract between the insurance broker and its client (see Griffin v Da Vinci Development, LLC, 44 AD3d 1001, 1002-1003, [2d Dept 2007]). In order to establish that a party is an intended third-party beneficiary of a contract, such party must prove: "(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for its benefit and (3) that the benefit to it is 'sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate it if the benefit is lost" (Town o/Huntington v Long Island Power Authority, 130 6 6 of 14 -----------------------------------------------., [* 7] 'II! ~ __ • AD3d 1013, 1014 [2d Dept 2015]). It is undisputed that there is no direct contractual relationship between Waste Management and , Cottingham. Notwithstanding, Waste Management contends that it was the intended third-party beneficiary ofthe agreement between Cottingham and Lu Transport. Annexed to Cottingham's motion papers is a copy of the "Transportation Service Agreement" between 'Yaste Management and Lu Transport (Cottingham Affirmation, Exhibit B, 9). Pursuant to section 15 of this agreement, Lu Transport (described therein as "Carrier") was required to obtain the following insurance coverages: (1) workers compensation insurance; (2) employers' liability insurance; (3) commercial general liability insurance; and (4) automobile liability insurance (id.). The agreement-further required Lu Transport to add Waste Management (described therein as "Company") as "additional insureds on a Primary basis to all required liability policies required of[Lu Transport] and its subcontractors, and all required insurance policies" (id.). In light of this agreement, and assuming the facts alleged in the fifteenth cause of action are true, the insurance coverage that Cottingham procured on behalf ofLu Transport, was intended to satisfyLu Transport's obligations under its contract with WastejManagement. Since Cottingham failed to demonstrate that "this material fact alleged by [Waste Management] was not a fact at all, and failed, moreover, to demonstrate that no significant dispute exists regarding the allegation," the Court finds that , the alleged facts give rise to a cognizable cause of action (Cog-Net, 86 AD3d at 586; Nunez v Mohamed, 104 AD3d 921, 922 [2d Dept 2013]). Accordingly, Cottingham's motions to dismiss the fifteenth cause of action of the third-party complaint is denied. B. The Seventeenth Cause of Action With respect to the seventeenth cause of action, Waste Management requests that the Court 7 7 of 14 [* 8] I J compel Cottingham, among others, to defend it in the main action and "to fully indemnifY [Waste Management] up to the policy limits and under the appropriate policy for any award that plaintiff were to obtain against [Waste Management] in this matter" (Third-Party Complaint, ~77). Hawever, Cottingham contends that any liability on its part would require that Waste Management establish the existence of privity between the two parties, which it failed to da in the complaint (see Cottingham Mem of Law in Supp, 13). Cottingham further argues that the cause .ofaction is "legally deficient because it seeks the equitable relief of a decl!lratory judgment," when Waste Management'sonly remedy, if one exists, "is a remedy at law through an action for damages against Cattingham" (id.). The Court notes that "[w]here a cause of action is sufficient to invoke the caurt' s power to render \a declaratary judgment ... as to the rights and other legal relatians of the parties to a justiciable . controversy, a motion to dismiss that cause of action should be denied" (Tilcon New York, Inc., v Town of Poughkeepsie, 87 AD3d 1148,1150 [2d Dept 2011]). In relatian to disputes invalving insurance , " coverage, the Caurt further notes that "[a] party who is not privy to an insurance cantract but would nevertheless benefit from the insurance policy may bring a declaratary judgment' action ta determine whether the insurer owes a defense and/or coverage under the policy (Tepedino v Zurich-American Ins. Group, 220 AD2d 579 [2d Dept 1995]). Moreover, an insurance broker who is negligent in failing to procure the necessary insurance "stands in the shoes of the insurer and is liable to provide for the insured's defense in the underlying action and to indemnifY the insured far any judgment which would have been covered by the policy" (Brian Fay Const. Inc., v Morstan General Agency, Inc., 90 AD3d 796 [2d Dept 2011]). Here, given that Waste Management's indemnity and contribution daims stem from its claim that 8 8 of 14 [* 9] it is an intended third-party beneficiary, the Court finds that the allegations in the seventeenth cause of .' action are sufficient to invoke the Court's power to render a declaratory judgment. As such, Cottingham's motion to dismiss the seventeenth cause of action is denied. In addition, contrary to Cottingham's contention, given that the issue here involves Cottingham's obligation to defend and indemnifY Waste Management, a request for declaratory reliefis appropriate in this matter (see generally Brian Fay Const. Inc., 90 AD3d at 798-799). The Eighteenth Cause of Action C. Next, the eighteenth cause of action seeks a declaratory judgment against Cottingham, among others, "for the amount of any judgment or verdict which may be recovered in this action against [Waste Management]"; Cottingham alternatively, Waste Management to the extent that it is responsible, indemnity and contribution, seeks to recover a portion of the judgment "in accordance of common law and in accordance with the contents of the contract referred to herein" (Third-Party Complaint, ~ 79). The cause of action also requests among others, "had a duty to [Waste Management] Management]" with the principles from a judgment to secure additional declaring that Cottingham, insured status for [Waste and, because Cottingham allegedly breached this duty, it must "defend and indemnifY [Waste Management] to the full extent of those policies" (id.). In support of its motion to dismiss this cause of action, Cottingham again argues that the cause of action fails to allege any contractual privity or special relationship between Cottingham and Waste Management, of care to Waste Management in the underlying such that would give rise to a duty' action (Cottingham Mem of Law in Supp, 16). Cottingham further avers that a claim for contribution is not appropriate here because "[n]owhere in the [t]hird-[p]arty complaint is there any allegation that Cottingham shared in responsibility 9 9 of 14 for any injury [* 10] to the [p]laintiff in the [t]irst-[p ]arty [a]ction" (id.). In this regard, the Court notes the general rule that the existence of a contractual obligation between two parties is sufficient to impose a duty in favor of an intended third-party beneficiary (see. Espinal v Melville Snow Contractors, Inc., 98 NY2d 136, 140 [2002]). In light ofthe foregoing, and for the reasons previously mentioned, the Court finds that the -facts asserted in the third-party complaint sufficiently allege that Cottingham, in its role as insurance broker for Lu Transport, breached a duty of care owed to Waste Management, rendering the allegations in the eighteenth cause of action adeq~ate , to state a claim upon which relief can be granted. Furthermore, the Court notes that a claim for contribution is proper in this matter because, rather than merely being "compelled to pay for the wrong of another," Waste Management is also alleging that Cottingham is liable "for its own failure to exercise reasonable care" under the circumstances (Salonia v Samsol Homes, Inc., 119 AD 2d 394 [2d Dept 1986]; citing D'Ambrosio v City of New York, 55 NY2d 454 [1982]). Accordingly, that branch of Cottingham's motion to dismiss the eighteenth cause of action is denied. IlL Dismissal of the Fourteenth, Seventeenth & Eighteenth Causes of Action of the Third-Party Complaint Against RBN RBN seeks dismissal of the fourteenth, seventeenth and eighteenth causes of action in the thirdparty complaint, insofa~ as asserted against it, for failure to state a cause of action under CPLR 3211(a)(7). In the third-party complaint, the fourteenth cause of action alleges that RBN acted as an insurance agent and/or-broker for Lu Transport in placing the General Liability and Excess/Umbrella ,coverages that Lu Transport was responsible for under its contract with Waste Management (Third-party 10 10 of 14 [* 11] Complaint, ,-r 67). The complaint further alleges that RBN "failed to place sufficient primary coverage under the contract" and "failed to have [Waste Management] named as an additional insured as required under the General Liability and Excess/Umbrella policies" (id.). As a result, Waste Management alleges that it is entitled to have RBN defend and fully indemnify it in the underlying action (id.). In the seventeenth cause of action, Waste Management requests that the Court also compel RBN to defend it in the main action and to "fully indemnify [Waste Management] up to the policy limits and, under the ~ppropriate policy for any award that plaintiff were to obtain against [Waste Management] in this matter" (Third-Party Complaint, ,-r 77). Moreover, the eighteenth cause of action also seeks a declaratory judgment against RBN for an amount commensurate with RBN's responsibility to Waste Management in the main action, as well as a judgment declaring that RBN breached its duty to Waste Management by failing to secure additional insured status for Waste Management (Third-Party Complaint, ,-r 79). In support of its motion to dismiss the three causes of action herein, RBN argues, in similar fashion to Cottingham, that the third-party complaint failed to allege that there is privity between RBN and W. ste Management, and, as such, RBN cannot be held liable to Waste Management (RBN Memo a of Law in Supp, 5-6). In addition, RBN argues that a contribution claim against it is improper because plaintiff failed to make any allegations of wrongdoing against RBN in the main action, and plaintiff is not seeking any damages or relief against RBN based on insurance coverage issues (RBN Mem of Law in Supp; 6). For the reasons stated above, the Court finds that the facts alleged in the fourteenth, seventeenth and eighteenth causes of action, as against RBN, are sufficient to state a claim upon which relief can be 11 11 of 14 I ' [* 12] granted. Accordingly, RBN's motion to dismiss the fourteenth, seventeenth and eighteenth causes of action is denied. Iv' Plaintiff's Cross-Motion to Sever the Third-Party Complaint from the Main Action Plaintiff, in his cross motion, requests that the Court sever the entire third-party complaint from the underlying personal injury action, on the grounds that there are no common questions offact between the claims in the respective actions. Plaintiff further contends that he will suffer undue prejudice if the two actions are tried together because the insurance issues involved in the third-party complaint, as well as the issues of indemnification, are separate and. distinct from the issues regarding how the accident occurred and of defendant's alleged negligence (Plaintiff Affirmation in Supp, ~ 13). In opposition to the instant cross-motion, Waste Management avers that severance is not appropriate in this matter because there are "complex and interwoven common questions oflaw and.fact," and its claims against the thirdparty defendants "are largely predicated upon the facts and legal determinations in the underlying ( personal inj~ry claim" (Waste Management Aff in Opp to Cross-Motion, ~ ~ 5-6). As the Court has determined that the eighth through eighteenth causes of action of the third-party complaint will be severed from the underlying action, the Court will limit its analysis to whether first through seventh causes of action ought to be severed as well. The first through seventh causes of action in the third-party complaint are all asserted against Lu Transport, plaintiff s employer. Th-efirst and second causes of action assert that Waste Ma'nagement is entitled to contribution and indemnification in the full amount of any judgment rendered against Waste Management in the main .action. The third cause of action is for the alternative remedy of statutory apportionment. The fourth through seventh causes of action are all breach of contract claims, and are 12 12 of 14 [* 13] based upon'the contract between Waste Management and Lu Transport, in which Lu Transport agreed, inter alia, to transport waste materials from the subject transfer station where the alleged accident occurred. The Court notes that while it is within the court's discretion to grant a motion to sever, severance will be deemed improper "where the claims against the defendants involve common factual and legal issues, and the interests ofjudicial economy and consistency of verdicts will be served by having a single trial" (New York Schools Ins. Reciprocal v Milburn Sales Co., Inc., 138 AD3d 940, 941 [2d Dept 2016]; quoting New York Cent..Mut. Ins. Co. v McGee, 87 AD3d 622, 624 [2d Dept 2011 D. Here, since Lu I Transport is the owner of the subject premises and, pursuant to its contract with Waste Management, agreed to indemnify it should an employee become injured on the premises (see Cottingham Affirmation, Exhibit B), Lu Transport's liability in the third-party action is dependent on whether, and to what extent, Waste Management is found)iable in the first-party action. Accordingly, based upon a review of the record submitted by the parties,' and the relevant law, the Court grants plaintiff's cross-motion to the extent of severing the eighth through eighteenth causes of action of the. third-party complaint. That branch of plaintiff's motion seeking to sever the first through seventh causes of action in the third-party complaint from the main action is denied (see Curreri vHeritage Property Investment Trust, Inc., 48 AD 3d 505,507 [2d Dept 2008]; see generally Ziti v City o/New York, 105 AD3d949 [2d Dept 2013D. CONCLUSION Accordingly, that branch of Cottingham's motion to sever the eJghth through eighteenth causes of action in the third-party cOfl?plaintis granted, and these causes of action are hereby severed from the 13 13 of 14 [* 14] I main action. Those branches of Cottingham's motion to dismiss the fifteenth; seventeenth and eighteenth causes of action in the third-party complaint, insofar as asserted against it, is denied. RBN's motion to dismiss the fourteenth, seyenteenth and eighteenth causes of action in the third-party complaint, insofar as asserted against it, is likewise denied. Plaintiff's cross-motion to sever the entire third-party complaint from the main action is granted to t~heextent of severing the eighth through eighteenth causes of action ofthe third-party complaint from the main action. Upon payment of any requisite fee, the Kings County Clerk is directed to assign a new index number to the severed causes of action (eighth through eighteenth) of the third-party complaint. The foregoing constitutes the decision and order of the Court. OCT 1'82016 Itr. .£0 LUl6 For Clerk use only MGe..X:I MD Motion Se .# ./ J) ') a, 14 14 of 14

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