American Home Assur. Co. v Port Auth. of N.Y. & N.J.
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American Home Assur. Co. v Port Auth. of N.Y. & N.J. 2017 NY Slip Op 32500(U) November 28, 2017 Supreme Court, New York County Docket Number: 651096/2012 Judge: Eileen Bransten Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 1] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 SUPREME COURT OF THE STATE OF NE\V YORK COUNTY OF NE\~' YORK: .PART 3 - - - - - - - - - - - - - - - - - - - - - - - - - - -·- - - - - - - - - - - - -X AMERICAN HOME ASSURANCE COMPANY, Plaintiff, -against- Index No. 651096/2012 Motion Seq. Nos. 014, 015, 016,017 J:vfotion Date: 4/28117 THE PORT AUTHORITY OF NEW 'YORK AND NE\V JERSEY, et at, Defondants. ----------------------------------------X RRANSTEN~ J.: This is an insurance coverage action in which plaintiff American Home Assurance Company (A.rnerican Home) seeks declaratory relief to determine its rights and obligations under a general liability insurance policy issued to defondant The Port Authority of New ·York and New Jersey (the Po1t Authority) in connection \Vith the constrnction of the original World Trade Center (the WTC), known as the \¥TC Hudson Tubes Project. Since the 1980s, defendants the Port Authority, Mario & DiBono Plaster Co., Inc. (Mario & DiBono or M&D), Alcoa Inc. (Alcoa), and TTV Realty Holdings, Inc. (Tislumm) (collectively, defendants or the Insureds), have been the subject of thousands of asbestos-related personal injury claims allegedly arising from exposure to asbestos at the \\/TC site during construction of the project (the WTC Asbestos Claims), For more than 25 years, 1\Jnerican Home defended and settled the WTC Asbestos Claims under American Home Policy No. CGB 448 229 (the Policy) on behalf of the Port Authority, Tishman and Alcoa.. However, in 2012, after defending and settling the \VTC Asbestos Claims 2 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 2] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page2 for decades, American Home filed this coverage litigation, contending that there \Vas never coverage under the Policy for the WTC Asbestos Claims. American Home no'.v seeks a declaration that it has no obligation to defend or indemnify defendants under the· Policy against asbestos-related personal injury claims. Motion sequence nos. 014, 015, 016, and 017 are consolidated for disposition. In motion sequence no. 014, American Home moves for partial summary judgment on two independent issues: ( 1) Timing of Injury; American Home seeks summary judgment that certain claims asserted against I:vfario & DiBono, Alcoa, Tishman and/or the Port Authority and tendered to .American Home are not covered lmder the Policy because the Insureds cannot meet their burden of proving that claimants' alleged injuries occurred during the period covered under the Policy; and (2) Spray-On Fireproofing/Exhaustion: American Home seeks summary judgment that claims asserted against Mario & DiBono and other defendants premised on alleged exposure to asbestos~containing spray-on fireproofing material sprayed by Mario & DiBono at the WTC arise from a single "occurrence," and that the applicable $10,000,000 limit of liability has been exhausted. In motion sequence no. 015, the Port Authority moves for summary judgment that: 1) coverage is triggered W)der the Policy for the WTC Asbestos Clairns because the injuries alleged by the underlying claimants arose out of construction of the \VTC; 2) coverage would be triggered in any case for the \VTC Asbestos Claims because personal injury sufficient to trigger the Policy is alleged and could have occurred during the Policy period; 3) the WTC Asbestos Claims do not constitute a single occurrence under the Policy and New York iaw; 4) the WTC 3 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 3] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American H()me v Port Authority Index No. 651096/2012 Page 3 Asbestos Claims arising out of "spray-on fireproofing" do not constitute a single occurrence under the Policy and New York lmv; 5) American Home's duty to defend under the Policy survives exhaustion of the Policy's liability limit; 6) A1nerica11 Home cannot obtain a declaration of no coverage for "Pending WTC Asbestos Claims"; 7) the Policy is not exhausted as a result of the WTC Asbestos Claims; and 8) American Home has '.vaived and is estopped from asserting its trigger and exhaustion defenses. In motion sequence nos. 016 and 017 both Alcoa and Tishman each separately move for summary judgment in their favor that: 1) coverage is triggered under the Policy for the WTC Asbestos Claims because the injuries alleged by the underlying claimants arose out of construction of the WTC; 2) coverage would be triggered in any case for the \VTC Asbestos Claims because personal injury sufficient to trigger the Policy is alleged and could have occurred during the Policy period; 3) the WTC Asbestos claims do not constitute a single occurrence under the Policy and New York lmv; 4) the \VTC Asbestos Claims arising out of "spray-on fireproofing" do not constitute a single occurrence under the Policy and New York Imv; 5) American Home's duty to defend under the Policy survives exhaustion of the Policy's liability limit; 6) A1nerican Home cimnot obtain a declaration of no coverage for "Pending WTC Asbestos Claims"; 7) the Policy is not exhausted as a result of the \\!TC Asbestos Claims; 8) American Home's Recoupment Claim (the third cause of action) is without merit; and 9) American Home has waived and is estopped from asserting its u·igger and exhaustion defenses and its Recoupment Claim. 4 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 4] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 4 For the reasons set forth beiow, American Home's motion is denied, and defendants' motions are granted in part, and denied in part. I. TIMING OF INJURY BACKGROUlVD The Policy and Coverage for WTC Asbestos Claims The Port Authority purchased the Policy from American Home on February 15, 1966, Affirm, ofJ\1ichael J Garvey. Exhibit 1. The Port Authority owned the site of the \VTC Hudson Tubes Project Complaint; i; 6, As characterized by the Port Authority it.self~ the Policy is a "wrap-up" liability policy that covered the Port Authority and the various contractors and subcontractors that worked on the construction of the \Vorld Trade Center, Garvey A{lirm., .Exhibit 2. The "insureds" under the Policy are the Port Authority and "[g]eneral contractors and subcontractors ... who perform work at the construction site ... in connection with the constmction of the World Trade Center~Hudson Tubes Project". Policy at .AHA 000752. Alcoa was a contractor retained to install an alwninmn curtain wall on the exterior of the two WTC towers. Cornplaint, ~ 7. Mario & DlBono, now defunct, performed work at the \VTC Hudson Tubes Project, including as a subcontractor of Alcoa, applying asbestos-containing fireproofing on the curtain walL ld, ~l 8. Tishman, operating under various entities, \Vas the Port Authority's agent and construction manager. Id.,~ 24. Thus, the lnsureds indude J\/fario & DiBono, Akoa and Tishman. 5 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 5] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 5 Policy Limitation Regarding Timing of injury Under the Policy, American Home "agrees 0 0 • subject to the limits of liability, exclusions, conditions and other tem1s of this policy .. , [t]o pay on behalf of the insured all sums which the insured shall become legally obligated by reason of the liability imposed upon the insured by law, or assumed by the insured under any contract, in connection '"ith the [V/TC construction] to pay as damages because of" .. personal injury ... sustained by any person or persons". Policy at AHA 000736. In the section entitled "Application of Policy," the Policy includes the following limitation: "This policy applies only to: A Er~mises-O~ratim1JJ~z£JrfJ: Personal injury or property damage which arises out of the premises-operation hazard, during the policy period, anywhere. Policy at AHA 000739. The Policy's Definitions section defines the "premises-operations hazard" as "all operations, including operations completed, by or for the insured during the policy period in connection with the construction of the Project". Id. at AHA 000744. American Home contends that, based on this language, the Policy "applies only to" personal injuries or property damage "during the policy period." On December 9, 1975, American Home sent the Port Authority a notice of cancellation, effective February 7, 1976. Garvey Ajftrm,, Exhibit 3. American Home contends that, thus, the Policy period ended on that date. 6 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 6] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 6 Claimants Sue the Insureds for Recent Injuries The clairnants in the underlying litigation (the Claimams), including the foHowing five Clairnants, are former workers in construction and related fields who worked on various construction sites in and around New-York City. Each Claimant sued the Insureds sometime between 2011 and 2014, al!eging a recent diagnosis of an asbestos-related illness. A. John Breen John Breen worked as a steamfitter with the steamfitter's union from 1962 tol 994. Garvey Affirm,, Exhibit 8. He alleged that he was exposed to various asbestos-containing products over the course of his 32-year career, as weU as to certain secondary exposures. Garvey ,~ffirm., Exhibit 9 at 93-96. From the early 1970s to 1974, Breen worked at the WTC site (Id at 62-64) He claimed that he was exposed to various asbestos-containing products while there. ld. at 75-77, 110-111, 224-226, Breen first experienced symptoms and sought medical care in the Spring of2014. Garvey Af!irm., Rthibit 8. In June 2014, doctors diagnosed Breen with mesothelloma, ld. On Ju[y 18, 2014, Breen filed suit against .rvfario & DiBono, Alcoa, Tishman and the Port Authority. Garvey Afjtrm., Exhibits 10 and 11. Natale Susino worked for a contractor called Schatz Painting, prirnariiy as a painter and plasterer, on various job sites from 1960 through the 1990s. Garvey Ajjirm, Exhibit 12and13. He alleged that he was t~xposed to various asbestos-containing products over the course ot:his career, as well as to secondary exposure. Id, 7 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 7] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 7 Susino spent approximatt~ly six months at the \Ii/TC site, He first mTived at the WTC the weekend of July 4, 1969, and spent four days working there. Garvey AlJlnn, ~Exhibit 14 at 208210: 658. He then letl to work at another job site and returned later that same year, or possibly in 1970. Id. at 303. He alleged that., during his time at the WTC, he was exposed to various asbestos-containing products, including fireproofing, tiles m1d insulation. Id, Exhibit 16. He testified to being present while workers applied spray-on fireproofing. Id, Exhibit 14 at 672~ 673. In fvlay 2011, doctors diagnosed Susino with lung cancer (Id, at 509-11; Plaint(ff's responses to interrogatories, No. 7; plaint{ff's amended responses at C&D 003460), and asbestosis. Plaint~.ff's Arnended Responses at C&D 003461. Susino filed suit on August 17, 201 L Garvey Affirm., Exhibit 15 at ALCOA 54665. He sued, among others, Alcoa, J\/fario & DiBono, and ce1tain Tishman entities. Id. C. Frank Bilello From 1957 to 1993, Frank Bilello worked as a tile setter for a contractor called Carlin Atlas. Garvey Affirm,, Exhibit 16. He a.Ueged that he was exposed to various asbestoscontaining products over the course of his career, as wel I as to certain secondary exposures. Id., No. 17. While working for Carlin Atlas, he allegedly spent three to fiJur years at the \VTC site, beginning in 1'v1arch 1971 (Garvey Affirm., Exhibit 17 at 279-280), and ending ln or around 1975 Id. f-:Xhibit 16. He a11eges that, while at the WTC, he \Vas exposed to various asbestos-containing products, including pipe insulation, cement, and gaskets, among others. Id. 8 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 8] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 8 In June 2013, doctors diagnosed Bilello with lung cancer. Garvey Affirm., Exhibit 17 m 193~194. On August 28, 2013, Bilello filed suit against, among others, Mario & DiBono and Tishman Realty & Construction Co., Inc. Garvey Affirm., .t':xhibit 18. D. Ro(f T. Hammer RolfHanm1er worked as a salesman for US. Plywnod from 1960 to 1985. Garvey A[finn, Er.hibit 19 at 84-85. He alleged that he \Vas exposed to various a.-;bestos-containing products over the course of his 25-year career, as well as secondary exposures. Garvey A.tt7rm., Eichibit 20. In 1970, Hammer spent a single half-day at the WTC site prior to April 1970. Garvey Affirm., Exhibit 19 at 103-104, 192. This was the only time he ever visited the site. Id. at 104. After working on the site, Hammer visited at least two dozen other sites where he alleges he was exposed to asbestos-containing products. id. at 104-105. In July 2012, doctors diagnosed Hammer vvith mesothelioma. Garvey Ajfirrn. Exhibit 19 at 12L On August 14, 2012, Hammer filed suit against Mario & DlBono, Alcoa, Tishman and the Port Authority. Garvey Atnrm., Exhibit 21. K Clive Tilley Nelson Clive Tilly Nelson brought suit against Mario & DiBono and Tlshman, among others, in July 2012. Garvey Affirm., Exhibit 22. In his complaint, he alleges that he was exposed to asbestos at multiple construction sites, including the WTC, and that such exposures were each a substantial contributing cause of his disease. Garvey ,{!}?rm., Exhibit 22, ~if 5, 8-18, 9 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 9] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Horne v Port Authority Index No. 651096/2012 Page 9 American Home Provides the Insureds a Defense~ S'ubjeci to a Resenation of Rights For more than 25 years, American Home defonded and settled the \VTC Asbestos Claims under the Policy on behalf of the Port Authority, Tishman and Alcoa, as insureds. Kaminska Affirm, Exhibit 7 at AHA. 105920-23; Kaminska Aj}irrn., Exhibit 8 at 90-92; Kaminska Ajfirm,, Axhibit 9. In so doing, A.mer.ican 1-fome interpreted the Policy as being triggered by all claims arising out of or resulting from exposure to asbestos products during construction of the WTC. During the pendency ofthis action, American Home has continued to defend the Insureds against Claimants' claims, subject to a reservation of the right to deny coverage on multiple grounds, including in the event that "[c]laimants did not suffer personal injury during the policy period or in the five years thereafter". Garvey Affirm., Exhibit 23. American Home Seeks to Enforce the Policy In March 2012, after defending and settling the \VTC Asbestos Claims for decades, American Home filed this coverage litigation, contending fix the first time that "[t]he pending WTC Asbestos Claims involve injuries that happened after the Policy period. Therefore, they are not covered by the premises-operation hazard", Complaint, ii 28. Accordingly, American Home seeks a declaration that "it has no obligation, either in \Vhole or in prut, to defend or indemnify Port Authority, Alcoa, DiBono and the Tisbman entities against pending vVTC Asbestos Claims"" Id., 41 33. On this motion, American Home seeks a declaration specifically \.V:ith respect to the five Claimants, which American Home submits win provide the necessary guidance for addressing hundreds of additional pending clairns. 10 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 10] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 ,{merican Home v Port Authority Index No. 651096/2012 Page 10 Specifically, American Home asse1ts that (1) for the Policy's personal inj my coverage to be "triggered" (i.e., coverage would be available, subject to the Policy's other tenns and conditions), an actual diagnosable disease needed to exist during the policy period; and (2) no such irtjuries in fact occurred during the policy period. Id.; see also Kaminska Ajfirm., .Exhibits 10~13. In taking these positions, .A.merican Home offers new readings of the Policy's trigger language and the definition of personal injury, heavily relying on the First Department's decision in Continental Cas. Co. v .Employers Ins. Co. of Wausau, 60 AD3d 128 (1st Dept 2008) ("Keas bey"'). DJSCUS~WON A. Legal Standard Corp., 81 NY2d 982, 985 (1993). The party opposing summary judgment has the burden of presenting evidentiary facts sufficient to raise triable issues of fact Zuckerman v City of New· York, 49 NY2d 557, 562 (1980); CitiFinancial Co. [DE] v AfcKinney, 27 AD3d 224, 226 (1st Dept 2006). The court is 11 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 11] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 11 required to examine the evidence in a light most favorable lo the party opposing the motion. lvfartin v Briggs, 23 5 AD2d 192, 196 (1st Dept 1997). Surrnnary judgment may be granted only when 1t is dear that no triable issues of fact exist (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]), and "should not be §,'ranted where there is any doubt as to the existence of a u'iable issue" of fact. Anierican Home Assur. Co, v Amer.ford Intl. Corp., 200 AD2d 4 72, 4 73 (1st Dept 1994); see also Color by Pergament v Pergament, 241 AD2d 418, 420 (1st Dept 1997) ("[sJummary judgment is an exercise in issue-finding, not issue-determination, and may not be granted when material and triable issues of fact are presented"). B. Instant .Motions Both parties move for partial summary jtidgment seeking differing declarations. American Home seeks a declaration that the Insureds cannot meet their burden to prove that any of the Claimants suffered injuries during the period covered under the Policy. lunerican Home contends that the Insureds cannot meet this burden because, under New York law, proving "injury" requires proving "actual htjury," and it is not possible to prove that an asbestos claimant who developed a disease within the past few years was, in fact, i1~jured more than three decades ago. Conversely, the Port Authority, Tishman and Alcoa seek a declaration that: (1) coverage is triggered under the Policy for the WTC Asbestos Claims because the injuries alleged by the underlying claimants arose out of the constrnction of the WTC; and (2) coverage would be triggered in any case for the WTC Asbestos Claims because personal injury sufficient to trigger 12 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 12] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 12 the Policy is alleged, and could have occurred, during the Policy period; and (3) American Horne cannot obtain a declaration of no coverage for "Pending WTC Asbestos Claims." C Analysis i. Occurrence of injuries and triggered coverage At the outset, it must noted that, although American Home argues that defondants have the "burden" to show that "injuries" occurred during the policy to trigger coverage under the Policy for any \VTC Asbestos Claims, in fact, under New York law, American Home, as plaintiff, "bears the burden of affirmatively proving its right to the declaratmy relief it seeks". }.1ount Vernon Fire Ins. Co. v NIBA Constr., 195 AD2d 425, 427 (1st Dept 1993); Gray v City of NY, 19 Jvrisc 3d l l l 7(A) (Sup Ct, NY County 2008) (Feinman, J.), ajfd 58 AD3d 448 (1 "1 Dept 2009), That burden is high: in order "to obtain a declaratory judgrnent as to its obligation to indemnif)r in advance of trial, [an insurer] must demonstrate as a matter of law that 'there is no possible factual or legal basis on which the insurer may eventually be held liable under its policy"', Keasbey, 60 AD3d at 135. Thus, American Home has the burden of proving that it is entitled to a declaration that the Policy requires "injmy" during the policy period, and that the WTC Asbestos Claims do not involve injmies during the policy period. As the First Department also recognized in 1979 when it interpreted this Policy, American Home agreed to provide defendants with "litigation insmance". American H{Jme Assur. Co. v Port Auth. oflv~ Y & NJ, 66 AD2d 269, 278 (1st Dept 1979) ("While policy covt~rage such as the one here involved is often referred to as 'liability insurance' it is dear that it is, in fact, 'litigation insurance' as \Veil"). 13 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 13] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 13 Iu making their surnmary judgment motions, both parties rely on difforing interpretations of the relevant Policy language, as set forth in the premises-operation hazard. American Home contends that the Policy applies only to "personal injury" that occurs during the policy period, and that the Policy was not triggered because the Claimants did not incur "personal injury" during the policy period. On the other hand, the Insureds contend that the plain language of the American Home Policy does not require personal injury during the policy period for coverage to be triggered. "An insurance agreement is subject to principles of contract interpretation". Universal c -:,; .. c A r Y[ • "'-im. _mp. v hatwna...... nwn p· J;ns. . o. . ire f OJ'"j).• ... urg·i,. pa., 2~ itts h ::i N"T3d 6. :J, 680 c·•o1-·· "1-1.S ··r .. i. ,:.., '.:>). with the constrnction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court" Id. [internal quotation marks and citation omitted]; accord Schron v Troutman Sanders LLP, 20 NY3d 430, 436 (2013) (where, as here, a contract is "complete, clear and unambiguous on its face," it "must be i.~nforced according to the plain rnean1ng of its tenns"); see also Slattery Skanska Inc. v American Home Assure Co., 67 AD3d 1, 14 (1st Dept 2009) (under New York lmv, the interpretation of an insurance policy is a legal question for the court to decide). The key inquiry at the initial interpretation stage is whether the contract is unambiguous '~ith respect to the question disputed by the parties. Breed v lr!.surance Co. ofN. Am., 46 NY2d 351, 355 (1978). "Vv11ether a contractual tennis ambiguous must be determined by looking within the four comers of the document and not to extrinsic sources", S'lattery Skanska Inc., 67 14 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 14] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 14 AD3d at 14. "An agreernent is unambiguous if the language it uses has a definite and precise meaning, unattended by danger of misconception in the purport of [the agreement] itseH: and concerning which there is no reasonable basis for a difference of opinion". Ellington v EJ\.:11 Music, Inc., 24 NY3d 239, 244 (2014) (internal quotation marks and citations omitted). A dispute over the reading of an insurance policy does not, by itself, render the language ambiguous. CT Inv. Mgt. Co, LLC v Chartis Specialty Ins. Co., 130 A.D3d 1, 6~7 (1st Dept 2015). Applying these rules of construction, it is clear that, contrary to American Home's arguments, the plain language of the Policy does not require injury during the policy period for coverage to be triggered. Indeed, under the plain language of the Policy, coverage is triggered if the injury "arises out of' construction of the Project, regardless of when the injury itself began. American Home primarily relies on Kea.>sbey to support its position that the \VTC Asbestos Claims do not trigger coverage under the Policy. Ho'>vever, American Home's reliance on Keasbe.Y is misplaced. American Home's fundamental argument is that, because the policies in Keasbey were triggered by injury during the policy period, the Policy here must be triggered by injury during the policy period. However, Keasbey expressly rejected the idea that the requirements for trigger are the same for all polices, As the Court there stated, "[a]s a stalting point for any analysis as to what triggers coverage, the Court must look at the applicable policy provisions". Keasbey, 60 AD3d at 144. The provisions in the American Home Policy are very different than those in the Keasbey policies, and dictate a very dit1erent result. The Keasbey policies were triggered by an "occurrence" that was expressly defined as an "accident including continuous or repeated exposure to conditions which results during the 15 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 15] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 15 policyperiod in bodizy injury". Id. (emphasis in original). Those policies then defined "bodily injury" as "bodily injury, sickness or disease sustained by a person ·which occurs during the policy period''. Id. (emphasis added)" In light of these provisions, the Keasbey court unde1iook an analysis of what constitutes bodily injury "during the policy period", Id In contrast, the Policy here contains no language requiring injury during the policy period for the "premises-operations hazard." Rather, the Policy's "premises-operations hazard" coverage explicitly states that coverage is triggered when personal injury "arises out of' the "operations" by the insureds "during the policy period in connection with the constrnction of the Project". Policy at AHA 000739, 744. The Policy begins with a broad grant of coverage reflecting that the Policy was issued to the Insureds specifically in connection with their construction of the original WTC The "Insuring Agreement" states that American Home will: "[P]ay on behalf of the insured all sums which the insured shall become legally obligated by reason of the liability imposed upon the insured by law, or assumed by the insured under any contract, in connection with the construction of the World Trade Center-Hudson Tubes Project (hereinqfier referred to as Project) to pay damages because of A. personal injwy, including death at any time resulting therefrom and including drunages for care and loss of services sustained by an person or persons" Id at AHA 000736 fernphasis added]). By contrast, the policies in Keas bey were not 1.vritten in connection with any particular project or liability. Further, the American Home Policy's definition of "personal injury" differs from the Keasbey policies because it is not limited to injury that occurred during the policy period, The Policy states simply that "[t]he words 'personal injury' as used in this policy, 16 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 16] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American H(>me v Port Authority Index No. 651096/2012 Page 16 include without limitation (1) bodily injury, sickness, disease, disability, shock, mental anguish and mental injury". id. at AHA 000746. Reflecting this broad grant of coverage, the Policy then goes on to state, under the heading "Application of Policy," that it applies to: "A. Premises-Operation Hazard: Personal injury or property damage which arises out of the premises-operation hazard, during the policy period, anywhere" Id. at AHA 000739 (einphasis added). Thus, the Policy makes clear that American Home must pay "all sums" that an insured becomes legally obligated to pay "in connection with" the construction of the Project "as damages because of ... personal injury," "which arises out of the premises operation hazard, during the policy period." Indeed, a plain reading of the Policy's terms reveals that the phrase "during the policy period" modifies the tem1 "premises-operation hazard," not the term "personal injury"_ id. Five pages later, the Policy provides a definition of "premises-operations hazard" that mirrors, and is consistent with, the above quoted "Insuring Agreement" and "Application of Policy" provisions: "Premises-Operations Hazard - The term 'premises-operations hazard' means all operations, including operations completed, by or _fi.)r the insured during the policy period in connection with the construction of the Project"-. Id. The reference to "during the poiicy period" in this provision, like the reference in the "Application of Policy" provision, modifies "operations." Wnen coupled with the above-quoted provisions, this definition confirms and reinforces that American Home must pay 17 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 17] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 Arnerican Home v Port Authority Index No. 651096/2012 Page 17 1. "all sums" that 2. an insured becomes legally obligated to pay "as damages becam;t' of [] personal injury" 3. "which arises out of' 4, "all operations, including operations completed, by or fiJr the insured during the policy period in connection v.i}th the construction of the Project." It is thus dear that it is the Insureds' operations, not a plaintifrs injury, which must occur "during the policy period" to trigger coverage. As reflected by the broad grant of coverage, defendants obtained coverage to protect themselves against liabilities "in connection with the construction of the \:Vorld Trade CenterHudson Tubes Project" Arnerican Home's new theory that personal injury liabilities arising from that Project are not covered is flatly inconsistent with the express policy language. Nevertheless, American Home contends that defendants' plain reading oftl1e Policy language leaves the tenn "during the policy period," as used in the "Application of Policy" section, without meaning and "completely superfluous", American Home memo at 18-20, citing Lawyers' Fund.for Client Protection for State ofN~ Y v Bank Leumi Trust Co, o.fN Y, 94 NY2d 398, 404 (2000) (it is axiomatic that a court should not construe a contract term in a way that renders other provisions "superfluous" or leads to illogical results); Black Bull Contr,, LLC v Indian Harbor Ins. Co., 13 5 AD3d 40 l, 406 ( l st Dept 2016) ("'The ml es of constrnction of conn-acts require [a court] to adopt an interpretation \Vhich gives mezming to every provision of a contract or, in the negative, no provision of a contract should be left without force and effect"'). 18 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 18] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 18 The court rejects this argument A.s explained above, the phrase «during the policy period" modifies operations, not injury, in both the "Application ofthe Policy" provision and the provision defining the "premises-operation hazard." Furthermore, vvhen dit1erent provisions of an agreement use the same phrase in a consistent fashion, the issue of whether one provision is "superfluous" or "meaningless" is not even presented. Imation Corp, v Koninkl~jke Philips Elecs. N 1<, 586 F3d 980, 990 (Fed Cir 2009) (applying New York and finding that "[aj proper interpretation of a contract generally assumes consistent usage of terms throughout the Agreement"); State ofNew York v R..f. Reynolds Tobacco Co., 304 AD2d 379, 379-380 (l 51 Dept 2003) (presumptively giving a phrase the same meaning in separate contract provisions); Finest lrtvs. v Security Trust Co. ofRochester, 96 AD2d 227, 230 (41h Dept 1983) (courts "may presume that the same words used in different parts of a \VI'iting have the same meaning"); see also Schron v T'routman Saunders LLP, 97 AD3d 87, 94-95 (1 •1 Dept 2012), affd 20 NY3d 430(2013) (rule that contract should not be constrned so as to render any portion of it meaningless "should not be carried to absurd lengths in order to imbue meaning into every legalistic jotting"), Further, American Home has ath.~mpted to manufacture its "superfluousness" issue by misleadingly manipulating the Policy text ln essence, American Home combines two separate provisions into a single provision by taking the definition of "premises-operation hazard" (which contains the phrase "during the policy period",) and plugging it into the "Application of the Policy" provision (v. .foch also contains the phrase "during the policy period"): 19 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 19] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Horne v Port Authority Index No. 651096/2012 Page 19 "This policy applies only to: A. P.r~.mi~~-:?.:-_Q42grations l·{tJz,a.ni: Personal injury or property damage which arises out of [aH operations, including operations completed, by or for the insures during the policy period in cormec.tion with the construction of the project], during the policy period, any\vhere. American Horne lv.fenw at 4. American Home then contends that, because its manufactured Policy provision repeats the phrase "during the policy period," defendants' plain reading of the Policy results in a "superfluous" use of that phrase. However, the two uses of the phrase "during the policy period" actually appear 1n h-vo separate provisions that are five pages apart. There is nothing "superfluous" a.bout a contract including t1,vo mutually reinforcing provisions that reflect the same agreement of the parties. fodeed, other examples can be found in the Policy where two different provisions mutually reinforce each other. For example, the Insuring Agreement section in the Policy provides that it covers liability "in cormection ·with the construction of the \Vorld Trade CenterHudson Tubes Project". Policy at AHA 000736. Eight pages later, in the definition of "premises-operations hazard," the Policy repeats the same phrase "in connection with the construction of the Project" to reinforce the same limitation on the scope of coverage. Id at AHA 000744. Simiimly, the "the Products Completed Operations Hazard" provision, which is a different coverage part in the Policy, requires the injury to be "sustained at the end of the policy period". ld. at AHA 000739. Eight pages later, the "Limits of Liability" section of the Policy repeats that requirement when stating that there is a $10 million aggregate limit applicable to injuries -...vhich arise out of the "Products Completed Operations Hazard" and "which are 20 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 20] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 20 sustained after the end of the policy period". Id. at AHA 000747. Accordingly, American Home's theory that a daim is covered only if the underlying plaintiff's injury arises during the policy period is inconsistent with a plain language reading of the Policy provisions. ii. Course o.f Conduct American Home's new coverage position is also belied by its own decades-long interpretation of those provisions, For more than 20 years before initiating this action, American Home consistently applied the Policy to provide coverage for the \.VTC Asbestos Claims, in cases \vhere the underlying plaintiffs alleged asbestos exposure during construction of the Project, hut were diagnosed \vith a disease after the date American Home now contends that the policy period ended. It also continued to defend and settle \VTC Asbestos Claims for four more years after the decision in Keasbey, the case on which it almost exclusively relies, before fi.ling the complaint in this action. Thus, for more than two decades, i\rnerican Home acted as an insurer that understood that it had a dear coverage obligation. Indeed, the American Home claims handlers responsible for the \VTC Asbestos Claims, up to and including the present claims handler, testified that, in determining whether the Policy was triggered, .American Horne considered only whether the claimant was exposed to asbestos during the construction of the Project. Not a single claims handler testified that the Policy provided coverage for the WTC A.sbestos Claims only if some disease occurred or existed during the policy period. Further, American Home cannot point to a single instance in the pre-litigation 21 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 21] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 21 record in which coverage for a vVTC Asbestos Claim was conditioned on some disease occmTing or existing during the policy period. Although American Home argues that a party's "course of conduct" is extrinsic evidence, which is inadmissible to interpret an unambiguous contract, the Insureds contend that they are "not presenting this as 'extrinsic evidence' to resolve an 'ambiguity' in the policy language". Tishman A:femo of Lmv at 7. Rather, the testimony cited below establishes that, for more than 20 years, American Home has consistently interpreted and applied the Policy in accordance vvith the plain language reading that defendants present on their motions, and in opposition to American Home's motion, and that, accordingly, there is no dispute as to the meaning of the Policy la.i1&ruage, This court agrees. For exa.inple, Steven Parness, the American Home claims handler responsible for the WTC Asbestos Claims from 2000 to 2010, testified that he (1) "never refused to settle a [\VTC Asbestos Claim]" on the basis that the disease developed after the policy period, because such infonnation was not important "from a coverage point of view"; and (2) he could not recall a single time in which American Home denied coverage or refused to defend or settle a WTC Asbestos Claim because the plaintiff did not develop an asbestos-related disease during the policy period (Kaminska Affirm., Exhibit 14 at 118-119); see also Id. at 166 ("As we sit here today, I ca.imot recall a point in time where. Alcoa \Vas denied coverage because, at some point during the litigation, we learned the date of the injury"). 22 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 22] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 22 Likewise, Amy Fitzpatrick, An1erican Home's corporate designee for the \VTC Asbestos Claims, and the claims handler currently responsible for those claims, testified that she looks for exposure during construction .... not bodily injury during the policy period ~ "\Vhen evaluating a WTC Asbestos Claim under the Policy. Kaminska Ajj/.rm,, Exhibit 15 at 100- J 02 ("I look at the earliest possible date that exposure could be. , , attributable to work at the \Vorld Trade Center"). Further, the primary source of information that a claims handler relied upon in evaluating potential settlement of an underlying WTC Asbestos Claim is an "i\sbestos Request For Settlement Authority" (ARFSA) form prepared by defense counsel. Kaminska Affirm., Exhibit 16. This form requires the date that a plaintiff was exposed to asbestos. Id, see also Kaminska Affirm., Exhibit 15 at 42), Fitzpatrick equated exposure to the timing of the claimant's personal injury. Id at 42-43, Fitzpatrick also testified that American Home had defe11se counsel input data on the number of claims filed and settlement amounts on a document entitled "Asbestos Claim Trend Data". Kaminska Afjlrm" . Exhibit 19; see also Kaminska .1{Dlrm,, Exhibit 15 at 42-45. The form was used in the management of WTC Asbestos Claims. Id. Importantly, the Asbestos Claim Trend Data report does not seek any information regarding when bodily injury occurred (id), again dem.onstrating that Arnerican Home does not consider such infonnation when deciding whether a claim is covered. Moreover, none of the prior claims handlers for the WTC Asbestos Claims (Peter Rand, Steven Schwesinger, Ryan Pilterson or Marci Shyavitz), or Laura Schoefer, the current thirdparty claims administrator employee responsible for the "coverage portion of this account," could 23 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 23] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096;'2012 Page 23 recall any instance in which American Home refused to defend or indemnify an insured on the ground that injury did not occur during the policy period. Kaminska "~ffinn., Exhibit 20 at 60; Kaminska A.[firrn, Exhibit 21 at 185; Kaminska Affirm .. Exhibit 22 at 104; Kaminska Affirm., Exhibit 17 at 68-69; Kaminska Affirm,, Exhibit 23 at 93-95, Similarly, John Goldwater, an outside analyst retained by American Home to audit and opine upon the potential liability to American Horne because of \VTC Asbestos Clairns arising from lawsuits against Mario & DiBono, testified that American Horne treated exposure to asbestos as the trigger for the Policy, as opposed to the timing of any bodily injury, Kaminska Ajfirrn., Exhibit 26 at 26. Goldwater understood that American Home's liability for \VTC Asbestos Claims was based on whether or not the claimant was exposed to a<>hestos at the World Trade Center-Hudson Tubes Project Id. at 27-28. He was not aware of any consideration given to the length of such exposure, or whether injury was alleged to have occurred during the policy period. Id. at 62-63. Courts have stated that "the parties' course of performance under the contract is considered to be the 'most persuasive evidence of the agreed intention of the parties.' 0 , , 'The parties to an agreement know best what they meant, and their action under it is often the strongest evidence of their meaning"', Federal Ins. Co. v Americas Ins. Co., 258 AD2d 39, 44 (1st Dept 1999) (citations omitted). American Home's more than 20-year history of providing coverage for WTC Asbestos Claims without ever detem1ining whether the disease at issue was diagnosable during the policy is (1) consistent \Vlth a plain language reading that the Policy does not, as American Home no\v contends, require injury to occur "during the policy period" to 24 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 24] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 24 trigger coverage under the "premises~operation hazard"; and (2) inconsistent \:vith American Home's new proposed inteq;retation designed to excuse it from providing any further coverage for such clairns. The comt notes that, even though there is evidence that American Home did issue some reservation of rights letters sporadicaHy over the years, the fact remains that it admittedly paid out over $30 million in daims, and, most importantly, it never disclaimed coverage. The corni also notes that, even under American Home's theory of the case, the claimed injuries in the \VTC Asbestos Claims "arose out of" construction of the Project, as that phrase is used in the Policy. New York courts construe the phrase "arising out of'' broadly. "Arising out of'' has been interpreted to mean '"originating from, incident to, or having connection with,' and requires 'only that there be some causal relationship between the injury and the risk for which coverage is provided"' Worth Comm·. Co. v Admiral Ins. Co., 10 NY 3d 411, 415 (2008) (citations omitted). The evidence of record is unifonn and uncontradic.ted that the underlying claimants allege that their injuries resulted from their exposure to asbestos during construction of the Project Complaint ,-r 6. It follows, by definition, that those alleged injuries "arose out of' construction of the Project for purposes of the Policy. Consequently, coverage was triggered under the terms of the Policy, Accordingly, because American Home's reinterpretation of the Policy is refbted both by a plain language reading of the applicable provisions, and by its own decades~long prior interpretation, American Home's motion for a declaratmy judgment (Motion Sequence No: 14) is denied, and the Insureds' motions for a declaratory judgment that coverage is u-iggered under 25 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 25] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority 1.ndex No. 651096/2012 Page 25 the Policy for the \VTC Asbestos Claims because the injuries alleged by the underlying claimants arose out of construction of the \VTC (Motion Sequence Nos: 15, 16 and 17) are granted. iii. Declaration of No Coverage The branch of defondants' motions (Motion Sequence 15, 16, and 17) that seeks a declaration that American Home is .not entitled to a declaration of no coverage as to Pending \VTC Asbestos Claims is also granted, In the complaint, American Home seeks a declaration of no coverage for "pending WTC Asbestos Claims" on the ground that the claims do not involve injuries occurring during the policy period. Complaint, ~i~ 28-29. As the Policy does not require injury during the policy period for coverage to apply, American Home is not entitled to a declaration of no coverage as to Pending WTC Asbestos Claims. Given that the Policy does not require injury during the policy period, it is unnecessary to reach the branch of the Insureds' motions seeking a declaration that coverage would be triggered in any case for the WTC Asbestos Claims because personal injury sufficient to trigger the American Home Policy under Keasbey is in fact aHeged, and cm1ld have occurred during the policy period. As such, this branch of the motions (l\rfotion Sequence 15, 16 and 17) is denied as moot. 26 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 26] NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority H. INDEX NO. 651096/2012 Index No. 651096/2012 Page 26 SPRAY-ON FlREPROOFING/EXHAUSTION BAl'KGROfJZVD The Port Authority Engages Tishman as a Construction 1Wanager On August 22, 1968, the Port Authority and Tishman sig11ed Contract \VTC 01.000, making Tislunan the construction manager for the project, effoctive "as of April 1, 1967". Garvey Af)!rm., Exhibit 41 at PORT00025504). On September 18, 1968, the Port Authority and Alcoa signed Contract WTC 400.00, according to which Alcoa agreed "to install the curtain wall for the North and South Tower buildings of the \Vorld Trade Center" Garvey A.(finn., Exhibit 38 at PORT00027263. In 1969, Mario & DiBono was hired to apply the spray-on fireproofing of the st11:.1ctural steel used to construct the 'f\iy'.in Towers. Robert Horkovich A_ffirm., Exhibits 5 and 6. Tlte WTC Asbestos Claint.>; In its complaint, American Home defines the "WTC Asbestos Clairns" as the "thousands of asbestos-related personal injury claims allegedly arising from exposure to asbestos at the WTC site". Complaint, i! 26. The WTC-Hudson Tubes Project was a massive construction project involving multiple major buildings and below grade areas. Sitting o.n a 16-acre construction site in lower Manhattan, the Project encompassed not only the 110-story T'vvin Towers, but also included a Plaza Structure, the Northeast Plaza Building, the Southeast Plaza Building, the U.S. Customs Building, a hotel, 7 World Trade Centre, and a new PATH Station and underground tracks, Charles A:faikish Affid., former director of the \VTC, 27 of 52 iJ 13. On any given day, there \Vere [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 27] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port A uthorify Index No. 651096/2012 Page 27 3,000 to 4,000 '>Yorkers at the Project ld., ~ 14. Each separate tower was comprised of multiple distinct areas. Each tovver vvas divided into three zones, each zone with its °'"'u elevator lobby and multiple elevator shafts. id., 11 15. Mechanical equipment rooms were located on several floors of each separate tower. Jd, The allegations underlying the WTC Asbestos Claims vary considerably regarding the nature, timing and location of exposure. Claimants allege exposure to a variety of asbestos materials, including sheetrock, joint compound, fireproofing, pipe insulation, cement, gaskets, insulation, floor tiles, elevator brakes, ceiling tiles, pumps and valves. The Port Authority's statement offacts (SOF), ~[ 43. They allege exposures in different years, ranging anywhere from the late 1960s to the mid 1970s and beyond. Id., ~ 46. They allege exposures in different locations, including one or both Towers, the PATH areas, the Northeast Plaza Building, the Southeast Plaza Building, and the U.S. Customs Building. Id. They allege exposures at different locations within each Tower, including different floors, the mechanical equipment rooms, the elevator shafts, and below grade areas. id. The claimants "\Vorked for roughly 20 different companies, including as ironworkers, cement workers, steamfitters, ornamental ironworkers, tile \Vorkers, painters, laborers, plumbt~rs, masons, operating engineers, elevator mechanics, carpenters, and insulators. Id., iii; 44-45. Thus, they allege exposure in a number of \Nays, including through cleaning up asbestos material or through the release of asbestos fibers dm~ to sanding or disturbing asbestos materials. Id., f 49, They even allege "take-home" exposures, i.e., where the claimant was not present at the Project, but was exposed to asbestos through a spouse who brought asbestos home. ld., ~ 48. Given 28 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 28] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 28 these many differences, the claimants allege exposure for varying lengths of time, ranging from a matter of hours, to many months and years. Id.,~[ 47. ltfario & DiBono }s Operations at the FVTC-lludson Tubes Project Mario & DiBono' s fireproofing operation at the \VTC lasted at ieast three years, and was littered \vith many intervening ev~mts. Mario & DiBono applied fireproofing material pursuant to three difforent contracts, made with different entities, which called for application of different fireproofing materials at diffrrent locations. Afaikish ,{lfid., i!~l6-20; SOF ~~ 52-72, For instance, Contract WTC 113.00 behveen the Port Authority and Mario & DiBono, covered fireproofing to the interior of the 200 floors and below grade areas of each Tower and the PATH areas. Afaikish Afjid, 4"[ 18. In contrast, Contract \VTC 200.00, originally between the Port Authority and Alcoa, and later subcontracted to Ma.rio & DiBono, applied to the exterior steel columns of each separate tower, SOF, ~lil 65-660 Contract WTC 113.00 called for two varieties of fireproofing materials depending on location: (1) CAFCO Blaze Shield Type D (CAFCO D), which \Vas used in the interior and on the exkrior colunms of each Tower; and (2) MARK H, which was used in the elevator shafts and mechanical equipment rooms. Id,, ~~j 60, 62-63 ). CAFCO D and Mark n each contained different amounts of asbestos (30%1 and 80%, respectively). The Port Authority's counterstatement (~fmaterialfacts (CSOF), ~-~] 20, 30.1, 3703, and accompanying citations). 29 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 29] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 29 Under Contract 113.00, Mario & DiBono applied fireproofing materials using two different methods -- either by spraying or by hand applying with a trowel Afaikish Affid., ~[ 18 . Contract WTC 113.00 specifically required "patching" or hand application of:fireproo:fing \Vhere Mario & DiBono previously applied fireproofing, but such fireproofing was later scraped off or disturbed by construction workers in other trades. Id.,~[~ 18-19, 55-59. Mario & DiBono's patching work was done because workers in other trades needed to remove previously applied fireproofing in order to complete their jobs, such as hanging HVAC equipment, which could not occur before fireproofing. Id., ii 19; see also, Horkovich Aj}Irm._. Exhibit 26 at 73-76 . Mario & DiBono also hru1d applied fireproofing in the various mechanical equipment floors of each Tower instead of spraying because spraying would damage the mechanical equipment present in those rooms. lvfaikish Ajjf:d, ii 20; H()rkovich Affirm., Exhibit 26 at 73-76 . :r. fru-io &DiBono began its work in the Twin Towers in August 1969, and continued tmtil 1 at least November 1972, with more than one stoppage in between. Maikish Affid, ~ 21. Mario & DiBono applied CATTO D and Mark II for approximately eight months until April 20, 1970, \:vhen the Port Authority suspended all fireproofing operations so that it could explore asbestos~ free fireproofing. Id. Mario & DiBono's work was not continuous, as it was interrupted by more than '\Vork stoppage for reasons including union issues, and Mario & DiBono's failure to abide by safety protocols. Id., ir~r 22-23. 30 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 30] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 30 11te Policy The Policy provides general liability coverage for the Port Authority and its contractors fur liability arising out of the consu·uction of the WTC-Hudson Tubes Project. American Home promised "[t]o pay ... ail sums which the insured shall become legally obligated ... in connection with the construction of the fProject] ... to pay as damages because of ... personal injury". Policy, §I [AJ. "Personal injury" is defined as "indud[ing] 'Without limitation. 0 • bodily injury, sickness, diseases, disability, shock, mental anguish and mental injury". Id., § 11 [g]. The Policy states that the "total limit of the company's liability for all darnages because of personal injury ... caused by one occurrence shall be $10,000,000" (id, ~f 6 [a]). The Policy does not define the tenn occurrence. Allegations Jn This Action With Respect to ''Occurrence~' American Horne's complaint alleges, among other things, that the Policy includes a coverage limit of _.$10 million per occurrence for WTC Asbestos Claims" and that the limit has been exhausted by American Home's payment of"WTC Asbestos Claims". Cornplaint, ~· 30. As American Home asserted in its complaint, American Home also claimed in its first interrogatory responses that all \VTC Asbestos Claims constitute one occurrence under the. Policy. Specifically, on August 20, 2012, American Home served inten-ogatory responses to the Port Authority's first set of intemJgatories which state: "American Home states that under the applicable la.,,:v governing the Policy, claims alleging bodily injury from exposure to asbestos during the construction of the World Trade Center Hudson Tubes Constrnction Projected are a 31 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 31] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 31 group of claims arising from exposure to an asbestos condition at a common location, at approximately the same time and therefore arise from one occurrence" Horkovich Affirrn., Exhibit 13 at 19. Over two years into this litigation, American Home amended its interrogatory responses to assert an entirely new occurrence theory- namely, that only a subset of the claims related to "spray-on fireproofing" at the WTC-Hudson Tubes Project is a single occurrence. Specifically, on September 15, 2014, American Home served supplemental interrogatory responses to the Port Authority's first set of interrogatories that state: "American Home states that all WTC Asbestos Claims arising from the installation of spray-on fireproofing at the WTC Hudson Tubes Project arise out of one 'occurrence' and are subject to a $10,000,000 limit". Horkavich Affirm., Exhibit 11 at 9. American .Home refers to these claims as the "WTC Fireproofing Claims." American Home ts Handling of the WTC Asbestos Claims As noted, Arnerican Home defended and settled WTC Asbestos Claims under the Policy for approximately 20 years prior to initiating this lawsuit. As A.merican Home's claims handlers te.stified at their depositions in this action, while handling these claims, American Home never tracked whether the claims constituted one or multiple occmTences. SOF iii; 74-78. For instance, Steven Parness, the American Home claims handler who handled the WTC Asbestos Claims against defendants fr)r 10 years, testified that American Home "didn't look at it claim by claim" to determine whether the claims constituted a single or multiple occurrence. Horkovich Affirm., Exhibit 31 at 98. Amy Fitzpatrick, American Home's designated corporate deposition \:vitness in 32 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 32] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 32 this action \\-1th respect to the WTC Asbestos Claims, testified "I don't track it, period," when asked, "Do you track the occurrence that an individual. plaintiff's claim arises out of in any way". Horkovich Affirm., Exhibit 41 at 183, American Home also did not track whether the claims arose from "spray~on fireproofing," exposures to other types of asbestos, or a combination of both. Id at 18 (responding "[w]e don't track," '>Vhen asked if"American Home track[s] which World Trade Center asbestos claims arise from spray-on :fireproofing as opposed to ... other types of exposure to asbestos at the \Vorld Trade Center"). American Homejs Indemnity Payments Under the Policy American Home contends that, to date, it has paid more than $30,5 miIHon in indemnity under the Policy to settle claims alleging persona! injuries resulting from exposure to asbestos in connection \1v'ith the construction of the WTC. Schaefer Affirm., ,-r416-7. American 1-Iome further contends that Inore than $10 million in indemnity has been paid specifically to resolve WTC Fireproofing Claims. Id., ~419-14, According to American Home, it has paid more than $9.37 million in indemnity just with respect to "\VTC Fireproofing Claims against Mario & DiBono. (ld., 414i 9-11, 13), and has also paid more than $681,500 to resolve \~7TC Fireproofing Claims against Alcoa. Id., ir 12. 33 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 33] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority index No. 651096/2012 Page 33 DISCUSSION American Home seeks a declaration that the WTC Fireproofing Claims arise from a single "occurrence," and that the applicable $10,000,000 limit ofliability has been exhausted. Conversi.~ly, the Insureds seek declarations that (1) the \VTC Asbestos Claims do not constitute a single "occurrence" under the Policy and New York law; (2) the \VTC Fireproofing Claims do not constitute a single "occurrence" under the Policy and Nevv York law; and (3) the Policy is not exhausted as a result of payment of the WTC Fireproofing Claims. A. Occurrence and the "unfortunate e1»ent test" First, those parts of deJendants' mot.ions seeking a declaration that the \VTC Asbestos Claims do not constitute a single occurrence are denied as moot, as American Home asserts that it only seeks a declaration that the \VTC Fireproofing Claims constitute a single occurrence, not all \VTC Asbestos Claims. American Home Opposition memo at 1, 5. American JJome further asserts that it is not contending that the WTC Asbestos Claims arise out of a single occurrence, or that coverage is exhausted for all WTC Asbestos Claims. Id. With respect to the issue of whether the WTC Fireproofing Claims constitute a single occurrence, this court finds that application of the prevailing "unfortunate-event" test to the facts of this case demonstrates that these daims lack the requisite temporal and spatial relationship to constitute a single unfortunate event "[T]he issue ohvhat constitutes an occurrence has been a legal question fr1r courts to resolve". Roman Catholic Diocese of Brooklyn v National Union Fire Ins. Co. of Pittsburgh, Pa., 34 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 34] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 34 21NY3d139, 148 (2013); accord ExxonJfobil Corp. vCertat'n Undenvriters at Lloyd's, London, 15Misc3dl144(A) (Sup Ct, NY County 2007) (Fried, J.) (nmnber of occmrences is "a .proper subject of a rnotion for summary judgment"), ajfd 50 AD3d 434 (1st Dept 2008). Under Nevl York law, an insurance company is free to define occurrence in a manner that combines multiple incidents as a single occurrence. Appalachian Ins. Co. v General Elec. Co., 8 NYJd 162, 173 n3 (2007) ("There are mm1y ways that parties to an insurance contract can provide for the grouping of claims"), In the absence of such a definition, Nev.,r York applies the unfortunate-event test to determine whether a set of claims arises from one or multiple occurrences. Id. at 173. Here, American Home chose not to define "occmTence" in the Policy. Thus, the unfortunate-event test governs. Under the unfortunate~event test, multiple claims may be grouped as a single occurrence only if they occur close in tirne and space without any intervening agents such that they can be considered a single unfr)rtunak event Id. at 171-174. The test is a t\1vo-part inquiry. First, the court must identify the "operative incident or occasion giving rise to liability". Id. at 174. Second, the court must "analyze the temporal and spatial relationships between the incidents and the extent to which they were part of an undisrnpkd continuum to determine whether they can, nonetheless, be viewed as a single unfortunate event~ a single occurrence", Jd., The "unfortunate-event" test derives from the Court of Appeals' opinion in Arthur A. Johnson Corp. v Indemnity Ins. Co. ofNA., which defined "accident" in an insurnnci.~ policy as an "'event of an unfortunate character that takes place without one's foresight or expectation"' (Johnson, 7 NY2d 222, 228 (1959) (citation omitted) (emphasis in original). 35 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 35] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port .Authority Index No. 651096/2012 Page 35 In Johnson, the Court considered whether the collapses of "two entirely separate, temporary cinder block \Valls" in two "adjoining" buildings constituted one or two "accidents" under a liability policy that did not define the tenn "accident", Id. at 225 (e1nphasis in original), The collapses, which occurred only one hour apart, were the result of a single rainfall. To determine the number of "accidents," the Court adopted the unfortunate-event test, which gives the term "accident" its "commonly accepted meaning" as "an event of an unfortunate character that takes place without one's foresight or expectation[,] ... [t]hat is, an unexpected, unfortunate occunence". Id. at 228, Applying the test, the Courl found that two accidents occurred, even though only a single rainfall was involved, and only an hour had elapsed bel'\.veen the two collapses. Id. at 229-230. Subsequent decisions by the Court have held that the undefined terms "accident" and "occunence" were interchangeable, and thus applied the Johnson "ru1fortunate-event" test for purposes of detennining whether multiple claimants' claims were caused by the same "occunence." In Har(.ford Acc. & Jndemn. Co. v ·weso!owski (3 3 NY2d 169 [1973 ]), the Court of Appeals applied the unfortunate-event test to a policy that did not define "occurrence." The Court stated that "the words 'accident' and 'occurrence' are synonymous," and "that no distinction should be drawn on th[ at] basis". Ido at 172~ l 73. Applying the test, the Court found that a three~car accident, in which the insured driver's vehicle struck an oncoming vehicle and ricocheted into a second vehicle, 'vVas a single occurrence because "[t]he continuum between the two impacts was unbroken, with no intervening agent or operative factor"o Id. at 174. 36 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 36] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 36 Following Johnson and Wesolowski, New York courts applying the unfortunate-event test in the mass bodily injury context have repeatedly found that multiple claims constitute multiple occurrences when the claimants are exposed at separate times. See e.g. Appalachian, 8 NY3d at 173~174 (exposure to asbestos); International Flavors & Fragrances, Inc. v Royal ins. Co. of 11 Am., 46 AD3d 224, 232-233 (1 · Dept 2007) (respiratory injuries caused by exposure to diacetyl); Bausch & Lomb inc v Lexington Ins. Co., 414 Fed Appx 366, 370 (2d Cir 2011) (eye injuries caused by exposure to contact lens solution); Afatter ofPrudential Lines, Inc., 158 F3d 65, 81~83 (2d Cir 1998) (exposure to asbestos); see also J\;fetropolitan Life Ins. Co. v Aetna Cas. & Sur. Co., 255 Conn 295, 317 (2001) (exposure to asbestos) (applying New York law). In the asbestos context, New York courts have consistently concluded that asbestos claims constimte multiple occurrences because the claimants in such cases, like the claimants here, were invariably exposed to asbestos in different ways, for different periods of time, at different times and locations. For instance, the New York Comt of Appeals applied the unfortunate-event test in the asbestos context in .Appalachian. There, the Court held that thousands of personal injury claims arising from exposure to asbestos in turbines arose from multiple occurrences. Applying the test, the Court found that the operative incident giving "rise to liability was each individual plaintiffs 'continuous or repeated exposure to asbestos"', Jd, at 173. The Court then held that, even if the claims share a common cause (i.e., asbestos exposure due to the policyholder's "failure to warn"), the claims were still mulliple occmrnnces because they "share[d] fov.,r, if any, commonalities, differing in terms of when and where exposure occurred, vihether the exposure 37 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 37] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 A:rnerican Home v Port Authority Index No. 651096/2012 Page 37 ' \"f\ln.en ~~-ri\]11 a.sbestos . ·related. bodily c.Jain·1s aga.IJ1St tsr1Jcler1t.ia.~ rest.dtb°l!~ frorn. e}z:po~~·ure to asl)estos on a partic.ular si1ir~ car1T1ot l)e attrib·ut(:d r::rtH.h.~r1tial ~ S Iia.l).ibty it? h.rt:Y '\A.1as ex:postlr.f..: to asbestos~ l:~ac.h (~lain:iar1t \:v·as se1»arat{.~]y ex_posed to a.sl>estos at cliftl~rent po.i.nt.s iY1 tin·le. 'I'h.er~~f;:)t\:\~ ·H-ie ir1·~t1ries ar1s(: .t}\)r11 il1ultl}J.ie f{)r bi."}{il(i·~ 1 38 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 38] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 38 claims. Id. at 232-233. The court explained that, "under New York law, the injury imposing liability on the insured does not result until exposure occurs". Id. at 232. Thus, "the exposure of the individual claimants" to toxins "on different occasions, extending over different periods of thne," constitute multiple occurrences under the unfortunate-event test id. at 232-233. In surn, New York courts have applied the unfortunate-event test to claims involving individual exposures to injurious substances, and have consistently held that the exposures arise from multiple occurrences, even ,,,,,;hen the exposures occur at the same location. Applying the unfortunate-event test to the facts at hand, it is clear that the WTC Fireproofing Claims do not constitute a single occurrence. As noted, the unfortunate-event test first requires identification of the "operative incident or occasion giving rise to liability". Appalachian, 8 NY3d at 174. Here, the incident giving rise to each defendant's liability is each underlying claimant's alleged injury. id.; Prudential, 158 F3d at 8L With respect to the second part of the test, the temporal and spatial relationship between the incidents, American Home asserts that "all negligence claims against Mario & DiBono ("M&D") and Alcoa are, by definition, WTC Fireproofing Claims because the only actionable asbestos claims against M&D and Akoa are predicated on M&D's application of spray-on fireproofing". American Home J\1emo at 1J. However, Mario & DiBono faces liability not only for alleged direct exposures to spray-on materials, but also for alleged exposures to various materials applied by hand, scraped off or disturbed after inhial applk.ation. .Indeed, American Home has aUegedly fi.mded settlements on behalf of Mario & DiBono for exposure to products other than spray-on fireproofing, CSOF~ 46-48. Moreover, as American Home admits, Alcoa is 39 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 39] INDEX NO. 651096/2012 NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authori~y Index No. 651096/2012 Page 39 a defondant in 19 of the 57 cases that admittedly involved multiple types of alleged asbestos exposure, of which spray-on fireproofing by Mario & DiBono was only one, and was named as a defondant in 4 of the 15 cases that admittedly did not involve spray-on fin.~proofing allegations at alL id., ~] 66. In addition, even if certain claims relate 10()1}(; to spray-on fireproofing, the claims still lack the requisite "temporal and spatial relationship," such that they can "be vfo,ved as a single unfortunate event". Appalachian, 8 NY3d at 174. There are numerous differing events within :tvfario & DiBono's operations that preclude a finding that any claims alleging exposure to "spray~on fireproofing" 1;vere "part of ru1 undisrupted continuum," including that: (1) Mario & DiBono installed fireproofing over parts of many years; (2) Mario & DiBono installed fireproofing in different locations and at different times, pursuant to different constmction contracts; (3) Mario & DiBono used at least two varieties of fireproofing materials depending on location; (4) in addition to being applied at different locations, the asbestos products contained different amounts of asbestos, and 1.vere applied using different equipment and techniques to apply the asbestos; (5) Mario & DiBono applied fireproofing not only by spraying, but also by "patching" or hand application after initial application; ru1d (6) Mario & DiBono's work was not continuous, as it \Vas interrupted by several work stoppages. SOF ~[~ 52-72. In light of these different events within Mario & DiBono's operations, as well as the intervening agents and the protracted nature of Mario & Di Bono's operations, it is plain that the \VTC Fireproofing Claims do not constitute a single occun·ence. 40 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 40] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 40 Nonetheless, Americ~m Home argues that some of these distinctions are "immaterial" as to "dairnants Vv'orking at the same building during the same time frame". Opposition Aferno at 9. The comt rejects this argumt:nt. Contrary to A.merican Horne's contention, Mario & DiBono's use of at least two varietit~s of fireproofing material requires a multiple occurrence finding, CAFCO D and Ivlark II contained different amounts of asbestos, and were applied using different equipment and methods, resulting in different types and doses of asbestos t~xposure to different claimants. These materials resulted in a multiplicity of different exposure arnmmts and duration to different claimants, a fact that the Appalachian court relied on in finding that there were multiple occum.~nces in the underlying asbestos claims. Appalachian, 8 NY3d at 174 (finding multiple occurrences because the claims "share fow, if any, commonalities, diftering in terms of when and where exposure occurred, whether the exposure was prolonged and for how long"). American Home also contends that "[t]he fact that different workers' exposure to MaTio & DiBono's spray-on fireproofing.,. may have occu.ned on different floors of the Twin Tov./ers does not mean those exposures lacked 'spatial relationship' that Vv'ould support a multiple occurrence finding", Opposition lvfemo at J J, In making this argmnent, however, American Home ignores both the size and the layout of the T'ivin Towers, Each tm.ver was comprised of multiple distinct areas, induding three zones with separate elevator lobbies and multiple elevator shafts, and mechanical. equipment rooms that were located on several floors of each tower. Afaikish Aj]hi., ~ 15. American Home also ignores that the claimants allege exposure to fireproofing and other asbestos-containing materials at various locations, other than just the 41 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 41] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authoritv Index No. 651096/2012 Page 41 ·' different floors of the Twin Towers, including below-grade areas of the Twin Towers, the PATH areas, the Northeast Plaza Building, the Southeast Plaza Building, and the U.S. Customs Building. 8011: ii 46). In support of its argument, American Home cites to Allied Grand Doll A1jg. Co. v Globe Indem. Co., l 5 AD2d 90 l (1st Dept 1962), \Vhere the courl found that the "leaving on of a faucet" over a weekend, which damaged several businesses on different floors of a single building, "\Vas a "single accident with separate consequences". Jd, at 901. American Home contends that "the same is true for Mario & DiBono's spray-on fireproofing vmrk on the Twin Towers". Opposition Adema at 1 r That case, however, is completely inapposite, as the property damage arose out of a single act over a short period of time, i.e., the "leaving on of a faucet" over a weekend. Here, in contrast, multiple events occuITed over the course of three years in difforent locations, resulting in thousands of personal injuries. Arnerican Home further argues that the fact that "there was more than one work stoppage" while Mario & DiBono was spraying fireproofing in the Twin Towers does not "militate in favor of' multiple occurrences. Id To the contrary, the intem1ption of Mario & DiBono's operations by work stoppages prevems the claims from being "part of the same causal continuum, without intervening agents or factors," as is necessary for all the claims to be considered a "single m1fortunate event". Appalachian, 8 NY3d at 172. The cases that American Home cites for the proposition that claims may be grouped as a single occurrence "despite limited interruptions bet\veen incidents" are distinguishable. They involved single acts over short periods that resulted in property damage, not in thousands of personal injuries over many 42 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 42] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 42 years. i\1ichaels v lvfutual lvfar. Off,, Inc., 472 F Supp 26, 29 (SDNY 1979) (unloading cargo "was a unified and continuous function ... over a period of days" resulting in a "single loss"); Aguirre v City of NY, 214 AD2d 692, 693 (2d Dept 199 5) ("single act" of spray painting a single ship, damaging 40 vehicles). Although the nature of Mario&. DiBono's operations alone compels the conclusion that claims alleging exposure to "spray-on fireproofing" could not possible be "part of an undisputed continuum," a review of the claims that American Home contends are attributable to a single "spray-on fireproofing" occurrence confinns this point. According to· American Home's expert report, of 81 WTC Asbestos Claims cases settled by American Home on behalf of Pmi Authority, Tishman and Alcoa, 57 involved multiple types of asbestos exposures, of which sprayon fireproofing was only one. Garvey A:fJlrm., Exhibit 38 at Appendix C Moreover, a revie'vv oftbe individual claims referred to by Imhoff in his report reveals significant differences among the circtm1stances and extent of the various claimants' aHeged exposure. For instance, in one claim, the claimant alleged that he was a sheet metal worker and was exposed to asbestos in the PATH areas for seven months in 1971 through exposure to sheetrock, joint compound, tape and spray fireproofing. In another claim, the claimant alleged that he was an estimator for a wire company that vvould visit the Project on various occasions during the late 1960s to early 1970s, and that he was exposed to asbestos in pipe insulation, cement, sheetrock, spray fireproofing and asbestos tiles that were being cut and sanded. 43 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 43] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 43 Another claimant alleged that he was a steamfitter, and that he was exposed to asbestos only in the elevator shafts and mechanical equipment rooms of the South Tower while handling and installing pumps and valves, and by working next to others that were 'Wiapping pipes and installing spray-on fireproofing. Jn yet another claim, the claimant alleged that he worked for Mario & DiBono spraying and cleaning up fireproofing in one of the Towers only on the 79tn to 109th floors. Id. Based on these differences in the manner of exposure, time and spatial relationship between these claims alone, American Home cannot contend that the fireproofing claims are attributable to a single "spray-on fireproofing" occurrence. A comparison of the facts in this case v.rith the Court of Appeals' decisions in Johnson and Wesolowski confirms this. In Johnson, a single rainfall caused the collapse of "two entirely separate, temporary cinder block walls" in "adjoining" buildings. Johnson, 7 NY2d at 225 (emphasis in original). Yet, even though the \Valls collapsed only an hour apart and due to the same rainfall, the Court still found that each collapse was a separate unfortunate event under the policy in that case, which, like here, did not define "occurrence." Conversely, in Wesolowski, the Court found that the thret:-car accident in that case was a single occurrence, because the "continuum between the two impacts \Vas unbroken, with no intervening agent or operativf.~ factor". Wesolowski, 33 NY2d at 174. In this case, even if the claimants were exposed to a common source of '"spray-on fireproofing" (analagous to the single rainfall in Johnson), it is the exposure and injury of each claimant (analogous to the collapses of the walls) that constitutes the unfo1tu11ate event. 44 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 44] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 44 Moreover, unlike the car .accident in Wesolowski, Mario & DiBono's operations were protracted and intermittent, and thus, each alleged exposure to "spray-on fireproofing" could not be part of an "unbroken continuum." In sum, the WTC Fireproofing Claims do not arise from a single occurrence, because they lack the temporal and spatial relationship required to be a single unfortunate event. Finally, A.merican Home's course of conduct in defending and settling the \VTC Asbestos Claims for over two decades supports a multiple occurrence finding. The American Home claims handlers testified that they never tracked, or could not recall if they tracked whether VlTC Asbestos Claims arose from a single occurrence, nor did American Home track whether the claims were attributable to "spray-on fireproofing," or a different source of asbestoso SOF, §§ 7478. This testimony dernonstrates that American Home's present occurrence position, which American Home first adopted over two years into this litigation, is an after-the-fact argurnent completely removed from the fl-lets of this case, and inconsistent with American Home's mvn course of conduct Federal Ins. Co,, 258 AD2d at 44 (internal quotation marks and citation omitted) ("the parties' course of perfonnance under the contract is considered to be the most persuasive evidence of the agreed intention of the parties"). Accordingly, the insureds are entitled to a declaration that the \VTC Asbestos Claims arising out of "spray-on fireproofing" do not constitute a single occurrence under the Policy and Ne•.v York law. 45 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 45] NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authori~y R INDEX NO. 651096/2012 Index No. 651096/2012 Page 45 Exhaustion American Home's motion for a declaratory judgment that the $10,000,000 per occun-ence limit applicahle to WTC Fireproofing Claims has been exhausted is denied. Even if this court were to accept as true American Home's contention that it has spent over $10 million in indemnity "specificaHy to resolve \VTC Fireproofing Claims" (American Home Memo at l 0-12, 19), the Policy would only be exhausted if American Home had dernonstrnted that the WTC Fireproofing Claims constitute a single occurrence, Because American Home has failed to do so, this branch of its motion is denied, and the branch of the Insureds' motions seeking a declaratory judgment that the Policy is not exhausted as a result of the WTC Asbestos Clairns (vvhich American Home concedes), or the WTC Fireproofing Claims, is granted. III. EXTRA~CONTRACTUAL DEFENSES A. The Duty to Defend The Insureds seek a declaration that American Home's duty to defend under the Po.licy does not terminate upon exhaustion of the Policy's liability limit. The Insureds contend that, even if American Home could demonstrate exhaustion of the Policy, it would still have a continuing duty to defend WTC Asbestos Claims under the Policy. American Home previously asked this court to deny the Port Authority's 2012 summary judgment mot.ion on the duty to defend on the ground that discovery would allegedly demonstrate exhaustion of the Policy's liability limit In its 2013 decision granting the Port Authority's motion, this court rejected American Home's argument, explaining that the duty to defend survives exhaustion of the liability limit unless the policy "expressly limit[s] the duty to defend", 46 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 46] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 46 American H(Jme Assur: Co. v Port Auth ofN. Y & NJ., 40 Misc 3d 1235(A), citing cases. In rejecting American Home's argument, the court held that it "cannot presume that such a limitation exists". Id. In fact, the Policy contains no such limitation provision. Indeed, three indisputable facts compel the eonclusion that American Home sold the Insureds "litigation insurance," agreeing to provide a defense even after exhaustion of the liability limit First, the Policy expn.~ssly provides that American Home "shall ... defend any suit against the insured alleging ... personal injury". Policy at 1, §II (a). Second, the Policy expressly provides that defense costs are "payable ... in addition to the applicable limit of liability". !d at 3, §I! (b)(4). Third, the Policy does not include any language expressly limiting the duty to defend upon exhaustion. Thus, this court finds that the Insureds are entitled to a declaration that American Home nmst continue to defond the WTC Asbestos Clairns, even if the Policy becomes exhausted. Although American Home argues that "New York law is settled that the duty to defond is extinguished when there is no possibility of an indemnity obligation" (Opposition Afemo at 14), this statement directly contradicts the court's prior holding in this case, and is thus barTed by the doctrine of the law of case. People v Evans, 94 NY2d 499, 502 (2000). fo opposing the Port Authority's motion for summary judgment on the duty to defend, American Home had a "full and fair opportunity" to i.nake the argument that it belatedly makes now, and it "has not presented any extraordinary circumstances permitting this court to ignore its prior decision". Travelers Cas. & Sur. Co. v Honeyv.<ell lntl., Inc,, 261\/Iisc 3d 1202(A) (Sup Ct, NY County 2006) (Tolub, J.) 47 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 47] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 47 B. f.Yaiver and Estoppel The Insureds also seek a deda.ration that American Home has waived and is estopped from asserting its trigger and exhaustion ddenses. The Insureds argue that, by defonding the Insureds and paying settlernents on their behalf for the last two decades, American Home has waived and is estopped from asserting declaratory judgment claims regarding the timing of the injury and exhaustion. Alcoa Aferno at 21-24. This branch of the motion is denied as moot, as it has already been detem1ined that American Home cannot assert its trigger defense, as the Policy does not require injury dtll'ing the po.licy period, or its exhaustion defense with respect to the WTC Fireproofing Claims, as there was more than one occurrence. C Recm1_rnnent Akoa and Tishman seek a declaration that American Horne's Recoupment Claim (the third cause of action) is without merit, and that American Home has waived and is estopped from asserting such a claim. Under New York law, where an insurer "reserved the right to reimbursement," the insurer is entitled to recoup defense costs that were not covered . Ostrager & Nw.vman § 5. 07 (3d ed 2014) (citing Certain Underwriters at Lloyd's London v Lacher & Lovell-Taylor, P.C., 112 AD3d 434, 435 (1 ~t Dept 2013), qtfd 29 NY3d 907 (2014) (an insurer is entitled to reilnbursement of defense costs following a findirnz of no coverage where it has reserved its ,__, ~ rights to do so). Likewise, for prior indemnity payments, "where an insmer defends a suit under 48 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 48] NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authoritv Index No. 651096/2012 Page 48 " ' INDEX NO. 651096/2012 a reservation of rights, it may recover settlement payi:nents if it is later determined in a declaratory judgment action that the underlying daims are not covered by the policy". Id. at§ 22.05 (citing Arnerican Guar. & Liability Ins Co, v CNA Reins. Co., 16 AD3d 154, 155 [l st Dept 2005] [finding that because the insurer had no responsibility for an additional insured, the insurer was entitled to recover amounts spent on t.he additional insured's behalf: including indemnity]). "The issuance of a reservation of rights allows the insurer the flexibrnty of fulfilling its obligation to provide its insured with a defense, while continuing to investigate the claim frnther". Law OffJ;, ofZachary R. Greenhill P.C v Liberty Ins. [lndenvriters, .Inc., 128 AD3d 556, 559 (1st Dept 2015). If the insurer concludes that there was no obligation to provide a defense, the insurer is then entitled to recouprnent id. at 560 (approving insurer's assumption of the defense subject to "a reservation of rights to, among other things, later recoup their defense costs upon a detem1ination of non-coverage"); see also Federal Ins. Co. v Kozlowski, 18 AD3d 1 33, 42 (1~ Dept 2005) (finding insurers "must pay all defense costs as incurred, subject to recoupment when Kozlmvski' s liabilities, if any, are detennined"); Dupree v Scottsdale Ins. Co., 96 Al)3d 546, 546 (1 si Dept 2012) (defense costs were "subject to recoupment"), Although Alcoa and Tishman argue that American Horne never reserved the right to recoup, this argument is contrary to fact In May 2012, after cornrnencing this coverage litigation, American I-fome sent letters to each of the four Insureds in which they reserved the right to recoup "all past and future uncovered payments related to the Claimants" in the event "[t]he Policy does nor provide coverage". Garvey Opposition Affirm., exhibit 2 at AHA 010301; id., Exhibit 3 at AHA 010384; id., Exhibit 4 at AHA 010412; id., exllihit 5 at AHA008350. 49 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 49] NYSCEF DOC. NO. 1255 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Moreover, pre~2012 INDEX NO. 651096/2012 Index No. 651096/2012 Page 49 letters to Tishman specifically reserved the right to "seek reimbursement of any defense costs paid" (Id,, Exhibit 10 at TRC 04251 ), and to "seek and demand reimbursement for any indemnity or any other payrnents paid". Id., Exhibit 75 at TRC 05947; see also exhibit 12 at TRC 04267; Exhibit 14 at TRC 04269, Exhibit 11 at TRC 04280, Exhibit 42 at TRC 04283. Alcoa and Tishman also contend that American Home may not seek recorrpment of defense costs because the Policy does not expressly provide for it Alcoa Afemo at 17-19. This argument, however, is flawed, New York law "pern1its reimbursement of costs incurred in defending claims that are later determined not to be covered" unless the policy expressly prohibits it. National Union Fire Ins. Co. of Pittsburgh, Pa. v Turner Constr. Co., 119 AD3d 103, 109 (1st Dept 2014) (denying recoupment because the policy expressly provided that the insurer could not seek recoupment). Alcoa and Tishman further contend that they each negated American Home's recoupment claim by sending a proforma response letter to American Home's May 2012 reservation of rights letters in which they purported to "reject" American Home's right of recoupment. Alcoa A:femo at 17~ 19. Nevertheless, Alcoa and Tishman then accepted American Home's payment of defense costs and indemnity throughout the pendency of the coverage litigation, all of v. .'hich \l\lere made subject to American Home's reserved right of recoupment This comt finds that, by accepting such monies, Alcoa and Tishman waived their objection. Finally, Alcoa and Tishman argue that they are entitled to summary judgment on American Home's recoupment claims, because American Home has not identified the date on which it contends the Policy became exhausted. Alcoa ldemo at 20. The court rejects this 50 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 50] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 50 argument, as lhe Insureds have not cited any law for the premise that American Home has such an obligation in order to survive summary judgment Accordingly, Alcoa and Tishman are not entitled to a declaration that American Horne's recoupment claim fails as a matter of law, and has been Vv'aived by American Home. The court notes, hcnvever, that because it has been determined that the Policy does not require injury during the policy period, American Home is not entitled to recoupment on the ground that the Insureds' claims involved injuries that did not occur during the policy period. It~ however, in the (unlikely) event that American Home could prove at trial that the aggregate Policy limits have been exhausted with respect to the WTC Asbestos Claims, American Home would be entitled to recoup any arnom1ts that it proves were paid after the fonit applicable to such claims was The courl has considered the remaining arguments, and finds them to be without merit Accordingly, it is ORDERED that plaintiff's motion for partial summary judgment (motion sequence no. 014) is denied; and it is further ORDERED that defendants' motions for summary judgrnent (motion sequence nos, 015, 016, and 017) are granted to the limited extent that they are entitled to declarations that (1) coverage is triggered under the American Home Policy No. CGB 448 229 (the Policy) for the asbestos-:related personal injury claims allegedly arising from exposure to asbestos at the World Trade Center (the WTC) site during constrnction of the project (the WTC Asbestos Claims) because the injuries alleged by the underlying claimants arose out of constrnction of the \VTC; 51 of 52 [*FILED: NEW YORK COUNTY CLERK 11/29/2017 11:19 AM 51] NYSCEF DOC. NO. 1255 INDEX NO. 651096/2012 RECEIVED NYSCEF: 11/29/2017 American Home v Port Authority Index No. 651096/2012 Page 51 (2) the \VTC Asbestos Claims arising out of "spray-on fireproofing" (the \VTC Fireproofing Claims) do not constitute a single occmTence under the Po[icy and New York lavv; (3) The Policy is not exhausted as result of the WTC Asbestos Claims or the WTC Fireproofing Claims as those claims are not considered "one occurrence"; (4) plaintiff's duty to defend under the Policy survives exhaustion of the Policy's liability limit; and (5) American Home Assurance Company (American Home) cannot obtain a declaration of no coverage for pending \VTC Asbestos Claims ("Pending WTC Asbestos Claims") and are denied in all other respects; and it is further ORHKRED that the remainder ofthe action shall continue. 1\H parties are to appear for a Pre-Trial Conference on January 16, 2018 at l 0:00 a.m, ,-·•'') . <···; Dated: November·"-----~~:::.'.~.' 2017 ENTER: lS.C. 52 of 52
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