Opinion
Index No. 655868/2021
05-20-2022
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., a New York Corporation, Plaintiff v. ACCREDITED SURETY AND CASUALTY COMPANY, a Florida Corporation, Defendant
Unpublished Opinion
DECISION AND ORDER
LUCY BILLINGS, J.S.C.
I. RELIEF SOUGHT
Plaintiff moves for partial summary judgment, C.P.L.R. § 3212(b) and (e), seeking a declaratory judgment that defendant is obligated to defend plaintiff in an underlying personal injury action, Yusupova v. EJM Consulting, LLC, Index No. 716661/2019 (Sup. Ct. N.Y. Co.), under an insurance policy defendant issued to its insured, nonparty Step Mar Contracting Corporation. C.P.L.R. § 3001. Plaintiff also seeks reimbursement for its defense expenses up to now. Defendant cross-moves for summary judgment, seeking a declaratory judgment that defendant is not obligated to defend plaintiff in the underlying action. C.P.L.R. §§ 3001, 3212(b). For the reasons explained below, the court denies plaintiff's motion and grants defendant's cross-motion.
II. DEFENDANT'S DUTY TO DEFEND IN THE UNDERLYING ACTION
A. The Underlying Complaint's Allegations
Defendant's broad duty to defend is triggered if the allegations of an underlying complaint raise a reasonable possibility of recovery under defendant's policy. Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 63 (1991); City of New York v. Travelers Prop. Cas. Co. of Am., 196 A.D.3d 401, 402 (1st Dep't 2021); Live Nation Mktg., Inc. v. Greenwich Ins. Co., 188 A.D.3d 422, 423 (1st Dep't 2020); Paramount Ins. Co. v. Federal Ins. Co., 174 A.D.3d 476, 476 (1st Dep't 2019). Plaintiff maintains that defendant owes coverage because the underlying complaint alleges claims against plaintiff and its agents for injuries caused by work performed on the roadway and premises at 176-50 Union Turnpike, Queens County. Defendant insists that the allegations against plaintiff's agents are too vague to trigger defendant's policy, since plaintiff may employ hundreds or thousands of agents, any of which may have created the condition that caused the injury.
Contrary to defendant's position, the potential numerosity of plaintiff's agents or the breadth of the allegations does not obfuscate defendant's duty to defend plaintiff. Vargas v. City of New York, 158 A.D.3d 523, 525 (1st Dep't 2018). Plaintiff owes a duty to defend if the underlying complaint reasonably suggests that plaintiff may recover under the policy's additional insured provision, which covers plaintiff;s liability for bodily injuries caused by Step Mar. Aff. of Shakeema Lowe Ex. 3, at 43. The underlying complaint does not name Step Mar as a defendant nor mention Step Mar, but alleges that Yusupova's injuries were caused by "Consolidated Edison . . . and/or [its] servants, agents, employees and/or licensees." Id. Ex. 4, at 17. Thus whether the policy covers plaintiff turns on its relationship with Step Mar.
Plaintiff maintains that Step Mar operated as plaintiff s agent, but the contract between plaintiff and Step Mar dated November 1, 2015, which the parties stipulated to be authenticated and admissible, explicitly defines Step Mar as an independent contractor and provides that "no conduct of the parties shall be construed to create a relation of principal and agent." Id. Ex. 1, at 44. Plaintiff points to no other allegation that triggers defendant's coverage under the policy. Consequently, plaintiff fails to connect the policy to the allegations in the underlying complaint. Since the allegations "allow for no interpretation which brings [Consolidated Edison] within the policy provisions," Seneca Ins. Co., Inc. v. Cimran Co., Inc.. 106 A.D.3d 166, 170 (1st Dep't 2013); Atlantic Mut. Ins. Co. v. Terk Tech. Corp.. 309 A.D.2d 22, 29 (1st Dep't 2003), defendant owes no duty to defend plaintiff in the personal injury action based on the underlying complaint. Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d 313, 327 (2017); Hanover Ins. Co. v. Philadelphia Indem. Ins. Co., 159 A.D.3d 587, 588 (1st Dep't 2 018); B.R. Fries & Assoc, LLC v. Illinois Union Ins. Co., 8 9 A.D.3d 619, 620 (1st Dep't 2011).
B. The Contract Between Plaintiff and Step Mar
Under the contract between plaintiff and Step Mar, Step Mar agreed to procure additional insurance coverage for "bodily injury . . . arising out of [Step Mar's] work." Lowe Aff. Ex. 1, at 40. Defendant subsequently issued a policy to Step Mar, which the parties also stipulated to be authenticated and admissible, and which provides:
A. Section II - Who Is An Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule, but only with respect to liability for "bodily injury," "property damage" or "personal and advertising injury" caused, in whole or in part, by your maintenance, operation or use of equipment leased to you by such person(s) or organization(s).
However:
1. The insurance afforded to such additional insured only applies to the extent permitted by law; and
2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.Id. Ex. 3, at 43.
Plaintiff construes the policy's terms, "will not be broader than that which you are required by the contract ... to provide," to mean that defendant must defend plaintiff against any bodily injury "arising out of" Step Mar's work, as Step Mar agreed in its separate contract with plaintiff. Id. Ex. 1, at 40. Yet this construction disregards the policy's limitation to injury "caused . . . by" Step Mar's maintenance, operation, or use of equipment. Id. Ex. 3, at 43. Plaintiff nonetheless insists that the additional insured provision's use of "However" expands defendant's coverage to the terms of other contracts, including the "arising out of" standard from plaintiff s contract with Step Mar.
Plaintiff s logic rests on the erroneous proposition that "However" transforms "will not be broader than" to mean "will be as broad as," but "However" simply introduces a limitation on defendant's coverage so it will not exceed Step Mar's obligations under a separate agreement. This limitation does not mean that defendant must provide the same coverage as Step Mar agreed to procure for an additional insured, but, instead, means that defendant will provide no more than Step Mar must provide under its contract with the additional insured, here plaintiff. Defendant still may issue a policy that provides coverage narrower or less than Step Mar agreed with plaintiff, if Step Mar agreed with defendant to narrower or less coverage.
Plaintiff points to no policy provision that actually obligates defendant to provide coverage to meet the terms of Step Mar's contract with plaintiff that it now seeks. As much as plaintiff insists that its contract with Step Mar requires defendant to provide the coverage required by that contract, defendant's "coverage is controlled by the relevant policy terms, not by the terms of the underlying trade contract that required the named insured to purchase coverage." Gilbane Blda. Co./TDX Constr. Corp. v. St. Paul Fire & Mar. Ins. Co., 143 A.D.3d 146, 151 (1st Dep't 2016) (quoting Bovis Lend Lease LMB, Inc. v. Great Am. Ins. Co.. 53 A.D.3d 140, 145 (1st Dep't 2008)), aff'd, 31 N.Y.3d 131 (2018). See J.P. Morgan Sec, Inc. v. Vigilant Ins. Co., 37 N.Y.3d 552, 561 (2021); Jin Ming Chen v. Insurance Co. of the State of Pa.. 36 N.Y.3d 133, 138 (2020).
To accept plaintiff s interpretation also would render the section preceding "However" superfluous, Burlington Ins. Co. v.' NYC Tr. Auth.. 2 9 N.Y.3d at 327; Atsco Footwear Holdings, LLC v. KBG, LLC, 193 A.D.3d 493, 494 (1st Dep't 2021); HTRF Ventures, LLC v. Permasteelisa N. Am. Corp., 190 A.D.3d 603, 609 (1st Dep't 2021); Eaglehill Genoar LLC v. FPGC, LLC. 188 A.D.3d 527, 529 (1st Dep't 2020), since defendant's coverage ultimately would be defined by other contracts' terms, rather than "only with respect to liability for "bodily injury' . . . caused, in whole or in part, by [Step Mar's] maintenance, operation or use of equipment leased to [Step Mar] by [Consolidated Edison]." Lowe Aff. Ex. 3, at 43. If sophisticated parties like Step Mar and defendant wanted a more expansive additional insured provision, so that defendant's coverage would encompass bodily injuries arising from any of Step Mar's work for plaintiff, then Step Mar and defendant would have drafted the policy to reflect such an intention. Burlington Ins. Co. v. NYC Tr. Auth., 29 N.Y.3d at 327.
C. The Opening Ticket
Plaintiff further insists that evidence other than the underlying complaint's allegations raises a factual issue whether defendant possessed actual knowledge of Step Mar's liability. A pavement "opening ticket," which the parties again stipulated to be authenticated and admissible, shows that Step Mar worked within 100 feet of 176-60 Union Turnpike, Queens County, six .months before the accident. Although plaintiff acknowledges that the underlying complaint alleges an injury at a different address, 176-50 Union Turnpike, plaintiff contends that the proximity of these two locations still raises a factual issue that requires defendant to defend plaintiff until it is established that Step Mar's work was not at the injury site.
Even if Step Mar's work at 176-60 Union Turnpike overlapped with the roadway or premises at 176-50 Union Turnpike, the underlying complaint still alleges no facts suggesting that Step Mar's work caused plaintiff Yusupova's injuries, nor even that her injuries arose out of Step Mar's work. In fact, the more significant difference between the policy's terms and the terms of plaintiff s contract with Step Mar is that the latter requires coverage for injuries arising out of Step Mar's work, while the policy affords coverage for injuries caused by Step Mar's "maintenance, operation or use of equipment leased by [Consolidated Edison]." Lowe Aff. Ex. 3, at 43. The opening ticket shows only that Step Mar performed work, not whether the work involved the "maintenance, operation or use of equipment leased by [Consolidated Edison]," which triggers defendant's coverage under the policy. Id. Since the opening ticket does not indicate whether Step Mar's work at 176-60 Union Turnpike involved plaintiff's equipment, let alone whether plaintiff leased any equipment, the opening ticket further fails to support plaintiff's prima facie claim. Notably, this result would ensue even if Yusupova's injuries arose out of Step Mar's work, the standard plaintiff urges. Therefore no evidence indicates a reasonable possibility of coverage. Automobile Ins. Co. of Hartford v. Cook, 7 N.Y.3d 131, 137 (2006); Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., 91 N.Y.2d 169, 175 (1997); Ruiz v. 829 Realty LLC, 198 A.D.3d 581, 581 (1st Dep't 2021).
Finally, even if the court construed "maintenance, operation or use of equipment" to mean any maintenance or operation at the job site, independent of leased equipment, Step Mar's maintenance or operation would not confer coverage any more than its work, absent a showing that its maintenance or operation caused or even was connected in any way to Yusupova's injuries. As discussed above, plaintiff fails to make this showing, because the opening ticket does not identify the nature of Step Mar's work other than that the street was "Restored By Stepmar" or indicate that the work created a dangerous condition. Lowe Aff. Ex. 2. In fact, the only evidence or allegations indicating causation are plaintiff s claims in defense of the underlying action that contractors other than Step Mar were responsible for the condition that, caused Yusupova's injuries.
II. TIMELY DENIAL OF COVERAGE UNDER INSURANCE LAW § 3420(d)(2)
Plaintiff also claims that defendant failed to deny coverage timely, pursuant to New York Insurance Law § 3420(d)(2), but this statute applies only if defendant disclaimed coverage based on an exclusion from or exception to the policy, which was not the basis for defendant's denial. U.S. Specialty Ins. Co. v. Navarro, 169 A.D.3d 415, 416 (1st Dep't 2019); B.R. Fries & Assoc, LLC v. Illinois Union Ins. Co., 89 A.D.3d at 620. See Markevics v. Liberty Mut. Ins. Co., 97 N.Y.2d 646, 648-49 (2001); Worcester Ins. Co. v. Bettenhauser, 95 N.Y.2d 185, 188-89 (2000). Defendant denied coverage because the injury fell outside the policy's terms. U.S. Specialty Ins. Co. v. Navarro, 169 A.D.3d at 416. The policy expressly specifies which sections are exclusions from the policy, none of which includes the additional insured provision. Nor is this provision an exception to the policy.
IV. CONCLUSION
For all the reasons explained above, the court denies plaintiff's motion for partial summary judgment, C.P.L.R. § 3212(b) and (e), seeking a declaratory judgment that defendant owes a duty to defend plaintiff in the underlying action. C.P.L.R. § 3001. The court also denies plaintiff reimbursement for its defense expenses up to now. Because the record discloses no allegations or evidence that triggers defendant's duty to defend plaintiff as an additional insured under defendant's policy, the court grants defendant's cross-motion for summary judgment dismissing the complaint, C.P.L.R. § 3212(b), and grants a declaratory judgment that defendant owes no duty to defend or indemnify plaintiff in the underlying action, Yusupova v. EJM Consulting, LLC, Index No. 716661/2019 (Sup. Ct. N.Y. Co.). C.P.L.R. § 3001. This decision constitutes the court's order.