Opinion
Index No. 656440/2022 Motion Seq. No. 001
01-05-2024
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., A NEW YORK CORPORATION, Plaintiff, v. ACE AMERICAN INSURANCE COMPANY, A PENNSYLVANIA CORPORATION, Defendant.
Unpublished Opinion
MOTION DATE 01/24/2023
DECISION + ORDER ON MOTION
JUDY H. KIM, JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 50, 51, 52, 53, 54 were read on this motion for PARTIAL SUMMARY JUDGMENT.
This declaratory judgment action arises from an underlying personal injury action, Mauro Parreiras v Consolidated Edison Company of New York, et al., Index No. 160391/2017 (the "Underlying Action"), in which Parreiras, a laborer for a Judlau/Waterworks joint venture sustained injuries when he was allegedly electrically shocked at a work site in the roadway of Tenth Avenue between West 48th Street and West 49th Streets. Parreiras alleges that his injury was due to Consolidated Edison Company of New York's negligent failure to mark the location of power equipment in advance of work being performed on the street and turn off the power to such equipment prior to work being performed.
Plaintiff Consolidated Edison Company of New York ("ConEd") now seeks a declaratory judgment that the defendant Ace American Insurance Company ("Ace") is obligated to defend and indemnify ConEd in the Underlying Action. ConEd now moves, pursuant to CPLR §3212, for partial summary judgment on its complaint seeking an order declaring that Ace is obligated to defend ConEd in the Underlying Action and directing Ace to reimburse ConEd for its defense costs incurred thus far in the Underlying Action.
FACTUAL BACKGROUND
On September 20, 2012, ConEd and Judlau/Waterworks, JV ("Waterworks") entered into an agreement (the "Agreement") in which Waterworks agreed to perform certain interference work for ConEd in connection with City of New York project MED-609. The Agreement provided, in relevant part, that:
In consideration for this lump sum [payment of $111,000,000.00] Waterworks, JV will provide all necessary engineering, design, labor, materials, equipment, supervision, insurance, an electronic copy of the project schedule with all applicable revisions, and incidentals and shall modify its methods of construction and operation, including special care excavation and the sequencing of the City contract work, when required...
Waterworks JV will be responsible for maintaining the integrity of all Con Edison utility systems and facilities during the performance of the City contract work and the utility interference work for the above referenced project and will be liable for and will indemnify Con Edison for all damages to the extent permitted by law resulting from any operations of Waterworks, JV, and Waterworks, JV agrees to maintain liability insurance coverage specified in the City contract documents and shall have Con Edison named as an additional insured on all such liability insurance policies. Waterworks, JV will provide a copy of the certificate of insurance naming Con Edison as an additional insured and any subsequent certificates of insurance during the duration of City project MED609(NYSCEF Doc. No. 54 [Agreement] [emphasis added]).
Pursuant to the Agreement, Waterworks added ConEd as an additional insured on its insurance policy issued by Ace, effective from June 29, 2016 to June 29, 2017 (the "Policy"). Under the Policy, Ace agreed that it would "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies" and would further "have the right and duty to defend any 'suit' seeking those damages" (Li at p. 65). An endorsement to the Policy, entitled "Additional Insured - Owners, Lessees Or Contractors - Automatic Status When Required In Construction Agreement With You," provides that:
A. Section II - Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by:
1.Your acts or omissions; or
2. The acts or omissions of those acting on your behalf: in the performance of your ongoing operations for the additional insured(Id. at p. 50 [emphasis added]).
On November 22, 2017, Parreiras-a Waterworks' employee performing work pursuant to the Waterworks' Agreement with ConEd-commenced the Underlying Action, alleging that: (1) ConEd, was negligent in failing to mark the locations of the power equipment at the worksite in the roadway of Lenth Avenue between West 48th Street and West 49th Streets and/or failing to turn off this equipment prior to work being performed at the work site; and (2) plaintiff, in the course of his employment as a laborer with Waterworks, was electrically shocked and severely injured as a result of this negligence. Parreiras alleged that ConEd violated Labor Section §§200, 240(1), and 241(6), Industrial Code (12 NYCRR) §§23-1.13, 1.13(3), 1.13(4), and 2.1, as well as the Rules and Regulations of the United States Department of Labor Occupational Safety and Health Administration ("OSHA").
ConEd subsequently filed a third party complaint against Waterworks in the Underlying Action asserting that, "[i]f the plaintiff sustained the injuries and damages as alleged in his complaint, such injuries and damages were sustained either through the negligence of Waterworks or through the negligence of the plaintiff and not through any negligence on the part of Con Edison for all damages to the extent permitted by law resulting from any operations of Waterworks" and asserting claims for indemnification (NYSCEF Doc. No. 39 [Third-Party Compl. at ¶6] [emphasis added]).
On or about May 23, 2018, Con Edison by letter, demanded that Chubb North America ("Chubb"), as successor to Ace American, defend and indemnify ConEd in the Underlying Action under the terms of the Policy (NYSCEF Doc. No. 8). On or about August 8, 2021, Chubb issued a denial of coverage (NYSCEF Doc. No. 9). ConEd commenced this action on May 23, 2022.
ConEd now moves for summary judgment, arguing that Ace is obligated to defend ConEd as an additional insured under the Policy because a reasonable possibility exists that Waterworks' negligence was a proximate cause of Parreiras's injuries. In opposition, Ace argues that it has no such obligation because the allegations of the complaint in Underlying Action, taken together with an Inspection Report issued by OSHA on October 4, 2017 (NYSCEF Doc. No. 52) and the deposition testimony of one Andrew Costa (a witness in the Underlying Action), establish that ConEd was solely at fault for any injury sustained by Parreiras. Ace argues, alternatively, that if the Court cannot yet determine that Waterworks was not the proximate cause of the alleged injury then plaintiffs motion should be denied because a triable issue of fact exists. In reply, ConEd argues that no reference to extrinsic evidence is necessary to resolve this motion and, in any event, the evidence submitted by Ace does not establish that Waterworks did not play a role in the alleged injury.
DISCUSSION
"The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" (Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985]). "Once this showing has been made, however, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form, sufficient to establish the existence of material issues of fact which require a trial of the action" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]).
"An insurance agreement is subject to principles of contract interpretation" and "as with the construction 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" (Wilcox Dev. Corp. v HDI Glob. Ins. Co.. 2021 NY Slip Op 30687[U], 12 [Sup Ct, NY County 2021] [internal citations omitted], affd 198 A.D.3d 590 [1st Dept 2021]). Whether a party is an additional insured entitled to a defense is a matter of law for the court to decide (id. at p. 14 [internal citations omitted]). A party "is not entitled to additional insured coverage if it is not named on face of the policy or required to be named pursuant to a written contract with the primary insured" and "[t]o determine whether an entity is an additional insured under a policy, the court must look to both the policy and the underlying contract entered into between the parties" (Id. at p. 12).
A duty to defend arises "whenever the allegations in the complaint in the underlying action, construed liberally, suggest a reasonable possibility of coverage, or where the insurer has actual knowledge of facts establishing such a reasonable possibility" (City of New York v Wausau Underwriters Ins. Co., 145 A.D.3d 614, 617 [1st Dept 2016] [internal citations omitted] [emphasis added]). In other words, "if any of the claims against [an] insured arguably arise from covered events, the insurer is required to defend the entire action" (Sport Rock Intl., Inc. v American Cas. Co. of Reading, Pa., 65 A.D.3d 12, 17 [1st Dept 2009] [internal quotation marks and citations omitted]). This is the case "[e]ven if a question of fact exists as to whether the insured's work or negligence caused the injury or a jury ultimately determines that the insured was not negligent" (International Bus. Machs. v United States Fire Ins. Co., 17 Misc.3d 1108[A] * 7 [Sup Ct, NY County 20071. citing BP A.C. Corp. v One Beacon Ins. Group. 33 A.D.3d 116, 120-121 [1st Dept 2006])
In light of the Policy's language that ConEd is an additional insured only with respect to liability for bodily injury, caused, in whole or in part, by Waterworks' acts or omissions or the acts or omissions of those acting on its behalf in the performance of its ongoing operations for ConEd, Ace is required to defend ConEd only where a reasonable possibility exists that "the damages [at issue in the Underlying Action] are the result of the [Waterworks'] negligence or some other act or omission" by Waterworks (Hanover Ins. Co. v Philadelphia Indent. Ins. Co., 159 A.D.3d 587, 588 [1st Dept 2018] citing Burlington Ins. Co. v NYC Tr. Auth.. 29 N.Y.3d 313, 317 [2017]).
ConEd has established that such a reasonable possibility exists. While Ace notes, correctly, that Waterworks is not named as a direct defendant in the Underlying Action, this is not dispositive. Rather, the complaint in the Underlying Action must be considered in conjunction with the third party complaint therein. The allegations in a third-party complaint trigger the duty to defend, even where an insured is not named as a direct defendant, where, as here, that third party complaint alleges that the named insured was negligent and asserts a claim for indemnification (See e.g.. All State Interior Demolition Inc. v Scottsdale Ins. Co.. 168 A.D.3d 612, 613 [1st Dept 2019]). In addition, the complaint and third-party complaint in the Underlying Action establish that any injuries sustained by Parreiras necessarily occurred in the course of his employment with Waterworks, which is also sufficient to raise "a reasonable possibility that the bodily injury is proximately caused by the named insured's acts or omissions" (Indian Harbor Ins. Co. v Alma Tower, LLC, 2017 WL 3438141, *2 [Sup Ct, NY County 2017] [internal citations omitted] affd 165 A.D.3d 549 [2018]; see also Pofi Constr. Corp. v Rutgers Cas. Ins. Co., 189 A.D.3d 465, 465-66 [1st Dept 2020]).
The October 4, 2017 OSHA Inspection Report submitted by Ace does not alter this conclusion. "Even where there exist extrinsic facts suggesting that the claim may ultimately prove meritless or outside the policy's coverage, the insurer cannot avoid its commitment to provide a defense, since [a] complaint subject to defeat because of debatable theories ... must [nevertheless] be defended by the insured" (Turner Const. Co. v Utica Mut. Ins. Co.. 2022 WL 1100976 [Sup Ct, NY County 20221 quoting Fitzpatrick v American Hondo Motor Co.. Inc.. 78 N.Y.2d 61. 66 [1991]).
Accordingly, it is ORDERED that plaintiffs motion for partial summary judgment is granted; and it is further
ADJUDGED and DECLARED that Ace American Insurance Company is obligated, as the primary insurer, to defend Consolidated Edison Company Of New York, Inc. in the action captioned Mauro Parreiras v Consolidated Edison Company of New York, et al.. pending in New York State Supreme Court, New York County, under Index No. 160391/2017; and it is further
ORDERED that the branch of plaintiffs application seeking reimbursement from defendant for plaintiffs expenses and attorney's fees incurred to date in defending against the claims in in the action captioned Mauro Parreiras v Consolidated Edison Company of New York, et al., pending in New York State Supreme Court, New York County, under Index No. 160391/2017, is granted; and it is further
ORDERED that a Judicial Hearing Officer ("JHO") or Special Referee shall be designated to hear and determine the appropriate amount of defense costs, including attorneys' fees, already incurred to be reimbursed by defendant Ace American Insurance Company; and it is further
ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119M, 646-386-3028 or spref@nycourts.gov) for placement at the earliest possible date upon which the calendar of the Special Referees Part (Part SRP), which, in accordance with the Rules of that Part (which are posted on the website of this court at www.nycourts. gov/supctmanh at the "References" link under "Courthouse Procedures"), shall assign this matter to an available JHO/Special Referee to hear and report as specified above; and it is further
ORDERED that the parties shall immediately consult one another and counsel for plaintiff shall, within fifteen days from the date of this Order, submit to the Special Referee Clerk by fax (212-401-9186) or email, an Information Sheet (which can be accessed at the "References" link on the court's website) containing all the information called for therein and that, as soon as practical thereafter, the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees Part; and it is further
ORDERED that the plaintiff shall serve a proposed accounting within twenty-four days from the date of this order and the defendant shall serve objections to the proposed accounting within twenty days from service of plaintiff s papers and the foregoing papers shall be filed with the Special Referee Clerk at least one day prior to the original appearance date in Part SRP fixed by the Clerk as set forth above; and it is further
ORDERED that the parties shall appear for the reference hearing, including with all witnesses and evidence they seek to present, and shall be ready to proceed, on the date first fixed by the Special Referee Clerk subject only to any adjournment that may be authorized by the Special Referees Part in accordance with the Rules of that Part; and it is further
ORDERED that the hearing will be conducted in the same manner as a trial before a Justice without a jury (CPLR §4320[a]) (the proceeding will be recorded by a court reporter, the rules of evidence apply, etc.) and, except as otherwise directed by the assigned JHO/Special Referee for good cause shown, the trial of the issues specified above shall proceed from day to day until completion; and it is further
ORDERED that any motion to confirm or dis affirm the Report of the JHO/Special Referee shall be made within the time and in the manner specified in CPLR §4403 and Section 202.44 of the Uniform Rules for the Trial Courts; and it is further
ORDERED that the Clerk is directed to enter judgment in favor of plaintiff and against defendant in accordance with the report of the Special Referee without any further application.
This constitutes the decision, order, and judgment of the Court.