Opinion
18311/96.
Decided August 8, 2006.
Upon the foregoing papers, plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company (Employers) and Trocom Construction Corp. (Trocom) move for an order, pursuant to CPLR Rule 3212, granting summary judgment on their complaint against defendants Underwriters at Lloyds, London, Yorkshire Insurance Co., Ltd., Cornhill Insurance Co., PLC (Cornhill), Allianz Cornhill International Insurance, PLC, The Ocean Marine Insurance Co., Ltd., Hansa Marine Insurance Co. (U.K.), Ltd., Vesta (U.K.) Insurance Co., Ltd., The Northern Assurance Co., Ltd., Sphere Drake Insurance, PLC, The Tokio Marine Fire Insurance Co. (U.K.), Ltd. (collectively, London Underwriters), with an award of indemnification damages, defense costs and expenses.
Plaintiffs contend that defendants, as underwriters of a certain insurance policy, had an affirmative duty to defend and indemnify Trocom and nonparty New York City Transit Authority (NYCTA) in connection with an underlying personal injury action, Neal v. New York City Transit Authority, et al., Kings County Supreme Court Index No. 14521/93, but wrongfully refused a proper tender of that defense by Wausau. Wausau seeks indemnification of $254,818.70 from London Underwriters, for payments made by Wausau in settlement of the underlying personal injury action, as well as $40,204.39 in defense costs, and interest at the statutory rate. The underlying personal injury action was actually settled for $750,000 ($250,000 to each of three defendants). Wausau paid the sum of $500,000 on behalf of Trocom and NYCTA, and seeks $254,818.70 on the grounds that this amount is the correct percentage of the $500,000 settlement payment actually attributable to London Underwriters.
Background
In 1990, NYCTA and Trocom entered into a written agreement for Trocom's services as a general contractor on an NYCTA concrete repair project. Pursuant to that agreement, Trocom was required to procure and maintain a general liability insurance on NYCTA's behalf, by obtaining an insurance policy that provided coverage "on a primary and not on an excess or contributing basis with any policies which may be available to the [NYCTA]." Trocom complied by securing in late December 1991 the requisite policy from Wausau, with NYCTA named as an insured.
On or about August 20, 1991, Trocom and defendant Epoxy Design System (Epoxy), an affiliate or subsidiary of defendant Team, Inc. (Team), entered into a written subcontract agreement for Epoxy's performance of the concrete repair work. Epoxy, pursuant to Article 9 was required to procure and maintain insurance "as may be required by the contract documents" and pursuant to Article 19 to "name [Trocom] as an additional insured in all insurance policies required by the contract documents." The term "contract documents" was defined in the subcontract agreement to include "the contract between the owner (NYCTA) and contractor (Trocom)." Epoxy complied by procuring in 1992 the requisite insurance policy, underwritten by the London Underwriters and issued by Criterion International Managers, Inc. (the Criterion Policy). Trocom and NYCTA are "blanket additional insureds" thereunder, and covered "as respects to liability arising out of operations by or on behalf of [Epoxy]."
Kevin B. Neal, the non-derivative plaintiff in the underlying action, allegedly sustained injuries on June 8, 1992 while performing construction work for Epoxy at the NYCTA's jobsite. In April 1993, Neal commenced the underlying action, naming NYCTA, Trocom and Epoxy as defendants, alleging their negligence in causing his accident. It is undisputed that, at the time of Neal's accident: Trocom and NYCTA were insured under the commercial general liability policy issued by Wausau; and, Epoxy, Trocom and NYCTA were all insured under the 1992 Criterion comprehensive general liability policy underwritten by all or (pursuant to one or more subsequently added endorsements) some of the London Underwriters.
Beginning on or about September 12, 1994, Wausau tendered NYCTA and Trocom's defense of the underlying action to Epoxy and its insurer, London Underwriters, for London Underwriters' assumption. London Underwriters failed or refused such tender by not responding. Wausau thereafter commenced the instant action. On or about December 12, 1997, Wausau reached a settlement with plaintiffs in the underlying personal injury action, paying out $500,000 in settlement monies on Trocom and NYCTA's behalf.
The instant motion seeks summary judgment on plaintiffs' complaint with an award of: $254,818.70 on Wausau's indemnification claim; $40,204.39 jointly and severally against each of the London Underwriters defendants for legal expenses allegedly incurred by Wausau in its defense of the underlying personal injury action; and, interest at the statutory rate. Plaintiffs do not seek a declaratory judgment as to London Underwriters' obligation to defend and indemnify Trocom and NYCTA in connection with the underlying personal injury action. Defendants' obligation to provide a defense and some coverage is not in dispute. The dispute is involved with the limits of coverage and which of the defendants are responsible for providing same.
Summary judgment standard
The proponent of 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. See Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986); Zuckerman v. City of New York, 49 NY2d 557, 562 (1980); Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 (1957). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers. Matter of Redemption Church of Christ v. Williams, 84 AD2d 648, 649 (3rd Dept 1981); Greenburg v. Manlon Realty, 43 AD2d 968, 969 (2nd Dept 1974); Winegrad v. New York University Medical Center, 64 NY2d 851 (1985).
CPLR Rule 3212 (b) requires that for a court to grant summary judgment the court must determine if the movant's papers justify holding as a matter of law, "that the cause of action or defense has no merit." The evidence submitted in support of the movant must be viewed in the light most favorable to the nonmoving party. Marine Midland Bank, N.A. v. Dino Artie's Automatic Transmission Co., 168 AD2d 610 (2nd Dept 1990). Summary judgment shall be granted only where there are no issues of material fact and the evidence requires the court to direct judgment in favor of the movant as a matter of law. Friends of Animals, Inc., v. Associated Fur Mfrs., 46 NY2d 1065 (1979).
Discussion
Wausau argues in the instant motion that: London Underwriters had a duty, but improperly failed or refused, to defend its insureds, Trocom and NYCTA, with respect to the underlying personal injury action; the defense and satisfactory conclusion of that action were, thus, left to Wausau; and, London Underwriters are, therefore, obligated to indemnify Wausau for monies expended in settlement of the underlying action and to reimburse defense costs.
The London Underwriters do not claim that Trocom and NYCTA were not insured under the Criterion policy, or that the underlying incident was not a covered event under that policy. Instead, London Underwriters oppose summary judgment on the grounds that: plaintiffs' notice of loss and alleged tender of defense was defective, in that the documents were sent or made to the wrong party and/or to an improper address; pursuant to one or more modifications or security endorsements to the Criterion policy, only two of the named London Underwriters are exposed to liability, and only up to $100,000 for the underlying incident; primary coverage for the incident was provided under both the Wausau and Criterion policies, and Wausau and London Underwriters are both primarily obligated and must share equally in the indemnity and defense costs; and, Wausau failed to provide a prima facie demonstration of its entitlement to the amount sought in defense costs.
The underlying personal injury action was commenced against Trocom, NYCTA and Epoxy in April 1993. Plaintiffs' evidence demonstrates that Wausau sent notices of claim, and tendered the defense and indemnification of the underlying action, in writing, on or about September 22, 1994, to Trocom, at its Houston, Texas offices, and on or about September 12, 1995, to London Underwriters, at their Frankfort, Kentucky offices. Defendants challenge the sufficiency and effectiveness of the notice of claim and tender on the grounds that the notice was not made to defendants at their Houston, Texas address, the address in the policy. Plaintiffs respond, correctly, that the Criterion policy simply lists the Houston, Texas address as an address where "Notice of Loss" might be sent, but does not mandate that notice be sent to that specific address as a condition precedent to coverage. Defendants, moreover, failed to assert that they did not receive actual notice of the claim prior to receipt of the complaint in this action, and failed to raise a triable issue of fact as to whether both Trocom and NYCTA properly and timely complied with the policy's notice provisions.
Assuming, however, that the Criterion policy required notice of loss be sent to London Underwriters at their Texas address, the Court notes that, contrary to plaintiffs' assertions, London Underwriters would not be estopped from raising the defense of late notice of claim merely due to their having otherwise obtained actual notice of the claim. Rather, in New York, an insurer's obligation to disclaim coverage as to a particular insured does not arise until the insured provides notice of the occurrence or claim. Roofing Consultants Inc. v. Scottsdale Ins. Co., 273 AD2d 933 (4th Dept 2000); Dryden Mut. Ins. Co. v. Brockman, 259 AD2d 947 (4th Dept 1999). The insured is not relieved of his or her notice obligations merely because the insurer has somehow otherwise gained actual knowledge of the occurrence or claim. Steinberg v. Hermitage Ins. Co., 26 AD3d 426 (2nd Dept 2006); City of New York v. St. Paul Fire and Marine Ins. Co., 21 AD3d 978 (2nd Dept 2005); Travelers Ins. Co. v. Volmar Const., Inc., 300 AD2d 40 (1st Dept 2002); Sayed v. Macari, 296 AD2d 396 (2nd Dept 2002); American Mfrs. Mut. Ins. Co. v. CMA Enterprises, Ltd., 246 AD2d 373 (1st Dept 1998); Heydt Contracting Corp. v. American Home Assur. Co., 146 AD2d 497 (1st Dept 1989).
Trocom, in the instant matter, if not already accomplished by its September 1994 and September 1995 notices, provided London Underwriters with the requisite notice of occurrence and claim by filing the complaint in the instant action. This triggered London Underwriters' obligation to disclaim coverage based upon the failure to provide timely notice. London Underwriters has never sought to disclaim coverage of any of the subject insureds as to the underlying incident on the ground of untimely notice, and their answer, inter alia, fails to assert untimely notice of claim as an affirmative defense. It is not sufficiently detailed and compliant with Insurance Law § 3420 (d) so as to constitute a valid disclaimer on such basis. The written notice of a disclaimer requirement can be satisfied by the pleadings. Thomson v. Power Authority of the State of New York, 217 AD2d 495, 497 (1st Dept 1995). A disclaimer in this matter would be untimely as a matter of law. London Underwriters is deemed to have waived any grounds it might have had for a disclaimer of coverage.
London Underwriters further contends that certain July 1992 endorsements to the Criterion policy modified the policy subscribers and coverage limits such that: only the Cornhill and Hansa Marine defendants are exposed to any indemnity and defense obligations in connection with the underlying incident; and, the policy has a coverage limit of $100,000, rather than $1,000,000 as alleged by plaintiffs. The Criterion policy at issue provided coverage for the period May 31, 1992 through May 31, 1993. The incident for which coverage was sought occurred on June 8, 1992, during the covered period. The policy endorsements did not come about until July 1992, after the occurrence for which coverage is sought had already happened. Therefore, subsequent policy endorsements are inapplicable to plaintiffs' instant causes of action. They cannot be relied upon by London Underwriters to limit the number of defendants exposed to potential liability or the amount of that exposure.
Defendants further oppose the motion on the grounds that Wausau and London Underwriters are co-insurers of Trocom and NYCTA, with primary coverage for the incident provided under both the Wausau and Criterion policies, and that Wausau and London Underwriters are both primarily obligated and must share equally in the indemnity and defense costs. The Court, in Home Ins. Co. v. Travelers Ins. Co. (Accident Dept.), 156 Misc 2d 479, 481 (Sup Ct, Nassau County 1993) held that "[t]he law is well settled that where different insurers provide coverage for the same interest and against the same risk, concurrent coverage exists ( Federal Ins. Co. v. Empire Mut. Ins. Co., 181 AD2d 568, 569 [1st Dept 1992])." See Pennsylvania General Ins. Co. v. Aetna Cas. Sur. Co., 306 AD2d 906 (4th Dept 2003); Merchants Business Men's Mut. Ins. v. Savemart, Inc., 213 AD2d 607, 610 (2nd Dept 1995); B.K. General Contractors, Inc. v. Michigan Mut. Ins. Co., 204 AD2d 584, 585 (2nd Dept 1994); Tracey Road Equipment, Inc. v. Village of Johnson City, 174 AD2d 849, 852 (3rd Dept 1991).
Here, as in B.K. General Contractors, supra, both policies provided coverage to the same subject insureds, against the same risk. Both policies contained clauses providing primary coverage for the occurrence at issue. The Court, having thoroughly reviewed both of the subject policies of insurance, and the facts in this matter, finds that both Wausau and London Underwriters provided concurrent coverage and are primary coinsurers for damages arising out of the underlying incident. Merchants Business Men's Mutual Ins., supra, at 610; B.K. General Contractors, supra, at 585; Tracey Road Equipment, supra, at 852. The Court, in Aetna Cas. Sur. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 228 AD2d 385, 386-387 (1st Dept 1996), held that:
The allocation of the payment of damages among concurrent insurers whose coverages are to be applied to the loss on the same basis is governed by the respective "other insurance" clauses in the policies, if any, and, where, two or more such policies provide for contribution by equal shares, the concurrent insurers subject to those clauses are obligated to contribute equally to the defense or indemnity of their mutual insured.
See Pennsylvania General Ins. Co. v. Aetna Cas. Sur. Co., supra, at 906, citing J.P. Realty Trust v. Public Serv. Mut. Ins. Co., 102 AD2d 68, 72-73 (1st Dept 1984); Merchants Business Men's Mutual Ins., supra, at 610.
Under the "other insurance" provisions of their respective policies at issue, Wausau and London Underwriters are obligated to contribute in equal shares to the defense and indemnification of Trocom and NYCTA in the underlying actions. Pennsylvania General Ins. Co. v. Aetna Cas. Sur. Co., supra, at 906; Aetna Cas. Sur. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., supra, at 386; Merchants Business Men's Mutual Ins., supra, at 610 ; B.K. General Contractors, supra, at 585; J.P. Realty Trust v. Public Serv. Mut. Ins. Co., supra, at 73. Further, the court has considered and rejected for lack of merit plaintiffs' remaining arguments on this issue.
Wausau is entitled to recover one-half of their reasonable defense costs from defendants. London Underwriters argue that there is insufficient evidence to support the amount sought in legal fees, since plaintiffs do not provide an explanation of the defense expenses supposedly actually incurred, or any evidence of the reasonableness thereof. The reasonableness of legal fees is a matter "within the sound discretion of the hearing court." Santemma v. Chasco Co., 261 AD2d 408 (2nd Dept 1999). See Jacoby Meyers Law Offices, LLP v. Gorayeb Associates, 282 AD2d 573 (2nd Dept 2001); Hulsair v. Benedetto, 254 AD2d 488 (2nd Dept 1998).
The application for such fees should be supported, at the very least, by an affirmation from an attorney. Plaintiffs, in the instant matter, have not submitted an attorney's affirmation that specifically supports in more than a cursory fashion their application for attorneys' fees. The only sworn statement in plaintiffs' moving papers that claims to provide support for an award of reasonable attorneys' fees is made by Wausau's Senior Technical Claim Specialist, Walter Polehenky, who is not an attorney. In Steiger v. Dweck, 305 AD2d 475, 476 (2nd Dept 2003), the Court instructed that:
In determining reasonable compensation for an attorney, a court will consider the following factors: "time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; the lawyer's experience, ability and reputation; the amount involved and benefit resulting to the client from the services; the customary fee charged by the Bar for similar services; the contingency of certainty of compensation; the results obtained; and the responsibility involved" ( Matter of Freeman, 34 NY2d 1, 9 [1974]).
In the matter before the court, even if Mr. Polehenky's affidavit were to be considered on this branch of the motion, he refers only to a "breakdown of defense costs and expenses" submitted by plaintiffs in exhibit 8 of the motion, which are merely computer printouts of payments made to different parties, many of whom appear to be non-lawyers. The list includes payments made to unnamed persons or entities referred to as "unknown" and named parties whom are insufficiently identified, and thus "unknown" to the Court. Exhibit 8 lacks any explanation as to the relationship of those non-lawyer parties to the defense of the underlying action, and why payments to these parties were a necessary or reasonable expense of the defense of the underlying action.
In addition to an explanation of the type and reasonableness of the defense services provided by non-lawyers, it is plaintiffs' burden and responsibility to clearly, and in detail, present the hourly rate for legal services performed by various counsel, the specific services rendered, and the time spent in performing these services, to avoid the Court having to speculate or surmise this information. See Equitable Lumber Corp. v. IPA Land Development Corp., 38 NY2d 516 (1976); Orix Credit Alliance, Inc. v. Grace Industries, Inc., 261 AD2d 521 (2nd Dept 1999). Plaintiffs failed to meet this burden by not providing the Court with a particularized affirmation from any attorney as to the tasks performed, number of hours billed, and the rate charged. There is insufficient evidence from which the court can determine the reasonableness of the defense costs requested. In Carroll Air Services, Inc. v. Northland Aviation, 225 AD2d 870, 872 (3rd Dept 1996), the Court held that "in the absence of contemporaneous time records or, for that matter, any showing of the legal services necessarily rendered on plaintiffs' behalf, the time expended or the applicable hourly rate, there was no basis for the award of counsel fees, made by Supreme Court." Therefore, the issue of reasonable defense costs is severed, and this will be referred to a Judicial Hearing Officer for a recommendation as to defense costs.
Finally, plaintiffs' request for an award of prejudgment interest is granted. Pursuant to CPLR § 5001 [b], prejudgment interest "shall be computed from the earliest ascertainable date the cause of action existed." Matter of Kummer, 93 AD2d 135, 183 (2nd Dept 1983). See Hedaya Home Fashions, Inc. v. American Motorists Ins. Co., 12 AD3d 639, 640 (2nd Dept 2004); American Home Assur. Co. v. Morris Indus. Builders, Inc., 192 AD2d 477, 478 (1st Dept 1993). In the instant matter, plaintiffs' request that pre-decision interest be granted at the statutory rate, pursuant to CPLR § 5004, from December 12, 1997, the date of settlement of the underlying personal injury action, is reasonable. See American Motorist Ins. Co. v. Public Service Mut. Ins. Co., 149 AD2d 552 (2nd Dept 1989). The grant of prejudgment interest is not affected by the fact that plaintiffs failed to make a demand for such relief in their complaint. Dietrick v. Kemper Ins. Co., 76 NY2d 248, 254 (1990); Flamm v. Noble, 296 NY 262, 268 (1947).
Conclusion
Accordingly, it is
ORDERED, that the motion of plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp. for summary judgment, pursuant to CPLR Rule 3212, is granted to the extent that plaintiffs are awarded partial summary judgment in their favor on their indemnity claim in the amount of $127,409.35; and it is further
ORDERED, that plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp. are awarded one-half of defense costs to be determined; and it is further
ORDERED, that plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp. are awarded prejudgment interest at the CPLR § 5004 statutory rate from December 12, 1997; and it is further
ORDERED, that plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp. shall settle judgment on notice; and it is further
ORDERED that plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp. claims for defense costs, including attorneys' fees, are severed; and it is further
ORDERED that pursuant to Article 22 of the Judiciary Law, in accordance with the Rules of the Chief Administrator of the Courts 22 NYCRR § 122, the claims for defense costs, including attorneys' fees, by plaintiffs Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau, a Mutual Company and Trocom Construction Corp., is referred to a Judicial Hearing Officer, for his or her recommendation, upon the filing of the requisite forms and the approval of the Administrative Judge; and it is further
ORDERED, that the parties are directed to complete the JHO Referral form and serve it, together with a copy of this order with notice of entry, upon the JHO Clerk in the Motion Support Office.
This constitutes the decision and order of this court.