Opinion
Index No. 160498/2018 Motion Seq. No. 001,002
07-12-2023
MT. HAWLEY INSURANCE COMPANY, Plaintiff, v. WESCO INSURANCE COMPANY, FOUNDATIONS GROUP, INC., FOUNDATIONS GROUP I INC., FOUNDATIONS INTERIOR DESIGN CORP., AGBH PRINTING HOUSE HOLDINGS LLC, Defendants.
Unpublished Opinion
MOTION DATE 06/02/2021, 06/22/2022
PRESENT: HON. RICHARD LATIN JUSTICE
DECISION + ORDER ON MOTION
HON. RICHARD LATIN JUSTICE
The following e-filed documents, listed by NYSCEF document number (Motion 001) 11, 12, 13, 14, 15, 16, 18, 19, 20, 21,22, 23, 24, 25, 26, 27, 28, 29, 30, 31,32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43 were read on this motion to/for DISMISS.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 44, 45, 46, 47, 48, 49, 50, 51,52, 53, 54, 55, 56, 57, 58, 59, 60, 61,62, 63, 64, 65, 66, 67, 68, 69, 70, 71,72, 73, 74, 75, 76, 77 were read on this motion to/for JUDGMENT - SUMMARY.
Motion sequences numbers 001 and 002 have been consolidated for disposition.
In motion sequence number 001, defendant Wesco Insurance Company (hereinafter "Wesco") moves, pursuant to 3211 (a) (7), for an order dismissing Mt. Hawley Insurance Company's ("plaintiff') verified complaint as against it.
In motion sequence number 002, plaintiff moves, pursuant to CPLR 3212, for an order granting plaintiff partial summary judgment, and declaring that defendants AGBH Printing House Holdings LLC ("AGBH"), Foundations Group I Inc. ("Foundations Group I"), and Foundations Interior Design Corp. ("Foundations Interior") are not additional insureds under the plaintiffs excess policy at issue and are not entitled to indemnification in connection with the underlying case of Ricardo Villa v AGBH Printing House Holdings, LLC., Foundations Interior Design Corp., Foundation Group Inc., and Foundation Group I, Inc. (Sup. Ct. New York Co., Index No. 154655/2014).
BACKGROUND
In 2012, AGBH was the owner of a project to construct and renovate residential condominium units in a mixed-use building located at 421 Hudson Street, New York, New York. As part of the project, AGBH entered into a written contract with Foundations Group Inc. to have the latter serve as general contractor for the project. (See NYSCEF DOC. NO. 75, ¶l). Pursuant to an agreement dated November 30, 2012, Foundations Group Inc. ("Foundations Group") retained P&H Painting Inc. ("P&H") as a subcontractor to perform painting and wallcovering work. (See NYSCEF DOC. NO. 51). As part of the project, Wesco issued a primary commercial general liability policy to P & H effective November 8, 2012 to November 8, 2013. (See NYSCEF DOC. NO. 1, ¶7). Mt. Hawley issued an excess liability policy to P&H for the same time period as the Wesco policy. (See NYSCEF DOC. NO. 59; see also NYSCEF DOC. NO. 75, ¶14).
WESCO INSURANCE POLICY
The Wesco insurance policy dated November 9, 2012, between P&H and Wesco states in relevant part:
"This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
A. Section II-Who is An Insured is amended to include as an 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 arising out of your ongoing operations performed for that insured. A person's or
organization's status as an insured under this endorsement ends when your operations for that insured are completed, (emphasis in original).
This insurance applies on a primary basis if that is required by the written contract, written agreement or permit."(See NYSCEF DOC. NO. 34 at pg. 66).
MT, HAWLEY POLICY
The Mt. Hawley insurance policy dated November 8, 2012, between P&H and Mt. Hawley states in relevant part:
"Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.
The word "insured" means any person or organization qualifying as an insured person under the terms of the underlying insurance, (emphasis in original).
In consideration of the payment of premium, in reliance upon the statements in the Declarations and Schedule of Underlying Insurance which are made a part of this policy, and subject to the term, conditions and exclusions of this policy we agree with you as follows:
I. INSURING AGREEMENT
A. Coverage
Subject to the other provisions of this policy, we will pay on behalf of the insured the insured's ultimate net loss if such loss results from an occurrence insured by underlying insurance. However, the insurance afforded by this policy shall apply: (a) only in excess of the underlying insurance; (b) only after the underlying insurance has been exhausted by payment of the limits of liability of such insurance; and (c) only if caused by an occurrence which takes place during the policy period and anywhere in the world; provided however, if suit is brought such suit is brought in the United States, its territories or possessions, or Canada. If the underlying insurance does not pay a loss, for reasons other than exhaustion of an aggregate limit of liability, then we shall not pay such loss.
(emphasis in original).
This policy, except where provisions to the contrary appear herein, is subject to all of the conditions, agreements, exclusions, and limitations of and shall follow the underlying insurance in all respects. This includes changes by endorsement."(See NYSCEF DOC. NO. 35, at 5).
In addition to providing coverage for P&H, Wesco also agreed to defend and indemnify AGBH, Foundations Interior, Foundations Group and Foundations Group I as additional insureds. (See NYSCEF DOC. NO. 1, ¶21). Plaintiff objected to Wesco's decision to defend and indemnify AGBH, Foundations Group I and Foundations Interior, (id, ¶22).
On November 6, 2013, Ricardo Villa, an employee for P&H, was injured on the project site. (See NYSCEF DOC. NO. 52). On May 13, 2014, Ricardo Villa commenced a lawsuit against AGBH, and Foundations Interior related to his accident in New York State Supreme Court, New York County. (See NYSCEF DOC. NO. 53). The Wesco policy was in effect on the day of the alleged accident. (See NYSCEF DOC. NO. 58; see also NYSCEF DOC. NO. 75, ¶12).
The full caption of the matter is Ricardo Villa v. AGBH Printing House Holdings, LLC and Foundations Interior Design Corp. (Sup Ct, New York County, Index No. 154655/2014).
On September 23, 2016, Ricardo Villa commenced a separate lawsuit against Foundations Group and Foundations Group I, also related to his accident in New York State Supreme Court, New York County. (See NYSCEF DOC. NO. 54).
The Full caption of the matter is Ricardo Villa v Foundations Group, Inc. and Foundations Group I, Inc. (Sup Ct, New York County, Index No. 158007/2016).
Pursuant to an order by this court dated March 24, 2021, both of Ricardo Villa's aforementioned lawsuits were consolidated into a single action, with Ricardo Villa v AGBH Printing House Holdings, LLC., Foundations Interior Design Corp., Foundation Group Inc., and Foundation Group I, Inc. (Sup Ct, New York County, Index No. 154655/2014). (See NYSCEF DOC. NO. 55).
On November 4, 2021, Foundations Group, Foundations Group I Inc. and Foundations Interior filed a third-party action against P&H. (See NYSCEF DOC. NO. 56).
On November 29, 2021, AGBH filed a third-party action against P&H. (See NYSCEF DOC. NO. 57).
On August 6, 2018, Mt. Hawley issued a letter to P&H acknowledging additional insured status for Foundations Group, but denied additional insured status to AGBH, Foundations Group I and Foundations Interior. (See NYSCEF DOC. NO. 65).
EBT TESTIMONY OF MATTHEW LIO
In support of its motion to dismiss, Wesco annexed the EBT testimony of Matthew Lio, dated September 7, 2016, which was taken as part of the underlying action. (See NYSCEF DOC. NO. 27).
Matthew Lio testified that he was employed by Foundations Group and that its proper name was "Foundations Group Interior Design Corp." (id., pg. 19). Matthew Lio testified that he is currently a senior project manager, (id., pg. 21). As part of his job responsibility, he testified that he requests building permits from expeditors and hires expeditors to obtain the permits, (id., pg. 22).
Matthew Lio further testified in relevant part:
Q: Is there a difference between Foundations Group and Foundations Interior Design Corp.?
A: I believe that it is just an entity name.
Q: Are they separate?
A: Yes. They are two companies that operate under the same umbrella.(id., at 19-20).
Q: What is your understanding if you have one of the differences between Foundations Group and Foundations Interior Design Corp.?
A: I don't really have one. I just know there are two companies that my boss owns.
Q: What is your boss's name?
A: Saif Sumaida.(id., at 21).
DISCUSSION
WESCO'S MOTION TO DISMISS:
Wesco moves pursuant to CPLR 3211(a)(7) to dismiss the complaint of plaintiff.
'"[A] motion to dismiss made pursuant to CPLR 3211 (a) (7) will fail if, taking all facts alleged as true and according them every possible inference favorable to the plaintiff, the complaint states in some recognizable form any cause of action known to our law'" (East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 A.D.3d 122, 125 [2d Dept 2009], aff'd 16 N.Y.3d 775 [2011], quoting Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman &Dicker, LLP, 38 A.D.3d 34, 38 [2d Dept 2006]).
Moreover, in considering a motion to dismiss for failing to state a cause of action pursuant to CPLR 3211 (a) (7), the pleading is to be afforded a liberal construction (see CPLR § 3026), and the court should "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." (Leon v. Martinez, 84 N.Y.2d 83, 87-88 [1995]; see also African Diaspora Mar. Corp, v Golden Gate Yacht Club, 109 A.D.3d 204, 211 [1st Dept 2013]).
Although "evidentiary material may be considered in determining the viability of a complaint. . . the complaint should not be dismissed unless the defendant has established that a material fact alleged by the plaintiff is not a fact at all and that no significant dispute exists regarding it." (Stewart v New York City Tr. Auth., 50 A.D.3d 1013, 1014 [2d Dept 2008][internal quotation marks and citation omitted]; see also Nunez v Mohamed, 104 A.D.3d 921, 922 [2d Dept 2013]).
In support of its motion to dismiss, Wesco argues that plaintiffs complaint has failed to state cause of action upon which relief can be granted. (See NYSCEF DOC. NO. 15, pg. 2). Wesco acknowledges that it has agreed to represent the defendants, AGBH, Foundations Group and Foundations Interior, in the underlying action (See NYSCEF DOC. NO. 40), but argues that since the underlying case remains pending, Mt. Hawley has not yet been ordered by a court order to indemnify any party. Wesco maintains that therefore, plaintiffs action seeking a declaratory judgment is not yet "ripe." (See NYSCEF DOC. NO. 15, pg. 7). Wesco further argues that the relief sought in Mt. Hawley's complaint, namely a declaratory judgment stating that AGBH, Foundations Group and Foundations Interior are not additional insureds is improper and states "the only permissible relief it may seek for such a breach-of-fiduciary-duty claim is monetary damages." (id. at pg. 3).
In opposition to Wesco's motion to dismiss, plaintiff argues that it has pleaded a cognizable legal theory by alleging that Wesco breached and grossly disregarded its duties to Mt. Hawley "when it failed and refused to withdraw its agreement to defend and indemnify the noninsured entities" AGBH, Foundations Group I and Foundations Interior. (See NYSCEF DOC. 18, pg. 13). Further, plaintiff argues that injunctive relief is an appropriate remedy and that, contrary to Wesco's contention, courts routinely issue declaratory judgments in matters involving matters of insurance representation, (id. at pg. 18).
Here, Mt. Hawley's complaint seeking a declaratory judgment as against AGBH, Foundations Group I and Foundations Interior presents a justiciable controversy. The Appellate Division, First Department, has held that a declaratory judgment action against insurers, including excess carriers, is permitted prior to judgment where judgments likely to be recovered or the potential liability might well reach into the coverage contracted for. See Cabrini Medical Center v KM Ins. Brokers, 142 A.D.2d 529, 530 (1st Dept 1988) quoting State Farm Fire &Cas. Co. v LiMauro, 103 A.D.2d 514, 518 (2d Dept 1984), affd65 N.Y.2d 369 (1985). Wesco's argument that the underlying action is not yet ripe is immaterial.
Plaintiff's entire action is predicated on the fact that AGBH, Foundations Group I and Foundations Interior were improperly designated as additional insureds and thus, plaintiff seeks a judgment based on improper designation against its own excess policy. Mt. Hawley does not dispute that Foundations Group was properly named as an additional insured. (See NYSCEF DOC. NO. 46, pg. 1). Based on the allegations in the complaint, Mt. Hawley's complaint presents a justiciable issue regarding whether defendants should be identified as additional insureds. Accordingly, Wesco's motion to dismiss for a failure to state a cause of action must be denied.
In conclusion, plaintiff has demonstrated that a cognizable legal action exists under the law for a breach of duty as against Wesco. Therefore, defendant Wesco's motion to dismiss must be denied.
MT. HAWLEY'S MOTION FOR PARTIAL SUMMARY JUDGMENT:
It is well settled that "[t]he 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" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986] citing Winegrad v New York Univ. Med. Ctr., 64N.Y.2d 851, 853 [1985]). Once the movant has made a prima facie showing, the burden shifts to the opposing party to "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact" (Casper v Cushman &Wakefield, 74 A.D.3d 669, 669 [1st Dept 2010], Iv dismissed 16 N.Y.3d 766 [2011] [internal quotation marks and citation omitted]).
The court's function on summary judgment is "issue-finding rather than issue determination" (Mayo v Santis, 74 A.D.3d 470, 471 [1st Dept 2010]). In deciding the motion, "the court should draw all reasonable inferences in favor of the nonmoving party" and deny summary judgment if there is any doubt as to the existence of a material issue of fact (Assaf v RopogCab Corp., 153 A.D.2d 520, 521 [1st Dept 1989] [citations omitted]). "'[M]ere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient'" to defeat a motion for summary judgment (Siegel v City of New York, 86 A.D.3d 452, 455 [1st Dept 2011], quoting Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980]).
Furthermore, since summary judgment is a drastic remedy, it should never be granted when there is any doubt as to the existence of a triable issue of fact (Rotuba Extruders v Ceppos, 46 N.Y.2d 223, 231 [1978]). When the existence is even arguable or debatable, summary judgment should be denied (Stone v Goodson, 8 N.Y.2d 8, 12 [I960]).
Here, plaintiff argues that it is entitled to partial summary judgment as a matter of law and seeks a declaratory judgment stating AGBH, Foundations Group I, and Foundations Interior are not additional insureds under the Mt. Hawley policy. (See NYSCEF DOC. NO. 27). In support of its motion, plaintiff relies on the language in the Wesco policy that reads in relevant part "an insured [is] 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." (See NYSCEF DOC. NO. 34). Specifically, plaintiff concludes that based on the express terms of the Wesco policy, "only signatories to the contract with P&H can qualify as additional insureds under the Wesco policy." (See NYSCEF DOC. NO. 46). Plaintiff contends that since there is only a contract between P&H and Foundations Group, defendants AGBH, Foundations Group I and Foundations Interior are not entitled to indemnification under the Mt. Hawley excess policy in the underlying action.
In opposition to plaintiffs motion, Wesco argues that triable issues of fact exist, namely that Mt. Hawley's requested relief is not ripe since the underlying action is still pending and, to date, Mt. Hawley has not yet been ordered to provide any indemnification coverage. (See NYSCEF DOC. NO. 76, pg. 5-8). Moreover, Wesco argues that Foundations Group and Foundations Interior are two entities that operate under the same "umbrella," and thus a question of triable fact exists as to whether Foundations Group and Foundations Design are entitled to coverage, (id).
The Court of Appeals has held that "the courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies" (State of New York v Home Indem. Co., 66N.Y.2d 669, 671 [1985]). Moreover, the Court of Appeals has held that "in determining a dispute over insurance coverage, we first look to the language of the policy" (Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 N.Y.2d 208, 221 [2002]). "As with the construction of contracts generally, 'unambiguous provisions of an insurance contract must be given their plain and ordinary meaning.'" (Vigilant Ins. Co. v. Bear Stearns Cos., Inc., 10 N.Y.3d 170, 177 [2008], quoting White v Continental Cas. Co., 9 N.Y.3d 264, 267 [2007]). Additionally, the Court of Appeals has held that the terms of a policy at issue "require a written contract between the named insured and an additional insured, if coverage is to be extended to an additional insured." (Gilbane Bldg. Co. TDX Constr. Corp, v St. Paid Fire &Mar. Ins. Co. (31 N.Y.3d 131, 134 [2018]).
Here, Wesco's agreement with P&H states:
"Who is An Insured is amended to include as an 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."(See NYSCEF DOC. NO. 34 at pg. 66))
In affording a plain and ordinary reading to Wesco's policy, it is clear that no party can be considered as "an insured" unless that party has a contract or written agreement with the policyholder, in this case P&H. Here, the only contractual agreement in the record is between Foundations Group Inc., as contractor, and P&H, as subcontractor. (See NYSCEF DOC. NO. 29). Moreover, in a letter dated August 6, 2018, Mt. Hawley issued a letter to P&H acknowledging additional insured status for Foundations Group Inc. and thus it is indisputable that Foundations Group Inc is an additional insured. (See NYSCEF DOC. NO. 65). Additionally, there is no contractual agreement between P&H, the insured, and AGBH. Therefore AGBH cannot be identified as an additional insured.
Furthermore, there is no dispute that Foundations Group Inc. and Foundations Interior are two distinct and separate incorporated entities. Wesco's attempt to create a feigned question of fact as to whether Foundations Interior is an agent for Foundations Group is unconvincing and not supported by the record. In support of its motion, Mt. Hawley notes that Matthew Lio testified that permits were obtained for the project by Foundations Group, Inc. (See NYSCEF DOC. NO. 76, pg. 24). Mt. Hawley also annexes a record from the New York City Department of Buildings showing that at least one permit for this particular project was obtained by Foundations Interior Design. (See NYSCEF DOC. NO. 50, pgs. 9-11). In response, Wesco admitted that at least one permit was obtained for the project in defendant Foundations Interior Design's name. (See NYSCEF DOC 75, ¶4). Therefore, the record supports that both Foundations Group and Foundations Interior are distinct corporations, each of which pulled at least one permit for the underlying project.
Wesco has failed to meet its burden in opposition to plaintiff s motion for partial summary judgment. Instead, Wesco's submission of Matthew Lio's testimony, when viewed in light most favorable to the non-moving party, is inconclusive in establishing that Foundations Group and Foundations Interior are one corporation.
Moreover, in adhering to the plain reading of Wesco's policy, only the contractual agreement between P&H and Foundations Group is appropriate for coverage. (See NYSCEF DOC. NO. 51).
In conclusion, based on the plain and ordinary meaning of the Wesco policy, it is apparent that AGBH, Foundations Group I and Foundations Interior do not qualify as additional insureds in this action. Therefore, plaintiff s motion seeking a declaratory judgment that it is not obligated to provide a defense to and indemnify AGBH, Foundations Group I and Foundation Interior, must be granted.
CONCLUSION AND ORDER
Accordingly, it is
ORDERED that the motion by defendant WESCO INSURANCE COMPANY to dismiss the verified complaint is denied; and it is further
ORDERED that the motion of plaintiff Mt. Hawley Insurance Company for partial summary judgment seeking a declaration that it is not obliged to provide a defense to, and provide coverage for the defendants AGBH PRINTING HOUSE HOLDINGS LLC, FOUNDATIONS GROUP I INC., and FOUNDATIONS INTERIOR DESIGN CORP, in the action of Ricardo Villa v. AGBH Printing House Holdings, LLC, Foundations Interior Design Corp., Foundations Group Inc. and Foundations Group I, Inc., Index No. 154655/2014, New York County is granted; and it is further
ADJUDGED AND DECLARED that plaintiff therein is not obligated to provide a defense to, and provide coverage for, the defendants AGBH PRINTING HOUSE HOLDINGS LLC, FOUNDATIONS GROUP I INC., and FOUNDATIONS INTERIOR DESIGN CORP, in the said action pending in New York County; and it is further
ORDERED that the balance of this action is severed and continued.