Opinion
No. 2023-51425 Index No. 654917/2018
11-30-2023
U.S. Specialty Insurance Company, Plaintiff, v. State National Insurance Company, Inc., Defendant.
London Fischer LLP, New York, NY (Christopher Ferreira and Robert S. Nobel of counsel), for plaintiff. Rubin, Fiorella, Friedman & Mercante LLP, New York, NY (Paul Kovner of counsel), for defendant.
Unpublished Opinion
London Fischer LLP, New York, NY (Christopher Ferreira and Robert S. Nobel of counsel), for plaintiff.
Rubin, Fiorella, Friedman & Mercante LLP, New York, NY (Paul Kovner of counsel), for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58 were read on this motion to/for JUDGMENT - SUMMARY.
This motion is about which party has a duty to defend NYU Hospitals Center (NYUHC), Turner Construction Company, and LJC Dismantling Corp in two separate underlying personal injury actions in Supreme Court, New York County: Tornabene v NYU Hospitals Center (Index. No. 154947/2016) and Pacheco v NYU Hospitals Center (Index No. 159699/2016).
Tornabene and Pacheco were injured in 2014 on a construction site owned by NYUHC. They were both injured on scaffolding related to the construction project. Turner was the general contractor on the project. LJC subcontracted with Turner; and Skyline Scaffolding Corp. subcontracted with LJC. LJC is a named insured on a policy issued by plaintiff. Skyline is a named insured on a policy issued by defendant. NYUHC and Turner are additional insureds on LJC's policy.
Tornabene and Pacheco each sued NYUHC and Turner. Plaintiff claims that NYUHC, Turner, and LJC are additional insureds under Skyline's policy with defendant and therefore that defendant has the duty to defend NYUHC, Turner, and LJC in the underlying actions. Plaintiff sought to tender to defendant the defense of NYUHC, Turner, and LJC. In the Tornabene action, plaintiff tried to tender the defense by letter dated February 24, 2017. In the Pacheco action, plaintiff tried to tender the defense by initiating the instant action before this court on October 3, 2018. Defendant refused to take on the defense. Plaintiff provided a defense to NYUHC and Turner in the Pacheco action, which is now resolved, and continues to defend NYUHC, Turner, and LJC in the Tornabene action.
In the Tornabene action, Tornabene also sued an additional defendant, the Safety Group Ltd. (See NYSCEF No 34.)
Plaintiff now moves for partial summary judgment. Plaintiff contends that defendant has a duty to defend NYUHC, Turner, and LJC in the underlying actions as additional insureds under Skyline's policy with defendant and to reimburse plaintiff for its defense costs incurred in the underlying actions. This court agrees that defendant owes a duty to defend and to reimburse plaintiff's defense costs. Plaintiff's motion, with some limited exceptions discussed in Point II, infra, is granted.
DISCUSSION
I. Whether Defendant Owes NYUHC, Turner, and LJC a Duty to Defend in the Underlying Actions
Summary judgment "shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party." (CPLR 3212 [b].) Summary judgment may "be granted only where the moving party has 'tender[ed] sufficient evidence to demonstrate the absence of any material issues of fact' and then only if, upon the moving party's meeting of this burden, the non-moving party fails 'to establish the existence of material issues of fact which require a trial of the action.'" (Vega v Restani Constr. Corp., 18 N.Y.3d 499, 503 [2012], quoting Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986].)
A. Whether the Skyline Subcontract has Been Authenticated
In a motion for summary judgment, the movant must establish its prima facie case "by tender of evidentiary proof in admissible form." (Zuckerman v New York, 49 N.Y.2d 557, 562 [1980].) Evidence must be authenticated to be admissible and, in turn, "an appropriate basis on which to grant summary judgment." (Clarke v American Truck & Trailer, Inc., 171 A.D.3d 405, 406 [1st Dept 2019].)
Defendant contends that the subcontract on which plaintiff's motion for summary judgment is based is not authenticated. Defendant claims that plaintiff failed to submit an affidavit of someone with personal knowledge of the subcontract to authenticate it. (NYSCEF No. 48 at 3.) Initially, plaintiff submitted only the affidavit of its attorney, who has no personal knowledge about the subcontract. (See NYSCEF No. 24.)
Plaintiff contends that defendant conceded the authenticity of the subcontract under CPLR 4540-a because Skyline produced it for discovery in the Tornabene action. CPLR 4540-a provides that material produced by a party in response to a discovery demand is presumed authentic when offered by an adverse party in that action. But plaintiff is essentially arguing that this court should hold that the subcontract is authenticated under CPLR 4540-a although it was submitted in discovery by Skyline in a different, albeit related, action. And plaintiff provides no support for the proposition that CPLR 4540-a presumes the authenticity of a document offered in one action which was produced in discovery in a different action. (See NYSCEF No. 56 at 2-3.)
Nonetheless, plaintiff later cured this error by submitting the affidavit of Bret McCabe, who was Vice President of Operations at LJC from September 2012 through May 2015 and who prepared the subcontract in the regular course of LJC's business. (NYSCEF No. 57.) Defendant has not objected to McCabe's affidavit. The subcontract has been sufficiently authenticated. The court will consider it in adjudicating plaintiff's motion for summary judgment.
B. Whether a Genuine Dispute of Material Fact Exists Given the Language of the Subcontract
Plaintiff contends that it is entitled to summary judgment because Skyline's policy with State National contains a blanket additional insured endorsement. (NYSCEF No. 46 at 7.) This endorsement provides that if Skyline agrees in a separate written contract to provide coverage for another person or organization, Skyline's policy will cover that person or organization. (NYSCEF No. 32.) The policy will cover the additional insureds "with respect to operations performed by or on behalf of [Skyline] and only with respect to occurrences subsequent to the making" of that written contract. (Id.)
Plaintiff argues that one term of the subcontract between Skyline and LJC is that Skyline will name LJC, NYUHC, and Turner as additional insureds on Skyline's insurance policy "for both ongoing and completed operations on a primary and non-contributory basis." (NYSCEF No. 29 at 6, 17.) Plaintiff also argues that the "occurrences" for which it wants defendant to defend the tendered parties, the injuries suffered by Tornabene and Pacheco, occurred after the LJC/Skyline contract was effective in July 2013. (NYSCEF No. 29 at 30, 46 at 9.) Although LJC did not sign the contract between itself and Skyline-it was signed only by Skyline-it is still enforceable against Skyline, and therefore defendant, under the statute of frauds. (See NYSCEF No. 29 at 30, 46 at 10.) Plaintiff contends that it wants defendant to defend the tendering parties "with respect" to Skyline's operations and that the underlying Tornabene and Pacheco actions "related to" or "[arose] out of" Skyline's scaffolding operations. (NYSCEF No. 46 at 10-11.)
i. Enforceability of the Subcontract
For a contract to be enforceable under the statute of frauds, the contract must be in writing and "subscribed by the party to be charged." (GOL § 5-701.) The "writing must [also] identify the parties, describe the subject matter, [and] state all the essential terms of an agreement." (Urgo v Patel, 297 A.D.2d 376, 377 [2d Dept 2002].) If the agreement states all the "essential terms and conditions required to satisfy the Statute of Frauds," it will be enforceable even if the signatures are undated. (Robins v Noveck, 99 A.D.2d 441, 441 [1st Dept], affd 63 N.Y.2d 833 [1984].)
Here, the subcontract identifies LJC and Skyline as the parties to the agreement. (NYSCEF No. 29 at 2, 13.) The subcontract provides the work Skyline subcontracted to perform for LJC-to furnish, erect, and dismantle scaffolding. (NYSCEF No. 29 at 24, 27, 29.) And it is signed by Redza on Skyline's behalf. (NYSCEF No. 29 at 12, 23.) Although Skyline's signature is not dated, the agreement states that it was made by LJC and Skyline on July 24, 2013. (NYSCEF No. 29 at 2; see Colindres v Mohajer, 2023 NY Slip Op 31076[U], at *5 [Sup Ct, Kings County] [finding contract valid when the signature of the party to be charged was undated but the "initial page of the [a]greement [bore] the date"].) Further, Redza's signatures on the three proposals are each dated July 24, 2023, and defendant concedes that Skyline signed those proposals. (NYSCEF No. 49 at 2.) The proposals were explicitly incorporated into the subcontract. (NYSCEF No. 29 at 10-11, 13, 21-22.)
The subcontract is thus enforceable against Skyline and became effective on July 24, 2013. Because (1) Skyline agreed to include LJC as an additional insured, (2) the subcontract was effective in July 2013 before Trombone and Pacheco were injured, and (3) the accidents involved Skyline's scaffolding operations, Skyline's insurance policy with defendant covers LJC, Turner, and NYUHC.
The court considers the enforceability of the subcontract before adjudicating the admissibility of Redza's affidavit: "Consideration of parol evidence in assessing the adequacy of a writing for Statute of Frauds purposes would otherwise undermine the very reason for a Statute of Frauds in the first instance." (DeRosis v Kaufman, 219 A.D.2d 376, 379 [1st Dept 1996].)
Defendant contends that Redza, Skyline's owner, in his affidavit, contradicts plaintiff's factual contentions about the subcontract. (NYSCEF No. 48.) Plaintiff counters that Redza's affidavit is parol evidence that this court should not consider in evaluating the subcontract. The court concludes that the affidavit is not parol evidence.
Parol evidence is not "admissible to add to or vary the terms of the writing." (Matter of Nobile v Board of Educ. of the City Sch. Dist. of the City of NY, 166 A.D.3d 527, 528 [1st Dept 2018].) But "such evidence is admissible to show that a writing, although purporting to be a contract, is, in fact, no contract at all." (Dayan v Yurkowski, 238 A.D.2d 541, 541 [2d Dept 1997] [internal quotation marks omitted].)
Here, however, Redza's assertions do not contradict the subcontract. Redza refers to earlier proposals signed by Skyline and LJC in July 2013. Redza states that these proposals are silent about any obligation to provide liability insurance naming NYUHC, Turner, and LJC as an additional insured. (NYSCEF No. 29, 49 at 3.) But those proposals were incorporated into the subcontract, which required Skyline to buy insurance and name NYUHC, Turner, and LJC as additional insureds.
Redza further states that after removing the scaffolding from the project, LJC and Skyline signed an indemnity agreement. (NYSCEF No. 49 at 3.) In that agreement, Skyline agreed to indemnify NYUHC, Turner, and LJC with respect to any claims stemming from Skyline's negligence. (NYSCEF No. 51.) The indemnity agreement was signed by LJC in 2013 and by Skyline in 2015. (Id.) Redza also refers to indemnity clauses contained within the proposals incorporated into the subcontract. Under these indemnity clauses, LJC agreed to indemnify Skyline for any claims of bodily injury caused by Skyline's negligence. (NYSCEF No. 49.) These indemnity provisions, though, are distinct from-and do not contradict-the additional-insured clauses of the subcontract that ensure that defendant will provide insurance coverage for NYUHC, Turner, and LJC under Skyline's insurance policy. (See NYSCEF No. 29 at 6, 17 [subcontract].)
In his affidavit, Redza also contends that even if the subcontract did require Skyline to make LJC an additional insured, the subcontract was not signed by LJC, and Skyline's purported signature is undated. (NYSCEF No. 49 at 2.) In the alternative, Redza contends that Skyline did not sign the subcontract prior to the Tornabene and Pacheco accidents. (NYSCEF No. 49 at 3.) This aspect of Redza's affidavit, however, goes to whether the subcontract was executed (and thus enforceable) in the first place. It is not barred by the parol evidence rule.
Although Redza's affidavit is admissible on this motion, its assertions do not undermine the court's conclusion that the subcontract was enforceable as of July 24, 2013. As stated above, Skyline signed the subcontract. And although Skyline's signature is undated, the document itself is dated July 24, 2013. Further, the subcontract does "identify the parties, describe the subject matter, [and] state all the essential terms of an agreement." (Urgo, 297 A.D.2d at 377.)
II. How Defense Costs Should be Allocated Between the Parties
The language of the policy issued by plaintiff provides that it is excess over other available primary insurance on which parties covered by plaintiff's policy are named as additional insureds and that "cover[s] liability for damages arising out of the premises or operations" (NYSCEF No. 28 at 36)-here, the policy issued by defendant. The language of the policy issued by defendant provides that, in the circumstances presented here, the policy is primary relative to other available primary-insurance policies. (See NYSCEF No. 31 at 17.) Defendant thus owes a duty to defend NYUHC, Turner, and LJC on a primary basis.
Plaintiff contends that given this duty, it is entitled to reimbursement from defendant for all defense costs that it incurred in representing NYUHC, Turner, and LJC in the underlying actions (plus interest). (NYSCEF No. 46 at 18.) This court disagrees. Under governing Appellate Division precedent, defendant is required to provide reimbursement only for those defense costs incurred after defendant received plaintiff's tender of the underlying actions. (See Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 A.D.3d 84, 94 [1st Dept 2005].) Defendant must, therefore, reimburse defense costs in the Tornabene action starting from February 24, 2017 (the date of the tender letter); and must reimburse defense costs in the Pacheco action starting from October 3, 2018 (the date the action was commenced). Defendant does not dispute these dates.
Plaintiff also seeks a declaration that it may withdraw from defense of NYUHC, Turner, and LJC in the underlying actions. This court agrees that plaintiff is not currently required to provide a defense to these parties in the Tornabene action. But it is not clear on this record-and the parties do not discuss-whether a realistic possibility exists that coverage of these parties under defendant's policy could be exhausted before resolution of the Tornabene action, in which case plaintiff would then have to provide a defense. The court therefore declines to render this additional declaration sought by plaintiff. The court will instead make clear that defendant's duty to defend is both primary and non-contributory.
The Pacheco action was settled in 2020. (See Index No. 159699/2016, NYSCEF No. 39.) This court therefore construes this aspect of plaintiff's requested relief as pertaining only to the Tornabene action.
Accordingly, it is
ORDERED that plaintiff's motion under CPLR 3212 for partial summary judgment against defendant is granted in part and denied in part; and it is further
ADJUDGED AND DECLARED that defendant has a duty going forward to defend NYUHC, Turner, and LJC in the underlying Tornabene and Pacheco actions on a primary and non-contributory basis; and it is further
ADJUDGED AND DECLARED that defendant must reimburse plaintiff for its reasonable attorney fees and costs incurred in the Tornabene action since February 24, 2017, and plaintiff's reasonable attorney fees and costs incurred in the Pacheco action since October 3, 2018; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on all parties.