Opinion
36318/07.
Decided March 11, 2009.
Michael Forzano, Esq., Brooklyn, NY, Attorney for Plaintiff.
Mark Ian Binsky, Esq., Speyer Perlberg, LLC, New York, NY, Attorney for Defendant C. J. Rubino.
Peter Shipman, Esq., Codelia Socorro, Bronx, NY, Attorney for Defendant and third party plaintiff F F Electrical Corp.
Seth Weinstein, Esq., Lester Schwab Katz Dwyer, New York, NY, Attorney for Defendant New Hampshire, Ins.
Thomas P. Gorton, Gorton Gorton, New York, NY, Attorney for third party Defendant.
Third party plaintiff moves for summary judgment pursuant to CPLR 3212 for an order requiring third party defendant to provide a defense and indemnify the third party plaintiff for any damages assessed against it as a defendant in the main action and to direct restitution for all counsel fees incurred in the defense of the main action to date.
BACKGROUND
The third party action arises from a disclaimer issued by insurer third party defendant Farm Family Casualty Insurance Company ("Farm Family") on a general commercial liability insurance policy claim submitted by third party plaintiff F F Electrical Corporation ("F F") which was named as a defendant in the main action ( Adami v C.J. Rubino, et al., Index No. 36318/07). The main action arises from the repair of an apartment building owned by the plaintiff. Plaintiff Adami alleges that, on February 21, 2006, his building, and the ten rentable apartments therein, suffered fire damage and, as a result, the building became uninhabitable. Plaintiff submitted a claim under his insurance policy. C.J. Rubino Company Inc. ("C.J. Rubino") was retained by plaintiff's insurance company and it's representative, defendants New Hampshire Insurance Company and Brownstone Agency Inc., respectively, to adjust the claim and perform all necessary repairs on the building. C.J. Rubino, in turn, retained F F and Proud Enterprises Corp. ("Proud") to perform the needed repairs and renovations on the building. Plaintiff Adami claims the work performed by C.J. Rubino, Proud, and F F was defective and not in accordance with the contract or the Building Department rules, regulations and codes. Plaintiff alleges that, as a result of the alleged poor workmanship, he is unable to obtain a certificate of occupancy for the building or rent the apartments and thus claims damages incurred to correct and complete the work and for the lost rental income.
After receiving service of the complaint in the main action in October of 2007, F F served a copy of the complaint with a demand for defense on Farm Family under their general commercial liability policy titled "Contractors Advantage Special Policy" ("Policy"). On December 21, 2007, Farm Family disclaimed coverage and informed F F that they would not provide a defense in the main action. The disclaimer cited policy exclusions for property damage and damages claimed for the loss of use and repair of F F's work and stated, "[s]ince, the allegation in complaint stems from your work' and/or work product', rather than from resulting damage, there is no coverage under your policy. . . ." On March 27, 2008, plaintiff served F F with an amended verified complaint ("Adami Complaint") which included a modified 26th paragraph claiming that Proud and/or C.J. Rubino performed the defective work "using the name of and under the auspices of" F F thus making F F vicariously liable for the damages. On March 31, 2008, F F submitted the Adami Complaint to Farm Family and requested that they reexamine the claim arguing that F F was "being sued solely for alleged shoddy workmanship of [Proud], a subcontractor" and they were "fully covered by [F F's] business rider . . .." On April 16, 2008, Farm Family issued a second disclaimer noting that there is no coverage under the Policy as "[t]he allegations in the complaint stems [sic] from your work' and/or work product', as defined in the policy." F F filed a third party complaint against Farm Family for a declaratory judgment declaring that Farm Family is obligated to defend and indemnify F F under the Policy and has moved for summary judgment requiring Farm Family to provide a defense and indemnify F F in the main action.
The court notes that F F did not submit either the original complaint or the initial demand for defense in support of their summary judgment motion.
DISCUSSION
In order to obtain summary judgment, the movant must establish its cause of action or defense sufficiently to warrant a court's directing judgment in its favor as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact ( Zuckerman v City of New York, 49 NY2d 557, 562; CPLR 3212 [b]). Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action ( Vermette v Kenworth Truck Co., 68 NY2d 714, 717). The parties' competing contentions are viewed in the light most favorable to the party opposing the motion ( Marine Midland Bank, N.A. v Dino Artie's Automatic Transmission Co., 168 AD2d 610 [2d Dept 1990]).
"An insurer's duty to defend is broader than its duty to indemnify, such that an insurer may be obligated to defend its insured even if, at the conclusion of an underlying action, it is found to have no obligation to indemnify its insured. An insurer must defend its insured whenever the allegations of a complaint in an underlying action suggest . . . a reasonable possibility of coverage.' The duty to defend is not triggered, however, when, as a matter of law . . . there is no possible factual or legal basis upon which the insurer might eventually be held to be obligated to indemnify the claimant under any provision of the insurance policy' or when the only interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion." ( Global Constr. Co., LLC v Essex Ins. Co. , 52 AD3d 655 , 655-656 [2d Dept 2008], quoting BP A.C. Corp v One Beacon Ins. Group , 8 NY3d 708 , 714 and Bruckner Realty, LLC v County Oil Co., Inc. , 40 AD3d 898 , 900 [2d Dept 2007] (internal citations omitted).) "An insurer's duty to defend must be determined from the allegations of the complaint. If the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend.' [quoting Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73] . . . Moreover, to negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case.' [quoting Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 652]" ( Incorporated Village of Cedarhurst v Hanover Ins. Co., 89 NY2d 293, 298.)
The Adami Complaint does not allege an "occurrence" that resulted in "bodily injury" or "property damage" as contemplated by the Policy. The "coverages" section of the Policy states, "[w]e will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury', property damage', personal injury' or advertising injury' to which this insurance applies." Paragraph 1(a) of the "coverages" section of the Policy states:
This insurance applies only:
(1) To "bodily injury" or "property damage":
(a) That occurs during the policy period; and
(b) That is caused by an "occurrence". The "occurrence" must take place in the "coverage territory". (emphasis added)
Paragraph 9 of the "Liability and Medical Expenses Definitions" section of the Policy defines "occurrence" as " an accident, including continuous or repeated exposure to substantially the same general harmful conditions" (emphasis added). The claims asserted in the Adami Complaint clearly arise out of a dispute between plaintiff and the defendants regarding the quality of the workmanship in repairing the fire-damaged property. The Adami Complaint does not contain any allegations against the insured F F of an accident or of bodily injury or property damage resulting from an "occurrence." It has been established that the comprehensive general liability policy, upon which the third party plaintiff sues, "does not insure against faulty workmanship in the work product itself but rather faulty workmanship in the work product which creates a legal liability by causing bodily injury or property damage to something other than the work product" ( George A. Fuller Co. v United States Fidelity Guar. Co., 200 AD2d 255, 259 [2d Dept 1994]; see Baker Residential Ltd. P'ship v Travelers Ins. Co. , 10 AD3d 586 [1st Dept 2004]; see Bonded Concrete, Inc. v Transcon. Ins. Co. , 12 AD3d 761 [3d Dept 2004] (holding, "the issuer of a commercial general liability insurance policy is not a surety for a construction contractor's defective work product")). Thus, Farm Family does not have a duty to defend F F in the main action as there is no possible basis upon which Farm Family might eventually be obligated to indemnify F F where the Adami Complaint does not allege an "occurrence" resulting in property damage as defined by the Policy ( see Global Constr., 52 AD3d at 655; see Incorporated Village of Cedarhurst, 89 NY2d at 298; see Mid-Hudson Castle, Ltd. v P.J. Exteriors, Inc., 292 AD2d 355 [2d Dept 2002]).
Furthermore, even if the claims against F F in the Adami Complaint were otherwise covered, they would fall within Policy exclusions k(5), k(6) and o of the Policy exempting coverage. The "exclusions" section of the Policy expressly states that the insurance does not apply to:
k. "Property damage" to:
Paragraph 12(a) of the "Liability and Medical Expenses Definitions" defines "Property Damage" as "[p]hysical injury to tangible property, including all resulting loss of use of that property."
. . . .
(5) That particular part of real property on which you or any contractor or subcontractor working directly or indirectly on your behalf is performing operations, if the "property damage" arises out of those operations; or
(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.
. . . .
o. Damages claimed for any loss, cost or expense incurred by you or others
for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of:
(1) "Your product;"
(2) "Your work;" or
Paragraph 15(a) of the "Liability and Medical Expenses Definitions" defines "Your Work" as "[w]ork or operations performed by you or on your behalf."
(3) "Impaired property;"
Under Paragraph 5 of the "Liability and Medical Expenses Definitions," "Impaired Property" means tangible property, other than "your product" or "your work", that cannot be used or is less useful because: a. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement; if such property can be restored to use by: (1) The repair, replacement, adjustment or removal of your product' or your work'; or (2) Your fulfilling the terms of the contract or agreement.
if such product, work or property is withdrawn or recalled from the marketor from use by any person or organization because of a known or suspecteddefect, deficiency, inadequacy or dangerous condition in it.
The only damages alleged in the Adami Complaint are the costs to "correct, complete, and cure the defective and improper workmanship on the premises," and the lost rental income from the "uninhabitability of the premises, due to the shoddy workmanship." All of plaintiff's claims against F F relate to alleged defects in the work on the property by F F, or C.J. Rubino and/or Proud "using the name of and under the auspices of [F F]." Exclusions k(5), k(6), and o unambiguously exclude coverage for property damage caused directly by the improper performance of work by F F, or any contractor or subcontractor working directly or indirectly on F F's behalf. As noted in George A. Fuller Co., 200 AD2d 255, 261 [2d Dept 1994], which involved a general commercial liability policy with language nearly identical to that of the Policy, "the insurers clearly did not intend to provide coverage for claims against their insured for breach of express or implied warranties of workmanship when the damages claimed were the cost of correcting the work itself. The risk that the insurers clearly intended to cover was the possibility that the work product of the insured, once completed, would cause bodily injury or damage to property other than to the product or completed work itself, and for which the insured might be found liable." As Farm Family's duty to defend must be determined from the allegations of the complaint, and the only interpretation of the allegations against F F "fall wholly within" a clear and unambiguous policy exclusion, there is no duty to defend ( Global Constr., 52 AD3d 655; see Incorporated Village of Cedarhurst, 89 NY2d at 298; see Poulos v United States Fid. Guar. Co., 227 AD2d 539 [2d Dept 1996]).
F F cites Hotel des Artistes, Inc. v Gen. Accident Ins. Co. of Am. , 9 AD3d 181 [1st Dept 2004] in support of it's motion. However, Hotel des Artistes is inapposite to the present matter as the First Department specifically distinguished the decision from George A. Fuller Co., and similar holdings in general commercial liability coverage decisions, because there was an "occurrence" as required by the policy and no work product exclusion.
In it's memorandum of law in support of it's motion, F F seeks leave to amend it's impleader to add common law fraud counts because Farm Family allegedly misrepresented the "Contractor's Advantage Special" policy as having broader coverage than a "commercial liability policy." As F F's motion for summary judgment refers to the Policy as a "general commercial liability policy" and the coverage of the Policy is nearly identical to that of other commercial general liability policies ( see George A. Fuller Co., 200 AD2d at 256-257; see Baker Residential, 10 AD3d at 586; see Mid-Hudson Castle, 292 AD2d at 356), this argument is unavailing and the court will not entertain an amended impleader by F F.
CONCLUSION
The third party plaintiff's motion for a summary declaratory judgment that the third party defendant has a duty to defend third party plaintiff in the main action is denied. It is adjudged and declared that third party defendant has no obligation to defend or indemnify third party plaintiff or pay third party plaintiff's attorney fees and expenses in the main action.
As there are no issues of fact and the third party complaint does not have merit, third party defendant is granted summary judgment dismissing the third party action.
The remaining parties are directed to appear in Commercial Part 1 on April 8 at 2:30 P.M. for a compliance conference. The foregoing constitutes the decision and order of the Court.