Opinion
# 2012-039-301Claim No. 116384Motion # 2012-039-301Claim No. M-79620M-79852
04-30-2012
BUCKLEY v. STATE OF NEW YORK
Synopsis
Third-party defendant's motion for summary judgment dismissing the third-party complaint is granted. Defendant's motion for summary judgment on the third-party action is denied. Defendant is not an "additional insured" under the terms of the insurance policy, and third-party defendant thus has no obligation to defend or indemnify defendant under the policy with respect to the underlying accident. Case information
UID: 2012-039-301 Claimant(s): JAMES BUCKLEY as the Attorney-in-fact for KRESANDRA ROSE BUCKLEY and JAMES and MELODEE BUCKLEY Claimant short name: BUCKLEY Footnote (claimant name) : Defendant(s): STATE OF NEW YORK Footnote (defendant name) : Third-party claimant STATE OF NEW YORK (s): Third-party TOWER INSURANCE COMPANY OF NEW YORK defendant(s): Claim number(s): 116384 Motion number(s): M-79620, M-79852 Cross-motion number (s): Judge: James H. Ferreira The Rothschild Law Firm, P.C. Claimant's attorney: By: Martin J. Rothschild, Esq. Hon. Eric T. Schneiderman Defendant's Attorney General of the State of New York attorney: By: Joel L. Marmelstein Assistant Attorney General in Charge Third-party Hurwitz & Fine, P.C. defendant's attorney: By: Dan D. Kohane, Esq. Signature date: April 30, 2012 City: Albany Comments: Official citation: Appellate results: See also (multicaptioned case) Decision
On January 27, 2009, while participating in a recreational swim at a pool located in Maxcy Hall on the campus of the State University of New York at Potsdam (hereinafter SUNY Potsdam), claimant Kresandra Buckley was injured when she dove off the starting blocks and struck her head on the bottom of the pool. Claimants thereafter commenced this negligence action for damages against defendant State of New York. Defendant, in turn, commenced a third-party declaratory judgment action, pursuant to Court of Claim Act § 9 (9-a), against third-party defendant Tower Insurance Company of New York (hereinafter Tower) seeking an order directing Tower to provide a defense to defendant in the underlying claim and to indemnify defendant up to the limit of a commercial liability policy Tower maintained with the SUNY Potsdam Student Government Association (hereinafter SGA) in the event that defendant was found liable.
Following a trial on liability held at the Court of Claims in Utica, New York on January 24, 2011 through January 27, 2011, the Court found that claimants presented sufficient prima facie proof establishing their cause of action for negligence against defendant (see Buckley v State of New York, 34 Misc 3d 879 [2011]). Specifically, the Court concluded that the evidence established that defendant was negligent in training and supervising the lifeguards on duty, in permitting them to use their discretion to allow recreational swimmers to use the starting blocks in direct derogation of the pool's policies and the State Sanitary Code, and in failing to place barriers, cones, or covers on the starting blocks. The Court also found that claimants' recovery was not barred by the doctrine of primary assumption of risk because the affirmative actions of the lifeguards in ultimately granting claimant permission to use the starting blocks unreasonably increased the risk assumed by claimant. The Court concluded that claimant was 60% responsible and defendant was 40% responsible for claimant's injuries.
This decision addresses two separate motions filed after the trial concluded but prior to the issuance of the Court's Decision on liability. In the first motion (Motion No. M-79620), defendant seeks an order pursuant to CPLR 3212 granting it summary judgment in the third party action. In the second motion (Motion No. M-79852), Tower seeks an order pursuant to CPLR 3212 granting it summary judgment and dismissing the third-party complaint against it. Having found defendant partially liable for the injuries claimant sustained, the Court now addresses these motions.
FACTS
Tower issued to SGA a Commercial Lines Policy of insurance, policy number CPP2523311 (hereinafter the Policy), for the policy period of December 1, 2008 to December 1, 2009 (see Motion M-79852, Exhibit A). Claimant's accident occurred on January 27, 2009. On February 5, 2009, claimants filed the underlying claim (claim number 116384) in the Office of the Clerk of the Court of Claims (see id. at Exhibit B). Defendant filed an answer to the claim on March 13, 2009. On March 20, 2009, claimants filed an amended and corrected claim with the Clerk of the Court (see Motion M-79620, Exhibit A). On March 30, 2009, defendant filed an answer to the amended and corrected claim (see id. at Exhibit B).
In a letter dated June 8, 2009, and sent certified mail, return receipt requested, defendant's investigator notified Tower Group in Melville, New York, in pertinent part, as follows:
"Your company issued an insurance policy which would be applicable to this matter. This notice is being sent to you so that your company can take immediate steps to investigate and prepare to defend the State of New York and/or the State's contractor in accordance with the policy issued by your company"(M-79620, Exhibit E). The letter further indicated that the claim had been served on defendant's office on February 5, 2009 and requested that Tower acknowledge receipt of the letter (id.). By correspondence dated July 10, 2009, Tower disclaimed defense and indemnity to defendant (see id. at Exhibit F). The reasons for the coverage denial included (1) that the Named Insured for the Policy in place was SGA and the accident did not involve "liability arising out of SGA's operations" or SGA's ownership or leasing responsibilities, (2) that the accident arose out of an "athletic activity" not covered by the policy and (3) that defendant failed to "notify [Tower] of the 'occurrence,' claim and suit as soon as practicable" and failed to "immediately forward the suit papers to us" (id.). On September 2, 2010, defendant filed a notice of impleader and third party claim against Tower (see id. at Exhibit H). On October 1, 2010, Tower filed its answer (see id. at Exhibit I).
The Policy
Policy number CPP2523311 provides that the Named Insured on the Policy is "Student Government Association of Potsdam" with an address of 215 Barrington Student Union, SUNY Potsdam, Potsdam, New York 13676 (M-79852, Affidavit of Dan D. Kohane, Esq., Exhibit A). The Policy includes, inter alia, a Commercial General Liability Coverage Part and a Commercial Property Coverage Part.
The Policy states that "[t]hroughout this policy the words 'you' and 'your' refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words 'we', 'us' and 'our' refer to the company providing this insurance" (id. at Kohane Affidavit ¶ 14; Exhibit A, Commercial General Liability Coverage Form, CG 00 01 10 01, p.1). The Commercial General Liability Coverage portion of the Policy provides that Tower "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' . . . to which this insurance applies" (id. at Kohane Affidavit ¶ 15; Exhibit A, Commercial General Liability Coverage Form, CG 00 01 10 01, p.1). Tower's obligation to pay damages for "bodily injury" can arise from an "occurrence" during the policy period (id. at Exhibit A, Commercial General Liability Coverage Form, CG 00 01 10 01, p.1). . An " 'occurrence' means an accident" (id. at p. 14).
Significantly, in the Commercial General Liability Coverage Part, the Policy names "The State University of New York, State University Plaza, Albany, NY 12246" and "The State of New York, State Capitol, Albany, NY 12224" as "Additional Insured[s]" (id. at Kohane Affidavit ¶ 17; Exhibit A, CGL Extension of Renewal Certificate). However, the Policy provides that an "Additional Insured" is included "as an insured, but only with respect to liability arising out of your operations or premises owned by or rented to you" (id. at Kohane Affidavit ¶ 16, Exhibit A, CG 20 26 11 85, p.1) (emphasis added). As previously noted the terms "your" and "you" refer to the Named Insured, which here is SGA. Hence, coverage for the additional insured under the Policy occurs only with respect to liability "arising out of [SGA] operations or premises owned by or rented to [SGA]."
The Policy further provides an exclusion relative to athletic or sports participants:
"CG 21 01 (11/85) - Exclusion - Athletic or Sports Participants Description of Operations: Any and all athletic activities including instramural [sic] sports, cross-country skiing, and aerobic/excersize [sic] classes. This insurance does not apply to 'bodily injury" to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor or do not sponsor"(id. at Kohane Affidavit ¶ 19, Exhibit A, CGL Extension of Renewal Certificate).
Additionally, the Policy requires that Tower be "notified as soon as practicable of an 'occurrence' or an offense which may result in a claim" (id. at Kohane Affidavit ¶ 20, Exhibit A, CGL Conditions, CG 00 01 10 01, p. 10). The notification provisions also require that if a claim is made or a suit is brought, Tower receive written notice of the claim or suit and the date received and "[i]mmediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or 'suit' " (id. at 11).
DISCUSSION
Defendant contends that Tower erred in finding that defendant, an Additional Insured under the Policy, is not entitled to coverage for the accident on January 27, 2009. In its coverage denial letter dated July 10, 2009, Tower stated that it has "reviewed this matter and [has] determined that no coverage is available for NYS/SUNY under the policy . . . [and] we disclaim coverage of this matter to NYS/SUNY and we will not defend or indemnify NYS/SUNY" (M-79620, Exhibit F, at 1). Among the reasons for Tower's denial of coverage was that "[Tower's] investigation reveals that SGA does not own or rent the subject swimming pool and was not operating the free swim at which claimant was injured" (id. at 3). Since the Policy provides coverage for the Additional Insured "only with respect to liability arising out of [SGA] operations or premises owned by or rented to [SGA]" (Motion M-79852, Exhibit A, CG 20 26 11 85, p. 1), Tower disclaimed coverage.
As a general rule, insurance policies are interpreted according to established principles of contract interpretation (Matter of Covert, 97 NY2d 68, 76 [2001]).
"[C]ontracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous the terms are to be taken and understood in their plain, ordinary and proper sense" (id. at 76, quoting Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, 47 [1943]).
It is also a generally accepted principle that " 'policies of insurance are to be construed liberally in favor of the insured and strictly against the insurer' " (Matter of Liberty Mut. Fire Ins. Co. [Malatino], 75 AD3d 967, 968 [2010], quoting Penna v Federal Ins. Co., 28 AD3d 731, 731 [2006]; accord Matter of New York Cent. Mut. Fire. Ins. Co. v Ward, 38 AD3d 898, 899 [2007]). "Where ambiguity exists as to coverage, doubt should be resolved in favor of the insured" (Matter of Liberty Mut. Fire Ins. Co. [Malatino], 75 AD3d at 968; see also Stillwater Cent. School Dist. v Great Am. E & S Ins. Co., 66 AD3d 1260, 1262 [2009]). Even so, "[a]lthough ambiguities are to be construed liberally in favor of the insured, if the only reasonable construction is favorable to the insurer, it must be followed" (Hubert v Lumbermens Mut. Cas. Co., 117 AD2d 964, 964 [1986]; see also Terwilliger v American Motorists Ins. Co., 156 AD2d 805, 806 [1989]).
The Policy language at issue in this proceeding states that coverage is afforded an insured, including the Additional Insured, "only with respect to liability arising out of [SGA's] operations or premises owned by or rented to [SGA]" (M-79852, Exhibit A, CG 20 26 11 85, p.1). The Court of Appeals has "interpreted the phrase 'arising out of' in an additional insured clause to mean 'originating from, incident to, or having connection with' " (Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38 [2010], quoting Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472 [2005]). "It requires 'only that there be some causal relationship between the injury and the risk for which coverage is provided' " (id.; accord Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d 411, 415 [2008]). "[T]he focus of the inquiry 'is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained' " (Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA,15 NY3d at 38, quoting Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d at 416).
Upon applying these principles to the motion papers before the Court, and the exhibits attached thereto, defendant's motion for summary judgment on its third party declaratory judgment action is denied and Tower's motion for summary judgment seeking dismissal of defendant's third party claim is granted. The Court finds defendant's argument - that SGA's association with the Maxcy Hall recreational swim through its sponsorship of the activity "with its involvement made manifest by its employment of the supervising lifeguards" equates to SGA "operations" for insurance coverage purposes - to be unsupported and without merit (M-79620, Affirmation of Joel Marmelstein ¶ 11). The proof is markedly insufficient to demonstrate that the diving accident at Maxcy Hall on January 27, 2009, was an incident "arising out of [SGA] operations or premises owned by or rented to [SGA]" (emphasis added).The Court finds no evidence of a causal connection between the injury and the risk covered by the policy, namely occurrences that arise out of SGA operations or out of premises owned or rented to the SGA.
No evidence was proffered - and no argument was made - that Maxcy Hall was owned by or rented to SGA. Notably, the covered premises identified in the Policy are located at 215 Barrington Student Union, Potsdam, New York (see M-79852, Exhibit A), and it is clear that claimant's injuries did not "arise out of" those premises.
Defendant contends that the SGA "was an important sponsor" of the daily recreation swim at the Maxcy Hall swimming pool and that "the lifeguards who supervised each recreation swim were SGA employees" (id. at ¶ 10). In support of that argument, defendant relies on SGA budget approvals for 2008-2009, which includes funds for "Maxcy Pool/Rink," "SGA/Intramural Student Time Sheet[s]" for students who worked at Maxcy Pool, and time sheets and pay slips for the lifeguards who were on duty on the day of the accident (M-79620, Exhibits L, M and N). William Beauchamp, the Director of Intramurals at SUNY Potsdam, states in his affidavit that the "recreational swim at the Maxcy Hall pool is one of the oldest recreational programs sponsored by SGA" and that "SGA has paid the lifeguards' wages since my involvement in 1999" (M-79620, Affidavit of William Beauchamp, ¶ 6).
The Court finds that the repeated use of the term "sponsor" and "sponsorship" to describe SGA's role relative to the recreational swim at Maxcy Hall does not establish that SGA was actually "operating" the recreational swim. An excerpt from the SGA Constitution states that SGA's purpose is "to promote the educational well being of its membership through the recognition of academic, cultural, recreational, social, and athletic programs" (M-79620, Exhibit J). Exhibits attached to defendant's papers indicate that the SGA sponsored an area in the Student Union known as "Pete's Place" for students to relax in and play games, an outdoor equipment rental shop, a legal aid service and an intramural sports program offering "a wide variety of sports contests" for individual and team participation (id. at Exhibit K). There is no mention in these exhibits of sponsoring recreational swim.
In addition, although there is evidence that SGA funds were used to pay the lifeguards working at the pool, this factor alone does not, in this Court's view, establish that the lifeguards were SGA employees and therefore that SGA was "operating" the pool. Indeed, the record indicates that the lifeguards were not SGA employees but were employed by defendant. In his deposition, Beauchamp testified that SGA had no involvement in the operation of the recreational swim at Maxcy Hall:
Q. What other responsibilities did the Student Government Association have with respect to the lifeguards other than paying the lifeguards their salary?(M-79852, Exhibit H, Beauchamp EBT at pp. 61-62,70-71).
A. None.
Q. The Student Government Association did not select the lifeguards, right?
A. Nope.
Q. They didn't train the lifeguards?
A. No.
Q. They didn't decide which lifeguards would work at the pool?
A. No.
Q. They didn't supervise the day-to-day activities?
A. No.
Q. They didn't discipline them if that was necessary?
A. Not to my knowledge.
Q. The only responsibility SGA had was to pay those lifeguards you told them to pay?
A. Yes.
* * * Q. Other than the completion of government forms and the processing of paychecks, did the SGA have any other responsibilities or duties relative to lifeguards for recreational swim at the Maxcy Pool?
A. No.
This testimony clearly demonstrates that, other than serving as a funding mechanism for compensating lifeguards, SGA had no role in the operation of the recreational swim at Maxcy Hall. No evidence was proffered showing that SGA had any control or decision-making authority relative to the Maxcy Hall pool, the recreational swim or any of the programs that occurred therein. In fact, Beauchamp identified numerous other SUNY Potsdam employees as the persons responsible for the oversight and management of the pool itself and the activities offered (M-79852, Exhibit H, Beauchamp EBT at 16, 18, 19-21). In addition, Tower has offered a copy of SUNY Potsdam's "Swimming Pool Safety Policy." This document contains no reference to SGA and indicates that the Aquatics Director of Maxcy Hall Pool is responsible for "oversee[ing] all aspects of pool operations except the water chemistry" (M-79852, Exhibit I, at 2). Moreover, neither the SUNY Potsdam incident report nor notes from a briefing meeting about the accident - where Beauchamp, the lifeguards on duty at the time of the accident and the SUNY Potsdam Aquatics Director were present - mention the SGA (M-79852, Exhibits J and K).
Insofar as employment of the lifeguards is concerned, Beauchamp's affidavit submitted in connection with this motion describes his interaction with the lifeguards as follows:
My work with the recreational swim program also involves credentialing and approving the students who apply for lifeguard positions. Typically, a SGA student worker application is completed by a lifeguard applicant and submitted to me. I interview each applicant when there is a vacancy being sure to verify their Red Cross certification as well as assuring that they are competent and mature candidates. I notify SGA when I have approved a candidate for a vacancy.(M-79620, Beauchamp Affidavit ¶ 6). Beauchamp stated further that he approved lifeguard time sheets and on one occasion had made a decision to not allow a lifeguard who "was not performing adequately" to work at the recreational swim (id.).
The Court finds that Beauchamp's vague statements in his affidavit are merely efforts to avoid describing his (and SUNY Potsdam's) relationship with the lifeguards as an employer-employee relationship. The other evidence before the Court indicates that the lifeguards were employed by SUNY Potsdam, not the SGA. Beauchamp's deposition testimony establishes that, as the Director of Intramurals and Recreation at SUNY Potsdam, he exercised direction and control over the lifeguards (see generally Thompson v Grumman Aerospace Corp., 78 NY2d 553, 558 [1991]; Ramsey v New York Cent. R.R. Co., 269 NY 219, 224 [1935]; Matter of Tully v Live Right Realty Corp., 36 AD3d 1108, 1109 [2007]). Beauchamp hired the lifeguards for the recreational swim at the Maxcy Hall pool, scheduled their work hours, managed them, evaluated them, and had the ability to fire them (see M-79852, Exhibit H, Beauchamp EBT at p. 13, 19-20, 23-24, 26-30, 34-35).In sum, the liability for the accident did not arise out of SGA operations and there is no evidence of a causal connection between the injury and the risk for which coverage is provided under the Policy. Thus, defendants are not "Additional Insured[s]" under the Policy's Additional Insured Endorsement with regard to the accident and underlying claim at issue, and Tower has no obligation to defend or indemnify defendant under the Policy for the accident at Maxcy Hall Pool on January 27, 2009. In light of the Court's finding that the defendant is not an Additional Insured for purposes of defense and indemnification coverage, the Court finds it unnecessary to address Tower's alternative arguments.
The Court notes that Beauchamp's deposition testimony was consistent with the testimony that he gave at the liability trial, as well as with other testimony received at trial. In its trial decision, this Court found, in relevant part, that "Sufficient proof was offered to establish that defendant maintained control and direction of the lifeguards, and that the lifeguards were therefore special employees of defendant. The director of intramurals and recreation at SUNY Potsdam, Beauchamp, an employee of SUNY Potsdam, testified that he was responsible for interviewing, hiring and supervising the lifeguards, and that [SGA], the agency responsible for issuing paychecks to the lifeguards, played no part in the supervision or monitoring of lifeguards, or in the operation of the recreational swim program. The SGA's Business Manager, Taylor, confirmed that the SGA does not train, supervise or monitor the lifeguards, nor does it operate Maxcy Pool" (Buckley v State of New York, 34 Misc 3d at 883 n 5 [citations omitted]).
Accordingly, for the aforementioned reasons, it is hereby ORDERED that defendant's motion (M-79620) seeking summary judgment on the third-party claim is denied; and it is further ORDERED that Tower's motion (M-79852) seeking summary judgment dismissing the third-party complaint is granted. The third-party claim is hereby dismissed in its entirety.
April 30, 2012
Albany, New York
James H. Ferreira
Judge of the Court of Claims
Papers considered:
1. Notice of Motion of Defendant (M-79620) filed March 29, 2011;
2. Affirmation of Joel Marmelstein, AAG, in Support of Defendant's Motion, dated March 11, 2011, with attached affidavits and exhibits;
3. Notice of Motion of Third Party Defendant (M-79852) filed April 4, 2011;
4. Affidavit of Dan D. Kohane, Esq., in Support of Third Party Defendant's Motion, dated March 30, 2011, with attached affidavit and exhibits;
5. Affirmation of Dan D. Kohane, Esq., in Opposition to Defendant's Motion, dated April 28, 2011, and filed May 2, 2011;
6. Affirmation of Joel Marmelstein, AAG in Opposition to Third Party Defendant's Motion, dated May 18, 2011, with exhibits, and filed May 19, 2011; and
7. Reply Affirmation of Dan D. Kohane, Esq., in Further Support of Third Party Defendant's Motion, dated May 26, 2011, and filed May 26, 2011.