Opinion
652669/2020
08-06-2021
GEMINI INSURANCE COMPANY, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON SUBSCRIBING TO POLICY NUMBERS XB52310180163 AND XB552310180164, Defendant.
Coughlin Midlige & Garland LLP, New York, NY (Steven G. Adams and Achille Alipour of counsel), for plaintiff. Furman Kornfeld & Brennan LLP, New York, NY (Jason H. Seiler of counsel), for defendants.
Coughlin Midlige & Garland LLP, New York, NY (Steven G. Adams and Achille Alipour of counsel), for plaintiff.
Furman Kornfeld & Brennan LLP, New York, NY (Jason H. Seiler of counsel), for defendants.
Gerald Lebovits, J.
This action concerns an insurance dispute between plaintiff, Gemini Insurance Company, and defendant, Certain Underwriters at Lloyd's London (Underwriters), arising out of an underlying personal-injury claim brought in connection with a construction project at 214 West 72nd Street in Manhattan.
Gemini insures general contractor CM and Associates Construction Management, LLC (CMA), and project owner Aventis—72nd LLC. Underwriters insures subcontractor Source Construction Contracting Inc. A Source employee, Vicente Hernandez, sued CMA and Aventis in Supreme Court, Kings County, alleging that he was injured in May 2019 while working on the project. On September 20, 2019, Gemini sent a letter to Source in an attempt to tender the defense of CMA and Aventis in this underlying action to Underwriters pursuant to the Source policy, asserting that CMA and Aventis qualified as additional insureds on that policy.
In November 2019, CMA also filed a third-party complaint in the underlying action, alleging that Hernandez was working for and employed by Source at the time he was injured.
On October 2, 2019, Underwriters brought an action in this court to rescind the Source insurance policy. Underwriters’ rescission complaint alleged that Source had made material misrepresentations in applying for insurance policies from Underwriters. In May 2020, Underwriters disclaimed a duty to defend or indemnify CMA and Aventis in the underlying action, contending that they had not established that they were additional insureds on the Source policy, and noting that Underwriters had sued to rescind the Source policy altogether.
In June 2020 Gemini brought this declaratory-judgment action against Underwriters. Gemini seeks a declaration that CMA and Aventis are additional insureds on the Source policy, declarations that Underwriters owes a duty to defend and indemnify CMA and Aventis in the underlying action pursuant to the Source policy, and an award of Gemini's defense costs in the underlying action (plus attorney fees). Gemini now moves for partial summary judgment on its declaratory-judgment claims as to CMA and Aventis's status as additional insureds and as to Underwriters’ duty to defend. The motion is denied.
DISCUSSION
A party bringing a motion for summary judgment "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." ( Alvarez v Prospect Hosp. , 68 NY2d 320, 324 [1986] [internal citations omitted].) If a movant does not "sufficiently demonstrate its right to summary judgment" the court must deny the motion "regardless of the sufficiency, or lack thereof, of the opposing papers." ( Cugini v Sys. Lbr. Co., Inc. , 111 AD2d 114, 115 [1st Dept 1985].) Once a prima-facie entitlement has been established the opposing party must, to defeat the motion, "assemble, lay bare, and reveal his proofs in order to show his defenses are real and capable of being established on trial ... and it is insufficient to merely set forth averments of factual or legal conclusions." ( Genger v Genger , 123 AD3d 445, 447 [1st Dept 2014].)
Gemini seeks summary judgment on its declaratory-judgment claim that CMA and Aventis are additional insureds under the Source policy issued by Underwriters. Gemini is not, on the current record, entitled to summary judgment on this claim.
The Source policy adds as additional insureds entities who "have agreed in writing in a contract or agreement" with Source that they must be "added as an additional insured on [Source's] policy. (NYSCEF No. 43 at 47.) Such a provision is binding under New York law if a direct written contract exists between the named insured and the additional insureds. ( Linarello v City Univ. of NY , 6 AD3d 192, 195 [1st Dep't 2004].) CMA and Aventis's contracts with Source required it to procure commercial general liability insurance listing them as additional insureds (see NYSCEF No. 42 at 33-36), which satisfies the direct-written-contract requirement. (See Carlisle SoHo E. Trust v Lexington Ins. Co. , 49 AD3d 272, 272 [1st Dept 2008].)
Crucially, however, the Source policy does not provide that entities meeting these requirements qualify as additional insureds in all circumstances. Rather, those entities are additional insureds "only with respect to liability for ‘bodily injury’ ... caused, in whole or in part by: 1. [Source's] acts or omissions, or 2. The acts or omissions of those acting on [Source's] behalf." (NYSCEF No. 43 at 47.) And Gemini has not established, even prima facie, that this further condition has been satisfied here.
Neither Hernandez's complaint in the underlying action against CMA and Aventis nor CMA's third-party complaint against Source in that action alleges that Hernandez's injuries were caused in whole or in part by the acts or omissions of Source or its agents. Rather, the third-party complaint alleges only that CMA is entitled to contractual indemnification from Source, implicitly because Hernandez's injuries arose out of or resulted from performance of Source's work on the project. (See NYSCEF No. 40 at ¶¶ 6-8.) But that Hernandez was injured while performing project work for Source does not mean that acts or omissions by Source or its agents brought about the "broken, cracked, misaligned and/or otherwise defective condition" that allegedly brought about Hernandez's injuries. (NYSCEF No. 39 at ¶ 60; cf. Hogan v 590 Madison Avenue , 2021 NY Slip Op 03255, at *1-*2 [1st Dept May 20, 2021] [holding both that a fact issue existed "as to whether the accident arose out of Commodore's work" for contractual indemnification purposes, and that "there is no evidence that Commodore ... [was] otherwise negligent" for common-law indemnification purposes].)
Gemini does not otherwise provide evidence that might fill in this gap, either. Thus, on this record Gemini has not met its prima facie burden of demonstrating its entitlement to judgment as a matter of law declaring that CMA and Aventis are additional insureds on the Source policy issued by Underwriters. The branch of Gemini's CPLR 3212 seeking that declaration is denied.
Gemini also seeks summary judgment declaring that Underwriters owes CMA and Aventis a primary, non-contributory duty to defend them in the underlying action and must reimburse Gemini's incurred defense costs. Given this court's conclusion that Gemini has not established prima facie that CMA and Aventis are additional insureds on the Source/Underwriters policy, this branch of Gemini's motion necessarily is denied as well.
Underwriters also contends that no duty to defend was triggered here because it served notice of intent to rescind the Source policy before Gemini tendered CMA/Aventis's defense under the policy directly to Underwriters in particular, as opposed to Source. (See NYSCEF No. 54 at ¶¶ 10-12.) Although this court need not definitively decide the question now, the court is somewhat skeptical of Underwriters’ contention. In Federal Insurance Co. v Kozlowski (18 AD3d 33, 39-40 [1st Dept 2005] ), the First Department held that obligations that have accrued or been incurred under an insurance policy are not suspended merely by later service of a notice of rescission. Kozlowski described this holding as applying to a scenario "where the insurer asserts the right to rescind by notice at a time when there are outstanding claims against an insured who is seeking coverage under the policy's obligation to defend" against those claims—not necessarily one where that effort to seek coverage has already been successful. (Id. at 40 [emphasis added].) Nor, given an additional insured's interest in being able to rely on the promise of defense coverage, is it clear why the insured must provide notice directly to the insurer to preserve the insured's right to a defense pending a rescission action, as Underwriters would have it. (See Indian Harbor Ins. Co. v Alma Tower, LLC , 165 AD3d 549, 549 [1st Dept 2018] ["Once a policy goes into effect and a claim has been made, the status quo is changed , and a defense of rescission may not be asserted until there is a judicial determination."] [emphasis added].)
Accordingly, for the foregoing reasons, it is hereby
ORDERED that Gemini's motion for summary judgment under CPLR 3001 and CPLR 3212 is denied.