Opinion
01 Civ. 10632 (JFK)
September 17, 2003
Thomas D. Hughes, Esq., Richard C. Rubinstein, Esq., GREATER NEW YORK MUTUAL, INSURANCE COMPANY, New York, N.Y., For Plaintiff
Marshall T. Potashner, Esq., Barry J. Roy, Esq., JAFFE ASHER LLP, New York, New York, For Defendants/Third-Party Plaintiffs
For Third-Party Defendant: Regis E. Staley, Esq., WHITE, QUINLAN EC STALEY, LLP Garden City, New York
MEMORANDUM OPINION and ORDER
Preliminary Statement
Plaintiff Greater New York Mutual Insurance Company ("GNY") brought this action seeking contribution from defendants Liberty Mutual Insurance Company ("LMIC") and Liberty Mutual Fire Insurance Company ("LMFIC") (LMIC and LMFIC are hereinafter referred to collectively as "Liberty Mutual") for payments it made to satisfy a judgment rendered against its insureds, Center Associates and Smith Affiliates Management ("Smith Affiliates") in a personal injury action commenced by Juan Figueroa ("Figueroa") in New York State Court. GNY alleges it is entitled to an indemnity contribution of $581,994.79 from defendants. GNY and Liberty Mutual have each filed motions for summary judgment.
Facts
Center Associates is the owner of a two-story, multi-tenant building located at 401-405 Avenue of the Americas, New York, New York (the "Premises"). Pl. Rule 56.1 Statement ¶ 1. Smith Affiliates is the management company employed by Center Associates to oversee the daily affairs at the Premises. Def. Mem. in Supp. Summ. J., at 2. Center Associates purchased an insurance policy from GNY that included coverage for personal injury claims related to incidents that occurred at the Premises.
On or about September 10, 1992 Center Associates and Savemart, Inc. ("Savemart") entered into a lease agreement ("Lease Agreement") for one of the spaces located within the Premises. Rubinstein Aff. Ex. B. Pursuant to the Lease Agreement, Savemart occupied a store and basement previously occupied by General Nutrition Center, Inc. Rubinstein Aff. Ex. B. The Lease Agreement specifically excluded the Premises's roof from the property demised to Savemart. See Rubinstein Aff. Ex. B, ¶ 95. In addition, the Lease Agreement placed the burden of maintaining the roof squarely on Center Associates's shoulders. See Rubinstein Aff. Ex. B, ¶ 112. The Lease Agreement did, however, require Savemart to obtain and maintain, at its sole cost and expense, an "air-conditioning maintenance contract." The air-conditioning unit, located on the roof of the Premises, served only Savemart's rental property. See Rubinstein Aff. Ex. B., ¶ 82. True to its responsibilities, Savemart contracted with Cold Wave Air Conditioning ("Cold Wave") to maintain the unit.
The Lease Agreement is also attached to the Potashner Affidavit as Exhibit 5. The Court sees no purpose in citing each affidavit every time the lease is cited, and will therefore cite only to the Rubinstein Affidavit.
The Lease Agreement also provided that Savemart obtain a liability policy and include Center Associates as an additional insured on that policy. See Rubinstein Aff. Ex. B, ¶ 8. Accordingly, Savemart purchased Commercial Lines policy, No. YP2-12P-081317-01518 (the "LMFIC Policy"), with a policy period of March 1, 1995 to March 1, 1996, from LMFIC. Consistent with the Lease Agreement, the LMFIC Policy contained an "Additional Insured — Managers or Lessors of the Premises" endorsement, under which, Center Associates was named as an additional insured. Potashner Aff. Ex. 4.
In July 1995, the air-conditioning unit was not functioning properly. Savemart contacted Cold Wave, which in turn sent its employee, Figueroa, to fix the unit. On July 26, 1995, Figueroa climbed, by ladder, on to the roof and attempted to repair the unit. While on the roof it began to rain. Figueroa was forced by the rain to put the cover back on the unit and retreat from the rooftop. As Figueroa walked across the roof, an I-beam on which he stepped gave way causing Figueroa to fall and be injured. See Rubinstein Aff. ¶ 10. Figueroa tore his anterior cruciate ligament and his medial meniscus. See Potashner Aff. Ex. 11. The beam that caused Figueroa's fall was located on a portion of the roof not above Savemart's rental property.See Rubinstein Aff. Ex. F (Figueroa's deposition testimony); Potashner Aff. Ex. 9 (Figueroa's trial testimony from the state court action).
On March 28, 1996, Figueroa commenced a personal injury action against Central Associates, Smith Affiliates and Savemart in the Supreme Court of the State of New York for the County of the Bronx. After a jury trial, Savemart was found not liable for Figueroa's injuries. Center Associates and Smith Affiliates were, however, found to have acted negligently and be jointly and severally liable for Figueroa's injuries. Potashner Aff. Ex. 10. Judgment was entered against Center Associates and Smith Affiliates on March 2, 2000, and subsequently affirmed by the Appellate Division, First Department. As a result, GNY paid Figueroa $1,163,993.59 in satisfaction of his award.
GNY believes Liberty Mutual should have concurrently indemnified Center Associates, and therefore, owes GNY a $581,994.79 contribution plus statutory interest. Liberty Mutual has raised two defenses: (1) Figueroa's accident and subsequent verdict is not covered by the LMFIC Policy, and (2) GNY failed to comply with the notice requirements of the LMFIC Policy. As discussed herein, the Court agrees with Liberty Mutual's argument that Figueroa's accident and subsequent verdict is not covered by the LMFIC Policy. For this reason, there is no need for the Court to address whether GNY complied with the notice provisions or discuss the facts relevant to that issue.
Discussion
Standard of Review
This Court may grant summary judgment only if the moving party is entitled to judgment as a matter of law because there is no genuine dispute as to any material fact. See Silver v. City Univ. of New York, 947 F.2d 1021, 1022 (2d Cir. 1991); Montana v. First Fed. Sav. Loan Ass'n, 869 F.2d 100, 103 (2d Cir. 1989); Knight v. U.S. Fire Insur. Co., 804 F.2d 9, 11 (2d Cir. 1986). The role of the Court on such a motion "Is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight, 804 F.2d at 11; see also First Fed. Sav. Loan Ass'n, 869 F.2d at 103 (stating that to resolve a summary judgment motion properly, a court must conclude that there are no genuine issues of material fact, and that all inferences must be drawn in favor of the non-moving party).
The movant bears the initial burden of informing the court of the basis for its motion and identifying those portions of the "pleadings, depositions, answers to interrogatories, and admissions to file, together with affidavits, if any," that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the movant meets this initial burden, the party opposing the motion must then demonstrate that there exists a genuine dispute as to the material facts. See id.; Silver, 947 F.2d at 1022.
The opposing party may not solely rely on its pleadings, on conclusory factual allegations, or on conjecture as to the facts that discovery might disclose. See Gray v. Darien, 927 F.2d 69, 74 (2d Cir. 1991). Rather, the opposing party must present specific evidence supporting its contention that there is a genuine material issue of fact. See Celotex Corp., 477 U.S. at 324; Twin Lab. Inc. v. Weider Health Fitness, 900 F.2d 566, 568 (2d Cir. 1990). To show such a "genuine dispute, " the opposing party must come forward with enough evidence to allow a reasonable jury to return a verdict in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986);Cinema North Corp. v. Plaza at Latham Assocs., 867 F.2d 135, 138 (2d Cir. 1989). If "the party opposing summary judgment propounds a reasonable conflicting interpretation of a material disputed fact," then summary judgment must be denied. Scherinq Corp. v. Home Insur. Co., 712 F.2d 4, 9-10 (2d Cir. 1983).
When, as in this instance, both the plaintiff and the defendant have filed motions for summary judgment, either side is permitted to assert that there are issues of fact that preclude entry of summary judgment for the other party. See Schwabenbauer v. Board of Educ. of Clean, 667 F.2d 305, 313 (2d Cir. 1981). The Court, for its part, is not obligated to grant summary judgment to either side. Id. "Rather, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id. at 314.
Scope of Center Associates Coverage as an Additional Insured
GNY premises its right to contribution from Liberty Mutual on the fact that Center Associates is listed as an additional insured on Savemart's liability policy with LMFIC. There can be no disputing the fact that Center Associates is listed as an additional insured on the LMFIC Policy. See Potashner Aff. Ex. 4. The endorsement listing Center Associates as an additional insured, however, limits the scope of Center Associates's coverage. The endorsement provides that Center Associates is covered "only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to [Savemart]." Potashner Aff. Ex. 4. Liberty mutual asserts that because Figueroa's accident did not occur on Savemart's premises, the LMFIC Policy is not implicated.
GNY does not seem to contend that Figueroa's accident occurred on the portion of the Premises leased to Savemart. Were GNY to assert such an argument, the Court would be forced to reject the argument on the basis of collateral estoppel. Collateral estoppel, or claim preclusion, applies when (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and actually decided, (3) there was a full and fair opportunity for litigation in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits. Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir. 1986). The four requirements for a finding of collateral estoppel have all been met in this case.
As part of the underlying action, Figueroa v. Center Associates, the issue of whether the portion of the roof on which Figueroa fell was within Savemart's control was fully litigated by the plaintiffs in this case and resolved. In ruling on a post-trial motion made by GNY's proxies, Center Associates and Smith Affiliates, the trial court ruled, "Movant's assertion that the beam in question was on a part of the roof over co-defendant Savemart's demised premises was unsupported by the evidence and was properly rejected by the jury." Potashner Aff. Ex. 11. On appeal, the First Department agreed, holding, "The lessee's responsibility to maintain its air conditioning unit, and asserted right of access to the roof for that purpose, did not make the rest of the roof part of the demised premises." Potashner Aff. Ex. 12.
Rather, GNY's contention is that Figueroa's injuries arose out of Savemart's use of the demised premises. Namely, that Figueroa hurt himself while attempting to service the air conditioner unit that is leased to Savemart. Thus, GNY contends that because the injury "sprung" from Savemart's use of the property, the claim is one that arose from "ownership, maintenance or use of that part of the premises leased to [Savemart]." It is Liberty Mutual's contention that because Figueroa was not injured on Savemart's premises, Liberty Mutual has no indemnity responsibility.
Faced with identical language to that in the LMFIC Policy, New York courts have construed the language as requiring the accident to have occurred within the boundaries of the demised premises. See, e.g., Rensselaer Polytechnic Inst. v. Zurich Am. Ins. Co., 176 A.D.2d 1156, 1157 (3d Dep't 1991) (stating that it was not persuaded that a duty to indemnify existed by the argument that although the accident did not occur within the leased premises, it did arise out of use of the leased premises); Commerce Indus. Ins. Co. v. Admon Realty, Inc., 168 A.D.2d 321, 323 (1st Dep't 1990) (finding no duty to indemnify where the cause of the damage occurred outside the leased premises); Gen. Accident Fire Life Assurance Corp., Ltd., 162 A.D.2d 130, 132 (1st Dep't 1990) (finding insurer obligated to defend only when the accident occurred within the leased premises). GNY directs the Courts attention toZKZ Associates LP v. CNA Insurance Co., 224 A.D.2d 174 (1st Dep't 1996) in which the Appellate Division required the insurer of the tenant of a garage to defend the owner of the garage in a personal injury suit even though the accident occurred on the sidewalk in front of the tenant's property. The ZKZ Assocs. case is, however, distinguishable from the instant case.
Critical to the court's analysis in the ZKZ Assocs. case was the fact that the language of the insurance policy referred to the "leased" premises when in reality there was no lease. Rather, the tenant had a management contract with the owner. The management contract charged the tenant with operating and managing the garage. The insurance policy, in turn, stated that garage operations included "the ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations . . . [; and] all operations necessary or incidental to a garage business." ZKZ Assocs. 224 A.D.2d at 175. The court reasoned that "without traversing the sidewalk for access to and from the garage, there could be no use at all of the garage as a parking facility."Id. at 176. In essence, lacking a clearly defined lease to set the boundaries of the premises, the court deemed the accident to have taken place on the demised property. As such, the case is distinguishable from the instant action in which the accident did not occur on the named insured's property.
The other case GNY points to for support is University of California Press v. G.A. Insurance Co. of New York, 1995 WL 591307 (E.D.N.Y. Sept. 27, 1995). That case is also distinguishable from the instant action. Critically, in University of California Press, the property damage and actual injury occurred within the demised premises. Books stored within the leased premises were damaged by leaking water from a sprinkler system malfunction one floor above the leased premises. Judge Sifton found the language of the insurance agreement to be ambiguous and unclear as to whether "the term `arising out of referred to where the breach took place, where the accident occurred or where the damage occurred." Id. at *5. Unable to reconcile that ambiguity, the court followed a basic principle of contract law and construed the ambiguity against the insurer as the policy's drafter. Thus, because the damage occurred within the leased premises, the court directed judgment in favor of the insured. Id. at *5-6.
The decision in University of California Press does not, however, overrule or otherwise discredit the holdings in Commerce Industry Insurance. General Accident Fire Life Assurance Corp. or Rensselaer Polytechnic Institute. Rather, Judge Sifton carefully distinguishes the case before him from those cases. The critical fact which distinguishes the University of California Press case from the others is not, however, present in the case at bar. In this instance, "where the breach took place, where the accident occurred [and] where the damage occurred" are one and the same. Thus, this action is controlled by the precedent set forth in Commerce Industry Insurance, General accident Fire Life Assurance Corp. and Rensselaer Polytechnic Institute limiting coverage to accidents that occur within the demised premises. In light of the fact that the accident occurred on the roof — a location the lease specifically excludes from the demised premises and which two separate courts held not to be within the demised premises — the accident did not occur within the area covered by the LMFIC Policy. As such, Liberty Mutual bears no burden to indemnify GNY for its expenditure in satisfaction of theFigueroa verdict.
Conclusion
GNY's motion for summary judgment is denied and defendants', Liberty Mutual, motion is granted. The Court directs summary judgment in favor of the defendants and hereby dismisses plaintiff's amended complaint. Having found no obligation on the part of defendants to indemnify GNY for its expenditures relative to the Figueroa verdict, Liberty Mutual's third-party complaint seeking to hold Smith Affiliates liable for Figueroa's injuries is dismissed accordingly. The Court orders this case closed and directs the Clerk of Court to remove it from the Court's active docket.
SO ORDERED.