Opinion
112808/11
12-18-2017
PAVARINI MCGOVERN, LLC, Structure Tone, Inc., and TAG Court Square, LLC, Plaintiffs, v. GEIGER CONSTRUCTION COMPANY, INC., Endurance American Specialty Insurance Company, Spectrum Painting Contractors, Westchester Fire Insurance Company and Illinois National Insurance Company, Defendants.
Attorneys for the Plaintiff: Gyimes & Wedinger, 265 Joline Ave, Suite A, Staten Island, NY 10307 Attorneys for the Defendants: Faust Goetz Schenker & Blee, 2 Rector Street, 20th Fl, New York, NY 10006, Hammill O'Brien Croutier, 6851 Jericho Turnpike, Suite 250, Syosset, NY 11791, Sedgwick, LLP, 225 Liberty Street, 28TH FL, New York, NY 10281, Jeffrey Matthews Law Offices, 80 Pine Street, 3rd FL, New York, NY 10005, Litchfield Cavo, LLP, 420 Lexington Avenue, Suite 2104, New York, NY 10170
Attorneys for the Plaintiff: Gyimes & Wedinger, 265 Joline Ave, Suite A, Staten Island, NY 10307
Attorneys for the Defendants: Faust Goetz Schenker & Blee, 2 Rector Street, 20th Fl, New York, NY 10006, Hammill O'Brien Croutier, 6851 Jericho Turnpike, Suite 250, Syosset, NY 11791, Sedgwick, LLP, 225 Liberty Street, 28TH FL, New York, NY 10281, Jeffrey Matthews Law Offices, 80 Pine Street, 3rd FL, New York, NY 10005, Litchfield Cavo, LLP, 420 Lexington Avenue, Suite 2104, New York, NY 10170
Carmen Victoria St. George, J.
This is a declaratory judgment and breach of contract action filed by plaintiffs Pavarini McGovern LLC (Pavarini), Structure Tone, Inc. (Structure Tone) and TAG Court Square, LLC (TAG), in which plaintiffs seek a declaration of insurance coverage (including defense and indemnification) in connection with an underlying personal injury action entitled Lombardo v. TAG Court Square, LLC, Pavarini McGovern, LLC, Geiger Construction Company, Inc. and Structure Tone, Inc. (index No. 11574–2010 [Sup Ct, Kings County] ).
The construction project at issue in the underlying action involved the conversion of a factory/warehouse into condominiums in Long Island City, New York (the Premises). TAG was the owner of the Premises, Pavarini was the original construction manager, and Structure Tone was the guarantor replacement manager. In the underlying action, Philip Lombardo, a union plasterer employed by defendant Spectrum Painting Corporation i/s/a Spectrum Painting Contractors (Spectrum) alleges that he was injured while he was engaged in the installation of a phase of exterior finishing known as EIFS, at the project. Plaintiffs allege that they qualify as additional insureds on the insurance policies purchased by two subcontractors on the project: Geiger Construction Company, Inc. (Geiger) and Spectrum, according to the terms of their contracts with Geiger and Spectrum. Geiger is insured by defendant Endurance American Specialty Insurance Company (Endurance). Spectrum is insured by defendants Illinois Union Insurance Company i/s/a Westchester Fire Insurance Company (Illinois Union), which issued a commercial general liability policy to Spectrum. Spectrum also carried an umbrella policy issued by Illinois National Insurance Company (Illinois National).
Motion sequence nos. 002, 003, 004, 005 and 006 are consolidated for disposition. In motion sequence no. 002, defendant Spectrum moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint.
In motion sequence no. 003, defendant Illinois National moves for summary judgment seeking a declaration, pursuant to CPLR 3001, that TAG, Structure Tone and Pavarini each do not qualify as an additional insured within the meaning of Commercial Umbrella Liability Policy No. BE 0891362 issued to Spectrum (the Illinois National umbrella policy), and that accordingly, Illinois National has no obligation to provide any insurance coverage to TAG, Structure Tone and Pavarini for the underlying action. Illinois National also moves, in the alternative, for a declaration that: (1) Structure Tone is not an insured under the Illinois National umbrella policy because the Spectrum subcontract does not require the procurement of insurance on behalf of Structure Tone; (2) the Illinois National umbrella policy is excess to the Illinois Union policy; and (3) Illinois National has no duty to defend or indemnify plaintiffs because they cannot prove proper exhaustion of all scheduled underlying insurance.
In motion sequence no. 004, plaintiffs move, pursuant to CPLR 3212, for an order granting them summary judgment, and a declaration of coverage and defense in their favor.
In motion sequence no. 005, defendant Illinois Union moves, pursuant to CPLR 3212, for summary judgment dismissing the claims asserted against it in the complaint.
In motion sequence no. 006, defendant Endurance moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint as against it. Endurance also moves, pursuant to CPLR 3001, for a declaration that: (1) Pavarini and Structure Tone do not qualify as additional insureds on the commercial general liability policy of insurance issued to Geiger; (2) Endurance's disclaimer of additional insured coverage on the basis of late notice is valid; (3) plaintiffs are not entitled to additional insured coverage because Lombardo was performing work that falls under the EIFS exclusion set forth in the Endurance policy; and (3) to the extent that any plaintiff qualifies as an additional insured, additional insurance coverage can only be triggered upon a jury determination that Geiger created the condition that caused Lombardo's accident.
For the reasons set forth below, defendants' motions are granted, and plaintiffs' motion is denied.
FACTS
General Background
TAG was the owner of the Premises, located at 45–31 Court Square in Long Island City, New York. TAG entered into a construction management agreement (the CMA) with Pavarini, as construction manager, to design, renovate and construct a luxury eight-story mixed-used condominium apartment building at the Premises. Structure Tone was a party to the CMA as a guarantor of Pavarini's obligations in the event that Pavarini ceased business operations.
The Geiger Contract
TAG entered into a written contract with Geiger dated August 11, 2005, to perform "exterior and interior concrete restoration work with exterior finishes as outlined in Exhibit ‘A’ " to Geiger's contract (see aff of Jeffrey A. Matthews, exhibit 11). Geiger's work also included stripping the existing roof and re-roofing the Premises (see id. ). Neither Pavarini nor Structure Tone were parties to the Geiger contract.
The Spectrum Subcontract
On March 16, 2006, Pavarini entered into a subcontract with Spectrum to perform interior painting at the project, and to apply Kadex, a type of joint compound specifically formulated for adhesion to concrete ceilings and columns (see aff of Peter Kreymer, exhibit D). The subcontract incorporates an explicit "Scope of Work," memorialized in exhibit A to the subcontract. The Scope of Work sets forth, in intricate detail, the nature and extent of work that Spectrum is to perform, pursuant to the subcontract. Spectrum's trade work is described as "[a]ll labor, material, and equipment" for:
"the painting of: sheetrock walls and ceilings, masonry walls, doors, frames, soffits, concrete and kaydex [sic] ceiling and columns, stair treads & stringers, all railings (exterior and interior), bollard, guardrails, ladders, metal access doors, wood base, window stools, and wood trim, copings & roof rails"
(subcontract, exhibit A).
It is clear from the language of the subcontract that it calls for Spectrum to carry out painting and Kadex work only. The contract documents and drawings do not incorporate or make any reference to any EIFS work, which is the work that Lombardo was performing at the time of his accident. Indeed, the Scope of Work specifically states that the "Trade Contractor has excluded any facade painting" (subcontract, scope of work § 23).
Article 9 (Indemnification) of Exhibit E (General Conditions) to the Spectrum subcontract imposes contractual indemnity obligations on Spectrum that are directed toward the generically defined term of "Construction Manager." It provides in pertinent part that:
"To the greatest extent permitted by law, Trade Contractor [Spectrum] shall indemnify, save and hold the Owner [TAG] ... [and] the Construction Manager [Pavarini] ... harmless from and against all liability, damage, loss, claims, demands and actions of any nature whatsoever which arise out of or are connected with, or are claimed to arise out of or be connected with:
1. The performance of work by the Trade Contractor, or any act or omission of the Trade Contractor"
(subcontract, exhibit E, article 9).
The subcontract also provides that Spectrum was required to procure insurance:
"The Trade Contractor, at its own expense, shall obtain insurance which shall be primary to all other insurance and submit to the Construction Manager, before undertaking any part of the Work, policies and certificates with receipts for the payment of premiums from the Trade Contractor's insurance carriers indicating coverage from companies, in accounts and on such other terms as provided for hereinafter and in the "Insurance Requirements" attached to this Agreement as Exhibit F"
(subcontract, § 10.1).
The subcontract sets forth additional insurance requirements in the addendum entitled Exhibit F. Exhibit F obligated Spectrum to obtain commercial general liability coverage with combined single limits for bodily injury and property damage of at least $5,000,000 per occurrence and in the aggregate. It also contains the following pertinent provision requirements for additional insureds:
"(f) Endorsement naming the following entities as Additional Insured, and state that this insurance is primary insurance with respect to any other insurance afforded to us[:] Pavarini McGovern, LLC [and] TAG Court Square, LLC"
(subcontract, exhibit F).
The Illinois Union General Liability Policy
Illinois Union issued Commercial General Liability Policy No. G220450270011 (the Illinois Union policy) to Spectrum, covering the period from September 4, 2006 to September 4, 2007 (see aff of Dirk Haarhoff, exhibit E). The Illinois Union policy affords bodily injury and property damage liability coverage up to an each occurrence limit of $1,000,000, subject to a general aggregate limit per project of $2,000,000, and a deductible of $5,000 (see id. ).
The Additional Insured—Owner, Lessees or Contractors—(Form B) Endorsement provides:
"WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of ‘your work’ for that insured by or for you"
(see id. )
The Name of the Person or Organization described in the Schedule is "As required by contract, provided the contract is executed prior to loss." The term "your work" is defined as follows:
" ‘Your work’
a. Means:
(1) Work or operations performed by you or on your behalf; and
(2) Materials, parts or equipment furnished in connection with such work or operations.
b. Includes:
(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of ‘your work’, and
(2) The providing of or failure to provide warnings or instructions"
(see id. ).
The Illinois National Umbrella Policy
At the time of Lombardo's accident, Spectrum had excess liability coverage with Illinois National, under policy number BE0891362, with policy limits of $5,000,000 per occurrence/$5,000,000 aggregate see Matthews aff, exhibit 15). The Illinois National umbrella policy was issued for the policy term September 4, 2006 to September 4, 2007.
Endorsement No. 6 to the Illinois National umbrella policy provides that:
"no person or organization is an Insured under this policy who is not an Insured under applicable Scheduled Underlying Insurance"
(Illinois National umbrella policy, endorsement no. 6 [amending definition of "Insured"] ).
The Endurance Policy
Endurance issued a policy of commercial general liability insurance coverage to Geiger under policy number GLO10000304400, effective December 29, 2006 through December 29, 2007, with limits of $1,000,000 per occurrence/$2,000,000 aggregate (the Endurance policy [aff of Dana M. Ricci, exhibit F] ).
Contained within the policy is a commercial general liability form, Number CG 00 01 12 04, which sets forth the coverage afforded by the policy (id. , exhibit N). This endorsement provides that:
"2. Duties in the Event of Occurrence, Claim or Suit
a. You must see to it that we are notified as soon as practicable of an ‘occurrence’ or an offense which may result in a claim. To the extent possible, notice should include:
(1) How, when and where the offense took place;
(2) The names and addresses of any injured persons and witnesses; and
(3) The nature and location of any injury or damage arising out of the ‘occurrence’ or offense.
b. If a claim is made or ‘suit’ is brought against any insured, you must:
(1) Immediately record the specifics of the claim or ‘suit’ and the date received; and
(2) Notify us as soon as practicable.
You must see to it that we receive written notice of the claim or ‘suit’ as soon as practicable"
(see id. ).
The applicable endorsement regarding Additional Insured coverage is Endorsement CG 20 33 10 01, entitled "Additional Insureds—Owners, Lessees or Contractors—Automatic Status When Required in Construction Agreement With You":
"A. Section II—Who is An Insured is amended to include as an insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured. A person's or organization's status as an insured under this endorsement ends when your operations for that insured are completed"
(see Ricci aff, exhibit O] ).
The Underlying Action
The underlying action arose out of a construction site accident that took place on May 14, 2007, while Lombardo was working at the project as a union plasterer for Spectrum. Lombardo was engaged in the installation of EIFS, a type of stucco. Lombardo described the work as "sticking Styrofoam to walls, applying cement and mesh over it, and then the finished product would be stucco" (Lombardo dep at 24–25 [Haarhoff aff, exhibit F] ). While applying a finish coat for the EIFS work to the wall of a mechanical room on the sixth floor of the premises, Lombardo realized that he was running out of the finishing compound (id. at 28, 29, 31). He walked approximately 40 feet to a workstation to retrieve a bucket of finish, and as he attempted to lift it, he claims that he slipped and fell upon an accumulation of spilled finishing compound (id. at 31–32, 34).
On May 10, 2010, Lombardo commenced the underlying action, bringing suit against TAG, Pavarini, Structure Tone and Geiger. The underlying action asserted causes of action for common-law negligence, violation of Labor Law §§ 241 (6) and 200, and a derivative action by Lombardo's spouse.
On September 7, 2010, TAG, Pavarini and Structure Tone filed a third-party complaint against Spectrum, asserting claims for contribution, contractual and common-law indemnity, and breach of contract to procure insurance.
Spectrum and Geiger each filed motions for summary judgment seeking dismissal of all claims against them. Spectrum moved to dismiss the third-party action against it on the basis that no indemnity was owed to the third-party plaintiffs, since the work leading to Lombardo's accident was performed outside of the parties' contract. Specifically, Spectrum sought dismissal of the claims for contractual indemnity and breach of contract to procure insurance on the ground that TAG, Pavarini and Structure Tone had failed to produce a contract for the EIFS work that contained contractual indemnity and insurance requirements, and had failed to produce a written amendment or change order to the Spectrum subcontract that purports to make the EIFS work subject to the contractual indemnity and insurance procurement provisions of the subcontract.
On April 15, 2013, the trial judge denied both motions. This denial was appealed to the Appellate Division, Second Department. On February 9, 2015, the Second Department issued a decision and order which modified the trial court's ruling, in part, finding that "[t]he Supreme Court should have granted Spectrum's motion for summary judgment dismissing the third-party complaint" seeking contractual indemnification ( Lombardo v TAG Court Square, LLC , 126 AD3d 949, 950 [2d Dept 2015] ). Specifically, the Court held that:
"A contractual provision imposing a duty to indemnify ‘must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed.’ While Spectrum's contract relating to this construction project required it to indemnify the owner and construction managers against all liability arising out of or connected with the performance of Spectrum's work under the contract, Spectrum made a prima facie showing that this indemnification clause is inapplicable here by submitting evidence demonstrating that at the time of the accident, the injured plaintiff was applying stucco to the roof of the building, which was outside the scope of the painting work to be performed by Spectrum under the contract. In opposition, the owner and the construction managers [i.e., TAG, Pavarini and Structure Tone] cited to the deposition of a principal of the owner, in which he testified that a change order expanding the scope of Spectrum's work to include the stucco work on the roof of the building might have been issued, but he could not recall whether such a change order actually was issued. This testimony was insufficient to raise a triable issue of fact as to whether the injured plaintiff's work was within the scope of Spectrum's contract. Thus, Spectrum was entitled to summary judgment dismissing the cause of action seeking contractual indemnification"
(id. at 950–951 [internal citations omitted] )
The Second Department also held that "Spectrum demonstrated its entitlement to judgment as a matter of law dismissing the cause of action seeking common-law indemnification" (id. at 951). Finally, the Second Department specifically held that Spectrum had not breached its obligations to obtain insurance naming TAG, Pavarini and Structure Tone as additional insureds under its CGL policy. The Court stated:
"Spectrum also demonstrated ... its entitlement to summary judgment dismissing the remaining causes of action in the third-party complaint, since those causes of action are dependent on the viability of the cause of action seeking contractual indemnification. Accordingly, Spectrum's motion should have been granted in its entirety"
(id. ).
With respect to Geiger, the Second Department found that all of the plaintiffs' claims alleging violations of the Labor Law against Geiger should have been dismissed because Geiger did not exercise supervisory control over Lombardo's work. As such, the only remaining claim against Geiger is common-law negligence, due to an issue of fact as to whether Geiger's employees created an unreasonable risk of harm that was the proximate cause of the injured plaintiff's injuries.
TAG, Pavarini and Structure Tone have not appealed the Second Department's ruling, and the time for such appeal has expired.
Endurance's Disclaimer of Coverage
On August 12, 2010, over three years after Lombardo's accident, Barry, McTiernan and Moore, plaintiffs' counsel, served Rockville Risk Management Associates (Rockville) with correspondence demanding that Endurance defend and indemnify plaintiffs with regard to the claims asserted in the underlying action (see Ricci aff, exhibit G).
On September 7, 2010, Rockville issued a disclaimer of coverage to plaintiffs on behalf of Endurance (see id. , exhibit H). As set forth in the correspondence, Endurance disclaimed coverage on the basis that there was no written agreement between its named insured, Geiger, and plaintiffs, that Geiger had completed its work at the time of the accident, that plaintiffs failed to notify Endurance of Lombardo's accident as soon as reasonably practicable, and that the subject jobsite was covered by a Consolidated Wrap–Up Insurance Program.
DISCUSSION
" ‘[T]he proponent of a summary judgment motion 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’ " ( Ayotte v Gervasio , 81 NY2d 1062, 1062 [1993] [citation omitted]; Winegrad v New York Univ. Med. Ctr. , 64 NY2d 851 [1985] ). "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers" ( Winegrad v New York Univ. Med. Ctr. , 64 NY2d at 853 ; see also Lesocovich v 180 Madison Ave. Corp. , 81 NY2d 982 [1993] ).
The party opposing summary judgment has the burden of presenting evidentiary facts sufficient to raise triable issues of fact ( Zuckerman v City of New York , 49 NY2d 557, 562 [1980] ; CitiFinancial Co. [DE] v McKinney , 27 AD3d 224, 226 [1st Dept 2006] ). The court is required to examine the evidence in a light most favorable to the party opposing the motion ( Martin v Briggs , 235 AD2d 192, 196 [1st Dept 1997] ). Summary judgment may be granted only when it is clear that no triable issues of fact exist ( Alvarez v Prospect Hosp. , 68 NY2d 320, 324 [1986] ), and "should not be granted where there is any doubt as to the existence of a triable issue" of fact ( American Home Assur. Co. v Amerford Intl. Corp. , 200 AD2d 472, 473 [1st Dept 1994] ).
When analyzing a dispute over insurance coverage, courts should look first to the language of the policy ( Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa. , 5 NY3d 157, 162 [2005] ; Consolidated Edison Co. of NY v Allstate Ins. Co. , 98 NY2d 208, 221 [2002] ). As with the construction of all contracts, "unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and the interpretation of such provisions is a question of law for the court" ( White v Continental Cas. Co. , 9 NY3d 264, 267 [2007] [internal citation omitted]; see also Vigilant Ins. Co. v Bear Stearns Cos., Inc. , 10 NY3d 170, 177 [2008] ). In the context of an insurance coverage dispute, "[g]enerally, it is for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage" ( Consolidated Edison Co. of NY, Inc. , 98 NY2d at 218 ; see York Restoration Corp. v Solty's Constr., Inc. , 79 AD3d 861, 862–863 [2d Dept 2010] ).
Spectrum's Motion for Summary Judgment (Motion Sequence No. 002)
In the third cause of action, plaintiffs allege that they entered into a contract with Spectrum, which provided that Spectrum was to defend and indemnify them (complaint, ¶ 41), but that Spectrum "has wrongfully refused to indemnify and defend plaintiffs herein in the underlying Lombardo action in material breach of the aforementioned work contract[ ]" (id. , ¶ 43). Plaintiffs seek a declaration that, on the basis of this contract, Spectrum owes them "a duty to defend, indemnify and/or otherwise provide insurance coverage" for them in the underlying action (id. , ¶ 69 [b] ). This claim, however, is barred by the doctrine of collateral estoppel.
Collateral estoppel is based upon the general notion that a party, or one in privity with a party, should not be permitted to relitigate an issue that has already been decided against it (see Pinnacle Consultants v Leucadia Natl. Corp. , 94 NY2d 426, 431–432 [2000] [internal quotation marks and citation omitted] ["(c)ollateral estoppel, or issue preclusion, prevents a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party"] ). There are two requirements governing the application of collateral estoppel: (1) the party seeking the benefit of collateral estoppel must prove that the identical issue was necessarily decided in the prior action and is decisive in the present action; and (2) the party to be precluded from relitigating an issue must have had a full and fair opportunity to contest the prior determination ( Kaufman v Eli Lilly & Co. , 65 NY2d 449, 455–456 [1985] ; accord D'Arata v New York Cent. Mut. Fire Ins. Co. , 76 NY2d 659, 664 [1990] ; Matter of Kleiger–Brown v Brown , 306 AD2d 482, 483 [2d Dept 2003] ).
On March 25, 2015, the Second Department held in the underlying action that the third-party plaintiffs, who are now the plaintiffs in this declaratory judgment action, were not entitled to contractual indemnification from Spectrum, because Lombardo's work was outside the scope of the subcontract. The Second Department decision absolutely bars plaintiffs from relitigating the contractual indemnity issue, "the identical issue" which has already been decided against them in the prior action. Additionally, plaintiffs have already had a full and fair opportunity to contest the court's determination. Plaintiffs could have made a further appeal of the Second Department decision, but chose not to do so. Thus, plaintiffs' claims are barred by collateral estoppel, and the complaint must be dismissed as against Spectrum (see Pinnacle Consultants, 94 NY2d at 431–432 [dismissing shareholder derivative action on collateral estoppel grounds, where issues had been raised and decided against plaintiff in a prior federal court action] ).
In opposition to the motion, and in support of their motion for summary judgment, plaintiffs argue that collateral estoppel does not apply to their claim for breach of contract for failure to procure insurance, since the Second Department only resolved the contractual indemnity issue. The court rejects this argument. First, plaintiffs do not specifically plead a cause of action for failure to procure insurance as against Spectrum (see complaint, ¶ 43 [alleging that Spectrum "has wrongfully refused to indemnify and defend plaintiffs"]; see also id. , ¶¶ 40–46). "[O]rdinarily, summary judgment is not granted on an unpleaded cause of action" ( Bank of Am. v Tatham , 2002 WL 34452856 [Sup Ct, NY County 2002], affd 305 AD2d 183 [1st Dept 2003] ). Moreover, even if the complaint could be read to plead such a claim (see complaint, ¶ 69 [b] [Spectrum "owed a duty to defend, indemnify and/or otherwise provide insurance coverage" for plaintiffs] ), the Second Department specifically held that the accident-producing work fell entirely outside of the contract, and thus excluded the entire contract. Accordingly, under the preclusive Second Department decision, every provision of the contract, including contractual indemnity and insurance procurement, was inapplicable to the underlying plaintiff's accident.
Accordingly, Spectrum's motion for summary judgment dismissing the complaint is granted, and plaintiffs' motion for summary judgment seeking insurance coverage from Spectrum is denied.
Summary Judgment Motions of Illinois Union and Illinois National (Motion Sequence Nos. 003 and 005)
In their fourth cause of action against Illinois Union, plaintiffs allege that they are additional insureds under the Illinois Union policy, and seek a declaration that Illinois Union owes them "a duty to defend, indemnify and/or otherwise provide insurance coverage" for them in the underlying action (complaint, ¶¶ 52, 57[a] ). In their fifth cause of action against Illinois National, plaintiffs contend that they are additional insureds under the Illinois National umbrella policy, and seek a declaration that Illinois National owes them "a duty to defend, indemnify and/or otherwise provide insurance coverage" for them in the underlying action (id. , ¶¶ 60, 69 [a] ).
Illinois Union seeks an order granting it summary judgment dismissing the complaint as against it. Illinois National seeks an order declaring that it is not obligated to defend or indemnify plaintiffs under the Illinois National umbrella policy.
A party claiming insurance coverage bears the burden of proving entitlement to coverage ( Moleon v Kreisler Borg Florman Gen. Constr. Co. , 304 AD2d 337, 339 [1st Dept 2003] ). Here, Pavarini, TAG and Structure Tone are not listed as insureds on either the Illinois Union policy or the Illinois National umbrella policy.
"[T]he party asserting that someone other than a named insured is an insured under the policy bears the initial burden of submitting proof in evidentiary form that the alleged insured is, in fact, an insured within the meaning of the policy" ( Preferred Mut. Ins. Co. v Ryan , 175 AD2d 375, 378 [3d Dept 1991] ; Thomson v Power Auth. of State of NY , 217 AD2d 495, 496 [1st Dept 1995] ). Generally, it is for the insured to establish coverage and for the insurer to prove that the violation of a condition or the application of some exclusion in the policy serves to defeat coverage (see Consolidated Edison Co. of NY , 98 NY2d at 218 ; see also Northville Indus. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa. , 89 NY2d 621, 634 [1997] ). There is no duty to defend or indemnify when the party asserting coverage is not an insured under the policy ( Seavey v James Kendrick Trucking , 4 AD3d 119, 119 [1st Dept 2004] ; National Gen. Ins. Co. v Hartford Acc. & Indem. Co. , 196 AD2d 414, 415 [1st Dept 1993] ).
The additional insured endorsement in the Illinois Union policy, to which the Illinois National umbrella policy follows form, provides that "as required by contract ... executed prior to loss," a person or organization is a scheduled "additional insured" but "only with respect to liability arising out of ‘your work’ for that insured by or for you." Thus, plaintiffs are additional insureds under the Illinois Union policy issued to Spectrum only "as required by contract," and "only with respect to liability arising out of [Spectrum's] work for [TAG] and [Pavarini]." In dismissing the third-party complaint against Spectrum, the Second Department found that the EIFS work performed by Lombardo at the time of the accident was beyond the scope of the subcontract, which was expressly limited to "painting and kadex work." The court reasoned that "[a] contractual provision imposing a duty to indemnify ‘must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed’ " ( Lombardo , 126 AD3d at 950 [citation omitted] ). Following the reasoning of the Second Department, the subcontract does not contemplate an obligation to procure insurance relating to Spectrum's extra-contractual EIFS work.
In order for plaintiffs to establish additional insured coverage under the Illinois Union policy and the Illinois National umbrella policy, plaintiffs must come forward with a contract (executed prior to the loss) pertaining to Spectrum's EIFS work that requires plaintiffs to be named as additional insureds. No such contract exists, and accordingly, plaintiffs cannot satisfy their burden of proof as a matter of law.
Under New York law, it is clear that where, as here, the work being performed at the time of the accident is beyond the scope of the contract, there is no obligation on behalf of the named insured to procure additional insurance coverage. American Bridge Co. v Acceptance Ins. Co. , (40 AD3d 666 [2d Dept 2007] ) is directly on point. In that case, the Second Department held that the plaintiffs were not entitled to additional insured coverage pursuant to the applicable additional insured endorsement, stating:
"We discern no reason to disturb the trial court's findings of fact that the work performed by the injured plaintiff in the underlying personal injury action at the time of the accident did not occur within the operations of the defendant insured Hannibal Construction Co., Inc., as defined by the scope of work set forth in Schedule A of the subcontract agreement. Accordingly, the trial court properly declared that the defendant third-party plaintiff, Acceptance Insurance Company, pursuant to the terms of the Additional Insured Endorsement, was not obligated to indemnify the plaintiffs in the underlying action"
id. at 667; see also Harriman Estates Dev. Corp. v General Acc. Ins. Co. , 309 AD2d 575, 575 [1st Dept 2003] ["Thus, in granting X Traire's motion in the underlying action for summary judgment dismissing Harriman's third-party complaint, the court necessarily decided that the injuries claimed therein did not arise out of X Traire's work for Harriman, and therefore are not covered by the additional insured clause"]; see also Town of Oyster Bay v Employers Ins. of Wausau , 269 AD2d 387, 388–389 [2d Dept 2000] [citation omitted] ["(i)t has now been established in the underlying action, however, that Mill Rental was not responsible for snow removal in the parking lot before Ambriano's accident. Consequently, Ambriano's injuries did not arise out of the operations of Mill Rental. Therefore, the policies issued by the insurers did not provide coverage for Ambriano's accident. Because it has now been determined that the accident is not covered by the policies, under the circumstances of this case, the insurers are not required to assume the defense in the underlying action. Further, since there is no coverage, the insurers are not obligated to indemnify the Town"] ).
Plaintiffs have failed to produce a written contract with Spectrum requiring it to provide additional insured coverage for them with respect to Spectrum's work in installing the EIFS system. The Spectrum subcontract relates solely to the painting of the interior of the Premises and, as such, the contractual indemnity provisions and the contractual obligations of Spectrum to procure liability coverage naming TAG and Pavarini as additional insureds relate solely to that work. There is no evidence to establish that there was ever a written amendment or change order to include the EIFS work under the terms of the Spectrum subcontract. Indeed, the Second Department specifically found that plaintiffs' reliance on the deposition testimony of a principal of TAG in which he testified that a change order expanding the scope of Spectrum's work to include the stucco work on the roof of the building might have been issued, was insufficient to raise a triable issue of fact as to whether Lombardo's work was within the scope of the Spectrum subcontract. As such, the Court held that the indemnity and insurance procurement provisions of the Spectrum subcontract were inapplicable, because Lombardo was performing work outside the scope of the Spectrum subcontract at the time he was injured.
In opposition to the motion, and in support of their motion for summary judgment, plaintiffs contend that Spectrum was performing ‘work’ at the time of the accident, under the meaning of the Illinois Union policy, because the underlying claimant was an employee of Spectrum. Plaintiffs then conclude that they qualify as additional insureds based solely on the fact that Lombardo was an employee of Spectrum. This argument, however, completely ignores the language of the additional insured endorsement upon which Illinois Union bases its motion, and thus cannot serve as a basis to deny Illinois Union's motion.
In support of their motion for summary judgment, plaintiffs also contend that they qualify as additional insureds, because Illinois Union issued a certificate of insurance that "reflected Illinois Union's intent to insure plaintiffs as additional insureds" (see plaintiffs' mem of law at 9). However, a certificate of insurance, by itself, does not confer additional insured coverage. Rather, the determination of whether a party qualifies as an additional insured should be based on the terms of the policy alone (see Tribeca Broadway Assoc., LLC v Mount Vernon Fire Ins. Co. , 5 AD3d 198, 200 [1st Dept 2004] ["(a) certificate of insurance is only evidence of a carrier's intent to provide coverage but is not a contract to insure the designated party nor is it conclusive proof, standing alone, that such a contract exists"]; see also Buccini v 1568 Broadway Assoc. , 250 AD2d 466, 469 [1st Dept 1998] ).
Accordingly, Illinois Union's motion for summary judgment is granted, and the complaint is dismissed as against it.
In addition, the fact that plaintiffs do not qualify as an "insured" on the Illinois Union policy also prevents them from qualifying as an "insured" on the Illinois National umbrella policy, which expressly provides, in endorsement no. 6, that, "no person or organization is an Insured under this policy who is not an Insured under applicable Scheduled Underlying Insurance."
Accordingly, Illinois National's motion for summary judgment is granted, and this court finds that it is entitled to a declaration that plaintiffs do not qualify as additional insureds within the meaning of the Illinois National umbrella policy, and that Illinois National has no obligation to provide any insurance coverage to plaintiffs in the underlying action. In light of this determination, it is unnecessary to consider Illinois National's requests for alternative relief.
Plaintiffs' motion for summary judgment seeking insurance coverage from both Illinois Union and Illinois National is denied.
Endurance's Motion for Summary Judgment (Motion Sequence No. 006)
In their second cause of action, plaintiffs allege that they were all additional insureds under the Endurance policy, and that Endurance has "wrongfully refused to insure, indemnify and defend plaintiffs herein in the underlying Lombardo action, in breach" of the Endurance policy (complaint, ¶¶ 34, 38).
However, pursuant to the additional insured endorsement, Pavarini and Structure Tone do not qualify as additional insureds on the Endurance Policy as a matter of law. The Endurance policy provides that an insured includes any organization for whom Geiger is "performing operations," when Geiger and such organization "have agreed in writing in a contract or agreement that such ... organization be added as an additional insured" on Geiger's policy. Thus, the Endurance policy explicitly requires that a party seeking additional insurance coverage must have a written agreement with Geiger, Endurance's named insured, pursuant to which Geiger agreed to provide such insurance. It is undisputed that Geiger's only contract is with TAG, and that neither Pavarini nor Structure Tone entered into a written agreement with Geiger.
As Geiger did not enter into a contract or written agreement with Pavarini or Structure Tone, they are not additional insureds on the Endurance policy (see Linarello v City Univ. of NY , 6 AD3d 192, 195 [1st Dept 2004] ["By the plain terms of the policies issued ... to Jagler, Morse Diesel is not an additional insured because it had no written contracts with ... Jagler"] ). Genting NY LLC v Navigators Ins. Co. (48 Misc 3d 1211[A], 2015 NY Slip Op 51041[U] [Sup Ct, NY County 2015] ), which interpreted the same policy endorsement at issue here, is directly on point. In that case, four plaintiffs sought a declaration that Navigators Insurance company owed them a defense and indemnification in the underlying action based upon their contract with Navigators' named insured, Five Star, wherein Five Star agreed to obtain coverage naming all four plaintiffs as an additional insured. However, as only Tutor Perini (one of the four plaintiffs) was a party to the agreement with Five Star, only Tutor Perini could show that it was entitled to coverage as an additional insured on Navigators' policy:
"While it is undisputed that Five Star entered into a contract with Tutor Perini, which required Five Star to obtain general liability coverage naming, among others, Genting, Tutor Perini and People of the State of New York as additional insureds, none of the plaintiffs, except Tutor Perini, alleges that it entered into a contract with Five Star requiring that Five Star name it as an additional insured. Accordingly, on the record as it now stands, none of the plaintiffs, except Tutor Perini, can show that it is entitled to coverage as an additional insured on the Policy. It should go without saying that a contract that requires one party to purchase insurance coverage for the other, as an additional insured, is binding upon the first party, but not upon that company's insurer, a stranger to the contract. It is the insurance policy, not an extraneous contract, or other document, that determines whether a party is an additional insured under that policy"
(id. at *2 [internal citations omitted]; see also Illinois Natl. Ins. Co. v American Alternative Ins. Corp. , 58 AD3d 537, 537–538 [1st Dept 2009] [interpreting the same additional insured endorsement at issue here, and holding that the subcontractor's contract with the general contractor did not constitute a contract that the City be named as an additional insured on the subcontractor's policy, and, as such, affirming the lower court's decision that the City was not entitled to coverage due to the lack of an agreement with the City requiring same] ).
In opposition to the motion, plaintiffs argue that Pavarini and Structure Tone qualify as additional insureds because they are named on Geiger's certificate of liability insurance. The court rejects this argument because, as previously discussed, a certificate of insurance by itself does not confer additional insured coverage (see Tribeca Broadway Assoc., LLC, 5 AD3d at 200 ).
Accordingly, Pavarini and Structure Tone cannot qualify as additional insureds because they did not directly enter into a contract with Geiger, as required by the applicable endorsement to the Endurance policy. As such, all claims asserted against Endurance by Pavarini and Structure Tone must be dismissed, and Endurance is entitled to summary judgment declaring that Pavarini and Structure Tone are not, as a matter of law, additional insureds on the Endurance policy.
With respect to TAG, this court finds that it also is not entitled to additional insurance coverage under the Endurance policy, because it failed to notify Endurance of the underlying accident "as soon as practicable," as required by the terms of the Endurance policy.
Here, TAG did not provide notice to Endurance regarding Lombardo's accident until August 12, 2010, over three years after it occurred (see Ricci aff, exhibit G). Yet, Lombardo filled out two accident reports in May of 2007 regarding his accident at the jobsite (see the Structure Tone Injury/Accident Report and the Pavarini Third party Injury and Incident Report Form [Ricci aff, exhibit Q] ). Despite these two accident reports from May 2007, the first correspondence from TAG's attorneys to Endurance is dated over three years after such accident.
"Where a policy of liability insurance requires that notice of an occurrence be given ‘as soon as practicable,’ such notice must be accorded the carrier within a reasonable period of time" ( Great Canal Realty Corp. v Seneca Ins. Co., Inc. , 5 NY3d 742, 743 [2005], citing Security Mut. Ins. Co. of NY v Acker–Fitzsimons Corp. , 31 NY2d 436, 441 [1972] ). The insured's failure to satisfy the notice requirement constitutes "a failure to comply with a condition precedent which, as a matter of law, vitiates the contract" ( Argo Corp. v Greater NY Mut. Ins. Co. , 4 NY3d 332, 339 [2005] ). Relatively short periods of time have been found to be untimely as a matter of law (see Deso v London & Lancashire Indem. Co. of Am. , 3 NY2d 127 [1957] [51–day delay]; Tower Ins. Co. of NY v Miles , 74 AD3d 410, 410 [1st Dept 2010] [five-month delay]; SSBSS Realty Corp. v Public Serv. Mut. Ins. Co. , 253 AD2d 583 [1st Dept 1998] [91–day delay]; see also American Home Assur. Co. v Republic Ins. Co. , 984 F2d 76, 78 [2d Cir 1993], cert denied 508 US 973 [1993] [collecting New York cases holding that "similar inexcusable delays in providing notice," ranging from 10 to 53 days, were unreasonable and "discharged an insurer's obligation to provide coverage"] ). However, where the insured does not know about the accident, or has a "good-faith belief of nonliability," the insured's failure to give timely notice is excusable ( Security Mut. Ins. Co. of NY , 31 NY2d at 441 ).
Tower Ins. Co. of NY (74 AD3d 410 ), is directly on point. In that case, the plaintiff sought a declaratory judgment that it did not have a duty to defend or indemnify defendants due to their failure to provide notice as "soon as practicable." The Court stated:
"Where, as here, the contract of insurance requires the insured to notify its liability carrier of a potential claim ‘as soon as practicable,’ such requirement acts as a condition precedent to coverage, and the insured's failure to provide timely notice of an occurrence vitiates the contract as a matter of law. Here, Miles became aware approximately one week after the incident that a patron of his bar had potentially assaulted another patron on his premises. Because defendants were knowledgeable of facts that suggested a reasonable possibility of a claim against them and failed to conduct a sufficient inquiry into the circumstances, their five-month delay in notifying plaintiff of the incident was unreasonable as a matter of law"
(id. at 410 [internal citations omitted]; see also Savik, Murray & Aurora Constr. Mgt. Co., LLC v ITT Hartford Ins. Group , 86 AD3d 490, 492 [1st Dept 2011] [holding that a 4½–year delay in providing notice of an occurrence was a violation of the terms of the policy] ).
Likewise, here, Lombardo filled out accident reports contemporaneously with his accident. Thus, TAG became almost immediately aware of the possibility of a claim against it, but failed to notify Endurance for three years. This court finds that, based upon the above-cited precedent, TAG's three-year delay in providing notice of the occurrence is unreasonable as a matter of law.
Although plaintiffs contend that TAG was unaware of the accident until it was served with the summons and complaint on May 7, 2010, plaintiffs fail to offer any admissible evidence to support this allegation, either by sworn testimony or affidavit. Hence, TAG has failed to raise a triable factual issue as to whether there was a reasonable excuse for its delay in notifying Endurance of the occurrence (see Savik, Murray & Aurora Constr. Mgt. Co. , 86 AD3d at 493 ).
In support of their motion for summary judgment, plaintiffs also contend that Endurance failed to timely disclaim coverage and, as such, waived any defense to coverage. New York Insurance Law § 3420 (d) provides that when a liability policy is delivered or issued for delivery in this state, "[if] an insurer shall disclaim liability or deny coverage for death or bodily injury ... it shall give written notice as soon as is reasonably possible" ( Insurance Law § 3420 [d]; see George Campbell Painting v National Fire Ins. Co. of Pittsburgh, Pa. , 92 AD3d 104, 113 [1st Dept 2012] [the statute language requires the insurer to disclaim "as soon as is reasonably possible," not "as soon as is reasonable"] ). A failure by the insurer to give such notice as soon as is reasonably possible precludes effective disclaimer or denial (see id. ).
In support of this argument, plaintiffs completely ignore the August 12, 2010 letter in which they seek defense and indemnification from Endurance. Instead, they assert that, on June 9, 2010, they tendered the loss to Geiger and Endurance, but that Endurance did not disclaim coverage until September 7, 2010, almost three months later. Plaintiffs contend that this three-month period was unreasonable as a matter of law (see plaintiffs' memorandum of law at 14, citing First Fin. Ins. Co. v Jetco Contr. Corp. , 1 NY3d 64, 70 [2003] [delay of 48 days was unreasonable as a matter of law, and citing Appellate Division cases which "found fixed periods" between 30 and 48 days "unreasonable as a matter of law"]; Brother Jimmy's BBQ Inc. v American Intl. Group, Inc. , 96 AD3d 429, 430 [1st Dept 2012] [38–day delay] ).
Plaintiffs have failed, however, to offer any evidence that they provided notice to Endurance on June 9, 2010. Rather, plaintiffs provide, at exhibit M of their motion, a copy of Endurance's disclaimer letter dated September 7, 2010, and a copy of Pavarini's letter to Geiger, dated June 9, 2010, seeking contractual indemnification from Geiger. Not only does the June 9, 2010 letter fail to request additional insurance coverage, the June 9, 2010 letter was not even sent to Endurance. Merely placing Geiger on notice of the accident is insufficient to constitute timely notice to Endurance. An additional insured on a policy has an independent duty to provide the carrier with timely notice of the claim and its demand for coverage ( City of New York v St. Paul Fire & Marine Ins. Co. , 21 AD3d 978, 981 [2d Dept 2005] ["(a)s an additional insured under the ICNA policy, the City had an independent duty to provide the excess insurer with timely notice of the claim against it and its demand for coverage"] ). Further, any notice that was provided by Geiger to Endurance is not imputed to plaintiffs, and therefore, does not satisfy the plaintiffs' requirement to provide timely notice to Endurance (see City of New York v Welsbach Elec. Corp. , 11 Misc 3d 1085[A], 2006 NY Slip Op 50705[U], *3 [Sup Ct, NY County 2006], affd 49 AD3d 322 [1st Dept 2008] [citation omitted] [the " ‘law is clear that an insured's obligation to provide timely notice is not excused on the basis that the insurer has received notice of the underlying occurrence from an independent source’ "]; see also Ocean Partners, LLC v North Riv. Ins. Co. , 6 Misc 3d 1013[A], 2004 NY Slip Op 51785[U], *2 [Sup Ct, NY County 2004], affd 25 AD2d 514 [1st Dept 2006] ).
Indeed, although plaintiffs fail to provide it on their motion, the first correspondence from TAG's attorneys to Endurance is dated August 12, 2010—also over three years after Lombardo's accident occurred. Endurance issued a letter disclaiming coverage on September 7, 2010. This disclaimer was issued less than 30 days after it received notice from plaintiffs. Given plaintiffs' contention that delays over 30 days are unreasonable as a matter of law (see plaintiffs' mem at 15–16), this court finds that the delay here was not unreasonable as a matter of law.
Accordingly, Endurance's motion for summary judgment dismissing the complaint as against it is granted, and Endurance is entitled to a declaration that Pavarini and Structure Tone do not qualify as additional insureds on the Endurance policy, and that Endurance's disclaimer of additional insured coverage on the basis of late notice is valid. The remaining branches of Endurance's motion are denied as moot. Plaintiffs' motion for summary judgment seeking insurance coverage from Endurance is denied.
Plaintiffs' Motion for Summary Judgment Against Geiger
Although Geiger does not move for summary judgment, plaintiffs seek summary judgment as against Geiger for breach of contract for failure to obtain the required amount of insurance coverage. Plaintiffs contend that, pursuant to the contract between Geiger and TAG, Geiger agreed to obtain coverage in the amount of $5,000,000, but that the Endurance policy only indicates primary coverage in the amount of $1,000,000. Plaintiffs assert that Geiger clearly breached the contract by failing to obtain the required coverage for Pavarini, Structure Tone and TAG and that thus, they are entitled to summary judgment on their breach of contract claim against Geiger (see plaintiffs' mem of law at 12).
However, the complaint does not allege a cause of action against Geiger for breach of contract to procure insurance. Rather, plaintiffs allege only that Geiger "has wrongfully refused to indemnify and defend plaintiffs herein in the underlying Lombardo action in material breach of the aforementioned work contract[ ]" (complaint, ¶ 28). Accordingly, plaintiffs' motion for summary judgment is denied (see Bank of Am. , 2002 WL 34452856 ; see e.g. Quik Park W. 57 LLC v Bridgewater Operating Corp. , 148 AD3d 444, 445 [1st Dept 2017] [denying plaintiffs' motion for summary judgment as "plaintiffs' breach of contract claim was not plead prior to the filing of their motion"] ).
Accordingly, plaintiffs' motion for summary judgment as against Geiger is denied.
The court has considered the parties' remaining arguments, and finds them to be without merit.
Accordingly, it is
ORDERED that the motion of defendant Spectrum Painting Corporation i/s/a Spectrum Painting Contractors for summary judgment (motion sequence no. 002) is granted, and the complaint is dismissed with costs and disbursements to said defendant as taxed by the Clerk upon the submission of an appropriate bill of costs, and the Clerk is directed to enter judgment accordingly; and it is further
ORDERED that the motion of defendant Illinois National Insurance Company for summary judgment (motion sequence no. 003) is granted, and the complaint is dismissed with costs and disbursements to said defendant as taxed by the Clerk upon the submission of an appropriate bill of costs, and the Clerk is directed to enter judgment accordingly; and it is further
ADJUDGED AND DECLARED that plaintiffs do not qualify as additional insureds within the meaning of the Commercial Umbrella Liability Policy No. BE 0891362 issued by defendant Illinois National Insurance Company, and that Illinois National Insurance Company has no obligation to provide any insurance coverage to plaintiffs for the underlying action entitled Lombardo v TAG Court Square, LLC, Pavarini McGovern, LLC, Geiger Construction Company, Inc. and Structure Tone, Inc. (index No. 11574–2010 [Sup Ct, Kings County]; and it is further
ORDERED that the remaining branches of defendant Illinois National Insurance Company's motion are denied as moot; and it is further
ORDERED that the motion of defendant Illinois Union Insurance Company i/s/a Westchester Fire Insurance Company for summary judgment (motion sequence no. 005) is granted, and the complaint is dismissed with costs and disbursements to said defendant as taxed by the Clerk upon the submission of an appropriate bill of costs, and the Clerk is directed to enter judgment accordingly; and it is further
ORDERED that the motion of defendant Endurance American Specialty Insurance Company for summary judgment (motion sequence no. 006) is granted, and the complaint is dismissed with costs and disbursements to said defendant as taxed by the Clerk upon the submission of an appropriate bill of costs, and the Clerk is directed to enter judgment accordingly; and it is further
ADJUDGED AND DECLARED that: (1) plaintiffs Pavarini McGovern, LLC and Structure Tone, Inc. do not qualify as additional insureds on the commercial general liability policy of insurance issued by defendant Endurance American Specialty Insurance Company to defendant Geiger Construction Company Inc.; and (2) defendant Endurance American Specialty Insurance Company's disclaimer of additional insured coverage on the basis of late notice is valid; and it is further
ORDERED that the remaining branches of defendant Endurance American Specialty Insurance Company's motion are denied as moot; and it is further
ORDERED that plaintiffs' motion for summary judgment (motion sequence no. 004) is denied; and it is further
ORDERED that the remainder of the action shall continue.