Opinion
603212/2008
12-16-2010
Stantec Consulting Services, Inc. f/k/a Vollmer Associates, LLP, Plaintiff, v. Matana, LLC, Defendant.
ATTORNEY FOR THE PLAINTIFF : Firm : MILBER MAKRIS PLOUSADIS/SEIDEN. ATTORNEY FOR THE DEFENDANT : Firm : HOEY KING TOKER & EPSTEIN.
ATTORNEY FOR THE PLAINTIFF : Firm : MILBER MAKRIS PLOUSADIS/SEIDEN.
ATTORNEY FOR THE DEFENDANT : Firm : HOEY KING TOKER & EPSTEIN.
Paul Wooten, J.
Plaintiff Stantec Consulting Services, Inc. f/k/a Vollmer Associates, LLP ("plaintiff"), a commercial tenant, brings this action against its landlord, defendant Matana, LLC ("defendant"), to recover for the business interruption it allegedly sustained during the time that the computer system to its leased premises was closed due to a malfunctioning of the air conditioning system. Discovery has not been completed and the Note of Issue has not been filed. Defendant now moves for summary judgment, pursuant to CPLR 3212, seeking dismissal of the complaint on the ground that the lease between plaintiff and defendant contains a waiver of subrogation clause. Plaintiff opposes the motion on the basis that the waiver of subrogation clause does not apply to bar the present action.
BACKGROUND
On December 1, 1989, plaintiff's predecessor-in-interest executed a standard office lease agreement with defendant's predecessor-in-interest for premises located at 50 West 23rd Street, New York, New York ("the Lease"). The Lease was in effect on August 6, 2007 and August 7, 2007, with plaintiff as tenant and defendant as landlord.
The Lease was subsequently modified in 2002 and 2005, but the modifications did not materially alter the terms and conditions of the Lease as relevant to the instant motion.
Under the terms of the Lease, defendant was responsible for maintenance issues, including maintenance of the building's heating and ventilation systems, as set forth in Article 4, which provided in pertinent part:
"Owner shall maintain in good working order and repair the exterior and the structural portions of the building . . . , and the public portions of the building interior and the building plumbing, electrical, heating and ventilation systems (to the extent such systems presently exist) serving the demised premises. . . . It is specifically agreed that Tenant shall not be entitled to any setoff or reduction of rent by reason of any failure of Owner to comply with the covenants of this or any other article of this Lease. Tenant agrees that Tenant's sole remedy at law in such instance will be by way of an action for damages for breach of contract. The provisions of this Article 4 shall not apply in the case of fire or other casualty which are dealt with in Article 9 hereof" (Not. of Mot., Ex. B, Lease at Article 4 [emphasis supplied]).
Pursuant to Article 52 of the rider to the Lease, defendant was required to "provide condenser water from the Building's condenser water tower for the operation of the Units on business days from 8 a.m. to 5 p.m." (id. at Rider, Article 52).
Plaintiff alleges that on August 6, 2007, defendant failed to provide sufficient condenser water to the condenser units which caused the units to malfunction and render the air conditioning system ineffective. As a result, the air temperature at the leased premises began to rise significantly and purportedly reached 85 degrees on August 6, 2007, and over 90 degrees on August 7, 2007. The excessive heat allegedly affected plaintiff's electronic computer server and plaintiff was forced to close its office on August 7, 2007. Plaintiff seeks to recover for the business interruption sustained during the time that its office was closed and its server shut down due to the excessive heat.
DISCUSSION
Defendant argues that it is entitled to summary judgment dismissing plaintiff's complaint because Article 9 of the Lease contains a "waiver of subrogation" clause, which provides in pertinent part:
"If the demised premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Owner and this lease shall continue in full force and effect except as hereinafter set forth . . . . Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty, and to the extent that such insurance is in force and collectible and to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of recovery against the other or any one claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if both releasors' insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance" (id. at Article 9).
Defendant asserts that on the dates of its alleged damages, both plaintiff and defendant had insurance polices that provided that the insured could waive the insurer's subrogation rights. Citing only one case, Kaf-Kaf, Inc. v Rodless Decorations, Inc., 90 NY2d 654 [1997], for the proposition that subrogation waivers are enforceable, defendant argues that the complaint must be dismissed, as a matter of law, since the Lease and both insurance polices all contained waivers of subrogation language.
In opposition, plaintiff argues that defendant has not established its entitlement to judgment as a matter of law because the waiver of subrogation clause in the Lease does not apply to the air conditioning system failure that is at issue in this case. Rather, plaintiff contends that maintenance issues, such as the failure of the air conditioning system, are addressed by Article 4 of the Lease which also provides that plaintiff's sole remedy for defective conditions is an action for breach of contract.
Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Andre v Pomeroy, 35 NY2d 361, 364 [1974]). The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form demonstrating the absence of material issues of fact (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; CPLR 3212 [b]). A failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see Smalls v AJI Indus., Inc., 10 NY3d 733, 735 [2008]). Once a prima facie showing has been made, however, "the burden shifts to the nonmoving party to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial for resolution" (Giuffrida v Citibank Corp., 100 NY2d 72, 81 [2003]; see also Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; CPLR 3212 [b]).
When deciding a summary judgment motion, the Court's role is solely to determine if any triable issues exist, not to determine the merits of any such issues (see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). The Court views the evidence in the light most favorable to the nonmoving party, and gives the nonmoving party the benefit of all reasonable inferences that can be drawn from the evidence (see Negri v Stop & Shop, Inc., 65 NY2d 625, 626 [1985]). If there is any doubt as to the existence of a triable issue, summary judgment should be denied (see Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 [1978]).
The Court finds that defendant has failed to prima facie establish its entitlement to judgment as a matter of law based on the waiver of subrogation clause (see Smalls, 10 NY3d at 735). Subrogation is an equitable doctrine that "allows an insurer to stand in the shoes of its insured and seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse" (Kaf-Kaf, 90 NY2d at 660). "While parties to an agreement may waive their insurer's right of subrogation, a waiver of subrogation clause cannot be enforced beyond the scope of the specific context in which it appears" (id.). A waiver of subrogation clause is an allocation of risk provision, which places the ultimate risk of loss on the insurer (see Insurance Co. of North Am. v Borsdorff Serv., Inc., 225 AD2d 494, 494 [1st Dept 1996]; Viacom Intern., Inc. v Midtown Realty Co., 193 AD2d 45, 53 [1st Dept 1993]).
Here, defendant has not prima facie established the applicability of the waiver of subrogation to this action. Plaintiff is not an insurer, and the present action is not a subrogation action (see State Farm Ins. Co. v J.P. Spano Constr., Inc., 55 AD3d 824, 825 [2d Dept 2008] ["Where a party has waived its right to subrogation, its insurer has no cause of action"] [emphasis supplied]). Moreover, no evidence has been presented that plaintiff has submitted a claim for its loss to its insurer (see American Motorist Ins. Co. v Morris Goldman Real Estate Corp., 277 F Supp 2d 304, 307-08 [SDNY 2003] ["A typical waiver of subrogation clause requires the injured party to seek recovery for any loss from its insurer before bringing a claim against the other party. And to the extent that the insurance covers the loss, the damaged party waives its claim against the other party. If the insurance does not provide complete coverage, the injured party retains a claim against the other party for the difference."]).
Summary judgment is also inappropriate, in any event, as there are material questions of fact regarding whether plaintiff's alleged business interruption was caused by defendant's failure to comply with its contractual obligation to maintain the air conditioning system as set forth in Article 4 of the Lease (see One Beacon Ins. Co. v French Inst. Alliance Francais NYC, 50 AD3d 388 [1st Dept 2008]; Gap, Inc. v Red Apple Co., Inc., 282 AD2d 119 [1st Dept 2001]).
Accordingly, defendant's motion for summary judgment dismissing the complaint is denied.
For these reasons and upon the foregoing papers, it is,
ORDERED that defendant's motion for summary judgment dismissing the complaint is denied; and it is further,
ORDERED that plaintiff shall serve a copy of this Order, with Notice of Entry, upon defendant; and it is further,
ORDERED that the parties are directed to appear at a Status Conference on February 23, 2011, at 11:00 a.m., in Part 7, at 80 Centre Street.
This constitutes the Decision and Order of the Court.
Paul WootenJ.S.C.