Summary
In USAA Cas. Ins. Co. v. Brown (206 AD2d 470), the Second Department affirmed an order that, following a nonjury trial, granted the tenant's motion to dismiss the complaint on the ground that the landlord's insurer failed to establish its right of subrogation against the tenant.
Summary of this case from Phoenix Ins. Co. v. StamellOpinion
July 18, 1994
Appeal from the Supreme Court, Nassau County (McGinity, J.).
Ordered that the order is affirmed, with costs.
In May 1989, the USAA Casualty Insurance Company (hereinafter USAA) commenced this action, purportedly as the subrogee of John J. Schaefer, to recover $23,558.50 for damages caused by fire to premises owned by Schaefer and leased to the defendant tenant. The complaint alleged that the tenant was "negligent and careless in causing, permitting and allowing dangerous and unsafe conditions to exist such that a fire could result". There is no allegation in the complaint as to the insureds under the policy or of payment; nor was the policy or adequate proof of payment produced at trial. The court granted the tenant's motion to dismiss the complaint based, inter alia, on USAA's failure to establish its right of subrogation.
The rights of an insurer as equitable subrogee against a third party are derivative and limited to those rights which the insured would have had against the third party for the latter's default or wrongdoing (see, Federal Ins. Co. v. Andersen Co., 75 N.Y.2d 366, 372). Thus, the insurer can only recover if the insured could have recovered and the insurer's claim as subrogee is subject to whatever defenses the third party might have asserted against the insured (see, Federal Ins. Co. v. Andersen Co., supra). We agree with the court that USAA failed to establish that it had subrogation rights against the tenant. That a contributing cause of the loss may have been the tenant's negligence, a risk apparently covered under the unproduced policy of insurance, does not affect the obligation of the insurer to the tenant, apparently a coinsured, under the policy (see, New York Bd. of Fire Underwriters v. Trans Urban Constr. Co., 60 N.Y.2d 912; 6A Appleman, Insurance Law and Practice § 4055, at 77-78 [1993 Supp]). Thompson, J.P., Balletta, O'Brien and Florio, JJ., concur.