Bfp 245 Park Co., LLC v. Gmac Commercial Mortgage Corporation

• Decision Date: 30 November 2004
• Docket Number: 4742.
• Citation: 12 A.D.3d 330,786 N.Y.S.2d 425,2004 NY Slip Op 08818
• Parties: BFP 245 PARK CO., LLC, Appellant, v. GMAC COMMERCIAL MORTGAGE CORPORATION et al., Respondents.
• Court: New York Supreme Court — Appellate Division

12 A.D.3d 330

786 N.Y.S.2d 425

2004 NY Slip Op 08818

BFP 245 PARK CO., LLC, Appellant, v. GMAC COMMERCIAL MORTGAGE CORPORATION et al., Respondents.

4742.

Appellate Division of the Supreme Court of the State of New York, First Department.

November 30, 2004.

Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered May 18, 2004, which, to the extent appealed from, granted defendants' motion for summary judgment to the extent of dismissing the complaint and granting partial summary judgment on their first counterclaim, denied plaintiff's cross motion for summary judgment, and declared that plaintiff was obligated to obtain additional terrorism coverage and that defendants had properly obtained such coverage at plaintiff's expense, unanimously affirmed, with costs.

In February 2001, plaintiff obtained a mortgage for a commercial building near Grand Central Terminal, in connection with a $500 million loan on a building estimated to be worth a substantially greater amount. Under the mortgage agreement, plaintiff was obligated to obtain and maintain insurance for the property against "any peril now or hereafter included within the classification `All Risk' or `Special Perils,' in each case . . . in an amount equal to [100%] of the `Full Replacement Cost.'" A separate provision obligated plaintiff to obtain "such other insurance . . . as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against" for other comparable properties in Manhattan. The lender was entitled to protect its interest by obtaining, without notice to plaintiff, such insurance coverage as "in its reasonable discretion" it deemed appropriate consistent with the mortgage agreement, at plaintiff's expense. Plaintiff, as borrower, would be responsible for the lender's legal fees and costs incurred in protecting the lender's interest in the property "upon the occurrence and during the continuance of an Event of Default."

The motion court properly interpreted the unambiguous mortgage agreement, as a matter of law, in requiring that plaintiff obtain terrorism coverage under either the "all risks" provision or the "other insurance" provision. In this regard, the court aptly distinguished the "all risks" provision here, whose "now or hereafter" language contemplated a flexible obligation subject to change as the marketplace recognized new insurable risks, from that in Omni Berkshire Corp. v Wells Fargo Bank, N.A. (307 F Supp 2d 534 [SD NY 2004]), which lacked such language. Contrary to plaintiff's contention, the existence of the "other insurance" provision did not render the "all risks" provision meaningless under...