Greater Ny Ins v. Mut Mar off

• Decision Date: 16 December 2003
• Docket Number: 1256.
• Citation: 3 A.D.3d 44,2003 NY Slip Op 19574,769 N.Y.S.2d 234
• Parties: GREATER NEW YORK MUTUAL INSURANCE COMPANY, Respondent, v. MUTUAL MARINE OFFICE, INC., Appellant.
• Court: New York Supreme Court — Appellate Division

3 A.D.3d 44

769 N.Y.S.2d 234

2003 NY Slip Op 19574

GREATER NEW YORK MUTUAL INSURANCE COMPANY, Respondent, v. MUTUAL MARINE OFFICE, INC., Appellant.

1256.

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

December 16, 2003.

Richard C. Rubinstein and Thomas D. Hughes for respondent.

Brown Gavalas & Fromm LLP (Timothy G. Hourican and Michael P. Naughton of counsel), for appellant.

OPINION OF THE COURT

SULLIVAN, J.

At issue is an insurance coverage dispute between plaintiff Greater New York Mutual Insurance Company (GNY) and defendant Mutual Marine Office, Inc. (MMO) arising out of the January 15, 1999 collapse of the roof of a building housing a commercial parking garage located in the premises at 241 East Broadway, as a result of which a number of cars parked at the garage were destroyed or damaged. Numerous claims were thereafter filed against the owner of the building, Seward Park Housing Corp. (Seward) and its lessee, Ulltra East Parking Corp. (Ulltra), the operator of the parking garage, for the recovery of the value of the cars destroyed or the cost of repair of those damaged in the collapse.

On or about August 21, 1990, Seward, a real estate cooperative apartment corporation, and Ulltra entered into a 10-year lease of the "entire garage building, including roof, as presently constructed," which was to be used "solely and exclusively as a 24 hour garage for the storage of motor vehicles." Ulltra, at its own cost and expense, was to "keep the demised premises clean and well lit, fix broken windows and keep all doors and gates (including overhead doors) . . . operating and in good repair, paint and restripe the demised premises when necessary, keep the surfaces of walls, floors and ceiling in good repair and free of leaks . . . and make all other necessary repairs to the demised premises, including all repairs required to safely and legally operate the Garage and repairs to mechanical systems, except that the Tenant shall not make any structural repairs not expressly referred to herein." Thus, Seward was solely responsible for repairs to the structure of the parking garage.

The lease also required Ulltra to provide liability insurance coverage for itself and Seward with respect to Ulltra's leasing of the parking garage. The insurance procurement clause states "Insurance. (a) Tenant at its own cost and expense, shall procure and at all times maintain general liability insurance with companies satisfactory to Landlord, insuring Landlord and Tenant against damages from bodily injury, including death, and for injury to property to any and all persons, incurred either in the interior of the demised premises, or any part thereof, or upon and in or about adjacent to the exterior of the said premises."

In compliance with this requirement, Ulltra procured a comprehensive general liability policy with a garage keepers liability endorsement (No. 3) from MMO for bodily injury and property damage with an additional insured endorsement for the period January 31, 1998 to January 31, 1999 that included coverage for damage to cars "in connection with the insured's [Ulltra's] `garage operations.'" Endorsement No. 3 defined "Garage Operations" as "the ownership, maintenance or use of locations for the purpose of a business of selling, servicing, repairing or parking `automobiles' and that portion of the roads or other accesses that adjoin these locations." As regards the MMO policy's additional insured provision, endorsement No. 11 specifically provides, "It is agreed that this Policy shall include as additional insureds any person or organization to whom [Ulltra] has agreed by written contract to provide coverage, but only with respect to operations performed by or on behalf of [Ulltra]."

Shortly after the January 15, 1999 collapse of the parking garage roof, claims were asserted, as noted, by the owners of vehicles as well as by the vehicle owners' subrogated insurers against Seward and Ulltra, seeking to recover for the damage to the vehicles parked in the garage at the time of the collapse. At the time, Seward was the named insured under a general liability policy issued by GNY for the period of July 31, 1998 to July 31, 1999 providing commercial property, commercial general liability and commercial automobile coverage for Seward's properties, including 241 East Broadway. The coverage provided by the GNY policy issued to Seward is distinct from the MMO policy and not overlapping, and it covered claims arising out of the ownership of the building. As noted, the MMO policy, on the other hand, provided additional insured coverage for Seward only for claims arising out of Ulltra's parking garage operations.

After reaching agreement with MMO to fund jointly the settlement of claims by the owners of cars uninsured for damage or loss due to the roof collapse, subject to resolution of ultimate liability after the disposition of all similar claims, GNY, in March 2000, requested coverage from MMO on behalf of Seward as an additional insured for those claims asserted by subrogated insurers whose insureds' cars had been damaged or destroyed in the collapse. MMO disclaimed coverage on the ground that Seward was not an additional insured under the terms of endorsement No. 11 since the claims did not arise out of the "operations performed by or on behalf of [Ulltra]," the named insured. In response, GNY commenced this action seeking a declaration that Seward is entitled to additional insured coverage under the MMO policy. GNY moved for summary judgment for a declaration that MMO was obligated to defend and indemnify Seward with respect to the subrogated claims. MMO cross-moved for summary judgment dismissing the complaint. Supreme Court granted GNY's motion, holding, "Since the automobiles in question were damaged while parked in the garage maintained by Ulltra . . ., the claims against Seward which were filed by the automobile owners and their insurers clearly arose from Ulltra's . . . operations." Thus, the court held, the MMO policy's additional insured endorsement was triggered, obligating MMO to defend and indemnify Seward against the claims arising out of the roof collapse. As is plainly evident, the collapse of the roof had nothing to do with Ulltra's garage operations. Thus, the additional insured endorsement was never triggered and a reversal is in order.

To determine whether Seward is an additional insured under MMO's policy for claims arising out of the collapse of the parking garage roof, it is necessary to look to the policy itself and the underlying lease between Ulltra and Seward (General Acc. Fire & Life Assur. Corp. v Travelers Ins. Co., 162 AD2d 130 [1990]). In that case, a lessee of a marine terminal procured a general liability policy naming the lessor as an additional insured under an endorsement that limited additional insured coverage to liability arising out of the lessee's ownership, maintenance or use of the leased terminal. The Court looked to the obligations undertaken by the tenant in the underlying lease agreement to determine whether the claim asserted implicated those obligations so as to trigger the additional insured endorsement.

The lease agreement between Seward and Ulltra specifically limits the permitted use of the demised premises "solely and exclusively as a 24 hour garage for the storage of motor vehicles." Moreover, the lease limited Ulltra's duty to repair to cleaning and surface maintenance and keeping the premises in good repair. The lease reserved the obligation of making structural repairs to Seward. In accordance with the policy's terms, endorsement No. 11 qualifies an entity as an additional insured if Ulltra "has agreed by written contract to provide coverage, but only with respect to operations performed by or on...