Kaf-Kaf, Inc. v. Rodless Decorations, Inc.

• Decision Date: 16 October 1997
• Docket Number: INC,KAF-KA
• Citation: 687 N.E.2d 1330,90 N.Y.2d 654,665 N.Y.S.2d 47
• Parties: , 687 N.E.2d 1330, 1997 N.Y. Slip Op. 8588 , Appellant, v. RODLESS DECORATIONS, INC., Respondent. (And a Related Action.) RODLESS DECORATIONS, INC., Appellant, v., et al., Respondents, et al., Defendants. (And Related Actions.)
• Court: New York Court of Appeals Court of Appeals

Page 47

665 N.Y.S.2d 47

90 N.Y.2d 654, 687 N.E.2d 1330, 1997

N.Y. Slip Op. 8588

KAF-KAF, INC., Appellant, v. RODLESS DECORATIONS, INC., Respondent.

(And a Related Action.)

RODLESS DECORATIONS, INC., Appellant, v. KAF-KAF, INC., et al., Respondents, et al., Defendants.

(And Related Actions.)

Court of Appeals of New York.

Oct. 16, 1997.

Gwertzman, Lefkowitz, Greenwald & Burman, New York City (Morton Greenwald and Roberta Burman, of counsel), for appellant in the first above-entitled action and respondents in the second above-entitled action.

O'Brien & Mayr, Rockville Centre (Nicholas R. Calabria, James M. O'Brien and William F. Gormley, of counsel), for respondent in the first above-entitled action.

Gennet, Kallamann, Antin & Robinson, P.C., New York City (Michael J. Mernin, of counsel), for appellant in the second above-entitled action.

OPINION OF THE COURT

KAYE, Chief Judge.

The central issue in these two actions is whether the waiver of subrogation clause contained in the parties' lease precludes the negligence claims of their subrogated insurance carriers. Concluding that it does, we affirm the orders of the Appellate Division.

Pursuant to a Standard Form Loft Lease, commonly used throughout the State, Kaf-Kaf, Inc. rented two floors of a building located in Hollis, New York, from the owner, Rodless Decorators, Inc. Paragraph 9 of the lease set forth a waiver of subrogation provision, while paragraph 8 permitted the tenant to seek reimbursement for property losses caused by the negligence of the landlord.

In May 1983, a fire of unknown origin damaged both the leased premises and Kaf-Kaf's personal property. Kaf-Kaf's insurer, National Union Fire Insurance Company, paid Kaf-Kaf's claims for, among other things, personal property and business interruption losses. Rodless's claims for its own losses, including building damage and lost rents, were paid by its property insurer, Industrial Risk Insurers (IRI).

Each insurer then commenced a subrogation action. In its action against Rodless, National Union, as subrogor of Kaf-Kaf, alleged that Rodless was negligent in failing to maintain the sprinkler system, thereby greatly increasing the fire and water damage suffered by Kaf-Kaf. After ruling on a number of procedural issues, Supreme Court granted Rodless's motion for summary judgment and dismissed the complaint, holding that the waiver language of paragraph 9(e) applied to all subrogation actions, including the subrogation action of a tenant's insurer for damage to the personal property of the tenant. The Appellate Division affirmed.

In the second subrogation action, IRI, as subrogor of Rodless, brought a negligence claim against Kaf-Kaf. Procedural entanglements ensued, but ultimately Supreme Court granted Kaf-Kaf's motion for summary judgment and dismissed Rodless's complaint on the basis of the waiver of subrogation clause. The Appellate Division affirmed.

The Lease

Paragraph 9 of the Standard Form Loft Lease entered into by Kaf-Kaf and Rodless, entitled "Destruction, Fire and Other Casualty," states:

"9. (e) Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damage from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery of 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, Landlord 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 and also, provided that such a policy can be obtained without additional premiums. Tenant acknowledges that Landlord will not carry insurance on Tenant's furniture and/or furnishings or any fixtures or equipment, improvements or appurtenances removable by Tenant and agrees that Landlord will not be obligated to repair any damage thereto or replace the same" (emphasis added).

Paragraph 8 of the lease, entitled "Property--Loss, Damage, Reimbursement, Indemnity," provides:

"8. Landlord or its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the building, nor for loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause of whatsoever nature, unless caused by or due to the negligence of Landlord, its agents, servants or employees" (emphasis added).

The Insurance Policies

Pursuant to the lease, Kaf-Kaf purchased an insurance policy with National Union, effective July 15, 1982 to July 15, 1983, providing first-party property damage insurance as well as general liability coverage. The policy, which included an additional insured endorsement naming Rodless as an insured for general liability coverage, contained the following language:

"6. Subro...