Unpublished
Opinion
Motion
Date: March 5, 2021
PRESENT: HON. CATHERINE M. BARTLETT, AJ.S.C.
HON
CATHERINE M. BARTLETT, A.J.S.C.
To
commence the statutory time period for appeals as of right
(CPLR 5513 [a]), you are advised to serve a copy of this
order, with notice of entry, upon all parties.
The
following papers numbered 1 to 7 were read on Defendants'
motion for dismissal of the Complaint and imposition of
sanctions, and Plaintiffs cross motion to amend the caption:
Upon
the foregoing papers it is ORDERED that the motions are
disposed of as follows:
This is
an insurance dispute arising out of the settlement of an
underlying personal injury action entitled Lamela v
Verticon, Ltd. et ah, Ulster County Index No. 11-4377.
The Complaint of plaintiff Main Street America Assurance
Company ("Main Street") as subrogor of Lamela &
Sons, Inc. ("Lamela") asserts a cause of action
sounding in subrogation against defendant Verticon, Ltd.
("Verticon"), and causes of action against
defendants Satin Fine Foods, Inc.
and Satin Realty Associates, LLC (collectively,
"Satin") for impairment of Main Street's
subrogation rights and unjust enrichment.
A.
The Underlying Action and Litigation in the Third
Department
Relevant
factual background is set forth in detail in the Appellate
Division, Third Department's decision in Lamela v.
Verticon, Ltd., 185 A.D.3d 1319 (3d Dept. 2020):
Plaintiffs were injured when an unsecured wall collapsed,
displacing a motorized scissor lift that plaintiffs operated
while performing demolition work on a construction site.
During the course of their work, plaintiffs moved the lift in
close proximity to the unsecured wall. Plaintiffs were
employed by third-party defendant [Lamela], and the accident
occurred in a warehouse that was owned by defendant
[Satin]....Defendant Verticon, Ltd. was the general
contractor and contracted with Lamela, as well as defendant
Accurate Refrigeration Design, LLC, to serve as
subcontractors. Employees of Accurate's subcontractor,
defendant Cooler Panel Pros, Inc., were constructing the wall
that collapsed when the accident occurred. Plaintiffs
commenced this action alleging negligence and violations of
the Labor Law.
In July 2014, Supreme Court granted plaintiffs' motion
for partial summary judgment, finding Verticon and Satin
strictly liable pursuant to Labor Law §240(1).
Defendants thereafter agreed to a settlement of
plaintiffs' claims - specifically, defendants and
plaintiffs agreed on a total payment of $3.2 million, to be
apportioned under an agreement by which Verticon and Satin
would pay $2,199,999, Accurate would pay $ 1 and Cooler would
pay $ 1 million. Although Lamela did not participate in or
contribute to the settlement, its counsel was present at the
time the settlement was announced and objected. Releases were
thereafter signed providing that plaintiff James Lamela would
receive $500,000 and plaintiff Robert Lamela would receive
$2.7 million.
Subsequently, Verticon and Satin filed an amended third-party
complaint seeking contractual indemnity against Lamela based
upon the indemnification clause contained in the contract,
which required Lamela to indemnify both Verticon and Satin.
Lamela answered the amended third-party complaint and, among
other things, asserted cross claims against Verticon seeking
common-law indemnity and contribution. Lamela then moved for
summary judgment dismissing the amended third-party
complaint, and Verticon and Satin cross-moved for summary
judgment on the indemnity claim. Verticon withdrew its motion
prior to decision and Supreme Court granted that aspect of
the motion in which Satin sought contractual indemnity and
denied Lamela's motion for summary. Lamela appealed, and
this Court affirmed....
Following the appeal, Lamela remitted approximately $2
million to Satin, thereby satisfying its contractual
indemnity obligation to that entity Soon thereafter, Verticon
moved for summary judgment seeking dismissal of Lamela's
cross claims asserting, among other things, that the
indemnification provision contained in the contract between
Lamela and Verticon bars Lamela from seeking common-law
indemnity. Supreme Court granted Verticon's motion and
dismissed Lamela's cross claims. Lamela appeals.
Although this appeal stems from the dismissal of Lamela's
cross claim seeking common-law indemnity, we would be remiss
not to address the background of this case relative to this
issue. As made abundantly clear by Lamela, both in this
appeal and the prior appeal before this Court, Lamela is
dissatisfied with the allocation of the settlement proceeds
between Satin and Verticon and how the allocation impacted
Lamela's indemnity obligation to Satin. Lamela's
claim stems from its belief that the insurance company, which
represented both Satin and Verticon, acted in bad faith by
apportioning the larger share of the settlement to Satin,
which was concededly not negligent and only vicariously
liable as the owner (see Labor Law §240[ 1]).
Lamela asserts that this is unfair because it posits that if
Verticon was actually negligent, and if an accurate - larger
- share of the settlement was allocated to Verticon based
upon its negligence, Lamela's contractual indemnity
obligation to Satin would have been decreased
proportionately. However, even if all of this were true, we
cannot fashion a common-law indemnity right where none
exists, since we would be waving an obligation out of whole
cloth, one that was neither bargained for nor is permissible
under the law. Here, Lamela's novel upstream common-law
indemnity claim fails for two reasons: (1) indemnification is
governed by the contract and only goes one way - in favor of
Verticon; and (2) Lamela is seeking indemnity for a
voluntarily assumed contractual obligation flowing to Satin,
rather than one imposed vicariously, or otherwise, by
operation of law. As such, Supreme Court properly granted
Verticon's motion for summary judgment and dismissed
Lamela's cross-claim for common-law indemnity.
Id., 185 A.D.3d at 1320-21.
B.
Contractual / Insurance Relationships of the Parties to the
Underlying Action
Having
lost at every turn, Main Street / Lamela commenced the
present action against Verticon and Satin. Before proceeding
to analyze Main Street's claims, it is essential first to
identify the parties to the underlying personal injury
action, to understand their labyrinthine contractual and
insurance relationships, and to understand their role in the
accident and in the settlement of the underlying action.
____Satin was the owner of the premises where the accident
occurred.
____Verticon was Satin's general contractor.
____Verticon in turn contracted with subcontractors Lamela
and Accurate.
____Accurate in turn contracted with sub-subcontractor
Cooler.
Satin's
liability as owner under Labor Law §240(1) was purely
vicarious. There was no negligence on its part. All of the
other parties - Verticon, Lamela, Accurate and Cooler - were
involved either in an operational or supervisory capacity in
the work which led to the accident. Each of them may have
been negligent, and the negligence of each may potentially
have contributed to the accident.
2.
Contractual / Insurance Relationships
So far
as is pertinent to this case:
____Satin possessed rights of contractual and common law
indemnity against Verticon
____Satin and Verticon possessed rights of contractual
indemnity against Lamela.
____Verticon was insured by TIC.
____Satin was an additional insured under Verticon's TIC
policy.
____Lamela was insured by Main Street.
____Verticon was an additional insured under Lamela's
Main Street policy.
____Accurate was insured by the Hartford Insurance Company
("Hartford").
____Satin and Verticon were additional insureds under
Accurate's Hartford policy.
3.
The Litigation and Settlement of the Underlying
Action
As
additional insureds of Accurate under the Hartford policy,
Satin and Verticon tendered their defense of the underlying
action to Accurate / Hartford. Hartford accepted the tender.
Satin, pursuant to its right of contractual indemnity, and
Verticon, as additional insured under the Main Street policy,
tendered their defense of the action to Lamela / Main Street.
Main Street declined the tender, and, per the Third
Department, breached its contractual obligation to indemnify
Satin. Hartford, having accepted the tender of Satin's
and Verticon's defense, was in a position to control the
defense of the action and to shape the allocation of the
settlement proceeds among the parties accepting
responsibility. The allocation was as follows:
Verticon
|
$200,000.00
|
(Paid by TIC)
|
Satin
|
$2,199,999.00
|
(Paid by Hartford)
|
Accurate
|
$1
|
Cooler
|
|
Lamela / Main Street did not participate in the settlement
and vigorously objected to this allocation.
C.
Satin's Judgment Against Lamela / Main Street For
Contractual Indemnity
Satin
recovered the entirety of the $2,199,999.00 it paid in
settlement of the injured plaintiffs claims from Lamela /
Main Street pursuant to its right of contractual indemnity.
At the direction of Satin's counsel, the judgment was
paid by Lamela / Main Street to Hartford.
As the
Third Department observed, the allocation of the personal
injury action settlement was anomalous in that...
