Maxum Indem. Co. v. A One Testing Laboratories, Inc., 14-cv-4023 (KBF)

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtKATHERINE B. FORREST, District Judge
Citation150 F.Supp.3d 278
Parties Maxum Indemnity Company, Plaintiff, v. A One Testing Laboratories, Inc. aka A-1 Testing Laboratories, Inc., 610 West Realty LLC, Riverview West Contracting LLC, B&V Contracting Enterprises, Inc. and Ace Inspection and Testing Services, Inc., Defendants.
Docket Number14-cv-4023 (KBF)
Decision Date10 December 2015

150 F.Supp.3d 278

Maxum Indemnity Company, Plaintiff,
v.
A One Testing Laboratories, Inc. aka A-1 Testing Laboratories, Inc., 610 West Realty LLC, Riverview West Contracting LLC, B&V Contracting Enterprises, Inc. and Ace Inspection and Testing Services, Inc., Defendants.

14-cv-4023 (KBF)

United States District Court, S.D. New York.

Signed December 10, 2015


Meghan Eileen Ruesch, Robert S. Nobel, Traub Lieberman Straus & Shrewsberry, LLP, Hawthorne, NY,

150 F.Supp.3d 280

Craig Lawrence Rokuson, White Fleischner & Fino, LLP, White Plains, NY, for Plaintiff.

Christopher Michael Slowik, Klein Slowk PLLC, Peter Edmund Sayer, Law Offices of Stuart A. Klein, New York, NY, for Defendants.

OPINION & ORDER

KATHERINE B. FORREST, District Judge:

Plaintiff Maxum Indemnity Company, an insurer, seeks a declaration that it does not owe a duty to defend or indemnify its insured, defendant A-1 Testing Laboratories, in a lawsuit (the “Underlying Action”) that defendant 610 West Realty LLC filed in state court against A-1 and defendants Riverview West Contracting LLC, B&V Contracting Enterprises, Inc., and Ace Inspection and Testing Services, Inc. (ECF No. 1.) Now before the Court is Maxum's motion for summary judgment. (ECF Nos. 29 & 32.) The crux of Maxum's argument is that the general liability policy it entered into with A-1 does not cover 610 West's theory of liability in the Underlying Action because 610 West does not allege an “occurrence” resulting in “property damage” that occurred during the policy period.1

In the Underlying Contract, 610 West has asserted breach of contract, negligence, and fraudulent conveyance causes of action against A-1. These causes of action stem from allegations that A-1's faulty workmanship in performing certain inspections required 610 to undertake repair work. As a matter of law, the general liability insurance contract between Maxum and A-1 does not cover such allegations, and even if it did the damage occurred outside of the policy period. Therefore, because there is no genuine issue of material fact at issue in this case, the motion is GRANTED.

I. FACTUAL BACKGROUND

A. The Policy

Maxum provided A-1 with commercial general liability coverage between February 28, 2011 and February 28, 2012. (Pl.'s 56.12 ¶ 1; Policy3 at 7.) The contract provided that Maxum would “pay those sums that [A-1] becomes legally obligated to pay as ‘damages' because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” (Pl.'s 56.1 ¶ 2; Policy at 9.) It established that the insurance applied “only if ... [t]he ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ ... and ... occurs during the policy period.” (Id. )

The policy defined “occurrence” to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” (Pl.'s 56.1 ¶ 3; Policy at 24.) It provided two disjunctive definitions of “property damage:”

Physical injury to tangible property, including all resulting loss of use of that
150 F.Supp.3d 281
property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.

(Id. )

The contract further provided that Maxum would defend A-1 “against any ‘suit’ seeking those damages,” but would have no duty to defend A-1 “against any ‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which this insurance does not apply.” (Pl.'s 56.1 ¶ 2; Policy at 9.) An endorsement incorporated into the policy specifically provided that “[t]his insurance does not apply to any claim or ‘suit’ for breach of contract.” (Pl.'s 56.1 ¶ 9; Policy at 39.)4

B. The Underlying Action

In June 2013, A-1, Riverview, and B&V received a “Summons with Notice” alerting them that 610 West was suing them “to recover damages for each Defendant's breach of contract and negligence in connections with the construction of a building at 608 West 149th Street, New York, NY, and for indemnity.” (Pl.'s 56.1 ¶ 11; ECF No. 34, Exh. B.)

In October, Maxum sent A-1 a letter explaining that “[t]he summons with notice [gave] little information with which to establish a true evaluation of the covered and/or uncovered damages,” and that Maxum was therefore “continu [ing] to investigate this matter under a full reservation of rights.” (Pl.'s 56.1 ¶ 15; ECF No. 34, Exh. D, at 1.) Maxum's letter also explained that it had retained counsel “to secure an extension of time for A One to appear, move or otherwise act and demand plaintiff provide more information through a formal complaint,” which would put Maxum “in a better position to evaluate its obligations regarding defense and indemnity for the action.” (Id. )

In November, 610 West filed its complaint in the Underlying Action (“UAC”). (Pl.'s 56.1 ¶ 16.) The UAC alleged that 610 West was the sponsor of project to build condominiums and in 2005 had hired Riverview as a general contractor for the construction. (Pl.'s 56.1 ¶¶ 17-18; UAC5 ¶ 6-7.) It further alleged that Riverview had, during 2004 and 2005, hired B&V as a subcontractor to provide drywall and carpentry work and A-1 as a subcontractor “to perform controlled inspections in connection with, among other things, the ‘Fire Stops.’ ” (Pl.'s 56.1 ¶¶ 18-19; UAC ¶¶ 9-10.) According to the UAC, B&V's work was defective, a fact that neither Riverview nor A-1 detected or caused to be corrected, and which was only discovered by 610 West sometime prior to June 2010. (Pl.'s 56.1 ¶ 20; UAC ¶¶ 11-14.) As a result, the UAC alleged, 610 West was required to remediate and repair the defective work over a number of years. (Pl.'s 56.1 ¶ 20; UAC ¶¶ 15-16.)

The UAC asserted separate breach of contract and negligence causes of action against Riverview, B&V, and A-1. (UAC

150 F.Supp.3d 282

¶¶ 18-46.) The two6 causes of action asserted against A-1 mirrored each other; the breach of contract claim alleged that A-1 “breached its duties and obligations under the A-1 Testing Subcontract by failing to perform its controlled inspection services with reasonable care and in accordance with accepted industry standards and practices,” while the negligence claim alleged that A-1 “owed a duty to plaintiff to perform its controlled inspection services with reasonable care and in accordance with accepted industry standards and practices,” and breached that duty “by performing its controlled inspection services in a negligent fashion and contrary to accepted industry standards and practices.” (Pl.'s 56.1 ¶¶ 21; UAC ¶¶ 39, 43-44.)

In March 2014, Maxum's counsel wrote to A-1 to “advise [it] of Maxum's coverage position based upon the allegations and information presently known.” (Pl.'s 56.1 ¶ 25; ECF No. 34, Exh. F, at 1.) The letter explained that, in Maxum's view, various exclusions “bar[red] coverage for certain claims asserted in this matter,” and that Maxum was investigating “to determine whether there are any damages to which the [policy's] exclusions do not apply.” (ECF No. 34, Exh. F., at 7.) The letter also advised that “[t]here may be other reasons why no coverage is available.” (Id. )

Notwithstanding the determination of non-coverage, the letter went on to explain that Maxum would continue defending A-1 in the Underlying Action. (Pl.'s 56.1 ¶ 26; ECF No. 34, Exh. F, at 7.) This agreement to provide defense counsel was, however, subject to an explicit statement that Maxum did not “waive the right ... to contest the duty to defend, or indemnify or seek to recover back defense costs paid on behalf of [A-1].” (Id. ) Specifically, Maxum “reserve[d] its right to commence a coverage action to obtain a declaration of no coverage and/or recover back defense costs.” (Id. )

In June 2014, Maxum filed the instant action seeking a declaration of non-coverage and a determination that it was entitled to recoup defenses costs expended in the Underlying Action. (ECF No. 1.) It filed an amended complaint in August 2015, (ECF No. 25) and moved for summary judgment in September. (ECF Nos. 29 & 32.) That motion became fully briefed on November 2, 2015. (ECF No. 46.)

II. LEGAL PRINCIPLES

A. Summary Judgment Standard

Summary judgment may not be granted unless a movant shows, based on admissible evidence in the record, “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating “the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On summary judgment, the Court must “construe all evidence in the light most favorable to the nonmoving party, drawing all inferences and resolving all ambiguities in its favor.” Dickerson v. Napolitano , 604 F.3d 732, 740 (2d Cir.2010). The Court's function on summary judgment is to determine whether there exist any genuine issues of material fact to be tried, not to resolve any factual disputes. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248–49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)

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    ...things later recoup their defense costs upon a determination of non-coverage") (quoting Maxum Indem. Co. v. A One Testing Labs., Inc. , 150 F.Supp.3d 278, 283–84 (S.D.N.Y. 2015) ). In this case, Golden Insurance did not do so. It provided a defense pursuant to a reservation of rights. But i......
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    ...‘rests on when the injury, sickness, disease or disability actually began.’ " Maxum Indemn. Co. v. A One Testing Laboratories, Inc. , 150 F. Supp. 3d 278, 285 (S.D.N.Y. 2015) (quoting Downey v. 10 Realty Co., LLC , 78 A.D.3d 575, 911 N.Y.S.2d 67, 67 (2010) (internal 378 F.Supp.3d 990 quotat......
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    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • February 13, 2018
    ...v. Turner Constr. Co., 119 A.D.3d 103, 986 N.Y.S.2d 74, 77 (2014) (" National Union "); Maxum Indem. Co. v. A One Testing Labs., Inc. , 150 F.Supp.3d 278, 284 (S.D.N.Y. 2015). One of the cases, Exeter Building Corp. v. Scottsdale Insurance Co. , 79 A.D.3d 927, 913 N.Y.S.2d 733, 735 (2010), ......
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12 cases
  • Black & Veatch Corp. v. Aspen Ins. (Uk) Ltd., No. 12-2350-SAC
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • November 17, 2016
    ...established consistency up through the most recent decisions. See, e.g., Maxum Indemnity Company v. A One Testing Laboratories, Inc., 150 F. Supp. 3d 278, 285 (S.D.N.Y. Dec. 10, 2015) ("The George A. Fuller decision accurately captures New York law."). As shown in the prior citations, this ......
  • Golden Ins. Co. v. Ingrid House, Inc., 20-cv-1163 (LJL)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 10, 2021
    ...things later recoup their defense costs upon a determination of non-coverage") (quoting Maxum Indem. Co. v. A One Testing Labs., Inc. , 150 F.Supp.3d 278, 283–84 (S.D.N.Y. 2015) ). In this case, Golden Insurance did not do so. It provided a defense pursuant to a reservation of rights. But i......
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    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • March 29, 2019
    ...‘rests on when the injury, sickness, disease or disability actually began.’ " Maxum Indemn. Co. v. A One Testing Laboratories, Inc. , 150 F. Supp. 3d 278, 285 (S.D.N.Y. 2015) (quoting Downey v. 10 Realty Co., LLC , 78 A.D.3d 575, 911 N.Y.S.2d 67, 67 (2010) (internal 378 F.Supp.3d 990 quotat......
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    • February 13, 2018
    ...v. Turner Constr. Co., 119 A.D.3d 103, 986 N.Y.S.2d 74, 77 (2014) (" National Union "); Maxum Indem. Co. v. A One Testing Labs., Inc. , 150 F.Supp.3d 278, 284 (S.D.N.Y. 2015). One of the cases, Exeter Building Corp. v. Scottsdale Insurance Co. , 79 A.D.3d 927, 913 N.Y.S.2d 733, 735 (2010), ......
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