Monari v. Surfside Boat Club, Inc.

• Decision Date: 17 October 1972
• Docket Number: Docket 72-1392.,No. 9,9
• Citation: 469 F.2d 9
• Parties: Edward MONARI, Plaintiff, v. SURFSIDE BOAT CLUB INC., Defendant-Third-Party Plaintiff-Appellee, v. WESTERN WORLD INSURANCE CO., INC., Third-Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

469 F.2d 9 (1972)

Edward MONARI, Plaintiff, v. SURFSIDE BOAT CLUB INC., Defendant-Third-Party Plaintiff-Appellee, v. WESTERN WORLD INSURANCE CO., INC., Third-Party Defendant-Appellant.

No. 9, Docket 72-1392.

United States Court of Appeals, Second Circuit.

Argued September 19, 1972.

Decided October 17, 1972.

Edward Cherney, New York City (Friedlander, Gaines, Ruttenberg & Goetz, Harvey P. Rosenberg, New York City, of counsel), for third-party defendant-appellant.

Marvin M. Dingott, White Plains, N. Y., for defendant third-party plaintiff-appellee.

Before KAUFMAN, SMITH and MANSFIELD, Circuit Judges.

MANSFIELD, Circuit Judge.

Western World Insurance Co., Inc. (Western), third party defendant, appeals from a judgment awarded by the district court in favor of Surfside Boat Club Inc. (Surfside) against Western under the property damage provisions of an OLT (Owners', Landlords' and Tenants') liability policy that had been issued by it to Surfside. The judgment was for $3,116.55, plus interest, which represented the amount that had been assessed against Surfside, after a non-jury trial in the main action, an admiralty suit by Edward Monari (Monari) for damages to his boat caused by Surfside's negligent operation of marine equipment, and for $500 in legal fees incurred by Surfside to defend the primary suit.

Western here contends that it was not liable under the policy to indemnify Surfside for the damages assessed against it and not obligated thereunder to defend Surfside in the main action. We reverse the recovery of damages and affirm the award of legal fees.

Since Western's obligation to indemnify Surfside under the terms of the insurance policy issued by Western and in effect at the time of the accident turns on whether the accident fell within the coverage of the policy certain undisputed facts with respect to the accident must first be understood. Surfside is the operator of a Brooklyn boatyard and marina, located on waterfront property leased from the City of New York, where it services, rents and stores boats. As part of its equipment it owned and operated at the time of the accident a self-propelled crane located on land, which was used to lift boats out of and back into the water. The crane consisted of an operator's cab, a boom, motor-driven drum hoist, and a cable extending from the drum in the cab to the end of the boom. Attached to the cable, which hung vertically from the end of the boom, was a square metal frame, from the bottom of which were suspended two slings.

To lift a boat out of the water the operator of the crane, located in the cab, would operate the motor-operated drum with a lever and brake, lowering the cable and frame to a point where the slings could be looped around the bottom of the boat to function as a cradle, one sling fore and one aft, and then activating the motor to wind up the cable. The boat would then be lifted several feet out of the water and if work was to be done on the boat, the crane, which was movable, would be backed inland, carrying the boat to a point where it would be suspended over land. Upon completion of the work, the operation would be reversed and the boat lowered into the water, whereupon the slings could be released and the boat be free for operation on the sea.

On September 21, 1966, Monari, the owner of a 301/2-foot sport fishing boat named the ROSEMARIE, brought his boat to Surfside's marina for the purpose of having Surfside lift it out of the water and suspend it over blocks on the land so that Monari could wash the bottom and change the propeller himself. Surfside was then to return his boat to the water. Monari had in the past stored his boat at Surfside's marina and he was a friend of Surfside's owner, Allen Gormely, for whom Monari had performed some dockyard services in the past. Nothing was to be paid for the service to be rendered to him by Surfside.

At the time of the accident Gormely's brother Augie, a Surfside employee, was in charge of operating the crane. After he moved it to the water's edge and lowered the frame into position, Monari placed the two slings under the boat. Augie then operated the crane and cable to lift Monari's boat out of the water. When the boat reached a point where it was several feet out of the water, the crane began to tilt toward the water, apparently because the boat was too heavy or because the crane had been improperly positioned. Anticipating that the crane might topple, Augie released the brake on the cable, which rapidly paid out, causing the boat to drop suddenly back into the water and to hit another boat. A split second later the metal frame crashed onto the top of Monari's boat, causing it substantial damage. In the meantime Augie, apparently panicking, leaped from the cab of the crane, capping an almost comical mishap.

At the time of the accident Surfside was insured by Western under an "Owners', Landlords', and Tenants' Liability Policy" which protected Surfside up to a limit of $10,000 against property damage caused by its ownership, maintenance, operation and use of its boatyard premises, including "elevators" as defined, except for certain expressly stated exclusions. One of these "Exclusions," ¶ (k) (3), provided in relevant part that coverage for property damage liability would not apply to "property in the care, custody or control of the insured or property as to which the insured for any purpose is exercising physical control".¹ Invoking this exception Western disclaimed liability on the ground that at the time of the accident Monari's boat was in the care, custody and control of the insured, Surfside. The district court, taking the view that the abovequoted language was ambiguous, concluded that "it is inconceivable that the policy language, reasonably interpreted, brings within its ambit of exclusion the subject incident as one in which Surfside has the care, custody or control of the boat, or the exercise of physical control over it." We disagree.

At the outset it must be recognized that the exclusion from coverage of property in the "care, custody or control" of the insured is a fundamental and generally recognized provision, see generally, 12 Couch, Insurance § 44:424, et seq. (2d ed. 1963), which is incorporated in an "Owners', Landlords', and Tenants'" (OLT) policy for the reason that the policy's traditional function has been to provide a specific type of coverage, i. e., protection to an owner or lessee of real property against liability due to defective conditions in or on the property itself, 11 Couch, supra § 44.372, as distinguished from liability arising from the use of movable equipment or from acceptance of property as a bailee, for which other types of policies are offered.

While the reach and scope of the terms "care, custody or control," may under some circumstances be ambiguous, see Rochester Woodcraft Shop, Inc. v. General Accident Fire & Life Assur. Corp., 35 A.D.2d 186, 316 N.Y.S.2d 281 (4th Dept. 1970); Klapper v. Hanover Ins. Co.,...