Nautilus Ins. Co. v. Jirsa Constr. Co.

• Citation: 244 F.Supp.3d 315
• Decision Date: 24 March 2017
• Docket Number: 15–CV–194S
• Parties: NAUTILUS INSURANCE COMPANY, Plaintiff, v. JIRSA CONSTRUCTION COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of New York

244 F.Supp.3d 315

NAUTILUS INSURANCE COMPANY, Plaintiff,

v.JIRSA CONSTRUCTION COMPANY, et al., Defendants.

15–CV–194S

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

Signed March 24, 2017

Suzanne L. Jones, Hinshaw & Culbertson LLP, Minneapolis, MN, Dana A. Rice, Hinshaw & Culbertson LLP, Chicago, IL, Alan Frederick Kaufman, Hinshaw & Culbertson LLP, New York, NY, for Plaintiff.

Michael Anthony Riehler, Sugarman Law Firm LLP, Anne Marie Wheeler, Dolce Panepinto PC, Phyliss A. Hafner, Cartafalsa Slattery Turpin & Lenoff, Buffalo, NY, Dawn Marie Brehony, Clausen Miller, P.C., John Blaise Cartafalsa, Jr., Cartafalsa Slattery Turpin & Lenoff, New York, NY, for Defendants.

DECISION AND ORDER

WILLIAM M. SKRETNY, United States District Judge

I. INTRODUCTION

Presently before the Court in this insurance coverage dispute are the parties' cross-motions for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. (Docket Nos. 40, 44, 46.) Plaintiff, Nautilus Insurance Company ("Nautilus"), seeks a judgment declaring that it need not defend and indemnify Defendants, Jirsa Construction Company ("Jirsa"), Burlington Coat Factory of New York, LLC, and Burlington Coat Factory Warehouse of Cheektowaga, Inc. (together, "Burlington") in an underlying litigation. Defendant Jirsa does not oppose the motion. Defendants Burlington and CB Walden Village, LLC ("CB Walden") oppose Nautilus' motion and have cross-moved, seeking a judgment declaring that Nautilus has a duty to defend and indemnify them. For the reasons discussed further below, Nautilus' motion for summary judgment is granted. Burlington and CB Walden's cross-motions are denied.

II. BACKGROUND¹

Defendant Jirsa is an Illinois corporation in the construction business. Nautilus is an Ohio-based insurance company, which issued a general commercial liability policy to Jirsa effective during the relevant period. The insurance coverage dispute arises out of litigation pending in the Supreme Court of Erie County, New York, captioned John Green v. CB Walden Village, et. al. , index number 809108/14 (the "Underlying Litigation"). (See Docket No. 5–2, Amended Complaint in John Green v. CB Walden Village, et. al. (the "Underlying Complaint").) Plaintiff in the Underlying Litigation (the "Underlying Plaintiff") allegedly sustained "serious and permanent injury" when, on September 29, 2012, he fell from a trailer while working as a construction site laborer for Jirsa. (Id. at ¶ 20.) The incident took place on property owned by CB Walden and located in Cheektowaga, New York. (Id. at ¶ 7.) CB Walden leased the property to Burlington (id. at ¶ 8), which hired Jirsa as the general contractor for a construction project (id. at ¶ 10). There is no dispute that the Underlying Plaintiff was engaged in construction work for Jirsa at the time of the alleged incident, nor that the alleged incident occurred in New York.

Jirsa, Burlington, and CB Walden tendered the Underlying Litigation to Nautilus, seeking defense and indemnification for the claims asserted therein under the general commercial liability policy issued to Jirsa and in effect during the relevant period (the "Policy"). (Docket No. 5 at ¶¶ 20–26.) The Policy provides commercial general liability coverage, with certain exclusions. The Policy states:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.

(Docket No. 1–2 at 12.) The Policy contains a "Designated Ongoing Operations" exclusion, which limits coverage for occurrences in New York state:

This insurance does not apply to "bodily injury" or "property damage" arising out of [operations in the state of New York], regardless of whether such operations are conducted by you or on your behalf or whether the operations are conducted for yourself or for others.

(Id. at 32.) The terms "You" and "your," as used throughout the Policy, "refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named insured." (Id. at 12.) It is not disputed that Jirsa is the only named insured on the Policy.

Although Jirsa is the only named insured, the Policy extends coverage to additional insured parties for:

any person or organization when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for "bodily injury" ... caused, in whole or in part, by your acts or omissions, or the acts of those acting on your behalf:

1. In the performance of your ongoing operations for the additional insured ... But only for:...

2. "Occurrences" or coverages not otherwise excluded in the policy to which this endorsement applies.

(Id. at 58.)²

CB Walden has submitted an agreement between Jirsa and Burlington (the "Agreement"), wherein Jirsa agrees to provide insurance coverage to Burlington as an additional insured. (See Docket No. 45–1.) The Agreement states, under the heading "Name Owner and Landlord as Additional Insured":

The General Liability coverage shall include Owner as an Additional Insured ... Contractors shall also procure and maintain such additional types and minimum limits of insurance as the landlord may require of Owner under the Contract Documents between the Landlord and Owner and/or as Owner may require of Contractor hereunder.

(Docket No. 45–1 at 29.) "Owner" is defined as Burlington Coat Factory of New York LLC. (Docket No. 45–1 at 2.) "Landlord" does not appear to be defined, nor is CB Walden party to the Agreement.

III. LEGAL STANDARDS

"A motion for summary judgment may properly be granted ... only where there is no genuine issue of material fact to be tried, and the facts as to which there is no such issue warrant the entry of judgment for the moving party as a matter of law." Kaytor v. Elec. Boat Corp. , 609 F.3d 537, 545 (2d Cir. 2010). A court's function on a summary judgment motion "is not to resolve disputed questions of fact but only to determine whether, as to any material issue, a genuine factual dispute exists."

Kaytor , 609 F.3d at 545 (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249–50, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986) ). "A dispute regarding a material fact is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Weinstock v. Columbia Univ. , 224 F.3d 33, 41 (2d Cir. 2000)cert. denied , 540 U.S. 811, 124 S.Ct. 53, 157 L.Ed.2d 24 (2003) (quoting Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ). When a dispute hinges on contract interpretation, "summary judgment may be granted when [the contract's] words convey a definite and precise meaning absent any ambiguity." Seiden Assocs., Inc. v. ANC Holdings, Inc. , 959 F.2d 425, 428 (2d Cir. 1992). "The matter of whether the contract is ambiguous is a question of law for the court." Law Debenture Trust Co. v. Maverick Tube Corp. , 595 F.3d 458, 465 (2d Cir. 2010) (collecting cases).

Where, as here, multiple parties move for summary judgment, "each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales v. Quintel Entm't , 249 F.3d 115, 121 (2d Cir. 2001).

IV. DISCUSSION

Nautilus seeks a declaratory judgment denying coverage related to the Underlying Litigation on the ground that the ongoing operations of Jirsa through which the Underlying Plaintiff was injured are specifically excluded under the Policy's "Designated Ongoing Operations" exclusion.³ Nautilus further argues that, as an additional insured, Burlington is also excluded because the Policy extends liability coverage to additional insured parties only for incidents that are "not otherwise excluded" under the Policy.⁴ Burlington and CB Walden argue that the exclusion does not apply to them as additional insured parties or, in the alternative, that the language is ambiguous, and seek a declaratory judgment that they are covered under the Policy.

"Under New York law, ‘[a]mbiguity exists where the terms of an insurance contract could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement.’ " U.S. Specialty Ins. Co. v. LeBeau, Inc. , 847 F.Supp.2d 500, 503 (W.D.N.Y. 2012) (quoting 40 Gardenville, LLC v. Travelers Prop. Cas. of America , 387 F.Supp.2d 205, 212 (W.D.N.Y. 2005) ). Ambiguities in insurance coverage are to "be resolved in favor of the insured and against the insurer." Brabender v. Northern Assurance Co. of America , 65 F.3d 269, 273 (2d Cir. 1995) ; Handelsman v. Sea Ins. Co., Ltd. , 85 N.Y.2d 96, 101, 623 N.Y.S.2d 750, 647 N.E.2d 1258 (N.Y. 1994). "However, parties cannot create ambiguity from whole cloth where none exists, because provisions are not ambiguous merely because the parties interpret them differently." Universal Am. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. , 25 N.Y.3d 675, 680, 37 N.E.3d 78, 80–81 (N.Y. 2015) (internal quotation marks omitted).

A. Extent of Coverage

1. Jirsa is Excluded from Coverage

Jirsa did not oppose Nautilus' motion for summary judgment. Further, Nautilus, Burlington, and CB Walden all agree that Jirsa is not eligible for coverage under the terms of the Policy. In its Statement of Undisputed Facts, Nautilus states:

Because the Policy excludes coverage for "bodily injury" arising out of the ongoing operations in New York, regardless of whether such operations were performed by Jirsa or on Jirsa's behalf or whether the operations were performed for Jirsa or

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