Tower Ins. Co. of N.Y. v. Sanita Constr. Co.

• Decision Date: 26 July 2013
• Docket Number: INDEX NO. 101064/2011
• Citation: 2013 NY Slip Op 31678
• Parties: TOWER INSURANCE COMPANY OF NEW YORK, PLAINTIFF, v. SANITA CONSTRUCTION CO., INC. and CIAMPA ESTATES, LLC, DEFENDANTS
• Court: New York Supreme Court

2013 NY Slip Op 31678

TOWER INSURANCE COMPANY OF NEW YORK, PLAINTIFF,

v.SANITA CONSTRUCTION CO., INC. and CIAMPA ESTATES, LLC, DEFENDANTS

INDEX NO. 101064/2011

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PART 44

MOTION DATE: November 26, 2012

Filed: July 26, 2013

Date: July 12, 2013

PRESENT: HON. MILTON A. TINGLING

Upon the foregoing papers, it is ordered that the motion for summary judgment is denied, the motion for default judgment is granted, and the cross motion for a stay is granted.

Plaintiff moves the court to grant a default motion, pursuant to CPLR 3215(a), and a summary judgment motion pursuant to CPLR 3212. Plaintiff seeks a judgment that it has no duty to defend or indemnify Defendants Sanita and Ciampa in the underlying action entitled Robinson Duran Urena v. Ciampa Estates, LLC and Sano Construction Corp., and Ciampa Estates, LLC v. Sanita Construction Co., Inc. Defendant Ciampa opposes the motions for default and summary judgments, and files a cross motion for a stay.

Plaintiff, Tower Insurance Company of New York ("Tower"), issued a commercial line policy to Defendant, Sanita Construction Co. ("Sanita"), Inc., effective March 15, 2005 to March 15, 2006. The policy's general liability coverage does not include bodily injury for which the insured is obligated to pay damages by reason ofassumption of liability in a contract or agreement, unless liability is assumed in an "insured contract".

On or about February 1, 2006, Defendant Sanita Construction Co., Inc. hired Defendant Ciampa Estates, LLC ("Ciampa") as a subcontractor to perform masonry work, which included the construction of building foundations. On February 10, 2006, Defendant Sanita and Defendant Ciampa entered into a contractual agreement where Defendant Sanita assumed insurance obligations for the contracted work, and also agreed to indemnify Defendant Ciampa for liability arising out of any loss suffered by an employee of Defendant Sanita.

On February 17, 2006, Robinson Duran-Urena, Defendant Sanita's employee, suffered an on-the-job injury, and sought damages against Defendant Ciampa. Everest National Insurance Company ("Everest"), the primary insurer of Defendant Ciampa, settled the underlying action for $1,250,000.

On August 11, 2006, Plaintiff received a letter from Everest, in which it tendered Defendant Ciampa's defense and indemnification in the underlying action to Plaintiff. On August 17, 2006, Towers issued a letter to Everest denying tender; and notified Defendant Sanita that it would not be covered for its contractual liability to Defendant Ciampa based on the policy's contractual liability limitation and the employer's liability exclusion. Despite disclaiming coverage, Plaintiff agreed toprovide Defendant Sanita with a defense, but not indemnity, in the underlying action.

On or about August 28, 2007, Defendant Ciampa commenced a third party action against Defendant Sanita for contractual indemnification, common law indemnification and contributions.

To confirm denial of coverage, Plaintiff filed a Summons and Complaint on January 27, 2011. Defendant Ciampa served its answer to the complaint on March 7, 2012; however, Defendant Sanita failed to serve its answer to the complaint. According to the records of the New York State Divisions of Corporations, Defendant Sanita is no longer a registered corporation.

The movant on a summary judgment motion must establish his case as a matter of law. Winegrad v. New York University Medical Center, 64 N.Y.2d 851, 853 (1985). A motion for summary judgment must be denied if a triable issue of fact exists. C.P.L.R. Section 3212; Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). The proponent of a summary judgment motion has the initial burden of coming forward with evidentiary proof in an admissible form demonstrating that it is entitled to summary judgment. Zuckerman, supra. In this case, Plaintiff alleges entitlement to summary judgment on the basis that the policy's contractual liability limitation and employer's liability exclusions bar coverage. Consequently, Defendant Sanita isprecluded from coverage because of its contractual agreement with Defendant Ciampa. The policy states:

"The policy does not cover "bodily injury... for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement," unless the liability is assumed in a contract that is an insured contract."

"The policy also excludes coverage for claims involving bodily injury to:

(1) An employee of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business;

(2] The spouse, child, parent, brother or sister of that employee as a consequence of Paragraph (1) above.

This exclusion applies:

(1) Whether the insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

This exclusion does not apply to liability assumed by the insured under an "insured contract".

An endorsement to the policy, entitled "Contractual liability Limitation" defines an "insured contract to mean: a contract for a lease of premises, a sidetrack agreement, any easement of license agreement, an obligation... to indemnify a municipality, or an elevator maintenance agreement.

In response to Defendant Ciampa's opposition, Plaintiff contends that outright denial of coverage, based on the employer's liability exclusion, is not a conflict prompting circumstance. Since the exclusion bars coverage of all claims asserted against Defendant Sanita by Defendant Ciampa in the underlying action, the independent counsel rule does not apply. Plaintiff relies on Service Mutual Insurancev. Goldfarb, 53 N.Y.2d 392 (1981), citing that the right to independent counsel is triggered where the insurer is liable upon some of the grounds for recovery asserted and not upon others. Plaintiff also contends that failure to inform Defendant Sanita of its right to independent counsel does not preclude denying coverage based on Sumo v. Evans, 278 A.D.2d 169 (1st Dep't 2000). In Sumo, the plaintiff alleges that its insurer was liable for having failed to inform it of its rights to independent counsel, resulting in a defense compromised by inherent conflicts of interest. The court rejected the argument that the insurer's failure to inform the insured of that right triggered liability; and further underscored that an insurer has no affirmative duty to disclose the right to independent counsel.

Lastly, Plaintiff asserts that Defendant Sanita alone must demonstrate prejudice; therefore, Defendant Ciampa's allegations are insufficient on their face. Plaintiff cites Schnieder v. Canal Ins. Co., 210 F .3d 355 (2d Cir. 2000), where the court rejects the argument that a third party can demonstrate prejudice on behalf of the insured; and Inc. Village of Freeport v. Sanders, 121 A.D.2d 430 (2d Dep't 1986), where the court ruled that the doctrine of equitable estoppel is not a defense available to defendants third party plaintiffs since no representations were ever made to them by the plaintiffs.

Once the movant has established a prima facie case that it is entitled to summary judgment, the burden shifts to the party opposing the motion to tender sufficient evidence in admissible form to defeat the motion....