Travelers Indem. Co. of Conn. v. Losco Group

• Decision Date: 02 May 2002
• Docket Number: No. 99 CV 11422(CM)(GAY).,99 CV 11422(CM)(GAY).
• Citation: Travelers Indem. Co. of Conn. v. Losco Group, 204 F.Supp.2d 639 (S.D. N.Y. 2002)
• Parties: TRAVELERS INDEMNITY COMPANY OF CONNECTICUT a/s/o The German School of New York, Plaintiff, v. THE LOSCO GROUP, INC., Pacific Iron Works, Inc., Fairway Testing Co., Inc., and Peter Englert & Associates, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

204 F.Supp.2d 639

TRAVELERS INDEMNITY COMPANY OF CONNECTICUT a/s/o The German School of New York, Plaintiff, v. THE LOSCO GROUP, INC., Pacific Iron Works, Inc., Fairway Testing Co., Inc., and Peter Englert & Associates, Inc., Defendants.

No. 99 CV 11422(CM)(GAY).

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

May 2, 2002.

James C. Clerkin, Kral, Clerkin, Redmond, Ryan, Perry & Girvan, New York City, Michael B. Golden, Robinson & Cole, L.L.P., New York City, for Travelers Indem. Co. of Connecticut.

James C. Clerkin, Kral, Clerkin, Redmond, Ryan, Perry & Girvan, New York City, Bennett J. Lee, Watt, Tieder, Hoffar & Fitzgerald, LLP, McLean, VA, Harold M. Pressberg, Norton & Christensen, Goshen, NY, for Losco Group.

James C. Clerkin, Kral, Clerkin, Redmond, Ryan, Perry & Girvan, New York City, for Fairway Testing Co., Inc.

William R. Brocks, Milber Makris Plousadis & Seiden, LLP, Garden City, NY, for Peter Englert & Assoc., Inc.

MEMORANDUM DECISION AND ORDER DENYING THE LOSCO GROUP'S MOTION FOR SUMMARY JUDGMENT AND GRANTING FAIRWAY TESTING'S MOTIONS FOR SUMMARY JUDGMENT

McMAHON, District Judge.

Plaintiff Travelers Indemnity Company of Connecticut ("Travelers") brought a subrogation action for negligence and gross negligence against The Losco Group, Inc. ("Losco"), Pacific Iron Works, Inc. ("Pacific Iron Works"), Fairway Testing Co., Inc. ("Fairway Testing"), and Peter Englert & Associates, Inc. ("Englert"), and an additional action for breach of contract against Englert, on behalf of its insured, The German School of New York ("the School"), arising out of a collapse of a steel truss during the construction of a gymnasium at the School. The breach of contract claim against Englert was previously dismissed by this Court pursuant to Fed.R.Civ.P. 12(b)(6) and Travelers voluntarily withdrew its claim of negligence against Englert. Defendants Losco and Fairway Testing move for summary judgment pursuant to Fed.R.Civ.P. 56 on the negligence and gross negligence claims against them.

For the reasons stated below, Losco's motion for summary judgment is denied and Fairway Testing's motion for summary judgment is granted.

FACTUAL BACKGROUND

The German School is a private school located in White Plains, New York. On or about November 22, 1995, the School entered into an agreement with Englert whereby Englert agreed to provide architectural services in connection with the construction of a gymnasium on the premises of the School (the "Englert Agreement"). The terms of this contract contained a waiver of subrogation with respect to damages covered by property insurance. This waiver was not limited to the parties to the contract; the waiver extended to all contractors, consultants, agents or employees of either Englert or the German School. Maher Aff. ¶ 5. The waiver provision states:

The Owner and the Architect waive all rights against each other and against the contractors, consultants, agents and employees of the other for damages, but only to the extent covered by property insurance during construction, except such rights as they may have to the proceeds of such insurance as set forth in the edition of AIA Document A201, General Conditions of the Contract for Construction, current as of the date of this Agreement. The Owner and Architect each shall require similar waivers from their contractors, consultants and agents.

Englert Agreement at ¶ 9.4.

On or about July 23, 1997, the School entered into an agreement with Losco whereby Losco agreed to provide certain construction services in connection with the construction of the School's gymnasium (the "Losco Agreement"). Incorporated into the Losco Agreement are American Institute of Architects general conditions, including a "Waivers of Subrogation" provision. This provision states:

Waivers of Subrogation: The Owner [the School] and Contractor [Losco] waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other, and (2) the Architect Architect's consultants, separate contractors described in Article 6, if any, and any of their subcontractors, sub-subcontractors, agents and employees, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this Paragraph 11.3 or other property insurance applicable to the Work, except such rights as they have to proceeds of such insurance held by the Owner as fiduciary. The Owner or Contractor, as appropriate, shall require of the Architect, Architect's consultants, separate contractors described in Article 6, if any, and the subcontractors, sub-subcontractors, agents and employees of any of them, by appropriate agreements, written where legally required for validity, similar waivers each in favor of other parties enumerated herein. The policies shall provide such waivers of subrogation by endorsement or otherwise. A waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.

Losco Agreement at ¶ 11.3.7. In addition, the Losco Agreement provided that:

Property insurance shall be on an all-risk policy form and shall insure against the perils of fire and extended coverage and physical loss or damage including, without duplication of coverage, theft, vandalism, malicious mischief, collapse, falsework, temporary buildings and debris removal including demolition occasioned by enforcement of any applicable legal requirements, and shall cover reasonable compensation for Architect's services and expenses required as a result of such insured loss. Coverage for other perils shall not be required unless otherwise provided in the Contract Documents.

Losco Agreement at ¶ 11.3.1.1.

On or about January 20, 1998, the School took out a builder's risk insurance policy issued by Travelers, which covered the construction of the gymnasium on the premises of the School.

During the construction of the gymnasium, Fairway Testing, pursuant to an oral agreement with Englert, performed inspection and testing services at the School. Pursuant to the oral agreement, Fairway agreed to supply inspection and testing services on an "as needed basis," if and when they were contacted during the course of the project. See Maher Aff. ¶ 6, Ex. B (Aguanno Dep. At 14-15, 22). At that time it was also agreed if Fairway Testing performed inspection and testing services, it would be paid by Englert in accordance with the rates listed in a per diem fee schedule. Maher Aff. ¶ 6, Ex. C.

The roof structure of the gymnasium was designed to consist of five steel trusses that would support precast and prestressed concrete planks. On June 30, 1998, while the concrete planks were being placed on the steel trusses, one steel truss collapsed and fell forty feet to the gymnasium floor. Another truss failed but remained in place. The result was that tons of partially installed concrete planks fell to the floor and two workmen were injured.

In accordance with Travelers' builder's risk insurance policy to the School, which covered the gymnasium construction, Travelers has paid over $800,000 to the School in connection with the loss.

Travelers, as subrogee, filed a complaint alleging gross negligence and negligence against defendants Losco, Pacific Iron Works, and Fairway Testing, to recover the amount paid to the School for its property damages. Travelers amended its complaint to include Englert as a defendant in the action, asserting three causes of action against Englert: gross negligence, negligence and breach of contract. On March 23, 2001, this Court granted Englert's motion to dismiss plaintiff's Ninth Claim for Relief for breach of contract and denied Englert's motion to dismiss plaintiff's Fourth Claim for Relief for gross negligence. Plaintiff voluntarily withdrew its Eighth Claim for Relief for negligence. Travelers Indemnity Company of Connecticut v. The Losco Group, et al., 136 F.Supp.2d 253 (S.D.N.Y.2001).

On November 8, 2001, Losco moved for summary judgment on the claims of negligence and gross negligence (Second and Sixth Claims for Relief). On November 26, 2001, Fairway Testing moved for summary judgment on the claims of negligence and gross negligence against it (Third and Seventh Claims for Relief). No timely opposition was submitted to Fairway Testing's motion.¹ In its response to Losco's motion for summary judgment, plaintiff voluntarily withdrew its Sixth Claim of Relief for negligence against Losco based upon the contractual waiver provision in the Losco Agreement. Plaintiff opposes Losco's motion insofar as it seeks dismissal of the Second Claim for gross negligence.

DISCUSSION

I. Summary Judgment Standard

Under Federal Rule of Civil Procedure 56(c), the court will grant summary judgment if the evidence offered shows that there is no genuine issue as to any material fact and that the movants are entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Furthermore, where a plaintiff cannot establish an essential element of his claim, "there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial." Id. at 322-33, 106 S.Ct. 2548. On a motion for summary judgment, the court views the record in the light most favorable to the non-movants and resolves all ambiguities and draws all reasonable inferences against the movants. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Donahue v. Windsor Locks Bd. of Fire Commn'rs, 834 F.2d 54, 57 (2d Cir.1987).

II. Traveler's Standing

Under New York law, "[i]t is the very essence of...